New-York tribune., 1874-07-09
THE ERIE LITIGATION.
ARGUMENT BEFORE THE ATToRNEf-GEN-
ERAL.

,,,c,>r ,,,,,nrxDs-THE MANIPULATION or THE |
ACCoUNrs-THE ATToRNEl-GENERh khSh"N -
HIS DECISION.
lGENER,L PRESS DIsrATCHl
A1rASY. July s.-The case of John c. Angel
ssa,nst the Ere Railway Company was argued before
Pratt to-day, Wm FGllorton appear
ing for the Erie Protective Committee of London ana
John NJ Hll appearing for the plaintiff ana Wm' NJ
Tvarts and Judge W. ID. Shpman for the defendants
The papers submitted were the plaintins depOSluoh
and complaint and the affidavit Of sylvester H. Duhan'
The deposition Of Mr. Angel forth that he Is the
holder OF 80 shares OF the preferred stock OF tne L
Railway Company and the aud holder OF n'o q.
ITS fourth MORTGAGE bonds; that he is informed anu
believes the affairs or said Company nave oooH
Gently greatly mismanaged; that seNerai ui'iu'"u'
have been paid out Of the capital. there ha'ug poon
no net earnings applicable the payment OF such GiI
dends for lons time and that the funds ana property
Of said COMPANY constituting material part OF 'he
security for the payment Of its debts nave Deeh us"P
oiled in various ways to the extent OF seVera Ino"S
of dollars the particulars OF which are more iuy SGT
forth in an affidavit by 5. II. Ddnan at deponents re-
ouest: that depOnent is informed and believes the
floating debt OF the said Railway Company exceeds
O) and the securities and property OF every knd
belonging to the said Company which could De lhade
available the payment OF said floating debt by sale
or otherwise, do not exceed IN salable value
100000 the rest OF said COmpanys property oelng
moItgagcd the extent Of Its full market Vaue ana
the promlssory notes Of the said Company are now
freely offered the market for sale at discount at Tue
rate OF 80 OF 40 per cent per annum while the current
yaluo money upon thoroughly good securities Is Only
per cent per annum DepOneut also alleges that the
Erie Railway Company has created new mortgage
without proper advertisement in violation OF Its char
ter that tue present Board Of Directors has agreed TO
lease the Atlantic and Great Western Railroad an III
solvent concern producing enough net earnings 10
pay the amount of the annual interest required by
mortgages now existing upon said railroad; and
involve the Erie Railway Company in great
and continued loss; that sad Atlantic and Great
Western Company has purchased large amount OF
stock the Cleveland, Columbus, Cincinnati ana III
dianapol.s Railroad, aud has entered into obligations
for the raising money for such purposes, an opera
ton approved by the Erie Company which been in
volvea to ruiuous extent in the liabilities OF the At
lantc and Great Western Company; that deponent asks
therefore the OF the State for the benefit
Of the bona stockholders and creditors Of the Erie
COMPANY the dissolution Of the present Company, and
the organization OF a corporation free from the
present enormous load Of embarrassments. Such
course was pursued In lS5 and was for several years
source Of great advantage the holders Of the stock
ana bonds. Dcpouent believes tle same measure OF
advantage, If not even greater advantage would result
ACCOMMODATING this deposition ia the affidavit OF Mr.
Dunan the points OF which VIII be found below After
aprcminary conversation the dispositions for the plain
tfT were fled. Ex-Judge Shipman then read number
son. Mcssrs Little and HOusen, the examiners selected
from TIE Northern Central and Oswego Midland Rail
road; :. L. VI. Barlow, s. J.. Dodds, and LuCus Robin
SOD. None of the dispositions contained any specific
replies the charges made against the Company, all
being almost entirely confined the general statement
that the statements Of Mr. Angel and Mr.. Duuan were
malignant falsenOods.
The argument was opened by Mr.. Hin for the PLAIN
tf 20 general effect that tie Directors Of the Erie
Road had neglected their duty and had been guilty Of
such gross mismanaSement and violation OF law
that they should be removed. 1t was no
use TO say that they had been deceived,
or that Duuan had leagued with Gould
or other spectators, guilty of fasiiying
the record. He claimed that the Directors were person
ally liable for the immense sums lost through their mis-
management and negligence; that President Watson
was personally corrupt, and thar the Directors sat by
and let him he pleased while the road going TO
ruin in the embrace Of the Atlantic and Great Western
Mt Eyarts, for the Company, replied insisting first
that the alleged defect in the mortgage for want of
notice had whatever, and further that the
law required such notice; second, that the question
as to the dividends being properly declared did not be-
long to the jurisdiction Of the Attorney-General
and that the remedy only by private suit; further
that there was no foundation in fact for Dunans pre-
lenses that the dividends improperly declared.
He said the Directors acted honestly, shown by
the statements furnished b. DInan himself; and man
TO ask for the removal Of such men Gov. Nor
gan William Butler Duncan, aud the other Directors,
was altogether impudent aud wholly unwarrantable.
He insisted that the dividends in question we're de-
clared out of the net earnings Third, that II Angel
the Of any stock he bought the same on the
9TH OF June, two days after Dunans afHda-
Wit was made. and knew all he now knows. That he
bought IT, II it is his az ALL for the purpose OF bring
ing this suit and annoying the managers OF the Com
pany. Fourth that the purchase Of the Buffalo, New
York aud Erie Railroad stock perfectly legal,
tust1able and honest transaction. Fifth, that the
Bschofshem GOdschmidt matter and the purchase Of
coal lands were coneusiyey disposed of by the eyi
dence.
Judge FulertOn, for the Eric prosecution committee
replied claiming that tho revised statutes give the
power 10 proceed with this 70 the AtorneyGen-
eraL This is not question OF amount OF
property involved, small great, but whether
the law has been violated. Do the facts exsti
Does the necessity for action exist THIS proceeding is
a simple question Of information TO the Attorney
General. No matter whence the source sWhether
the newspapers, the streets, stock spectators in
good faith or bad faith, If the law has
been violated If public policy has been violated,
the complainant is entitled 70 redress. One Of our
greatest public evils is these great corporations They
must be punished If they violate :he law. This pro-
ceedlng will place the Erie Company a hrmer basis,
for it insures honest, economical management.
Judge Fullerton made the point against the Erie
Company that in buying the stock Of the Buffalo New
York and Erie Railroad for its notes, IN any other
way except by exchange and stock for stock
violated its charter The revised statutes expressly
provide against any such absorption. The notes are
stl outstanding, and no brought this fact 10
the attention Of the Attorney General The basis
of this charge Is Watsons affidavit, and
In making tho admission Watson says he
knowingly and wllfuly violated his duty.
The purchase of coal lands was also in violation of law