The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1874-03-21
CITY C0UAT-SPcClAL TERM.
Interesting to Railroad Companies-Can
the CrOsstown Company "Water''

Interesting to Railroad Companies-Can
the CrOsstown Company "Water''
Their stock!
Before Judge Nelson.
Alderman Demas Strong, stockholder In the
Crosstown Railroad Company applied Tor an in
junction TO restrain the Board OF Directors from
increasing their STOCK, and yesterday Judge Neil
son rendered the following interesting decision in
the case:-
from 100000 to $4,000 by the vote OF stock
holders at a meeting held on the 10th day OF De-
been III conformity to the statute Ct. L., 1850, p.
2l4, section 81 The avowed purposes Ior which
the increase Of the capital was maze were:-
First, TO meet demands which might ARISE under
the convertible clause in bonds OF the company
which had been issued, and second, to provloe
sufficient means constructing and equ1pping
the road. Those bonds were afterwards retired
and saushed oul OF other means OF the COMPANY;
Board of Directors, considering it neces-
sary to Apply the Increased capital to
the road. resolved tnat Ioos shares OF the capiai
stock OF the par value OF 500 per share should be
offered or sale at $50 per snare, the privilege of
purchasing the shares at that rate TO be first gwen
to stockholders. The pldlntln, stock older in
the company, exhibits his oi on his own Denalf
TO come III, &C., ana seeks to RESTRAIN the issuing
and sale OF that additional stock. He claims that
out right or legal authority; that the issuing and
the Sale at that reduced rate OF the additional
shares win lessen the value OF the stock held by
him and .hors and that great damages Will be
suffered. Other matters going to the for
>maity of pleading are duly set forth as that
those who might ofIn9 the action in the name of
the omi,any refuse TO do so upon request, &c,
ana SO he impleads the company and all the dlrec-
tors. The theory on the part OF tue complainant is
tncreased; that the authority given by the stock
holders at their meeting December 20, 1869, was
merely to issue additional shares, should that be
necessary to retire the bOnds tnat those bonds
having been satisfied that authority. unused
f.r md ivnh nftua tc
be revived and exercised by the Board OF Direc
tors wrongluliy. There are several objections
above cited expressly provides for the actual
increase OF the capital stock, not Tor
the NEE issue o. shares to meet specified
instance the capital, as such, was actually
increased, the directors could have issued the
shares Tor the additional 100000 immediately
thereafter, or postponed that issue as IN their
judgment seemed best for the interest OF the road
That statutory of the capital and the con-
sequent power to issue the corresponding amount
OF stock suffered no abatement or revocation by
the lapse of time which has occurred. The case in
this aspect 10 strongly contrasted with the princ
pie applied by Ven. Wood IN FISHER VS.. Whaey e Ii.
4 NJ. 10y, and by Redneld LAW OF Railroads, vol 1,
D. 565) to Ola resolution authorizing the issue OF
shares for purpose wh Oh mad ceased to be avail
able. 1t was held that an Injunction Will be
issued to restrain such action by the directors, it
not being q question or the internal management
OF the company. In this matter one OF the pur-
poses for which the capital was increased remains
10 be carried out with the means arising from the
sale OF the stock-to wit, the construction and
equipment OF the road. II In the progress made in
that work and In obtaining supplies debts had
been contracted the proceeds OF the stock would
have been applicable TO the payment OF such debts.
The resolution OF the 5th OF February proceeds
upon the correct principle In giving preference
to stockholders in proportion to the shares held by
them, the augmentation OF the capital being for
the benefit OF the Joint concern. q Mass. r..
364 10 Ohio K, 9 BY the bill and in the argument
OF the learned counsel for the plantlr the sale OF
o substantial ground OF objection. 1t Is alleged
that such sale Will appreciate the value OF the