The New York herald., 1866-02-24
STOCK OPERATIONS.

~~~~>~>>>>>->-~~~~><~~~~
An Important Suit Against . Stock
holder OF the National Bank Note Conn
Pany-Ailcged Frauds In Purchasing
Shares Sold at Eight Thousand Said TO
he Worth Over One Hundred Thousand
Dsllars-Interesting to Spectators.
SUPREME COUKT-sPECIAL TERM
Before Judge Sutherland.
FEB 22.-Frdncis b. Carpenter, Administrator, de- Of
oyd Clover, deceased os George H. DanorA and James
A. WIlidmson.-Ths suit involves many interesting
questions relative to the organization Of stock companies
and the sale of their stock large sum of money-be-
two and three hundred thousand dollarss also
at stake in the action From the parties interested and
tho nature Of the action rich and important develop
ments have come to light The facts Of the case ap
pear on the papers, are these:-
The defendant George II. Danforth is a large stock
holder and trustee in the establishment conducted under
the title OF the National Bank Note Company. On the
Cd Of August 1862 Mr. Lloyd Glover died ntestate in
Kings county. On the 23d of the following December
letters Of administration deceaseds property s-
sued to Mr. Francis b. Carpenter, who is the plaintiff in
this action. Mr. Glover left two chidren-one Frank
Elliot Glover aged eleven years. and the other Florence
Glover, aged nine years At the time Of his death Mr.
Glover owned hundred and thrysx shares of stock
In the National Bank Note Company of this city, the par
value Of which was fifty dollars per share Mr. Carpen-
heirs, by virtue Of his position administrator. There
very little property left besides by Mr. Glover and
liens or claims were upon this stock TO the amount of
So 961 81.
The COMPLAINT of Mr.. Carpenter then goes on to
that the National Bank Note Company was organized
about the 31st of October 1852 with capital stock OF
100000, divided into shares of $50 each There
twelve hundred shares, all of which taken by the
org nal number Of associates of the company of which
the defendant, George Fl. Danorh. and Lloyd Glover
were stockholders and trustees Augustus d. Shcphard
became treasurer OF the company after the death of Mr.
he IN fho laifc
well as five other shares The managers procured the
services of seven practical ravers, who became sub
scribers to the stock in small amounts Eighty four
shares were lef and were disposed Of among outside
friends OF the managers.
The stock Of the company had quotation in the mar
ket and the only ans of asccrainng its value was by
making all the necessary inquiries Us condition
Of the comranys affairs, VIII ch, as plaintiff alleges
were kept private desgncdly by those managing the
concern
The further allegations Of the plaintiff say that no
sold TO George II Dan orth the one hundred and thirty
six shares Of stock belonging Mr. Glover $50 per
share under circumstances winch he subsequently sets
forth folows:-Up to the time of sale no dividend
had been declared and at that the company was in
the full tide of Gritty the earnings being enormous
and sufficient to pay large dividends all OF which
from CARPENTER (the plaintif) order to dcprccatc
the value o. the stock in his eyes, thcr by get IL
into his Danforth's) hands at grossly inadeq ate
figure. Plant n asserts that aft being appointed
administrator lac sought by Dan orh at New York
who represented to him that he anxious to advance
the pecunaiy interest of Glovcrs children, with whom
in life he was on close terms of friendship and offered
10 purchase the stock at what he stated to he very
liberal price, The points which plaintiff takes
in relation to this sal are that Danforth
treacherously, knowing the dividends which be
paid and the full value of said stock took advantage OF
and perverted his fucary position of agent trustee
of the COMPANY fraudulenily influenced and induced the
plaintiff to sell and transfer TO him those hundred
and thirty shares r The grossly inadequate price of
SEQ per share, amounting to sS, 60 all the liens and
claims thereon 10 be cleared OF by the plaintiff al
Io,, Tsd X Kent s% him Gm an the the that Dian
TO tho stock and Of its earnings and dl,r.
