The New York herald., 1874-04-24
THE UNION PACIFIC RAILROAD
AND THE CREDIT MOBILIER.

Demurrer 10 the Plaintiffs B1Il In
Equity.
In the United States Circuit Court yesterday
Judge BlstchIord heard an argument in the equity
suit 0f Lucy d. Fisk, executrlx OF James FISK, Jr,
against the Union Pacific Railroad Company the
Credit Mobier or America and others. II win be
remembered that . considerable time ago, Mrs.
FIsk. through her lawyers-Messrs. d. d. Field,
James W. Ball and I. Z. Jenckes-nied Q bill
aralnst the defendants named to have restored to
her 10000 shares OF stock OF the Union Pacific
Railroad. Later still she fled an amended bill
against the same persons and named in that bill,
also defendants, r. G. Clarke, E. II.
ROsecrans George Opdyke, J. c. Henry, w. T.
Gilden and c. II. Mccormack. This amended bill
sets lorth that the Union Pacific Railroad Com
pany, with the assistance Of the assessments
upon the original subscriptions to its stock before
the road had been constructed, or before q sun1-
.aent part or 1t had been made SO as to determine
what might reasonably be the cost OF construction
per mile, controlled by the persons already named,
made pretended contract with one H. n. Hoxie
Sor the making OF the nrst 100 miles OF the road
extending west from Omaha, with the object and
purpose OF benefting those OF the defendants. who
~ that time were acting directors OF the rail-
read company, and others OF them, who, 1t is al
legged had obtained control Of the Credit Mosilier
by purchasing its stock at q nominal amount,
with view to have this stock assigned by Hoxie
TO the Credit M0bilier and OF securing the large
profits which would arise from the execution Of
the contract to themselves and stockholders.
Among the other allegations In the bill is one to
the enect that s6,ooo,voo. Whereabouts, was d.
vided among the directors OF the railroad and that
IN making this division OF the sum In question they
were acting IN violation oil the duties they had un-
dertaken as such directors. 1t Is iurther sged
IN the bill that the transactions or the defendants
~ regards the contracts with Hoxie were
she complainant, ana that the rsiIroad
company, III unlawful and Illegal man
ner. issued a considerable amount OF It's stock
70 the Crealt Mo6llier. The amended Dili winds up
with PRAYER that tue operations OF the directors
q the non rasc wn ths
directors shall be required to account to the rail-
road company for its unlawful issue or stock and
JOr the sums dlsbursed by them Tor illegal pur-
poses, and tnat the Credit Mobiier De restrained
from declaring or paying any dividend until the
road Company shall have been ascertained.
The matter now came before the Court on dc.
murrer by defendants VINO claimed that the Dill
shonld be set aside on the ground that IT was null
tMarlous.
p,a,nant and Mr.. stlckney Tor defendants
Mr.. Stickney said the amended bill put the COM
soTmsr Sn ' was I asseS il one BIZ ii { that At Mr.
Fisk had rendered nIty-dve per cent on the
$1,000 shares o. stock, and N the other Dill It was
The Complainant asked that decree shall be en-
tered for her the bass Of her 20,O0 shares the
COMPANY buying them in at the price agreed TO be
paid Tor them In the frst instance The claim Of
She complainant to q. 900 shares was matter be-
tween her and the Union Pac1nc Railroad Com
pany. and NOBODY else; and. TO the Credit
MODllier and other parties, rne matter as to them
was before the Court under the special circum-
stances already known The bringing IN OF an
outside stock matter into the bill was based upon
adjudicarion OF the Court that the stock was in
wand there were no parties before the Court TO
sought 'a decree against ii the W Uredit Mobiiier.
Mr.. JencKes, replying TO remarks OF counsel said
the point was thar this STOCK was Issued 10 the
DIR nv her vpa in n
Guch directors.
Mr.. SticKney remarked that the bill did ask from
the Credit Mobiller wnar they had acquired IN re-
gard to this STOCK 1t was not alleged IN this bill
that any particular director mad been concerned
IN any special act Of fraud He did not think they
could put into one suit every person who had been
Tor iour years connected WITH the company and
bill prayed that the stock should be bought in and
cancelled and 1t was asking the Court TO declare
csos n0s Was 0ns mot q aerea in out the bill
that there were profits from the earnings OF
the railroad company. Cntil the opposite SIDE
profits OF the road, and not until then, could they
ask the Court TO give decree to the complainant,
. "a q shareholder, for dlvldend. The defendants
were called upon TO cancel and buy in the original
shares OF stock which they had Issued, TO be paid
Tor at certain price; but there was no allegation
that the certlficates were now III the hands OF
those to whom they were issued. A court OF equity
wronguily in his possession 1t should be restored
70 righttul owner and II 1t was not In his pos
session aud ne mad Improperly ana Illegally dealt
with H. there could only be decree Tor damages.
IL the subscrpton price for the STOCK had not been
paid ior, and the stock had been issued 70 other
parties, there could be an action against them 10
recover the amount but he denied that by pro-
ceeding IKE this they could compel the defendants
TO replace the stock as to have dividend made
cut OF IL Tor the benefit Of the complainant.
Mr.. Jenckes contended that the complainant
sought ior was by the plaintin against the oirec-
tors OF the Union Pacific Railroad Company. The
Dill stated that, conrraventon OF the statutes.
certain number OF persons, among whom were
those directors, conceived the idea OF getting con-
ceiving the SUBSIDY granted by the United States
Tor the construction OF the road, and the enor-
nous land grants, and using them for their own
allegation TO the Credit Mopiler WAS tnat ie
was satellite corporation, through which the
bonds OF the corporation were paid for tine in
diyidual pront o. favored persons: the
stock was bought up BY Thomas O. Du-
mp 200,0l7 shares OF the Union Pacific stock. They
purcnased right 70 the SUBSCRIPTIONS. They
cansed themselves to be elected directors OF the
railroad, ana they issued the stock which Durant
held In the Credit Mobiier to eacn other in the
same proportion as they held the stock or the
Unon Pacific Rairoaa Company. Alter alleging
that there had been fraud in relation TO the con-
tracts for the construction OF the road claim
lng tnat the work had been contracted Tor az prices
considerably larger .han t could have been done
for, counsel stated that tue stock had been issued
Judge BIatchiord-The allegation in the bill is
that they issued the stock without paying 1t
converted IL 70 their own
Mr.. Jenckes--Yes. The stock was wrongfuly IS
sued by these defendants. they being directors OF
hoo IVou, w bhcmsciFcs, auu Hot Dy huthOTity OF
the Union Pacific Railroad. The Complainant did
NOT know. so well was the secret concealed, even
OF the existence or fraud OF this magnitude
This was q scheme OF the directors alone, and was
mot In any way public act Of the Union Pacific
RailFOad Company The relief which the COM
plainant sought Tor that thls stock either be
paid FOR, not treated as stock, tnat those per-
soma who took IL should cancel 1t. Nineteen
milliens OF dollars OF the money had been divided
through the Credit M0ollier and found its way into
the pockets OF the defendants. Dividends had
been made from which the complainant had been
excluded On the whole case ne contended that
there was nothing In the allegations Of the bills dis
connected fr0m this general scheme OF plunder.
Mr. Stickney replied, observing that, admitting.
for tne sake or arfument the Credit Mober
sham az stated py Mr.. yenckes, as TO intent and
rlse sti the fact remained, as charged In the bll
that the Credit Mobiier was corporation under
the law OF Pennsyvania, and held property there,
and on A former occasion, the plaintiff mad asked
ene fourt fnr An Injunction asking that rhe Credit