New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-02-01
COMFORT FOR EXPECTANT SHAREHOLDERS.
LILLE LAKE SHORE RAILWAY DIVIDEND NO LONGER

COMFORT FOR EXPECTANI SHAREHObDEho'
THE LAKE SHORE RAILWAY DIVIDEND NO LONGER
ENJoINED-DECIsIoN OF JUDGE TAPPEN.
The much talked-Of injunction restraining
the Lake Shore Railroad Company from paying the 81
per cent dividend due to-day dissolved on satur-
day. Judge Happen, in his opinion Introductory 10
the order denying the motion to continue the iuncop'
says:
Tie plaintiff has brought into court IN this action me
Lake Shore Railway "a corporation ana lts seveIa ~
rectors and the Unon Trust Company The drectOrsOl
the railway are the trustees OF the sharehoders au to
Unon Trust Company hold the s25OoO0OO MORTGAGE Ia
for those hOldbOnds which the mortgage was
given 10 secure or provide for IL VIII DC seeD, tueIe
fore, that al parties plaintiff and deiendant are poP
ery before the Court for the prosecution OF an acOn
proper he made out. And here we come 10
The consideration OF the pr9cpa act d
dvideOd to the shareholders, and the GROUND lor inc
OF this ACT 49, UrSs ns' snce
dividend and principally that Ine Gaecoc
the mortgage covenant to the accumulation OF the sink
ing Iuud, and that omission 40 TO apply JeOpaIaIes
the property OF the shareholders In the corporation D
exposing 1t TO the liability Of immediate seizure ana
sale II the facts established In the case DO not amount
to breach OF trust the Court will not be swift to
apply the remedy of Injunction and In the exercise
OF the JUDICIAL power OF the Court the uscIeOJ1
the directors have made good the sinking fund
nstament. as they claim, The painns chleI cause
paid such insallment, but in the condition IN
which the question Is left by the allegations ana
must be determined on the trial Of the action For the
purposes OF thi. motion 1t Will De assumed tnst tne
defendants proof establishes the fact in their favor In
referring to the Judicial power combined with inc as
cretOn OF the Court 1t Is proper further 10 say a tne
fact that the plaintiff acquired 200 shares OF the stock
days after the declaration OF the dividend ana
win full knowledge thereof - got TO be lost sght Oh
The other shareholders entitled to hOd the directors
10 the payment OF the dividend declared IL Is assign
able, and new rights may have been created tse,
and nothing should be permitted 10 deIeat that
payment but n strongly made case OF lmpIoyineht
action to amount to misapplcatlon OF tho
fund by such use 1t is Incumbent on palhuh coming
to make out prtnld fdcie case, ana soIe-
thing than the declaration and intended payment
dividend the existence OF unsatlsned mortgage
debts and the nonperormance OF special covenant III
support thereto Will be required. Several authorities
are cited the defendants the point that the Court
Will not exercise inGuislonal powers over corpora
This Is proper statement 81 the law Inc Court
will not undertake the management OF any corporation
No court equal to that task Any such attempt
might result in greater loss to the parties Interested
than would flow from refusal 10 Interfere.
But IN thus stating tue law II Will be understood that
Ito or transportation OF corporate or trust funds
Cumberland Coal Company agt. Sherman 80 Barb, 56D
and rcsra ned from committing clear excess OF cAdr
tered powers doing Illegal act to the prejudice or
shareholders cestui que trust bradshaw agt East
ern Counties, L. ", Hare ia; Maunders age. Com.
Bank % Penn, 379) Bat where there is no fraud or
clear OF chartered powers, and particularly
holders an Injunction has been refused. lord agt
Copper Miners Plat, 7n) An injunction has been re-
recOrs for purpose. Aud the Court has refused
10 enjoln o stock dividend, it appearing not TO DO
Uiowel agf Chicago aud Northwestern Railway, 90
~ " 378) Ia tins tle power to increase tho cap
tai VAS relied Justify aud legalz9 the stock diyl-
dend and the Court SAYS Ii does appear that any
fraudulent existed the part OF the directors IN
making the dividend" The powers or the Court are
further discussed ia Belmont against Erie Railway 81
Barbour 637 and the bona es Ot tho suitor also came
In question that case. do not discuss questions IN
tins which may more properly be presented al any
future stage OF the action, out governed by the appar
ent facts OF the on the notion conclude:
l. That declaration OF the dividend does not come
within the OF breach OF trust arising from mis-
application or a waste OF funds.
q That the directors power to declare ana pay dlV-
bends questioned and the exercise OF mat power
Will not be interiered with n the case now made; .
g. That the plaintiffs acquisition OF the stock after
such dividend was declared ana made known does not
prevent maintenance OF the action Tor the estaO-
shncn OF sUcA facts and the demand for such relief az
he advised; but that 10 does 20 to the question OF
enjOinin2 payment such dividend TO the otner ana
seemingy great body Of shareholders BY OF
these CONCLUSIONS and within tho rule that where the
whole equity Of the bill IL denied, your injunction VIII
not continued and the powers of the court should be
exercised with caution, elaboration, and sound dlscYe
ton. (BUsweil, 22l. 652
Tie motion to continue tho injunction pedehe hts -
denied