The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1872-03-10
BROOKLYN COURTS.
SUPREME cOUR!-spEclAL TERM.

COurt-DtrectOrs Charged with Specializing
In the Stock of the C0mpuny-An Iniunc-
zion Applied for and Reference Made rs
20 Plaintiffs Solvency.
Before Judge Gilbert.
Luther Q. Challis vs.. The Pacific Mail steamship
Company and A. B. Stockwell. James d. Smith, II.
H. Baxter and Others.-Plaintin brings SUIT in
behalf OF himself and all the other stock
holders OF the Pacific Mail Steamship Company,
OF which the defendant Stockwell Is President
and Director; another defendant, Mr.. r. w. @.
Bellows, Vice President, and third defendant, Mr..
c. A. Abercrombie, Treasurer. On Tuesday last
Judge Gilbert issued an injunction enjoining tine
directors from specializing In their own stock. but
the injunction was subsequently dissolved. On
Wednesday the plaintiff in this action obtained an
order for defendants to show cause why such an
Injunction should not ISSUE and tue order was made
relurnabe yesterday afternoon, at one O'CLOCK when
the case came on Tor argument.
that he mas been for some time past, and Is now,
9 stockholder In the company, being owner
q 400 shares Of lis capital stock; that said
ctmpany was chartered and Incorporated 'iOr
purchasing. chartering and owning vessels to
be propelled solely or partially by steam or
other expansive iuia or motive power, and to be
run and propelled IN navigating the Pacific Ocean,
anu Also purchasing, owning ana navigating such
vide fuel or other necessaries, and that no other
powers or rancnises were given 10 or are possessed
necessary to SAID purposes. That prior to N0vem-
Der 10. 1871 surplus fund OF over So, 900, the
reserved and neld ready to meet
ANY ExTRAORDINAR AND UNFORESEEN EMERGENCY
In the affairs OF said company sucn as the loss OF
steamers liability TO shippers, &c. That the POS
SESSION and preservation or said fund are tndispen
SADLY essential TO the business and operations OF
said company, and prior to SAID date said iund mad
been invested in government securities, to be
intact, exempt from hazard OF loss and ready 70
meet any emergency. That after the admlnistra-
ton OF said COmDaQV uQQGr the control OF the
individual defendants they withdrew said fund from
said investment and omitted and neglected TO In
vest eold funa In any sale or proper security,
but on the contrary, and in violation of their trust
and duty officers and directors Of said company,
Tor the promotion or their individual interests they
are now using said fund In making loans on the
security Of the stock OF said company and IN dis.
paper pap M IN Se p e4s
wise and In operations with the intent and effect
OF causing sudden and violent fluctuations In the
market value OF the stOck OF said company, and
that such use ana employment OF said iund are not
only
on the part Of said defendants. and misappropria
ton OF said fund for their personal emOument, but
said company, and contrary to It's charter and 10
the laws 81 the state; that by such use and employ
ment said fund Is diverted from ITS proper and
mutton and loss, and the solvency and security and
corporate business OF said company are subjected
IS now employed and expended In said im-
proper and unlawful uses and enterprises
t00t H1lO fu0u, OF 30 MUCH LuereOI as Ii OH loan.
ana otherwise unapprOprIated and employed, as
above set fortD is subject to the call OF the defend
ant and may be drawn I'D at any moments that
said individual defendants threaten and intend TO
persevere in the incorporation or said fund,
whereby the safety Of said fund.- the operations OF
said company, and the interest OF the plalntin
stockholder therein are and Will be incomparably
injured and exposed to
/ 'I-l1 -I ABSOLUTE RUIN,
wherefore plaintiff demands Judgment. First, that
the defendants De restrained and enjoined from
loaning said surplus or reserve fund, or any part
il otnerwise tnan In the prosecution Of The legal
and legitimate business Of said company; secondly,
that !ne descendants DC direSted ana compelled TO
be out on loan or otherwise employed and invested.
contrary TO law and the duty Of said defendant.
Court, and, thirdly Tor sucn order and further re-
llef as TO the Court may seem Just"
In reply Judge Nelson submitted Mr.. StocKwelps
anidavit. which sets forth that 400 shares OF the
stock the I'd and Atm or March transferred to
the name OF the plAlntl, for the purpose OF bring
ing this actlon and thar ne not the real owner Of
the stock, and shows tnat surplus fund of
100000 mad oeea accumulated and invested as
Cash IN hand and call loans. $780, 40 q
Time loans. 242, 100 90
$685., 700 u s. $40 bonds. ............. 9Sl067 81
S775,O0O u s. 1910 bonds ............. S3S,025 90
500, 900 U. s. per CENTS new 100000 90
Cash In hands Of agents and persons. 2OO 9O3 81
IL is denied by Inc directors that thew have mseT
the funds OF the company IN any OF the methods
stated In the morning papers, or that they ap-
proprated any OF them to their own personal en-
richment, and state tnat they are now having built
four steamers at The expense OF $4,000, 900; that
when they were elected directors in November
last the stock was selling &C Orty-six and forty
seven on the dollar and ut averages sixty
one TO siXty.three.
1t is further alleged that not dollar OF the funds
OF the company has been lost since the defendants
held CONTROL and tnat, when It became known that
an injunction mad been Issued the stock deprecated
upwards OF three per cent, and when It became
known 1t mad been vacated within one hour 1t
advanced three per cent and the knowledge OF this
cent. Judge Nelson also submitted four
other aaays by directors
dents statement. He then introduced two other
afdavits asserting the utter insolvency and IRE
sponsiblllty OF the plaintiff and that ne was not en-
titled to credit even under oath; and when asked
his intention last night In regard TO Pacific Mall he
replied, "Put II to forty" Judge Nelson contended
sheraton Of the Court. Tne stock had been bought
by him for the purpose OF bringing this litigation
and he was not using the Court for good purpose.
Counsel for plaintiff was surprised by the andavits
presented against MIR. Challis. lie said they were
wholly false, and he was prepared to prove
that Mr.. Cnais bore the most unimpeachable
character; that he owned STOCK since November
last, and Is worth at least $500,00O He asked
reference to INVESTIGATE ate his CHARACTER
to speculate with these stocks In Wall street,
1t was charged that they had loaned money
within the scope of their powerf On the 10Th OF
December last In one lump they loaned to one OF
the directors S3oO0OO, ana tnat director was nOtO
rlous as q stOckJ0Dber and Spectator.
Judge Fullerton wanted reference, ana applied
for Injunction meanwhile, but Judge Gilbert did
not think that they were entitled to that, for 1t
would be practically misjudgng the case.
Judge Fullerton said that defendant did not deny
the allegations that 1t was wrong to loan the stock
to the directors. The directors were charged with
doing that, and he did not think 1t would be pre-
ju 1ging the case when they came IN and confessed
their guilt
some further argument ensued, after which Judge
Gilbert denied the injunction meanwhile, but ap-
pointed John s. Lawrence, OF New York, referee,
to take testimony 10 plaintiffs respecaDilty and
sOlvency on saturday next The case (tne original
molion) was then adjourned until the 20tn INST, at
noon.
CITY COURT
The Westfeld Disaster-A Jury in the Widow
AIadden's Case that Did Agree-$J.OOO
Damages.
Before Judge Nelson.
The third trial OF the suit Of the WIDOW Madden
against the Staten Island Railroad COmDanV for