New-York tribune., 1868-12-17
THE ERIE VAR.
THE WHELPLEY ACTION.

Co-NesOn c. 1.-THE bill is filed, in this case, against
the Erie Railway Company by sockhoder, charging
that he is the owner OF 600 shares Of stock that they are
part OF 100000 shares Of overissues by said Company
in violation Of charter contrary TO aw and prays
that this Issue Of stock be inquired into and It's legality
or egaty be estabshed andf it held that the said
issue was Illegal and void them hat the Company be de
creed 10 nay complainant the amount paid by hn
for this spurious stock and Also that the company
pending the suit be enjoned from disposne OF lts
property. or so much Of it as VIII inuemplly nun
aud, also that receiver be appoind,'edi ana the
Company has decrced TO convey to HIM sufficient amount
Of moneys, or securities 10 enaDle h 10 pay 10 he
complainant the advance made for SAID stock win inter-
all other persons holding this alleged oyerisue OF stock
The Judge at Chambers, no opposition being made,
Belmont and Ernest B Iucke now come INTO Court WIN
petition, setting forth that they are the holders OF
portion OF TINS oNefssue OF STOCK, nne Hsh 70 pe ~ "uo @
terestcd the question to be determined by the Court
uuff ard DISQUALIFIED person for proper discharge
Of the duties of that ofice. The question in
upon construction Of several provisions OF the law OF
NewYork concerning the powers and duties OF railroad
corporations The first section OF the act OF April 1885,
authorizing the formation OF railroad corporations and
10 regulate the same provides that any number OF per
sons not than 2j may form company Tor the puf
nose OF constructing, maintaining ana operating rail-
road &C. and for that purpose may make ana sign any
of the company &C. the amount of the capital stock O.
the company which shall not be less than $1,000 Tor every
and the number of shares Of which the capital stock OF
the company shall consist &c The mnth section pro,
es In ease the capital stock Of any company formed
nnder tbis act is found 10 be Insufficient for
constructing and operating ITS road, such Company may
with tbe concurrence OF twOhrds IN amount OF all Its
stockholders increase it, capital stock from time 10
time, TO any amount required for the purpose aloreaa
such increase must be sanctioned by vote IN person. or
by proxy OF twOthrds In amount OF all the Stockholders
Of the Company, at meeting OF sush en- @ s,ofhnoluoIs
by notice in writing TO each stockhoider TO DO served
on him personally, or by depoaung the same, properly
folded and directed him. at the POstO1c nearest is
usual place Of residence at least 20 days prior TO such
meeting. Such notice must state the time aud place
a.. gff1 ffE oil
which :. Y proposed to increase the captai STOCK.
The 2sth section provides that every corpora
tnn formed under this act SHAH, In additlOn 10 the
nowe conferred on corporations In the third title OF
tile eighteenth chapter of the first part OF INC reVset
statutes have power subdivision l0 from time 10 time
TO borrow such sums Of money as may be necessary for
completing and finishing, or operating ther rairoad
borrowed, and to mortgage their corporate property ana
franchises 70 secure te payment o any dsDt
tors of Company confer with any holder OF any
bond issued for money borrowed afoesaid the light
o cSnyer Tie principal due owing thereon into stock
Of the said Company at any time not zen years m
from the date OF the bond under sueR 40 % o
Directors may it TO adopt. Oa the part OF inc
Erie Company, it claimed that, under TINS proVison,
the Directors possess the IEHt 10 Iss"o VIZ VIZ
is called convertible bonds for tho purposes speelhed
therein TO an unlimited n .Ty of th
planned Of was made under ana III puSuanoo Vi' @ .,s
author-that the stock held by the cOmpahaht III tho
suit and by Bem9a ane n desSe5 SS 70 convert their
bonds INTO stock aud which stock, t Is insisted Is legal
sst that the power conferred py ,his tet ssGi %
upon the directors should apply 10 the case Where tue
Cdnlta
scTptions OF stock and for the purpose Of enabling he
Company to anticipate these subscriptions by BORROWING
money on convertible into stock at the option 0tthe
h0deTs aud was not intended 10 authorize, Indirectly an
unlimited Of stock, ana thus 10 increase lne ttl
o. the Company, indefinitely, ana wlthout conplhncc
