New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-07-24
THE NEW ERIE LITIGATION.


ATTORNEY GEN. PRATT DECIDES TO BRING THE SUIT
IN THE NAME OF THE STATE.
Next TO the bids for the new bonds, the Erie
eumors OF general interest. Early in the day
1t reported that Capt Tyler the engineer who has
Just examined the road, had made an Official statement
jn favor Of the road This afterward denied, and
then it announced that the Attorney General had
decided bring the suit begun by John c. Angel agt.
the Erie Railway Company in the name of the people
The Attorney General has decided that Sufficient facts
proved by the papers submitted by Barrett, Red
field & Hi, plaintiffs attorneys, 70 Justify the inter
ference state, and he Will forthwith begin a suit
10 dissolve the Erie Company. The grounds for this
action are briefly Illegal action OF the Company ~
purchasing certain coal lands with view OF mining
coal: On in purchasing the capital stock OF the New
York. Buffalo and Erie Railroad Company; (3n leasing
the Atlantic aud Great Western Railway, and lastly In
the declaration of dividends. The Attorney General Is
careful TO say that does mpute bad faith TO the
directors the Company in committing the excess of
power complained or The following Is the Attorney
Generals opinion:
THE OPINION.
The complainant makes application to the Attorney
General for leave TO bring action against the Erie
Railway Company aud Its directors to compel them 10
account for their official conduct and TO restrain them
from using or usurping powers not granted to them by
che act OF Incorporation As action against the ROAD
and its directors might seriously affect the interests not
only the corporation, but of stockholders ana cred
tors the Attorney General declined TO act upon the am
davits produced by the complainant until notice had
been given TO the officers OF the Company, and
they had had an opportunity to be heard. Hav-
ing now heard the allegations pro and coD and
duly considered tie same. the AttOrneyGeneral
-; tha o,uton that that the complainant had entirely
failed to sustain his allegations OF corruption ana VIII
iul Violations OF law on III part OF me 0netrs OIL tne
of the Board Directors for honesty ana luIegr Is
TOO well established IN the business community 10 war
rant suspicion hat they wohu EIVI
the law willtuly fan ~ discha!SlhS tho trust iul'
posed upon them rs such directors. ,,..
And SIM the Attorney General j not convinced Dy Ihe
able arguments of the counsel Tor the Company tha
has transcribed In several respects the power %e
fhe state At least there Is 80 much DOUBT upon the
question that he deems 1t best that DC seeu W inc
Tqrs: As to the question the purchase of the stock
of the Buffalo, New York and Efie Ruroad Company.
Ipon the afidlvs, Of the complainant that
the purchase made IN the interest OF directors
authority under the charter or elsewhere aulhOrZlhR
the Company to purchase the stock and give the notes
il. The counsel Tor the Company III
the argument pctcaed the auJ1ony to purchase OH ~
mat act provides "a method by which railroad com
pany holding another railroad under lease may absorb
4b e,sed Toal by exchanging stock. but IL gives
,n right 10 one company To purchase the stock OF
another company. Although II may be doubtful wiener
the Erie Railway Company subject to the prohibition
n the General abroad act making IT unlawful Tor one
company 10 use funds in the purchase OF STOCK IN
another corporation yet II comes WITHIN tne genera
siatnes OF the State restricting corporations 10 tne
exercise OF powers expressly granted or necessary 10
Ses59dI In regard TO the purchase of coal lands or
etOck IN coal companies another grave estlon ARISES
as TO the power OF the Company. The counsel Tor tue
Company IN his argument claimed TO ma we power IN
The Ere Railway COMPANY as the successor 70 sI re
rights. franchises, ana privileges orlshay Tbo
the Hudson and Delaware Railroad Company me
Attorney GENERAL has not been aOe 10 satisfy nnse
that the Ere Railway derived any such authority
from that Nor can the power De IIpIIeu' no
coal is an article OF merchandise 10 De 1ound on sde
All places q. any nporance 1t is not necessary Tor the
purpose legitimate business Of the road That II
Thirdly Asto the power Of the COMPANY to lease the
Great Western Railway, the Acknowledgement mas not
The state Tue act 1882 chapter ais makes lawful for
one railroad corporation 10 contract with another Tor
OF one company lease and take the entire manage
nent and control of the road OF another corporation is
of Usher Ct New-YOrk Central aud Hudson River Rail
road Company N6 n. Y. CAD, the Court OF Appeals
lease, IL is manifest that the question was only
raised incidentally ana was not argued or ~
Erie the road OF foreign corporation Hing most OF
IT, outside of the State and outside OF all aleeance 10
the laws OF this That domestic corporation may
lease aud railway In another state raises serious
question OF corporate power. which should be deter
mined by the courts as speedily as may be.
AS 70 the OF the dividends the allegation OF IN
proved stl the Attorney General satisfied that
the condition OF the finances of the Company were such
Ms to authorize the dividends In question that wac
the only question he should not DC inclined " commence
proceedings for that cause alone. -,.-,-,.,
There are Otner points suggested wherein II is claimed
that the Company have exercised powers not possessed
by it, which are not necessary TO be examined now as
the questions already examined are suSeht 70 a9thor
ize the commencement OF an action They may there
aore be properly for the courts to pass upon ,,
without making an elaborate argument, Dut Simply
giving his impression, the Attorney IS OF opln
ion that some of the conceded acts of the Conpan.
serious questions corporate power winch should
determined by the courts As the directors have acted
corporation may safely be left with them pending lit
cation. Tne Attorney General. in asserting TO the com
the proceedings shall DO conducted occasion
little inconvenience TO the business OF the Company
possible DANIEL PRATT, Attorney General.
PASSING DIVIDENDS.