dends, soon after paid and artfuly persandcd
plaintiff to believe that he iDanforh) makjxe
crous offer. Five months after this sale tho company
paid declared dividends upon Its SOCK amount
ing to $40 Ter cent being upon the hundred and
thItysix shares lately owned by plant s21 Oss Thr
months later tc company paid 200 per CENT being
uron the hundred and thirty six shares $4,000
amounting In all to S3i ESQ, and The company III now
able pay further lae dividend soon to hc declared
The value OF those shares at hc time Of SALE was
100000. That DanfOrb purchased this stock with.
out tho knowledge OF the other trustees and on
of the company, and by carenIly conccaling tho
one hundred shares OF stock from tho executor
and exccutx Of Robert Oakley and also all the stock
held by SIX engravers, workmenof the company amount
inc - one hundred shares Danforth Who'll purchases
then amounted to three hundred and thirty six shares
increasing his stock in the company 10 four hundred and
sxtv.sevcn shares That after such purchases and TO
mp and protect h rrpd Danforth placed them all
in tho hands OF the defendant, James A. williamson
confidential friend Of the former. and that Williamson
know of those frauds.
Mr.. Carpenter petitions that said sale by him TO
nanforh, and all assignments to Williamson, may be
thry.sx shar'a may br ordered to be delivered up TO
the plant r. together with all the dividends, and that
defendant pay to plaintiff $50 000-hs damage In the
premises.
Mr. nnnforth sets forth lengthy answer 10 tho
complaint Of Mr. Carpenter He admits the purchase OF
the hundred and thrys'x stock and after
coniradcting several points in the complaint goes to
make the following statement Tho department in
which defendant was employed that In which plates
for printing made by transfer from dies rolls,
which l. purely mechanical aud lie had no connection
kept; the business of the company managed by its
three executive officers and c other nrrsons ticludng
defendant loxccptng Fitch, Shcphard and Clover who
out of door agcnts) engaged excl vcly In its
mechanical and artistic departments Mr. Danforth admits
the fact of the workmen owning shares in the company.
and that he purchased stock from i've of them That
all had the privileges Ia asccainny the
condition OF the company and denies that secrecy
was maintained to the business that IA the stock.
holders could ascertain the necessary information by APP
ply ing to the executive officers of the company From
the time OF the organization Of the company the end
of the ls6 complete statement was malo sent
annually Of ts affairs and they were open t the exani
nation of all the Stockholders aud The panU had the
same means or examining into the exact condition Of tho
company he (Danfortl had He admits that nj the
time Of sale of the hundred and thirty. ak
clarcd any disidond; but denies that it, earn
ings had been very larsc, or that 1t ha, a sur
any dividends ~ that he had any knowledge relation
thereto which was not whin reach Of the pla nir;
of September 1862. and that by the semi annua state
mcn Of is aiars 10 the 5oth o! June, 1862 appeared
that the compMy WAS ~ 'hat unc IN debt ssI,y9 tS
AS he (Danforth) knew, other statement q the
condition aud affairs of the company between the Goth
of juno 1862 and the date OF the negotiation sppead
he bad other guide than the fact that the Mad
large business from the Treasury Department at Wal
ngnu, which plaintiff also knew and that II top,d
by the company that such work would be- cintnncd
The price for such work. however had ben agreed
upon, and II was not known what compensation would
be allowed for IL by the Secretary OF te Treasury
also known tba, the Secretary had established an
engraving and printing department at Washington, and
dccarcd 10 be his purpose TO have all the prn,a the
government Issues executed there which woula mate.
rally affect the business OF the company Thes facts
were talk ell about between plaintiff aud defentantie
price Of the stock being merely speculative Mr. Danrth
then denies all purposes Of fraud in the purchase OF
the stock, set down in the complaint OF Mr.
Carpenter, and alleges the circumstances Of the pvr
chase to be- a. follows-In December 1885, hc met
plaintiff In the street. who remarked that he Wa de-
srons of selling Mr. Gloyer's stock and thai on applying
20 the officers Of the cumpany they would Psr moro
than its par value. He (Danforth then sad that he
wanted 10 get stock, and that l.; would call
plaintiff In a short time. which he did Offering him