The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-12-18
the receiver to run the stages long enough to wind

tue receiver 10 run the stages long enough TO vino
Mr. Rapallo said in that case the court acted from
its general equity Jurisdiction, and not from any
discussing the proposition that the court having
jurisdiction to make this order 10 must be set aside
here. He thought that question would be more
properly argued on regular appeal; but he was
now arguing before his Honor that the Supreme
Court had this jurisdiction and thaG his order should
that Judge Sutherland had overlooked some impOr-
tant pons-a matter for which he would nave TO go
tiers IN this suit not controverted. These three
| men had obtained for themselves the con-
troll OF this vast company. They had issued e
| twenty-five millions OF stock unawfuly; they
! had used the property SO controlled for
their own private gains, producing public distress
and inconvenience and risking the property OF its
company and the interests Of It's stockholders This
was the evil against which this suit was directed u
! was averred by Mr. Belmont and not denied that his
| purchase OF stock was in good faith and the SUIT
ITSELF There had been some charge that this SUIT
was brought in the interest Of some other persons.
| He did not wonder at their vindictivenesS Mr..
| Drew had been friend and had gone over to the
opponent, but that he was friend or that opponent
/ was different matter III Mr.. Drew had aided Mr.
Belmont with dollar it the most foolish invest
| ment he had ever made. He could gain nothing
from this SUIT He Mr Rapallo had not refeVea
named 1t was not proper or necessary for him mere
to speak OF them The fear OF Gould and Fisk was
that If proper receiver were appointed they would
/ be called TO an account OF matters which they did
| not desire. Actions had been commenceu
no doubt be answered in proper time and place.
Mr. Rapallo then went into the discussion OF the
| right OF the company to issue convertible bonds,
| using substantially the same arguments as were
used IN the cases last spring. In May, 1885, tney
had exceeded the authorized issue OF stock by the
issue to Drew Of $5S00,000. Then last spring there
further issue OF ten millions OF stock and an
other OF two millions which was the basis OF the July
settlement. This made $34, 900 Of stock. since
then, 1t is claimed they had issued twentysix mil
lions OF stock additional. The whole framework OF
the law, with its provisions as to how the stock
should be increased in direct conflict with the
claim OF the defendants There was no provision ia
the act that the directors might create STOCK, even
in conversion OF the bonds Counsel claimed that
the decision OF Judge Sutherland in last springs
cases was directly on the question OF the power OF
the directors to SO increase the stock. That was the
only point raised in the case OF the people last
spring. The njunctlons did not refer TO fraudulent
issues but to all issues, and necessarily based
issues Mr.. Rapallo reviewed the issue OF bonds
made last spring, and claimed That the
issue Of s50oo,ooo OF bonds produced TO
the company but 721a, while Mr. Fisk got for the
stock so, thus making SS75,000 which aid not come
INTO the treasury. VINO got that profit might be in
ferred from an agreement made when The bonds
were issued, between Drew, Fisk and Gould, to
divide the profits OF unnamed transactions Fisk
does not deny that he claimed from Drew share in
these profits. He had not dared TO deny this matter
because two men cOula be witnesses to 1t. The vim
dictiveness with which they pursued Drew was ex.
they would be safe. When they quarrelled counsel
would have failed in his duty to his clients not to
have used the information thus thrown In his way.
That the connection OF Mr.. Drew with this
that OF Va accomplish, who was willing to turn States
evidence. Then they fed, and later came the COM
promise with Mr. Schell. Schell was not director.
Drew, Fisk and Gould were. Gould swears he with
drew his opposition reluctantly. What overcame
treasurer ana presldentg Why did they. II
this was such foul transaction, reluctantly con-
sent? Could they plead they were "byeoabesY ~ Fisk
and Gould were not famous for allowing anything
to be done they disliked The answers they made
were in fact admissions Of facts and denial of mo-
tves. They presented remarkable series OF coin
cidences resulting placing them control or the
company, and all against their wishes. They say
they obtained the control without any design, and
have not used 1t In an improper manner. But they
have used the power and have done various acts.
When they came into power the stock was at
s34 DOC, 900. Immediately after this they received
from Mr. Drew $4,000 600 and upwards. Its averred
that they kept the directors in ignorance Of their
acts. Tney say 1t is not true in the sense in which
the charge is made. They do not say what that
sense is. Mr.. Diven's affidavit shows that he was
kept in ignorance OF the issue Of convertible bonds.
1t charged that after this settlement $3,0OoO00
issued previous to october, and since the cleo
ton S23, 900. Mr. Gould's answer was that he
true il they had only issued s2o, 100000 II amounted
substantially TO an admission. There was denial |
OF the issue OF s200oo00o, TO influence the election.
Probably that proposed issue never got beyond the
form VI convertible bonds In the hands OF cOnfed
crate. But the other s26,00000o was not denied
except as to the extent. They had right to infer
s20,00o,000 OF illegal stock had been issued. II
is coupled with statement that there was
Just that amount OF stock IN the market
IL was not probable that 50 disinterested an
onlcer as Mr.. Gould could have intended to aid a
bonds issued before the election but they don't
say how long before that they were issued before
he was President. He denies that the stock was
sued secretly but he does not deny that II was kept
from the stockholders the parties who had the right
to know IT, IL was not denied that the market price
OF the stock reduced by these Issues. The stock
sold below fifty cents, aud AIR. Gould sought the aid
OF the court to permit 1t to be bought back ut par.
Such kind Of things 1t was that alarmed stockholders
and made them desire TO have their property taken
from such hands. Was there any fact undenied
which supplied motive for these actonss Mr..
Rapallo read that part Of the complaint which AYERS
that they have sought to obtain control OF large sums
OF money to lock 1t up and thus break down the
markets. This, Mr.. Rapalo contended, was not de-
med. They did not deny the sale OF the stock the
schemes or the locking up, but they deny that the
stock was issued for that purpose.
Mr. vanderpoel-And he denies the allegations
in that behalf made In the complaint.
Mr.. Rapalo-That, then, Is the denial joining seve-
raj things conjuncfveiy so that t Is not good de-
NAL OF any one OF them. Mr. Rapallo contended that
the whole answer was evaslve In denying the con-
nection Of facts, but not the facts themselves.
Judge Cardozo here directed the case TO stand
over 70 this morning AZ eleven O'Clock.