New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1871-01-28
THE ERIE PREFERRED DIVIDENDS.

APPEAL FROM A JUDGMENT DECLARING THAT
NO DIVIDENDS WERE EARNED IN 1868.
John b. Peck, who owns go shares of the
preferred stock the Erie Railway Company, brought
suit compel the payment Of dividend TO him. out OF
the next earnings OF the road for 1863 The complaint
set forth tho contract by which the preferred stock was
given and received In payment OF the unsecured ndeb
edness Of the Erie Railroad Company by the defendant
the payment by the latter OF interest amounting TO
$685. their bonds, subsequently given by them for
Ell 900 storng and also the payment Of large sums.
amounting to 7607, rent for certain branch roads
the issue OF preferred stock These several payments
1t Is claimed. In derogaton Of tho rights OF the
plaintiff IA preferred shareholder. go -
The answer TO the complaint did not traverse
any Of the allegations except by asserting that
1 na, n sav Dividend. The action was referred
70 Hamilton W. Robinson, as referee, who o., found;
the gross of the Company for 1863 including the
rent paid for other roads and interest on the tlo
for the As matters OF law he found that the net
5Sr bs sy did no Fable 70
OF the holders OF the preferred stock any dy
dend thereon that the holders and Of the pre-
tent of per cent first dividends after the payment:
Egs oi o sroads to the and Erie Rail
road Company second Of rents OF other railroads leased
1sons Of law for increase and accession to bust
ness third Of expenses Of necessary and proper I'M
and operations OF the rail- roads belonging 70
or sssd by them Furthermore he found that the said
nreferrsd hold their preferred stock subject
Ia the ordinary lawful powers OF the directors OF the
Erie Railway Company In the management OF said rail-
road and TO direction vested in them and such dlrec
Of the affairs OF sad,corporaon that, subject to such
lawful cement and direction they are only entted
10 dividends accruing in each year TO the extent Oh
per cent the amount Of their stock upon the net earn
ngs OF said corporation after deductng al the
aud Losses arising from the business ana conduct ana
Of the directors; that although designated
as preferred stockholde their rights as such are NOT
"a contractors with the Company, but are subject as
TO the management OF the directors ana 20
the Of any ,ha Se Gn
ceived earnings during the current year ending De
cember 81 1868, any net earnings S
finally referee found that the defendants were en-
titled to Judgment with costs, and Judge ingraha con-
From this judgment the plaintiff appeals, and the ap
peal was argued Sce BARNARD and Cardozo
The points raised by the plaintiff on appeal ana pre-
that the nteres due on the sterling bonds though just
debt as against the defendants, was subsequently, III
Ss acS and under their contract with
bondholders. the defendants are not )usthed I'D ~,
that interest OF the current expenses prior "
discharging their to the plaintiff and those In
like condition with him.. Second, That inc ion,s uuo
for leases OF other railroads hired by the defendants SUD
eauent TO their contract with the holders OF the prefer
red stock are not properly current th rus restop
me Soseps OF the prerred stock 10 the
no matter what the name Of their claim ~ ID 'ha' Vi
on these three points Mr. Darlington argued that tns
Judgment should be rendered, and new tris sfanse
".
ton the points, among others, that the Erie faway
Company had net earnings during the year 1000
the preferred stockholders members OF tho
ton and cannot DO entitled 10 any advantage Wnon
would either DO fatal to the existence OF the he
or would impair the rights OF its creditors tnat INC
statute under which the Company was incorporated vas
not Intended 10 give preferred stocktoiders any i
epce creditors, and should not De cOhhtue 10 a.
ing effect that II the plaintiffs inefproo , I'm IN
contract and 1.-THE charter correct, III wouu ~,
the practical suicide OF the corporation. ana IN tn1 o
sruction Of the plaintiffs own property tnat tlo III 20
Hallway Company has full power To borrow nohe. :.
issue bonds and 10 lease railroads, and IL Ia IN no WY
bound To subordinate these rights TO the special @
OF the preferred sockhoders that the claim nov so
by the preferred stockholders that they arc IN
creditors Of tho corporation is wholly unfonndsu az ~
is an mpossibty that the ownership OF soek W 49,
poraOn should mako any one creditor OF ine coi
ton and finally, that the plaintiff has no right 70 pn
AN action dividend his stock nptli thht NV
dend has declared tho directors OF the corpora
ton - - 49, ,t.hrio, that
Under the last point Mr. Sherman urges on MS prol
the plaintiff just IN much as any common
stookboder; he has tho Same rights ana only Ino sa
remedes The directors chosen by all tho sockhou
era and represent tho holders Of preferred ock Jus,
mnob as the holders Of common stock. Thtdoatd OF ~
reotors Ia tribunal selected by ths Stockholders on
seves to determine whether or not any diyiuohu na
been earned n the directors In their delro up
this question: an aggrioyo st0okh0dcr ha I tu re~