New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1868-05-09
THE ERIE LITIGATION.

yesterday by two Of the controversy the
being the decision Of the Supreme Court General Term
in the cases Of BloodgoOd agt The Erie Railway Com
pany Schell agt The Same. The People aRt The Same
and the matter OF the Removal OF Daniel Drew and the
second being the argument at Special Term the mo-
lions TO dissolve the Injunction. The first above alluded
to was decision four OF the six appeals (Which
argued month"; from the orders to show why an
proceedings in the mean time All four Of these appeals
dismissed for reasons set out IN the opinion which Is
GR1HSx IL can see ground which the appeals the..
be sustained They are made from orders oal temporary in
naa5c The Court where the motions heard and form
s sy therein sDs s defendant desired have such stay "a
Gated modified h could .PB to The Judge S5lP1: the sane G F
The justice a. Chamber, on notice for such an Oreri bat
cause such motion to yssais modify the orders sPs, will
s 81 By judge H % M: notion Sc a; s In 81
Of Judge made Chambers General Term The rule
Zee sT nov at a u S R:s s'S S ,pps. H S PS
have r 6,, no 1sS b. .1 a s sS. au6S ' .1
that seems 20 be to d,es The matter I,y uSsI
ARGUMENT on TUE ISJUECTIoSs
The next proceeding was the continuation Of the argu
O'ConOr succeeded Mr. Rapalo in arguing against the
motion He enlarged upon tho injustice and lnproprey
rd a9 esc Asr IL The M suits Of S Attorney and
MT Work, Mr.. Fisk, one Of these directors had com
ing the continuance Of those suits and slspendlns Mr.
pSint sought was the removal Of Mr.; WORK;
~ pTay i oP but mo- one ee and no Judge ought to grant
such petition from any one else Then t6ey hs de
District Again, that complaint was brought against the
Attorney General who represented the people OF the
state il ia the A, b. Of the Law that the people
complaint did not take Mr. Work by the
tS SS6 anS ee Gs bHt " S HIN The ST c
1t less commendable because Il was less bold
Then after such injunction had been obtained by
malpractice, another
the other sde restraining the holding OF any meetings
OF the directors OF the executive committee long as
Mr. Work. one OF that board was excluded therefrOm
The argument OF the other side that those directors were
nniusty debarred from holding meetings and transact
ing necessary business was false They not de-
barred. They could instantly obtain, upon application
judge BalcOm the vacation OF his iYuneton when
they had obtained by malpractice Thor argument
that Mr. Drew was uDusty prevented from
wrongs make right which was false In law and logic
& Of d aIA b had recently BEEN ssned Tine
opening counsel on the other SIDE had SAID ia eect tha
IN the strength OF and modern light shed on old
subjects all the old laws relative to corporate bodies
be ignored by the sovereign people and old things
this new dispensation, corporations were 10 be law
unto themselves. He would examine the question AT
first under the General Railroad Law OF 1913.
That rather sought TO insist that the capital Of
panes named IN the beginning OF the enterprise should
tended The term captal" usually meant The amount
necessary TO found enterprise 70 launch and equip the
chip The law Of 1850 required the company 10 Insert IN
It's stock certificates the amount OF their capital And
the law required the concurrence OF twothrds On
yaiucl VI Of the stock and on of the stock
holders he notified The other side had argued the
possession by the Company Of eaterPiilars oa%Ilty
pieces, IN that they could incorporate other roads
leased TO them, and thus "grdiron" the state.
The law to be sure allowed the borrowing OF money FOR
construction purposes convertible bonds but that law
was for specially avowed purpose aud for the pur
pose of nnating their capital The statement that they
could borrow hundred millions OF money was not true
Could a board of directors. representing only moety
OF stock involved have power borrow money the
faith OF tho stockholders al Hbipa aud nd irah'D II
companies could not get subscriptions Tor the fu amount
Of their authorized capital they could borrow money 20
MI up the deficiency and could capitalize The bonds Dor
Company added together should never exceed the
authorized capital OF the Company IL was argued that
this needed an addition TO the act Dul SUCH clause
would be very complicated overriding OF the statute
with words entirely unnecessary when from the whole
statute the intent was clearly derYabie INT could DC
shown that the other Interpretation had been accepted
by Courts legislators ana business Hs9 " might ne
no not aware Of any grave departure from the IN
The Court called attention to the fact that the directors
OF S9 sS hSa SIen hsa ,S ~ gs Public s
private property, and that II had on this ground been
their own accord Now was not this power q borrowing
necessarily general TO meet that necessity II was
mere suggestion for counsel 10 consider.
Mr. OConor argued that for the purpose OF seltpeser
walton corporations vested without special grant
with the naked power TO borrow money II was inci.
dental their very existence but this power limited
to the eKgences Of their being The Company could not
against a. there was a different process by which the
State transferred tho management OF the road to
The Court called attention to tho fact that In the early
days OF raioa charters provision was inserted author
izng the staettO take possession certain terms.
Mr. OCOnor called attention 10 the change, IN ls6 from
system OF private charter TO the system Of general
laws OF incorporation. The question was now whether
there had been such departure from Ito intent and
meaning 10 preclude them from returning It's true
intent The act was rather a modern 70 have this
principle applied but even admitting to be possible
decision OF any Court had been prodeced to show
variance the part OF the Courts To what had
the Eric Railway gone to prove such variance.
A short was here taken.
After recess Mr OCOnor resumed and argued that the
only evidences OF received variance from the intent Of
pany 70 the State Engineer that their capital stock was
not fixed, report probably made and received by mad
being acted on as 70 show construction the act-and
small overlssue by one company ana considerable
this such cOpimDis error as Is meant Dy the AKIN
coumu'lis error fact jusi Rather The rule that
rected should be applied, and this mlseonstructlon
Of the statute arrested He would eau attention to the
sruction What keeps corporations healthy is the power
this process the Directors can, without consulting the
stockholders Increase the stock they at the critical
after year unless their abuses were SO great to cali for
the interpOsltiOn OF the Attorney General peTpetuae
original transaction between Mr.. Drew and the
Company In 1866. Those parties who brought these
discovered that Mr. Drew intended to issue not any par
ucular but an enormous amount OF stock Well they had
In proof that when the second batch OF stock consist
ing OF two books OF certificates three other books
were prepared thus showing an intent TO Issue beyond
the t00O00OO Of stock, were issued or f5ooO
lie introduced this TO negative the idea that tho only OBJ
tect OF the Injunction was TO prevent the issue OF tho
900 Of stock aud, therefore, petus OeO, that
II was unnecessary The issue OF tho bonds mere
sham, or Formally, 10 give Mr. Drew possession OF the
stock. The actual transaction the sale OF stock 10
Mr. Drew he being charged IN account with II at "a Can
corporation issue lie stock in any at less than
part Is 1t not fraud on other stockholders who have
paid pari But what ia to be said when Director causes
this enormous quantity OF stock TO DO Issued
70 himself at three millions nearly, below pari II Is
clear corporation do such thing Judge of the
Court has recently said that an Issue OF stock at
only n per cent below par void for that rea-
sou. Here II is at about 80 per cent below par.
There 10 issued TO strangers here director Here
Mr. Drew sells at higher rates isn't that line OF con
duct jusying stockholders, whose rights invaded
whom partners are brought in at half price for the