with the ninth section, that expressly Tequies te con-
curreuCe Of tWOhirds iu amount OF lt tOehOutIs iOr
f Tie several provisions Of the statute TO the powers
OF railroad companies formed under IL must necessary
come nm for consideration and disposal the hnai hear
ing on pleadings and proofs; but Ia the Wow We nave
taken Of the case 1t will not be necessary nor perhaps
oufu1 I'm YcgU
preliminary motion We are satisfied, on an examination
Of the h well upon the papers IN opposl5h case
has NOT been made ont that Will authorize the Court TO
uphold the order for the Injunction, or Tor tne appoint
nent receiver, even. assuming the stock IN question
the moneys received the sue OF the cOnYerpig eoh1s
had been kept apart ana IRA IRON @ sn6 S en
equity might well arise In behalf Of Ihe deiIaudeu sock
holders against the particular iund ana Mtach 70 ,nd
tus traced aud identhcd, would be hls money au to
holder OF stock into which the bond hnd 9Seh oonvefed
dwOuld stand the same equitable 10 Tue
c"uiainant TO follow the inonoy advanced ON these
alleged fraudulent issues OF stock on the gOuho hat e
moneys paid for tie same the securities therefor,
were kept separate ana apart from the general funds o
tho Company; but, the contrary upon the 6ht 70 SET
apart from these general funds sufficient amount to
at least admitting that they have been conmngled Win
tins is the fact Judge story states The principes
where" he observes they Courts OF Equity VIII
Interfere" and administers wholesome and sometimes
stern justice ia favor OF innocent persons VINO are
sufferers by 10 without any au on ther own suc lblS
IS done by converting the offending party into "a
trustee aud making the property itself subseryient
trust u or len Thus fraudulent purehSser viii be held
trustee for the honest but deluded and cheated
vender And stated by Lord dEllenboroughnT ag
Pinmer NJ and SEW, D. $751; IL makes no difference In
or law In whatever form, different from the orig
that pronissory notes for security OF money which
produced from the sale OF the goods &c. for the
lows the nature Of the thing ITSELF as long as u be
ceraned be such and the right only when tho
| aRcGrtalument
subject turned Into money nnd mixed ana cOnfOunded
Isee also 8 Mason, 28s aud stOry's Equty, i,2js
and 1863 In tho latter condition Of things the
aggreved party can come In only hs general
creditor and is entitled 10 preference priority
this OF creditors This Is the condition OF the COM
plant in the bill before us - claimed by the Learned
counsel for Belmont aud Lucke that the receiver Could
should be removed as unit and disqualified, npon the
facts set forth and admitted In this case some
other person should be appointed Ia his places and That
the Erie Company estopped from contesting the mat
ter having assented 70 al appointment ln Inc original
suit We do not assent TO this view. The Company
sntcd notice which Is required by tho rules ana prac
tce OF this Court before Injunction can be issued
but order for the Injunction and the appointment
learned Judge who granted them. Indeed. We are
not prepared 10 ADMIT tnat an uuer M noin
am Injunction or Receiver DO made In an Impoper
case with the consent OF Dolh paIes nloie
ay when the rights OF third persons may DC cObccrhe
The above view dpoSes aSS ao %. 'ro Gp soae
tions been taken 10 the appolntmehtoI oI 's IIes
dent and Treasurer OF the Railroad Company as Receiver
by theearned Judge the fling of the bill But IL should
be remembered, that primo lace one was su,poaep
10 nave Dech ulhue III tHc VII ioi
and objection opposition having beeh ane' ~ was
almost matter OF course 70 grant .no oLuoi , as US
gesed by counsel for complainant And besides, tno
authority TO DO given 20 the Receiver was 70 receive
only part of the moneys securities OF the company
1t is not surprising that. under the circumstances'
IL should have occurred 10 tho Judge that the put
ting OF part Of the moneys or securities into
tho hands Of third person. and thus dividing the com
fund aud resources Of the Company might have the
effect 10 embarrass the legitimate operations ana Dusi-
Of tho Company, business which produces an iI-
0f soms Sl5,OOOGO or tle0O0OOO per annuIn, an
amount larger IL is said than the ANIMAL revenues or
the State The order appointing this receiver also was