The evening Argus., 1868-04-16
THE G. R. 1. & P. FIGHT

TrrHp fsnF00X0 Il >
su;.s brought in the city OF
Maw York against the Chicago, Rock Island
& pacific Railroad Co., to restrain the d.
-octors from extending the road to the Mis-
souri, river.
The Judge dissolved the injunctions pro-
hibiting the directors from completing the
road, butheld that the sale ofthe 49, 900 shares
of stock was illegal, because it brought out ,
90 cents on the dollar. He appointed re
ceiver to take charge of the proceeds Oh 'ne
shares, and hold them "to protect Inc ..e
pauy against the holders OF the new ee''iA
cates or N enable it to retire them.
This looks little strange to US as the
..;,s ara brought by the old shareholders on
!, and they swore that the old stock could
-, he Distinguished from the new. 1T that
cannot be done, or even if it can. and the
holders Of the new certificates, who have
never been made parties to the suits, wall
not take the money and surrender the stock,
we would like to see how the order is to be
carried out. The larger portion OF the pro-
ceeds of the stock is not within reach OF nls
process, as we understand, and we are curl
Gus to see how the proceeds under his jur's- |
diction will be apportioned among the new
stockholders in case the other difficulties are
overcome.
The directors are said to have ample
means outside of the funds in Judge Cardo-
zo's jurisdiction to construct the road, which
they are proceeding to do as rapidly as pos
sible. A higher court may reverse the de-
cision before the funds are needed to
equip it, in which event the operations of the
company will not be crippled by the htiga.
ton. In his decision Judge Cardozo says;
s.The issue of 20 ,0O0 shares complained of was
.l.ra y;res Neither the corporation nor Its direc
tors had in any view the right to make certineates
purporting TO represent capital stock "hleh nso
not in fact been subscribed and PAID for, ana 10
put them in the market, as stock and sell them De-
low psr IF they might do so and Sell them ut
discount of one or two per cent, they might sel
them at fifty per cent, or any greater discount. IL
is not question of good faith, or OF honest IN
tention or of wise policy, skillful or discreet
management upon the part of the directors; 1t Is
aues,ion of power. No suoh power attaches I"
their Office and the stockholders have the right to
complain that they have assumed power which
was not conferred upon them.
The above may be good law, but to US 1t
seems technical in the extreme. Had the
directors procured the subscriptions in the
usual way and then paid ten per cent for
collecting them it would have been all night
under this decision, although the company
would have received 8 per cent less for the
stock than was realized by the sale.
We presume it would have been all legal
right and proper, if the directors had apph.
ed to the counties, cities and towns through
which the road is to pass and procnred their
subscriptions of stock, receiving their bonds
at par in payment, and then endorsing and
guaranteeing the bonds, as is customary In
such cases, and selling them at rs cents or
the dollar.
We presume too, the directors might have
paid commission for getting subscriptions
to the stock,or perhaps they might have pai
a commission of ten per cent for an agree
ment and guaranty that the $4,000 share
of stock should be taken and paid for at par
and then the contractor could have sub
scribed the whole amount himself and solt
the same in the market as the directors did
without mourning the displeasure of Judg
Cardozo.
Common sense would say the director
should dispose of the stock in such manne
as would realize the most for the compan.
but under this decision they must go throug
given forms and certain amount Of CT
cumlocution or their proceedings will be sc
aside as Illegal. He says
at is not question of good faith, or of hone
intention or of wise policy, or skiilfui or dscre
management on the part OF the directors; II Is
question of power"
In other words, although the direeto
have honestly, wisely, skillfully and discres
ly sold the stock, and although they mi
have realized more for the company ths
could otherwise have been done, yet the SO
must be set aside.
He does not find them guilty of any lach
in protecting the interests of the compan
or of any bad faith in the management
the business, but they did not use the p'
ticular form which he would have selects
and, therefore the sale must be held iileg
We think it would be well for the co
pi"ahoh~o ooioic CisAhS ~ oSs ''S'
the sale of the stock as illegal, because
was sold at less than par, to enquire into
history of the particular stock on which th
base their suits. The chances are that
was sold at much heavier discount than
this instance. We undertake to say that I
onehalf the stock of this company was ST
or taken at par, and such is the case W
most of the roads in the country. If we
to 20 back and get the history of all
stock and reject as spurious all which
not been taken in accordance with the te
nical views of Judge Cardozo, the 'railr
interests will be thrown into utter confusi
The directors of the G. &. n. w. r.
Co. sold several millions of the stock of I
company in the same manner, realizing
than SO cents on the dollar therefor,
such sales have been frequently made
never before complained of. There VIC
have been complaint in this case, we
sumo, had it not been for the fact tn
"ring" was formed on Wall street to get
control OF the majority of the stock, with
view of using the road to carry out their
sonal ends at the ex pense Of tha v.;.:.