New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1869-01-23
THE cEy1R4L RA1LEo1D VAR.

Mr.. Fairclild resumed his argument for the
defendants. lie did not RELY much Oh the legality OF
the issue Of convertible bonds though he was satisfied OF
SIS legality, but on the fact that the plaintiff was pro-
crded from raising IT, The objections raised " inc Issue
Of these certificates four First that the meeting Oh
the Directors which authorized 1t was on Saturday. (r
Vanderpool said he he'd made such point, and the
Court sad lie need not argueJ Tho second OlJtcon WIS
that one Of the Directors not Informed nl INC ett
ing In actual fact al the Directors except three NSle
present az tie meeting. and of those three Dir. JOY
was resident Of Michigan, knew that sucA niso.
Wr CIoniS had been one Of those prominent In
bringing forward the scheme; and the thrd one va
absent IN Europe II the doctrine that al directors Hst
no pfornrd were correct the whole business Of the New
York Central be stopped by reason OF such aefs
The third point wa, that railroad companies were oiu
den by 81 1915 10 create debts That
babe directors create debts beyond assets ana aXe1
liability on directors Tor snch crcauoh. ut 9 ,,n
1880 authorized the creation OF debts ana rrpeaeI to
statute OF 1915. But these certificates we're not u
they payable at the pleasure OF inc Comp"! M
ouy ground Of action that could arse on them w9uu m
# dividends were declared on the STOCK roS,rd an ~
not on them, Then there might DC a EIonnu oi
action, but there was no debt Tho oIher grOnmnnu
was. that if valid they were iG pau Gafrouded
Well there was AFFIDAVIT that there was rnmor, ana
night Of the l9th 10000 shares NeI suppose MI @
dpTbt had purchased shares IN view OF lhs WHO %Ss
dcfraudcdf In point Of fact 10 not true what no
held he had held since over year ago. Nn9 ~
had bought enough OF the stock to control, Win MS
friends, the election OF Directors OF that year.
Tie proof showed that the idea OF dividing MP the
profits realized n some shape not perhaps ~ inns pari s
lar one. among the stockholders was an Olu TS nj
m had no cause o comnint IL he obtained his divldond
Hai If t issue on The oath Of December he did not
his suit til the ON 3 iapnS " his COIN
pany now been closed nearly two months iDd
sequence Is That nearly az 6 9 Of Fbnary and there was
now barely time 10 prepare the books Tor that une
bey asked that this Injunction lie raised Tor TINS purpose
ana 10 Justice to those stockholders who had not re-
Mr. Field IN reply said there two questions quite
TO the Interest certificates. AS To the nrs nc nu
always argued rs an original question for the eonyert
bility but tie plaintiffs case rested on supposed
decision OF Mr.. Justice Sutberand lie VIII not ttre
fore argue that question. But the observation OF Mr
Farehd that such issue could only be made at par nc
thought q distinction not tenable. Railway companies
clearly settled might sell their bonds eeow par ad
tie statute made distinction. They might allow Tue
bonds 10 be converted for the principal amount due on
the bonds with regard to the second question ne hau 10
doubt AS to the law The law clearly said that every
director who be reached must be OF nod
ngof special meeting MrJoy cOhd nave beeh m y "
tYhese certificates declare that rcimbnrsement is ue
the stockholders This creates DEBT anu II ese hIe
valid at any time when the company may NY W. i
TO pay they can be compelled TO pay them, d1S Wo ,
at the pleasure Of the COMPANY would DC 9eu ~ .e
Court 10 mean hn0ect 10 te va ,h 80
pany II IS debt aud as such forbidden 10y the nhre
peaed statute OF 1915. Dividends can only DO declared
ont OF surplus profits But supposlng these 10 DC
such legal right this surplus Is merely Iiasory,
some cases IA years interest. They do not show
that they have deducted losses. They prom
For instance bridge rebuilt in 1884, ut cost of $4,000,
has added that interest for IA years. $500 Then. u
they again rebuild II cost Of $1,000 In 1862 they add
that with interest 10 the original amount Issuing thus
certificates for one $4,000 bridge to the amount Of s2sO
But the annual reports completely alsly this. The
port OF 1867 shows the whole cost Of the road to be less
Than and this with all the Other Investments 81
every Kind foot up t462353j a.; and this funded
debt Of S2,OOOOOO IL asked, who was defranGedi
Because they oder the plaintiff bis share In The robbery
is he 10 be stopped from protesting against the fraud
1t Ia known that Mr. Vanderbilt aud Ills friends owned
than half the stock OF this Company. which Stock
amounts to s2sOOOOCO He and his friends own, there
fore more than 10000 shares They kept this secret
Vanderbilt and Clark concealed il from their own cOdi
recOrs because they say they could not trust them
The gentleman said that lie observed Ine making figures
and while do not attempt to DO egOistlcal VIII say
those figures significant Surprising IL 70 be only
10000 shares that lie held, the so cent Is N0sCO0
The stock sold before this at 100 Tho moment you decide
that 10 be lawful the certificates go up equal TO the
original stock The 80 per cent 10000 shares that AZ
100 $4,000 But taking this ut only the rise from 100
to G5 5 per cent that Is on the $4,000 shares $4,000
Fairchild said he dd not desire to appear TO aC-
ducsce the proposition start ed by Mr. Field but
should not reopen the argument The Court reserved s
dpeisi