The New Orleans bulletin. [volume] (New Orleans [La.]) 1874-1876, 1875-01-31
RAYS RECORD.

We re-publish below portion Of the opinion OF
the United States Supreme Court in the cele-
DRAFTED case of Jackson IS. Jno. r. Ludeling and
others.
| Inc passages given show what was the opinion
OF the Court as to the moral character of Ludel-
| ing and his associate, Ray,
After reciting the allegations of the complain
ants bill and the facts in connection with the sale
OF the railroad made by the sheriff of Ouachita
parish, at Monroe on February 9 1866, which
| show that the sheriff bid off the property to
branner Co. for $55O,(00 but set aside the ad
ludicatlon at the instance of John T. Ludellng
and his associates, and by their advice and coun-
sci, and that he afterwards at a second CRYING
sold 1t to Ludeng and associates for s55. O7O, the
Court say:
| AWere there nothing more in this case than ia
narrated by the brief history thus given, which
is uacontradicted, it would be difficult to charac.
| terlze the transaction as anything less than
great wrong perpetrated by the agency of legal
forms. The great body of the bondnolders could
have known nothing OF the proceeding to sell the
mortgaged property and discharge their lien.
Their residence was remote and the sale was
hurried as fast as the forms of law permitted.
| Not day was lost. They were not afforded an
| opportunity to attend and bid at the sale, or pay
| OFF Gordons small claim of s720. Neither they
| nor their trustee were consulted
| The sale was made in village far in the inte-
rlor. 1t was advertised in only one local news
paper, and not a day longer than the law
| required. farcical appraisement was made at
the last moment, obviously intended to facilitate
| nasty sale Tor nominal price. Onerous and
illegal conditions OF sale were eXacted from other
bidders, but not from these purchasers, who paid
nothing except to themselves. A property upon
which had been expended nearly two millions of
dollars, together with large stock subscription,
a large grant OF lands, and considerable movable
property, was bought for fifty thousand dollars
by the very persons G4udellng & Co.. who de-
ated sale for much larger price, and the
purchase money was retained by themselves.
The Court then goes ON to show what were the
relations in which many of the purchasers stood
to the mplainants The opinion declares them
to have been trustees, who are prohibited in
equity from destroying the value OF a security
belonging to those for whom they are trustees.
The language Of the Court is
When two or more persons have common in
terest IN a security, equity will not allow one of
them to appropriate it exclusively to himself or
impair Its worth to others Community Of inter-
est involves mutual obligation.
The opinion then declares that the defendants |
(Luoeling a. Co.. entered into combination,
1.-The object of which was to divest the railroad
company OF its property and obtain it for them
selves, at sacrifice, at the lowest price DOS
sible But they had no right to enter into such
a combination had no sight to seek their own
profit at the expense of the railroad company, its
stockholders, or even it's bond-holders Such
course was forbidden by their relation to the
company. 1t was their duty, to the extent of
their power, to secure for all those whose in
terests were in tueir charge, the highest possible
price for the property which could be obtained
for it at the Sherltfs lie. They could not, right
iully, place them selves in a position in which
their interests became adverse to those of either
the stockholders or bondholders."
This combination the Court characterzes |
as ga plain violation Of their duty-a breach of
the trust reposed in them and, if not an actual,
at least constructive fraud"
The agreement entered into by the defendants |
prior to the sale to purchase this railroad is then
considered and commented on thus:
It is impossible to characterize this agreement
as anything else than gross fraud. Its obvi-
GUS purpose was to remove competition at the |
sale. 1t fragrant breach of trust on the part
OF Horne tone Of the purchasers, and it was |
fraud in Ludeing, with knowledge of the trust
Horne had undertaken to persuade him to VIC |
late his instructions and sacrifice the interests of
his constituents himself becoming party to the
violation.
The conduct of the directors OF the railroad
company is then commented on. The Court say
they not only made no effort, lifted not hand to
prevent the sacrifice of the property in their
charge, but were found to be in the combination
as purchasers with and associates of Ludeling.
The language Of the Court is this:
Thus directors of the company, owing duties
to its stockholders and creditors not only COM
bined to obtain the company property for them
selves, at a sacrifice through the formaty of
judicial sale, but were active participants in sue
cessive efforts to defeat sale for 500 OOO in Or
der that they might become the purchasers for
$50 900. 1t is impossible to sustain such trans
action. Throughout it was grossly inequitable
That the property was sacrificed by means of
an unlawful and widespread combination, is
abundantly proved, and that the directors, who
were parties to it, and who became the purchasers,
guilty of an nexcusable violation of conf.
dence reposed in them admits of no doubt. Lude-
ling, it is true not director, but he was lead
ing member of the combination and its chief agent
to carry out it's plan. He knewits purposes He
knew its llegallty. He had negotiated the sur
render of Horne, with full knowledge of Horne's
breach of trust. He assumed the control Of
Gorcon's executory process, and, as we have
noticed, when told that Gordon had consented to
stay the sale, he declared that Gordon had no
power to do it. Indeed, Ludelng appears to have
had compete possession of the Sheriff.
The defendants take nothing from such
sals thus made. We're we to sustain it we should
sanction great moral and legal wrong, give
confidence reposed, and countenance combna-
tons to wrest, by the forms of law, from the I'M
informed and confding, their just rights.
The judgment of the Circuit Court must there
fore be reversed.
81 AM NOT AFRAID Shakespeare.