The Findlay Jeffersonian. [volume] (Findlay, Hancock County, Ohio) 1870-1881, 1876-07-14

new OondS. when sne purchasing COM
Inittee had been compensated for their
services. the final settlement had been
made with the counsel, and the printed
pamphlet was put out, containing the
whole history of the reorganization and
the full statement in detail of the ac-
counts OF the purchasing committee,
this surplus of bonds is acknowledged
in the hands of the purchasing COM
mittee. These bonds, it is apparent,
should at that time have been cancel
led or placed in possession of the new
corporation for their use, since the
limit of the power of the purchasing
committee to disburse them was con-
tanned in the recognizing agreement by
virtue Of which they existed as trustees,
and every demand upon the bonds
which would arise from the reorgan-
izing agreement had been actually dis
charged.
The only subsequent mention of
this surplus of bonds appears in the
annual statement made by the Execu-
tive Committee to the stockholders of
the company, dated March, 1864, in
which the following mention of them
is made:
LIN the final adjustment with the
purchasing committee, of all Outstand-
ing liabilities of the old company.
which by the terms of the bondholders'
agreement for a reorganization, were
to be paid in first and second mortgage
bonds, it is probable that about S100,
900 of the first mortgage, $50, 900 of
the second preferred, and S3S, 900 of
the income bonds, may not be required
and may be ultimately cancelledp
1.-TWO of the three members of the
Executive Committee were also mem
bers of the purchasing committee.
1.-The only other fact we have been
able to ascertain with regard to them
is, that by examining the coupon ac-
count of the company contained in the
annual statement as early as 1866, they
appear to have been all issued and to
be outstandingas as a liability upon the
company, without any apparent ex-
planation appearing in the published
statements or accounts of the conf
pany. These facts were called to the
attention of the Board of Directors
to, the President being in the chair,
and requested an explanation of these
facts which might be within their
knowledge, and particularly from the
President, who was familiar with the
details of the organization. The an
swer which was received by us from
the President was that this corporation
had nothing to do with that surplus OF
bonds, and the committee were refer
red to Mr.. Samuel j. Tilden for de-
tailed explanation of the whole matter
ON returning to the city, We learned
that Mr.. Tilden had sailed for Europe;
and we, therefore, called upon MIR.
Butler for such explanation as he de-
sired to make, either as to what, in
fact, had become of the bonds, or what
in law, was the nature of the claim
under which they had been disposed
of, or distributed2 He informed us
that in MFR. Tilden's absence he declined
TO take the responsibility of making
any statement with regard to them.
He stated that it might be assumed
that the purchasing committee claimed
that the bonds left over after the reor-
ganization belonged to them personal
ly; but he would make no statement as
to what disposition was actually made
of themin this case. The claim that
the surplus bonds belonged to the
purchasing committee is considered by
us so absured, in view of the facts, as
to require no comment"
THR CHARTER VIOLATED.
The facts above reeited taken UeTbdt-
nm Il LjteT0tItBI from the report of this
committee, arr certainly damaging to
Mr.. Tilien and his purchasing com
mittae; but they do not embrace all
tie charges which tine committee had
to make Further ON i'm their report
they tell the story of a violation of tine
charter, which it is best to give i'll
their own words, and which runs as
follows:
EQUIPMENT BONDS
"The last matter to which he called
the attention of the board was with
reference to the $500, 900 10 per cent.
equipment mortgage bonds issued in
1870, and sold by the Directors in that
year 9l. n reference to the charter
of the company shows that this was in
direct violation of its spacific provis-
ions with regard to the issue of the
mortgage bonds. The charter pro-
vides:
"'And the said corporation may
make and issue its bonds, of not less
denomination than Sl00 each, payable
at such time and place, and bearing
such rates of interest, not exceeding
seven per cent per annum. payable
semi-annually at such place or places
as it may deem expedient; and may
hypOthecate or sell such bond within
or without this State, when issued, to
raise or borrow money at n price not
less than so cents on the dollar, and all
other bOIlds 20 be issued shall be sold or
ereianged at par
''Phgt is tO say, all the bonds which
the company could issue under its
charter must be seven per cent. bonds,
or must be sold at par, one or the
other.
''These equipment bonds, bearing
interest at 10 per cent, could not be
sold under the charter. therefore
at less than par, IL would seem, there
fore, to be the duty of the Directors of
the company, who had issued these
bonds in violation of the charter,
either TO see to it that they were re-
dueed TO II seven per cent. bond, or
that the difference between 81 and
par, with interest at 10 per cent. per
annum, since 1870, should be returned
TO the treasury of the company. This
claim, amounting at this time TO about
80, GOO, seemed a proper claim for the
stockholders to make upon the Direc-
tors of the company, inasmuch as the
stockholders were not consulted with
reference 10 the issue of that bond,
the Directors having themselves as
sumed the responsibility of it.
TIE RIGHTS OF THE PREFERRED STOCK
HOLDERS VIOLATED.
Further on in the report of the com
mittee are to be found the following
grave charges of a violation of the
rights of the preferred stockholders:
''In that connection we called the at
tention of the board to the improperly
and illegality of WHICH they were guilty,
in recognizing the coupons upon these
bonds as lien upon the earnings OF
the company, prior to the dividend up
on the preferred stock Since lo1O,
when these bonds were issued, the
coupons have been regularly paid; but
no cash dividends have been paid upon
the preferred stock, which is in direct
violation of the contract contained in
the second mortgage Of this company,
which secured the priorities of the
second mortgage bonds of the prefer
red stock.
The provision in the mortgage is In
these words
Nor shall any deed of trust or mort
gage creating a lien upon the property
herein before described, in priority to
the rights OF tine holder of the said
preferred capital stock, ever be made
l.. .I.l. ...iI u Inrris Alton a Terra