, 1873-03-27
THE TELEGRAPH CASE.
Tile Proceedings Charged to Be q
Scheme to Handle About
$400,000.
Exhaustive Arguments by Both Stiles rs
to Whether tho Company is
Bankrupt Or Not.
a Study for Those Who are in Favor
Of Staying OFF Bankruptcy.

~ AeuNy AuA !Auap WV t@A0 al EHVu1
Of staying OFF Bankruptcy.
Tho argument In tho caso Of John q. Hilton
y. Tho Great Western Telegraph Company, ,--an
application to lavo tie dofondant atljudicatol
n bankrupt.-was commenced before Judge
Blodgatt, in tho United statos District Court,
yoatorday morning. aud occupied tho ontiro day,
Mr. Z. A. s7tu1,
for tho potitionor urged that tho provablo olnlm
OF tho petitioner waa established by tho owl
donco, mud TINT tho iutont to gise d preference
Ind boon clearly ahown tlnt tho Kansas lines
OF tho respondent wero undor n contractor's lion
for construction: mud that neevo's claims upon
certain othor portions Of tho lino woro tho s,,1b-
ject Of litigation in tito stnte courts, pending
which Nooyo claimed that ho still retained r,oa-
Boabion Of them; TINT tho limos actually uudor
tic respondents control wero not paying Tho
duly expenses that wllatoyor vitality or poouni-
ary strength
THE "RoTTEN INSTITUTION
cvnr Ind 1t derived from tho liborality and credit
OF Mr. Gage, aud that the Company was clearly
insolvent when tho Judgments in favor OF tho
Commercial National Bank wero confessed.
Mn. ]. ]. BENNETT,
for tho respondent, claimed TINT unless tho power
Was givon By charter or other legislative enact
ment. no oflicor Of @ corporate body had tho
power, unless 1t WAS delegated by tho corpora
ton, to bind tho corporation by IN instrument
under seal. George L. Otis was entirely un-
authorized to agn tho na1no Of tho Company to
tic power Of attorney on tho throo Judgments in
favor Of tho Commercial National Bank; tue notes
upon which those Judgments wore entered up
wore also ttnnuth Tho Company WIS neither
tnsolyont, nor in contemplation Of Insolvency, iu
August or December, 1872, md did not suffer it's
property to be tahon by legal procoss with tho
antont to give preference to tic bank. Three
things must concur in tho case before tho TO-
spondent could DO docroea bankrupt: First, that
tho Company committed ono Of tho aotB alleged,
that is, autloritativo|y confessed or gavo power
to confess Judgment or suffered its property to
be seized In execution before tho petition was
filed; SECOND, that the Company was insolycnt
at the time, or in contemplation Of Insolvency
tho part Of tho Company to securo q preference
to tic Commercial National Bank. Ii the poti-
toner had failed to eatableh any one Of thcso
three facts, tho petition must DO dis
spectaole was prosecuted Of Gage, tho President
Kotvo, tho contractor, and Hilton, tho potitonor
uniting md contedorating, aftor having bound
Il tho Company under vote, when tho stock
bankruptcy, on ACCOUNT Of thoir own act, and
CRUSH THE ORGANIZATION
before It was allowed trial. The Company
owed, substantially, but ono debt, both tho
tera being neove'a indebtedness and controlled
q law lSs'' ''f "''A 'D'f' "A7 '''op1''' f0m'oy
11R. STARK,
for the respondent, followed. ue Bnil the case
failed to slow tho commission Of nets OF bank
ruptcy III the. giving Of warrants in August,
1862, to the bank. It was claimed BY tho
petitioner that they were renewal notes,
May. with like. WARRANTS of attorney
but It was evidont, If tho warrants woro author
izca, they were merely given as IN ordinary 30
ourity for dehtH md not in contemplation Of in
solvcncy or with intent to give preference.
Gage's statement TINT the Company was insol-
vent in August, 1872. was ovlontly unreliable,
ns ho (Gage) did not then think 80, according to
circular in June to tho stockholders The notes
must be regarded as mado In May, as they
originated then, and the now notoa woro hut an
extension Of the old ones for less amounts aud
takon in execution, aa alleged. The executions
were received by tho Sheriff prior to the filing
Of tho potilion, but nothing further was dono
LANGUAGE OF TIE nANKRuPT ACT
WAS, "shall antfor his property to be takon on
logal process," Property was not taken in any
just sonse whom only d lion had boon acquired
upon It !; that, he submitted, wna not the takiug
proof failed to show that tho Company wns inaol-
Won't ut tho time tho judgments wore con-
foHaod md executions issued. Insolvency
was d question Of law and fact. Gago's
sSssf'Y sea ef *1h asp sp thegns the 'o1e oen
pany was insolyont, because it bud no money
and could not pay the notes.. Tho technical
definition Of Insolvency, as applied to tralers
eod s1 ao b epsaed @ WIKI tyadofs M Thap proos
failed to show all indebtedness, nBile from
the Judgments, exceeding $4,000. Tic judg-
tnents ~ero $33 900, making the whole indebted
ness about $4,000. Tho property Of tho Com
pany waa
WORTH, nEyoSD DISPUTE, 100000
The Indebtedness to Nceyo was q worry uncer-
tain quantity; from the viow Of tho Superior
Court, tho presumption wus that tho balance wan
wero Just liabilities, thoy were loss thau 20 por
cont OF tho real value Of tho Companys present
property. Tho unpaid stock subscriptions might
not hayo much value; yet whom Il was seen tint
would bo amply sufficient to cancel all tho debts
Of tho Company, including tho judgments, in
full, it was not too much to assume that moro
thnn enhonsa might 10 1tssnd from that
heribors and tho Company. Tho proof
showed tho cash cost Of tho lines to bo
not far from 800 por milo. It could not DO
sold, would realize more than twice tic q On tire tire
indebtedness. Tho only ,reaBon tlere could DO
for resorting to the Court Of Bankruptcy must
DO for the collection OF petitioners debt. Tho
Bankruptcy net was not for tho collection OF
ordinary debts, and n creditor could not force q
debtor into bankruptcy for any other than tho
eausoa naaofl III tho act: Moro insolvency of
itself was not ground for Involuntary bank
raptcy. Tho acta charged as acts OF bankruptcy
wero those OF certain officers, Otis as Treasurer
md GnEe rs President, assuming to not for and
In tho hume Of tho Company, wien, i'll fact, MS
had beon decided by tho Supreme Court, tloy
aid not represent tho real Company,--tho bona
tido stockholders. Their position aud acts woro
nn uaurpation; they acquired and
HELD THEIR POSITIONS l3Y FRAUD,
and Woro, at the tnao Of these acts subject to tho
docialon Of the Supreme Court and tho decree Of
tho Circuit Court in pursuance thereof. Tho
Company, under those circumstances, could not