New-York tribune., 1869-01-22
THE CENTRAL RAILROAD IMBR0GLIO


This case was resumed yesterday. Dir. Van
derpoe for the plaintiff read an additional affidavit OF
Mr. Jenks that the rumor Of Walst that Mr. Van.
derbt Just before tho 10Th OF December, was large
purchaser OF the stock. and that day held 10000
shares OF tho Central stock and that friend
OF Mr. Vanderbilt had so informed him. Mr.. Farchd.
for the defendant setched briefly the history Of the
road from tho consolidation In 1853 lie spoke OF e
OF the 5000 OF convertible bonds IN 1851 ana OF
the subsequent payment and Of the subsequent issue OF
bonds In 1859 to about the same amount which had been
converted. 81
Judge ngraham asked II those bonds had anything to
do with this action, -, -,
Mr. c6d tha ssd e wSs :ng I to 81 NH e fe ec1 5e e
complaint averred that there had been an oyersue OF
stock OF 5000 OOO and Of the motions 60 extend
the Injunction to prevent the issue Of these certcates
thoae holding such oyerssue MI Fareo 1 read ,o 'c s
gaty OF the issue Of the convertible bonds ana tat
had received premium on those bonds q oep o EoaS
and some for the Athens Road under the authority Oh te
General Railroad law and the law OF 1922 tha ne issues
stock Of the Company has been so transferred ana min
Rled that IT cannot now be from tne one
brings the suit TO depess It. In answer 10 the charge as
TO the OF the certificates the supplemental answer
AYERS that 80 per cent OF the stock expended in
genuine investments and says that they have issued
certificates only s2O0000 Of the stock, and claims
that they were authorized aud legal. g
Daniel Torrance the VicePTesdent swears that nter
est certificates have been issued on only OF eno
stock and since Judge Cardozos order OF January
than 81 100000 Of the stock alleged 70 oe eACes
sive was issued previous to thst tne woe n bs
annual renorts that the whole of such issue has been
public aud notorious and has realized TO the company
Mr.. Fsrchild read the affidavit Of Henry Thompson,
which the frat order TO show canse was f0ndea, anu
read In answer an affidavit Of Horace r. Clark 70 the
that he of the Directors had never entered
into any agreement not 70 make SUCH diVaena 9IE 20
no such agreement had been entered Into ,,,
Mr. Farchild also read the undertaking on the inlnno
tion signed by the plaintiff and MessTs Hail ana FISK
in the OF $500 and the second undertaking executed
by Mr. Belden IN the sum Of 5000.
adayit OF Mt Vanderbilt that ne had not heard the
rumor did he believe such rumor existed nor did
he believe any intimate friend Of his had tod JenAS 30
Mr.. VanderpOel-Is that all the anidavitf -
Mr., irchdThat at least Is as good as your afdaVt
Ir Farehid read his own afdavt Of the publication
Of the notice Of the interest certificates beng delivered
when Judge 0ardoEos order was servedi at which time
about Of the certificates had been served
Mr, VanderpOe, for plaintiff, opened the argument
There were two motions and both presented the question
OF the legality Of the Issue OF stock beyond te amount
allowed by the charter OF 1852 That fixed the capital at
t0500O Unless they were authorized to increase lhe
stock by statute that was all 1t was claimed that hey
Acu ana act of 1855 Mr. Yanderpoel discussed the
power OF directors to convertible bonds in excess
tion as that so discussed IN the Erie cases Ie
argued In addition that the act Of 1859 formally limited
tho amount Of the capital IN this, making differ
ence from the Erie cases. and making stronger case.
TIN; Was The only q0esCn Rs nSOyga as Of n peeember TSe
other orders Involved that question, but more hOtWh
standing the Injunction was found las they Sere Is
was OF was Issued In The supplemental bill
ayers that their issue MHs an attempt to eVade %
treasury OF the Company TO meet them; 20 be used as
liability against the Company and that they be de-
cared This second motion, therefore, presented be-
good faith Of tho directors and the power OF Company
such liability The act OF 1850 gave no such
such power under the guse OF leasing roads 1t
was on this theory that the , purchase
s directors Of FOaa c6%pany like tie ss theory Y
Sosr ss % L TO their road and then create stock Of
their own company and exchangs ~ ,sEe for share But
OF certificates was NOT made ut regular meeting. All
the Directors must DO at least notified One Ont JAY
drang OF any part OF the capital OF the road TO be d.
vded among stockholders He should contend that when
property had been conceded IN this case placed
among ithe dlvidendea permanent Investments 10
capital within the meaning OF the act The laws or
to stockholders. This debt They had not nearly
nSss on ap s Ms Rs an aSeS
OF Increasing the ,SsRa . was iRsenSea az
into stock. but before that they participates
dividends But lawful they were fraudulent. The issue
likely tho would have been made II Mr. Wander
bt had owned but 5000 instead OF 1870 600 sharesl Under
to 1875 But in making up this statement they had
all additions but had made no allowances for
from The Eren0 illustration OF this point and to
show that In reality there had been no increase OF the
value Of the road aud no Income expended on permanent
Mr.. Farenild replieG-Ihe nrst order 70 show cause
fully denied by Mr.. Clark He supposed that
was enough. But Mr.. VanderpOel had Eono
bonds and he was not unwilling to follow him. That
power had been doubted until the contests about
Ero IN 1857 II had exercised by the other railroads
for fteen years without suspicion OF its iegalty He
did not think however. that 1t authorized the issue OF
bonds for more than the amount borrowed Counsel dis
Guessed this question at considerable length But oven
tbese not properly issued 1t could not now be sepa
rated The plaintiff himself guilty Of laches in not
earlier seeking TO have the separation made when poss
be and the spurious stock Cancelled that the only guar
anty of the stockholders In the character OF the d
reotors true OF oil companies irrespective OF this
power He argued that the power had been wisely exer-
cised the OF this corporation The Court inter
rupted the argument AZ the hour OF adOnrnmen and d.