The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-12-27

at least, applicable 10 private ones. Wnatever
control the court has over the internal aauiins'ra-
ton, the machinery OF corporations y uesSu rom
the statute; and that statute most menhcsty con
fines the right OF interference 10 cases where eiter
the State or general manager or ,he corpordIioii
or a creditor. fnvokes Its power ii Tue three vi
recfors complained OF have done wrong lei tnen De
removed. Their removal Will relieve the fcst iIoln
their influence tsnrey was never tnousns oalse ,u
putting the New Haven Railway into the n'i'ius Vi "
cever that It's president, Schuyler, having ACQUIRED
great influence over the remaining uirccorS, hau
obtained undispnted control ~ wy nppna,es ~
spurious stock. His fraud was, hagran. anu con-
fessed tie neglect OF duty on the part 81 lic othcr
were m much disorder Nevertheless, the road was
taken out OF the hands oil the stocshoucis ., VI
their representatives. inc h, hen re conna
ny was left in the hands or the other iauy DIRECTORS
1t was left IN the state In which the Erie Company
would be left Ii q delinnuent director or olncer
were removed. Granting therefore, for the sake OF
the argument that all the charges Oh the compiaht
are true, there Is not cause ior tne 30 Np
receiver as was ordered on the 23d oi November,
dsplacIng every one OF the directors and giving over
to an appolntee OF the Court the Whole OF the Erie
Railway, with all its franchises, roads anu equip
ments lis numerous branches and its vast and
varied interests. The. Erie hallway the
greatest naay t 81 t me s se Nes.
the Erie canal, 1t has been watched with
more socItuie guarded with more care
which the government or the State ever fostered
Already il bears the traffic OF the great Central
States and IS holding out Its arms to grasp the com
merce OF the Continent. While this litiganon mas
been In progress. and within the last week, The
enormous links OF the Atlantic and Great Western
Railway have been taken into the chain o1 the IRE
Railway Here Is pregnant instance to mark
the error of this appointment or receiver; Tor
If the Appointment had been SUFFERED 10 TAKE erect
this connection conld not have been perfected
and not only the Erie Railway. but this proud
city of New York. and the great state Itself, would
have had s op bna d IN aa
need OF money for finishing and operating MS road,
had recourse TO the issue OF convertible bonds sch
Issue being made by the late ana not by the presei
board OF directors After the election OF the present
board the bonds thus issued or portion OF them,
were converted into stock. But let me say word
about the charge OF locking up q part OF the
proceeds OF the bonds, aud keeping the notes on
hand, instead Of making general deposit OF ,henl
could possibly ne Just cause OF complaint by stock
holder am unable to see. Who shall say thai II was
not more prudent to keep the legal tender notes,
ready for any emergency than to deposit them in
banks or to invest them In tluctuatng securities
If this affected the money market 1t was because We
paper manufactured BY the government which paper,
nevertheless the government forces the citizen 70
receive IN payment Of debts. MI. fiel la
question of the power OF the company TO
issue the convertible bonds, citing ANONYMOUSLY
nom the General Railroad act ana. contnnng,
that the directors of the Erie Railway did well 70
allow the conversion OF bonds into stock II they mad
the power to do SO. They had power because such
Ia the natural sense OF the words used In the tenth
subdivision OF the twenty eighth section OF fe Gene
raj Railroad act Of 1850; because In any other sense
they would he superhuOus; because such has been
their construction by the Legislature, and because
such has been the practical construction
MANAGERS sas e and ~ t"e pnec genera
The Legislature has in other acts by express words,
given to the directors OF corporations power to IN
crease the capital through the issue OF convertible
bonds The capital OF the Hudson River Railroad
Company was reported to the state Engineer IN
December 1881, aud by HIM to the Legislature in
ac 4
stock as by charter TO be $i,0ooooo ana the total
amount now paid in OF capital stock to be
the consolidation OF the railways between Albany
ana Buffalo (ch. 10Y II was provided that the diree-
tors Of the different companies might enter into an
agreement for consolidation specifying among other
things, 1.-THE amount OF capital and the number OF
shares or the stock OF the new corporation, which
shall not he larger In amount than tne asgreEa, gaze
amount OF capital OF the several corporations thus
consolidated. and which shall not be Increased ex
cept In accordance with the provisions OF the act
act. In pursuance OF this act an agreement
OF consolidation was entered into Nay II.
