The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1872-06-19
BROOKLYN COURTS.
SUPREME CoUnT-sPEClAL TERM.
The Pacific Mail Steamship COmpany,s
Suit-Application for an Injunction.


Suit-ApplicatiOnf for Injunction.
Before Judge Tappen.
The argument in the matter of the application of
James b. Bach for an injunction to restrain the
Pacific Mail Steamship Company from specializing
with the surplus funds OF the company was heard
yesterday morning. Mr.. John Bergen in opening
the argument, stated that the company by its char
ter was permitted to accumulate large surplus
fund to be on hand in case OF sudden emergencies
He said that since November Is, 1871 when the
defendants were elected officers ana directors of
the company, this surplus fnnd had not been dealt
with or invested before that time the defendants
had sold the securities in which Ii was invested, and
since that time have been loaning the money to
firms Wall street on different kinds of securities
The plaintiff being the owner OF fifty shares of
stock brings this action to compel the officers OF
the company to call in these loans and invest the
surplus or trust fund OF the company in government
or State bonds, or permanent Notwithstanding Sc
curities. Mr. Bergen read portions OF the testimony
given by Alden r. StOckwell, the President OF the
company, before the referee in the suit brought by
Luther q. Chas against the company. and claimed
used by the directors, and II was the province
and duty OF the Court TO compel them TO in
vest the trust fund as any other trustee would
be obliged to invest trust funds. He claimed
that the act OF the Legislature OF May IL,
1872 was unconstitutional lift should be construed
to give the directors power to use the surplus fund
OF the company in purchasing and retiring the CAPT
tai stock OF the company at par or thereabouts The
act referred to authorizes the company to reduce its
very nice speculation If the directors can loan the
surplus fund of the company and use IL so as to
run up the price OF the stock. and then buy, with
the surplus fund.- for the company, at a high price,
the stock which themselves have bought when the
market was low, thereby putting into their own
pockets 81, O0O. 900 or $4,000, 600
Mr. Stoughton for the plaintiff stated that prior
to November l5 1871, the surplus fund amounted to
over 49, 000 and had been invested in safe secu-
rites, such AS governments. Since that time and
the election OF the defendants directors and off,
GERS these securities had been converted into cash
and the proceeds had been loaned on time or cali
loans on various securities. The atfdavit OF Mr..
Stockwell, purportng to be fun and tabular state
ment OF the loans, &c, in pursuance OF the order
made by Justice Tappen, Ia very evasive and the
particulars called fur are not given in con
temptuous disregard of the order. The statements
contained In the AFFIDAVIT show, however that the
directors have invested the fund of the company In
manner In (which they have no right to invest 1t.
They have no discretion as to how they must invest
It, but 1t is their legal duty to invest Ii in safe secu-
rites, or any stakeholder may call upon them, with
the aid OF court of equity to do 80. There was
under the charter no obligation upon the trustees
to invest the money, but If they do invest IL they
must invest 1t In government real securities as
the rule OF law requires.
Mr.. Fuller for the defendant argued that there
was no evidence, no facts before the Court which
showed that there was any for the plain,ir
any reason why an Injunction should be granted
There is nothing to sbew that the directors
threaten or intend In the future to do any thing in
violation Of law. He claimed also that the directors
OF corporation were not to be claased in the same
category "a chancery trustees. The primary duty
OF the guardian Of an infant, or the trustee OF q
lunatlc or married woman, IL 10 preserve the fund
and assure an income for the cestui Qut trust but
the duty OF the directors Of corportIon IL to make
all the money for the stockholders that they can.
Homer A. Nelson followed, ana alleged that this
action was merely scheme " deprcss the value Of