The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-12-02

ton. The remarks made as TO the corruption OF that
proceeding we're 10 irrelevant TO this case as they
were unfair 10 the persons concerned. This brought
the matter down TO the month OF July, 1858, when
company and Mr.. Gould was elected I'm his
place. Through some tnstrumentalities, ON the 18Th
OF October lsss M Gouid and his friends were unSn
pany. Mr.. Gould, the hero OF all those previous
transactions condemned by the court and pracucaiy
dent OF the company. He lMr. O'Conorl dld not
doubt that Jay Could cried the whole night OF the
friends to join him in crying over it. SO far a. his
protest and Indignation and the iniluity Of those
who were settled with might be concerned ne sSs.
want Subsequent to the election there appeared
In tine stock market large quantity Of Erie Railroad
there had been any overissue; but the stock Ex-
change appointed committee to wait ON Mr. Presi-
learned rom him that there had been an over.
ISSUE The complaint alleged, and he believed
Il could be snbstantiated, that the Ere
had issued twenty millions OF additional stock.
what was the answer TO THAR set OF affidavits
had been issued before the election, and after
the election except for the redemption OF converti-
stock market and led 20 the inquiry An application
was then made for the appointment Of . receiver.
Jay Gould then, on the 18th November went before
Mr. Justice Barnard and In an AFFIDAVIT he speaks OF
the issue Of those twenty millions OF STOCK and a.
having been issued beyond the power OF the CON-
pany 10 ISSUE and praying in the interest OF the
Iany that an order be granted TO buy or withdraw
or cancel this twenty millions issue of stock. A
modified order was granted by Judge Barnard
according to the prayer OF this application The
question is here whether the issue OF this twenty
millions of additional stock was thing TO be com
cation now before your Honor has grown out " this
issue OF twenty millions OF stock or bonds. whether
this twenty millions were issued In connection with
terial and whether 1t was applied 10 private pur-
poses by these directors may be very Wen regarded
us entirely immaterial to this inquiry. But he
thought that the evidence on this latter point was
very strong that this twenty millions has been inn
properly applied and that 1t has been used
for the private purposes OF those parties;
that they have 1T now IL their use
Tor these purposes and the desperate efforts they
make to retain the control OF these funds under In
strumentalny OF the courts Is conclusive evidence
that 1t is SO used by them. We charge that this
twenty millions OF stock was issued with reference
TO the election that was subsequently to be held.
But the other side triumphantly point to the fact
that the election was unanimous. II your Honor
please there Is a way OF making sn election in
joint stock company unanimous. AL that has to be
done Is to make it understood in Wal street That the
present directors Of the company were In position
60 issue such an amount OF stock al to render all
competition useless. All that IL necessary to
do Is TO acquaint the bell weathers on 'Change
that the present directors have the power to
flood the market with stock and to dpreclate prices
and you remove all opposition. We will show your
Honor that this issue OF 200 900 shares OF additional
stock was Illegal and that whether or not that we
are entitled to this motion. When 1t was known
that these 100000 additional shares issued Mr..
Belmont filed his bill OF complaint charging that
this issue was illegal and Fraudulent And that was
the point which he would now discuss-whether this
issue Of additional stock was legal OF not 1t would
be seen from the facts already presented that the
Erie Railroad Company by its directors had reached
the extent Of the maximum Of, stock to be issued
allowed by the statute Counsel then referred the
general railroad law OF 1850 and argued from 1t
That the issuance OF these additional 100000 shares
was In excess OF the maximum allowed by law and
consequently illegally issued. 1t would be the duty
of his Honor, according 10 the dictates OF common
rea1ired the Court to give effect to all parts Of the
act and not to allow one part to override the rest
and In that light he confidently anticipated the Court
would agree with him in his construction Of the
statute He commended that this issue OF 800 900
OF stock, even il fairly iSsued-even II it had not
been secret and legitimate transaction to provide
these people with money to enable them to operate
on che stock market, to raise and lower the price
Of shares, TO sell at high prices and TO buy
1t was still an illegal additional issue OF two hun
dred thousand shares an illegal increase of the capt.
tai OF the company Of twenty millions beyond what
the Legislature consented 10 allow
But to come to the question q the receivershp,
your Honor Will zee that the night before this COM
plant was fled Jay Gould and his eternal cOnfeder-
ate and affidavit associate, Fisk, had interview
with Daniel Drew. Drew came u them and said,
Gentlemen,I amin terrible scrape; there is good
into contracts for it and will be utterly ruined
less you do for me what you did last spring-et me
w 60 over to the other side" But they
an associate that he wanted too large share or the
plunder and they concluded not to have anything
ran Off and made an AFFIDAVIT for us. What did they
do Them They ran or to Mcintosh. who was the
got him to draw up complaint in Tie Supreme s
Court setting forth that this issue OF twenty millions
there was great necessity for the appointment or a
receiver On an er pdTte statement in Chambers,
before Judge Barnard, they obtain this very remark
able order-an order restraining August Belmont,
and others, that they suspected might be
cooperating with Belmont, from taking
with regard to the Transactions of the company and
appointing q receiver OF the moneys of the company
And who was the receiver asked for by Mcintosh
but Gould, his employer and treasurer OF the com
pany-the very man that had made the false Issue
and by which they had obtained money by fraud
on the company or by fraud on those who had
bought this very stock And on this order OF the
10th OF November Could appointed receiver
This order tied up his hands. But in two days
afterwards on the 18th, he goes before Judge Bar
nard again and obtains q modification OF the order
authorizing HIM to use the funds OF the company, TO
buy up the stock OF the company TO the extent
OF twenty millions OF dollars. and thus giving
him full privilege to deal with the stock or
the company. And II there was one thing
more than another, more no,perm ssable on the
part OF corporations II Is this dealing and purchas-
ing in their own stock. There are various statutes
prohibiting this practice. This pdrte order was
gross violation OF sound policy and OF corporate
duy-a point blank violation OF the statute forbid
ding corporations from buying or dealing IN their
own stock. And II stirred the desperate efforts OF
these to continue IN the control of the money! 1t
showed that the governing action OF their hearts
to secure and control the management Of these
SO 00e Counsel closed lengthy and very able
argument, cOntending that the order OF Judge
Blatchford was obtained by COLLISION and fraud pay
ing at the same time, q high compliment to the
purity and integrity Of Judge Blatchfords official
character aud conduct, which, he said. was above
all suspicion and all reproach In this matter.
Having concluded his argument counsel handed
his abstract OF law points to the Court
Judge Nelson--Let counsel hand in all their
papers
mass OF papers was then placed on the bench,
and TINS ended tue legal argument in the great Erie
case In the United states courts Judge Nielsen re-
served opinion.
Order Of Judge Balloon Of the supreme
Court Enjoinins the Directors OF rhe Erie
Road frosn Transferring the Property to
Any Person Other than the Receiver % BE
Annalni ed liY the (inurf.