The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-07-21

The Motion to Restrain Erie from
Issuing More Shares.
CLOSE OF THE ARGUMENT.
THE DECISION RESERVED.

4A4G AGOxSxOlV IlE0IxA v LII.
Yesterday the argument in the United States
Circuit Court before Judge BaJchfOrd, on the
motion on the part Of Heath and Raphael to re-
strain the Erie Railway Company and Jay Gould
from issuing $4,000 shares OF Erie stock, was re-
sumed.
Mr.. David Dudley Field, Mr.. Beach and Mr.. Sher-
man appeared ON behalf OF the Erie Railway Com
pany. and Mr. Soutnmayd and Mr.. Hoar, ex-Attor.
ney General OF the United States, represented the
English shareholders
ARGUMENT OF Mr.. DAVID DUDLEY FIELD.
Mr.. Field submitted that the bill was one OF an
anomalous character 1t was neither original nor
supplemental It referred TO the allegations Of an
independent bill .'as II the allegations Of that bill
OF complaint were Incorporated with this BILL but
without quoting them, while Its main purpose was
TO prevent the defendant Gould from complying
with order not yet entered In third suit pending
tn this Court The gravamen OF the bill may ne thus
statcd:-The Executive Committee Of the Erie Rail-
way Company have issued 10000 new shares In
manner supposed to be not warranted by law; but
the same had been recognized by the company and
had passed into the hands of bona nae holders for
value, who were not parties to the suit. These
shares had also been registered with the Farmers
Loan and Trust Company, but $4,000 other shares Of
good stock In the hands OF The receiver nave not
been registered. They might have been registered
had not the Old certificates for which they were
substituted been surrendered In order to obtain
the registration OF the $4,000 new shares.
therefore,, as the new shares, though spu.
rious. mad been registered and made good.
the 10000 good shares in the receivers hands
should be made bad and denied the privilege OF
registry Such was the logic OF the application and
SUCH substantially, the statement Of facts on which
1t was made II only asked declaration tnat the
$4,000 new shares were illegal and wrongful, and
Shat "whe the certificates remained in the hands Of
Jay Could and before the same were sold and dis
posed OF by him, were Illegal and spurious" and
then asked for an Injunction against registration
Now as the bill informed these shares had
been sold and disposed OF and tie certificates mad
gone into tie hands OF numerous bona rae pur-
chasers, the declaration would be mere brutun,
Ttynen and the bill remained mere bill for an
injunction against registration.
Counsel then submitted several points for the con.
sheraton Of the Court. He commended that the bill
could not be sustained IN any OF the positions it
O. took. 1t should have been framed as a supplement
10 the original bill Of Heath and others, now pend
ing In this Court. 1t was not framed In that man.
ner. nor was 1t framed Tor any independent purpose
1t was merely auxiliary, and must fail If the two
prior suits or proceedings lall. II the bill were
must fall because this Court had no power over Inc
internal affairs OF state corporations nor, indeed
n any power except as court OF equity. il had no
o1' the Gy of New york
as trustees In the management OF their trust 10
could NOS entertain suit to determine whether
The 80 900 shares OF stock issued In December 1870
were or were not lawfully issued II the Court mad
power TO determine the question OF the legality OF
the issue OF the $4,000 shares of stock should
not do 80 upon the present BILL because the neces.
sary allegations were wanting and the bill did not
pray for such relief: Under TINS bill It would be
Impossible to order either &c. shares issued In
December 1870, and January, 1871, those in the
hands Of Mr.. Coleman to be withdrawn aud can
celled The necessary parties were wanting to the
btu. Neither the holders Of the 10000 shares
AS no judgment could be rendered in this
suit affecting their rights 80 neither can
II the Court could not interfere with the ownership
or legality or the 5000 shares could not interfere
WIN any incident OF sucn ownership the privilege
the basis OF bill In equity. 1t was not right, but
mere favor dependent entirely upon the joint con-
the STOCK Exchange. II could be given or Withheld
At pleasure BY either OF those bodies The regstra-
lion with third party was purely voluntary ar
rangement OF the company made without consdera-
ton for the convenience OF spectators in It's
at Its pieasure-and, therefore, one which a stocN.
holder acquires no right either to or restrain
yng lis certincates on yellow paper, and the Stock
Exchange would deal IN no other certificates than
the yellow ones, would the stockholders have the
right to require the company to use the yellow
paper for all time to conner Considered a pre-
II or not as it pleased, and the Court could not con-
troll the OF its discretion in that respect
Tho thirty thousand new shares issued IN Decem-
her 1870 and January, 1871, part Of the capt.
al STOCK OF the company. THIS point the bill APP
,)eared to admit and then to deny; but whether it
idmltted or denied the fact, the law made these
shares part VI the capital stock. The company
ad power under the tenth subdivision Of the General
.sallr0ad act OF New York issue convertible
onds Tor the completing, finishing or operating OF
,leir railroad. This point had been adjudGed in the
mont vs. The Erie Company So Barbour, GIL,
;.ad jerks vs.. The New York Central Railroad, re-
the bill that convertible bonds upon which the stock
lad been issued were mere sham and pretence, got
UP for the purpose OF manufacturing and issuing
upon the pretended basis thereof, spurious and rau-
euient. $4,000 new shares. The answer that was
the particulars specified did not meet the general
allegations, and the general allegations were fully
met by the adavits which mad been read In answer
70 the motion. The bill showed resolution OF the
hoard OF Directors OF the Erie company passed I'm
1868. authorizing the Executive Committee TO Issue
convertible bonds. Counsel Intended that this was
u continuing authority The board was advised by
counsel. and among others ny counsel Tor
the pianun In the present case. The bill
Board Of Directors, raiiIying the action Of the
Executive Committed There was, therefore, b0th
previous authority for and subsequent Ratification
or the action OF the Executive Committee In au-
tn0rizlng the issue OF the convertible bonds. Then
1t WAS objected that these convertible bonds were
not issued Tor money borrowed. but were sold TO
OF their issue or the day after, ana were actually
converted before any money was received them,
and were not issued with intent TO negotiate keep
the same alive as bonds" all which circumstances III
made out, would not counsel cOntended lnvalidate
the bonds The statute expressly authorized the |
company TO issue and dispose OF their bonds for any
TO repay borrowed money. After commenting upon |
other features OF the case with his force ana
ability. Mr. Field ooncuoed his argument by stating
no tho Court that he thought he had shown sullcen
COQ0nt WHY the mOtlOn for An inuuction |