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

were guilty OF the corruptions charged against themf
rectors. That would have been sufficient protec
lion 70 the stockholders and creditors OF the COM
pany. But that was not done because it would not
nave Drought with 1t the rich proceeds OF the recev
ership: Who were the other directorss John Can
son, OF Buffalo, was one, and certainly ne was man
directors. They were ali capable Of taxing care Of
the interests OF the stockholders, who had done
wmasr VINO had last October, after oil the acts
were known to them, unanimously reelected them.
the petition In the bill OF complaint before the state
court dld not ask for any dissolution Of the COM
bany. II simply prayed that the directors. Gould,
FISK and Lane be removed. But the statute pr0vi-
oed Tor an election In such case, and that the pro-
perry Of the corporation should remain In the mean
time in the control OF The other directors. There
was another difficulty in the case Mr.. Henry Il.
Davies happened to be person who received $4,000
out o! the paid for the dsc0ntnuance OF the
Schell litigation A suit for the recovery OF that
$4,000 has been brought by the Erie Company, and
1t was too much to expect MIR. Davies to be vigant
and untirng as receiver in the prosecution OF that
suit. As to the relative merits or Receiver Davies
ana Receiver Gould. he would say few words In
reply to the remarks OF counsel the other side.
Counsel criticised IN this connection the affidavit OF
Drew, and remarked that he would not like to hang
respectable dog on sacn testimony as was there
the Schell litigation, the iniquity OF which was
sought TO be thrown on Gould, had oeen fully
brought before and decided by the Board of Direc-
TORS That settlement was part Of the conditions
on which the war on the company was to cease, and
although both sides had been guilty OF tampering
with the interests OF the stockholders II appeared
that Gould and Fisk were protesting all the time
against It, AS to the story Of the change in the by
laws by which no stockholders could vote In elections
unless they were present, and which was charged
upon Gould and Fisk 1t was an entire fabrication.
There was no reason or sense in it. because at the
election there was but one ticket presented.
As to che closing Of the books sixty days before
the election 10 was done at the suggestion OF the
transfer clerk who said that 1t was impossible to
write up the books and ascertain who the stockhod-
ers were within the usual time OF thirty days. AS TO
the statement that Gould, Fisk and Lane controlled
fhn that hrrrl
cognlzance OF by court because the business OF all
great corporations was usually managed by It's ex-
ecutiyc officers the directors only meeting at spec
fed times to receive their reports. II had been also
charged that the funds OF the company were in the
hands Of Gould, Fisk and Lane as II they were pri
MED, and was not true As to the aver.
ment that they We're not men OF means
counsel was sometimes inclined to regret that that
was not disqualification Tor Office In This country:
but even II 1t were he thought those gentlemen
could show themselves fully qualified In that re-
perry IN Buffalo, the only ground for II the pay
ment OF $4,000 for rights Of way. AS to the purchase
OF property in Weehawken. 1t had been procured at
less than its vaue. Counsel called attention TO the
significant fact that no complaint made against
those gentlemen by any Of their co-drectors, and
also to the fact that there testimony on the part
OF some OF the principal officers aud directors OF the
company that the conduct OF those gentlemen
had been marked by great efficiency, intelll-
II any receiver were TO be appointed other than MI.
Gould 1t should be person who had no interest In
either side OF the controversy i certainly should
not be Mr.. Davies. II that gentleman were re-
ceyer and entitled under the order Of the State
court then counsel admitted that ne must hold all
the property OF the company until Its affairs
relieved OF Its present embarrassed condition. 1t
did not appear that the eight millions obtained from
the sale OF the convertible bonds had been kept dis
tinct from the other assets OF the company II was
needless TO argue therefore, that the Court could
not appoint receiver over a fund which had no
was an alternative either 10 Compel the ' COM
pany 10 issue convertible bonds instead OF the
spurious stock, or else pay the amount
When it was suggested by counsel that there was q
stipulation that fund should be set apart for the
redemption OF the spurious stock 1t was sugges-
no such stipulation made.
