The Grange advance. [volume] (Red Wing, Minn.) 1873-1877, 1875-05-18

E.1llI ~ - I!lI|lI ..1l| - ~ I 49,
that regard to an alarming extent. The
climate in this region is fast becoming q
purely arctic climate only two seasons,
winter and summer, and the summer a
short one. ~
Dutch Bondholder's Claim on the st.
Vincent Rails.
The New York papers of the 18th pub.
lish summaries Of the decision of the
Supreme Court in the suit Of Lucas
Weitgen and others against the St. Paula
Pacific Railroad Company. The plain
tiffs are bankers of Holland, who claim
to represent the bulk of the bondholders,
under $20,000,000 mortgage made by
the St. Paul and Pacific Railroad Com.
pany 70 three trustees. Of these
trustees the defendant, Moorhead, who
was member Of the American and Eng
lish firms Of Jay Cooke & Co., and Jay
Cooke, McCulloch & Co., was one,
and he was also construction agent
of the Company. With the pro.
ceeds Of the bonds large amount of
railroad iron was bought and shipped to
this country, and some is still in the store
of Woodruff & Robinson, who are parties
to this action. Another part is, we be-
lieve, stored on the docks at Duluth.
The plaintiffs brought suit against all
the parties to whom they could trace any
portion Of the iron, where it had not been
bought outright and paid for, claiming
that, as it was pledged to them, they had
right to follow it and its proceeds
into whatever hands they could find it..
They procured an injunction restraining
the defendants in the suit from parting
with such portion Of the iron or its pro-
ceeds as was in their hands. The chief
defendants appealed. The Court, as to
those who did appeal, sustains the injunc-
ton, but modifies it in some respects.
Judge Daniels, delivering the opinion
of the Court, holds that as the iron rails
were purchased and received for the con-
structing of the track of the railroad,
that is sufficient as between the company
and the bondholders to render the iron
subject to the mortgage, and gave the
plaintiffs a clear, equitable right to have
these rails devoted to the purpose for
which they had been purchased. He
holds that the authority given by the
directors to Moorhead to dispose Of the
property was in plain violation Of the
terms of the mortgage.
BY the confederation and collision of
the directors and the acting trustee,
Moorhead, whose duty it was to protect
the bondholders, the rails were DISPOSED
of to other persons for very large
sums, and there is no con.
vincing reason given that the
Company needed those large amounts.
Moorhead, as trustee of the bondhoIders,
undoubtedly had complete knowledge of
the contents Of the mortgage, and knew
the right of the bondholders to have IT,
iron applied to the constructic =
of the read, and, having tina: knowl:
edge, it invalidated the sales made to Jay
Cooke & Co., and to Cooke, McCulloch &
Co., because he was a member of both
those firms. That he did not actively par
ticipate in the management Of the bust
ness Of those firms can make no differ
encc.
As to the pledge of l,647 tons to the
Secretary of the Navy, the Judge holds
that the Secretary had right to deposit
as he did with Cooke, McCulloch & Co.,
and it was lawful and proper for him to
exact security for such moneys as he had
on deposit, but asst was taken in security
for precedent debt, he acquired no bet.
ter title than Jay Cooke & Co. had. As
to the other 4, 446 tons on which the Sec
rotary made an advance Of 100000, the
injunction cannot be modified un-
til it is shown that the London
firm has not greatly reduced
the advance. The act Of the Secretary
making the advance was lawful, although
plainly injudicious because Of the finan-
cial embarrassment in which the firm of
Cooke, McCulloch & Co. was involved.
The rights of Vibbard, Forte & Co., as
bona 6de purchasers. were lost when their
part of the iron was repurchased by
Cooke, McCulloch & Co., because the
wrongdoer is not allowed to profit by the
of another's bona fide title,
when it has been created by his own mis-.
conduct or breach Of trust. Whether
Jay Cooke & Co. have any right to be re.
paid their advances out of the proceeds Of
the iron depends on facts not yet fully
before the Court.
The orders for injunction are modified
as to the New York Guaranty and In
delnnity Company, which advanced mon
ey on part Of the iron in good faith, on
evidence from Moorhead that he had
right to dispose of it, and without notice,
or actual, Of the plaintiffs
equities. They therefore have right to
sell the iron pledged to them for their
REIN bursement, but if any balance should
remain beyond that, that balance, which
is pledged to the Secretary of the Navy.
must remain under the injunction.
Paymaster Cutler, who has taken the
place Of the Secretary Of the Navy, has
leave to apply for further modification
on proof that the 100000 advance or
any LARGE mart is still nnnaid