New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1871-07-21
THE COURTS.
A EIEID DAY IN ERIE.

a FIELD DAY IN EkIE.
TIE uFATH-GoULD LITIGATIoN-DAvID DUDLEY
FIELD DISCUSSES CONVERTIBLE BONDS, REG
IsTRATIoN, BILLS IN EQUITY, AND OTHER
AMBIGUOUS MATTERS.
In The United States Circuit Court, yesterday,
in the case of Heath and Raphael and others agt the
Erie Railway Company and Others Mr. Field resumed
his argument in 70 the motion for an injunction
restraining the registration OF $1,000 ana alleged
spurious shares OF Eric stock In the course OF his argu
mcnt he spoke substantially as follows;
This Is o bill Of anomalous character, being
neither original nor supplemental. 1t refers TO
the allegations OF independent bill, as ii they
were incorporated in this bill, wbeits main purpose is
to prevent the defendant Could from complying with
an order not yet entered In third suit penng In TINS
Court The the bill may be thus concisey
stated: The Executive Committee OF the Erie Railway
Compapy has issued $4,000 new shares in manner sup
posed TO be unwarranted by law but these shares have
been recognized by tho Company and have passed INTO
the hands Of bona fde holders, who ere not
concerned in this suit These shares nave
also been registered with the Farmers Loan and Trust
COMPANY but 1000 other shares OF good stock IN tho
hands of a Receiver have not been registered They
might have been registered had not the old certificates,
for which they were submitted, been surrendered, in
order to obtain the registration OF the 10000 new shares
Therefore as the shares, though spurious, have
been registered and made good the 10000 good shares
in the Receivers hands should be made bad and denied
cation and such substantially is the statement Of facts
on which 1t is made II only asks for
declaration that the 5000 new shares were illegal,
and that while me eeTtheaes renamed i tn9 n h
they illegal and spurious" and hence IL asks for an
injunction against registration. Now, as the bill In.
forms us that these have been sold and disposed
Of and the certificates have gone into the hands OF
numerous bona fde purchaser the declaration would
be btUtum Jtilien, and the bill remains as mere
bill for an injunction against ieglsuaton. Inc OH
cannot be sustained in any view OF IT,, III should
have been framed as supplement to the original
bill Of Heath and Raphael now pending In thls CVut.
purpose. IL is auxiliary only, and must fall II the two
prior suits or proceedings fall But even II me blli
must fail because this Court has power over the in
over the defendants as trustees the management Of
their trusts. IL cannot entertain suit 10 determine
whether the 10000 shares of stock issued in December
had the power determine question of the legality
OF the issue OF the $1,000 shares OF new stock ~ sh0ud
not DO this upon the present Dll Tor these reasons
First: The necessary allegations are wanting, and the
blll does not ask Tor sueh reLeI under 'Hls OH
would he Impossible 10 oider either the yGO shares IS
sued In December 1870 and January 1871 or those IN the
hands of Mr. Coleman to be wlhdrawn ana canceled III,
might just wei be filed 70 set aside any other stock OF
making the holders parties Here neither tho holders
OF 5000 shares Mn Coleman arc before the COurt
ing their rights, injunction be issued having this
effect. The avowed object OF this suit Is to prevent INC
egistraOn of Mr. COIeman's certificate and 20 destroy
its market value This would he the plain result OF this
injunction How can The Court lOresee that Mr. Gould
obvious that the plaintiffs have real interest in this
stock they would not seek as they are seeking TO de-
Third; tie Court cannot interfere with The owner
Ship Legality of the $1,000 shares IL cannot therefore,
interfere with any incident OF such ownership. As it
cannot decide that the stock is not valid cannot Dc
eide that IL SHAH not have al the privileges and incidents
or validity that Is 10 say, the right Oh privilege OF reg
FoVr The privilege Of registration Is too vague and
evauesccnt to be the basis of bill in equity IL IS not
right 1t is favor, dependent entirely upon the
joint consent OF the managing body Of the corporation
ard OF the Stock Exchange II can be given or with
held ct pleasure, by either OF these bodies Inc TSgs
ent Of the G1s IG SY s5 suek Favor
me % SI Tra or Chance at neasnre:
and therefore, stakeholder acquires no right either to
S en Il hs H GaG T. p sGPRH;0 s0 n
| yellow paper, and the stock Exchange would
the stockholders have right TO require the Company to
use the Yellow paPer FOR az se 70 e oompany nav
e H. a0 M S5d in mi hat SS INSPECT As sG
soen o can mahain sui against company 70
compel it to adopt registry ne cannot m9l9tSln SUIT
tered. Suppose ta the ransferee Of loo shares hay
ing surrendered the former certificate IN conformity
him that he might present IL TO the registering third
party the 6qs rS of T SSd be %9 a f to
DO Inc E has g mg3e ca mo
send them TO the registering parlN
The so 600 new shares Issued in December, 1870 ana
JANUARY 1871 part Of the capital stock OF ng c Goq
fcn hut whether It admits or denies it, the fact and
tIe law makes these shares part of the capital stock
Tne Company has the power under subdivision 10 Of sec
ton o. OF the General Railroad Act of New-York, 10
issue convertible bonds for the purpose Of
g9m s IGt 1 bas been VI ad2dcatcd by the SUI
preme Court Of New-York, belmont ,agt, me
ES RaqS to the SoTY K don Road Company
the bin alleges that this power has not been properly
exercised l. The President issued the stock without the
authority OF the Board of Directors @ Tie convertible
bonds which the stock issned nave never Deeh
actually issued or put in circulation upon any pong ye
considerations and they not issued nor intended TO
be issued registered as bonds FOR he purpose OF 9or
rowing money or as debts or evidences OF Geol; nut
were a mere precnse for manufacturing upon pre-
TIE answers first, that the particulars specified do not
sustain the general allegations secondly, INC general
allegations are fully met by the adayts read in answer
to this notion Inc bli SHOWS fesOuuoh OF Ihe BOARD
o. Directors passed in 1853 authorizing the Executive
sttutlng authority The Board advised by counsel
aud among others, the counsel OF tho plaintiffs III the
resolutions OF the Executive Committee authorizing the
issue of the nyerble bonds. 1t also sets forth sub.
sequent resolution OF the Board of Directors raying
the action of the Executive Committee. There was,
therefore Po.a pTe{ t scnn of Ky EGrcuy e cm
mttee, in authorizing the issue OF the convertible bonds
Thcn, again, II is objected that these convertible bonds
were not issued money borrowed but were sold to
Mr. Could and converted into stock on the day OF
their issue that they were actually converted before
any money was received on them, and that they
not issued with intent to negotiate or keep tho same
alive as bonds. All these circumstances, made out,
would not inyalidae the bonds.
After a brief argument upon the statute author zing
tinued: Tie affidavit of Gould shows that he took
these bonds in good faith that the Company received
proceeds and used them for the purposes specified
in the statute aud that the stock issued for the bonds
passed the hands of bona de holders for value
Under these circumstances how is it possible to raise
question about the stock being now dc deo and de Je
part of the capital stock Of the Erie Railway Company
zine $1,000 shares have passed, moreover, beyond the
interference of this Court even as to registration They
have not only been issued, but recognized by the Com
pany, paid for, and rcgSercd and they are valid and
registered stock at this moment III the hands OF bona me
holders value. 1T the Court cannot interfere with
registration OF the $1,000 shares st less can 1t inter
with the certificates of shares in the hands OF Mr
Coleman the receiver II Of the foregoing
existed, and the question open II wOnd he