1858. creating 'the New York Central Railroad Conf
panyr by the third article OF whicn II was provided
ms folows:"The capital stock OF the said new Cor
poraton being limited by the act aforesaid 10 the
aggregate amount OF the capitals OF he several
panies thus consolidated, the respective parties
hereto do scverally agree and clare that the capt
tai stock or the said corporations respectively, 70
gethcr with the amount II any, of Outstani ing bonds
legally Issued by the SAID several corporations, with
the right aud privilege to the holders thereof 70 con-
pora'ion' respectively al pr, 90 SURRENDER
OF the said bonds and on the terms
therein mentioned, arc as ollowsThe present actual
paid mp capital stock OF the Albany and Schenectady
Railroad Company divided into shares oil 500 each,
Is $l,539,00 the amount OF the principal OF the
thereof as aforesaid, aud now outstanding anu I'M
paid to $4,000; and 80 for other companies the total
paid up capital being 81. SIS 500; and the total OF
convertible bonds issued by the Albany and schenec-
tvdy the Rochester and Syracuse and the Rochester,
LocSport and Niagara Falls Railroad Companies,
Of SD s5ss0o subject to he increased by the
sion into stock OF the said convertible bonds the
sum OF S22s.o0O making IN all the sum Of s250s,60o
The capital stock OF the new corporation Is there
FORE nyed pursuant In the said act OF the Legislature
the aforesaid aggregate SUN Of s22,SjS,doO 10 be
divided into 22s $50 shares OF 500 cach such capital
beng subject 10 bc increased by the conversion into
stock OF the principal of the said outstanding bonds
from time to time, so that the same shall not. when
OF So Os5 600 TO be divided into go, 500 shares OF
800 each" Tne capital OF the New York Central
Railroad Company vas reportei 70 inc state Engi-
turc in 1865 s2 600 THIS Is stated in the report
TO be So 10000 IN excess OF tc capital reported in
the previous year the addition being made up OF
sl..3Goeo, occasicned by the conversion Or bonds
due 1915 and 60 0o00 900 IN exchange for the capi
til stock OF the saratoga anu Hudson RIVER Railroad
Company. Upon examining the statutes IL VIII be
seen that besides the convertible bonds thus pro-
vdcl for the actual paidup capital Of tue ten cor
por3tioug Darfies 60 the sOlldation agrosment.
was largely III excess OF that liked by their charters.
II H. remarkable that most OF the railway rnder-
takngs or this country Were begun Win fnalc-
uuate capital. 10 Ia also provided, 4 %, sub.
To- that every railroad corporation that might
he organized under tins act and every railroad cor
poratou then existing. section fortynnc,l should
have power .sfrom time to time to borrow such
sums of money rs may be necessary for completing
and furnishing or operating tcir railroad and to
Issue bonds therefor. convertible into stock. The
power thus conferred could not he exercised 10y
most Of the existing railway corporations IN am
manner. except low increasing their capital. Their
stock 1t was known 10 the Legislature. had been
al. subscribed and called In. Year after
year an increase Of capital had been author
bed by pcrnlt.iug money to he borrowed,
ana the amount borrowed converted into capital
stock This section lsec. 2S sub TO-, which IA by ex-
press provision made applicab to then all ~ As 70
such corporations. imperative. u they cannot ~.
crease their capital by borrowing on convertible
bonds FOR the purposes mcntionei. i II possible Ga
doubt that the Legislature interded, BY the general
provisions OF the galway act o 1850 10 provide Too
those exI.enctes In the history OF railway corpo
rat.Ons, which u had heretofore provided fer
b. special lcg;slat.ong that 1t intended 70 give al
railway corporations the power 70 do that which had
before oecn given TO 40 manyY There " ~ no reason