ARGUMENT OF MR.. D. D. FIELD.
Mr.. d. d. Field followed on the same side. He
said that after the forcbe argument or Mr.. Stoug-
ton his task would be comparatively easy. IL would
be, out OF The great mass OF afdavits to pick out
important points and lay them before the Court for
Than the order appointing jay Gould receiver or
than the petition praying for It. 1t did not specify
over what he was to be receiver The paragraph
Of che bill under which he was appointed
was that during the pending Of the suit
a receiver OF the defendant should be appointed.
Who are they on whose behalf the suit had been in
stitutedH They were the holders of the spurious
stock ISSUED 10 Henry M. Smith. and by him dis
posed Of TO the complainant and others. There was
therefore this remarkable fact, that there was no
other descriptions Of the receivershp Of Mr.. Goud
than as receiver of the defendant, and that all he
ont stating the amount OF II. The question here was,
should Mr.. Gould be removed and Mr.. Davies put In
HIS place and should Mr.. Belmont be allowed 70 IN
tervenes Had anything occurred since the sd OF
November when Mr.. Could was appointed, which
required his removals Had he done suffered
q single act since which justified required
his removals No such suggestion had been
made. Mr.. Gould had acted Just "a IL was his
duty TO act Had any deception been pracised
on the Court in the appointment OF Mr.. GouId9
There suggestion OF that kind either. No de-
ceptlon had been practised a. to the frame OF the
tfg IN rr.,
suit 1t did not detract from the good faith in which
It had been brought. Mr.. Whelpey, the complainant
held stock on which a cloud had been cast, and he
wished TO have the determinations Of the federal
court upon ". There was nothing about the SHIT
false or deceptive either In omission statement
Who objected 10 itr Neither the plaintiff nor the
defendant. They were satisfied. The only persons
Directing were Mr. Belmont and Mr.. Davies What
was the objection 70 Mr.. Goulds II was threefod--
first that he fraudulentiy elected as president
OF the company by the over Issue OF shares Of
stock: second that he was frauducnty interested In
the Illegal issue OF convertible bonds and trd that he
used the funds or the company for unlawful PURPOSES
The first allegation was dlsproved MIR. Gould had
been elected by unanimous vote, at the head OF
which stood Mr.. Moses Taylor. The statement In
the complaint OF Mr.. Belmont "a TO The fraudulent
oyerissue OF STOCK was as false rs false could be.
A. TO the purchase OF Pixies Opera House, that was
private speculation Of Mr.. Fisk, out Vt hrs private
funds not out OF the funds OF the company me
charge Of It's being made out OF the funds OF the Erie
RAILWAY Company was NJ false as the cha ro,. ahouf
the overissue OF stock. Ii all as ssbaseless "a
the unsubstantial fabric OF a vision.n II was true
vertible bonds by the direction Of the company. lie
admitted that aud lac proceede1 70 argue that under
the tenth section OF the General KatToad act OF 1850
the company had a right to Issue such bonds.
The whole question turned on the operation of
that act, which allowed railroad coInpa-
MES To issue bonds convertible into stock.
The difference between counsel each side was
that IL was commended on the other side that that
only applied up To the limit fixed to the amount Of
stock TO he issued: but he contended that II was
restricted In such sense. II II was there was not
railroad IN the state which should not he In the
hands OF receiver TIE power TO issue convertible
bonds had been exercised by every railroad corpora
ton In the state that had occasion TO borrow large
stns OF money. Last year the central Railroad had
issued n large amount OF convertible bonds for the
purpose OF building ACKNOWLEDGEMENT In thc'do-
minlon OF Canada. That immaculate combination
of Spectators who had struck hands with Wander.
bilt had issued convertible bonds for that purpose
having no other means whatever. The capital OF the
New York Central Railroad had been thus increased
largely from time ~ time. IL was well known
that the Hudson River Railroad had. for the
purchase OF ~. Johns Park, issued STOCK ut
so, beyond the amount fixed 10y its charter.
Not only this done, but u, was reported 20 the
state Auditor every year by aiI those railroads that