The New York herald., 1876-07-09
Argument in the Western Union
Telegraph Injunction Case.
RESISTING THE PAYMENT or THE NEXT DIVIDEND
Grounds Of the Company's Oppo.
sition to the Injunction.
Construction or the Statutes in
Regard to Larceny.
THE SUIT AGAINST GOVERNOR TILDEN

THE SUIT AGAINST GOVERNOR TILDEN.
Tho absorbing matter OF interest the courts res
ierday was the Western Union Telegraph injunction
Court Chambers, for argument the order TO show
cause why the injunction should not be made perma-
nent, the temporary injunction granted being
sIaining the company from paying The dividend an
nounced to be paid on tho 10Th inst Messrs j. NJ Gu,-
teau and Luther r. Marsh appeared behalf OF Mr.
Levi Dowley the complainant N The case and Messrs
&. Y. Lowery and George W. Soren represented the
telegraph company The whole and spirit OF the
controversy are best set forth IN tho principal papers
in tho case AS given below:
THE COMPLAINT.
The complaint OF the plaintiff, Levi A. Dowlcy, by
John NJ Gnteau his attorney, states that the Western
Union Telegraph Company. the Farmers Loan aud
Trust Company ana The Union Trust Company defend
ants in the case are corporations under the laws OF the
Stale oi New York, ana that the said the Farmers
Loan and Trust Company and also the Union Trust
Company the agents trustees, both, and have
the moneys or part thereof TO be used to dis
burse the same hereinafter mentioned the subject of
this action, tor said telegraph company and that tho
Western Union Telegraph Company owes 50, All 800
borrowed money. known as It's funded debt and se-
cured by It's bonds with the plcgc OF its property for
the paymen, thereof with interest and that tho
plaintiff The Of two OF said bonds each of the
denomination OF 81 oO0 bearing interest seven per
cent per annum, payable bali-yeary and dated May l.,
1878 becoming due IN the year 1900 The complainant
further states mat he rs the in good iath Of 200
shares OF the stock OF the Western Union Telegraph
Company On June 1867 he says certain officers OF the
company claiming the power 10 bind IL undertook to
and declare the earnings and receipts earned
and to be earned received aud TO he rccei cd during
the quarter ending June 80 1876 and declared certain
receipts TO be earnings which not earnings and
mado divers estimates believed by the plaintiff TO be
erroneous, and paced large sums Of money which the
company had before that time borrowed with the
items OF income, rs ,hc same were earn
irgs, and thereupon declared that the said
telegraph company had or would have as
cient money to pay qparterly dividend
upon the stock OF the company OF one and one half
per cent amounting to $500 72O when the COM
pany had not aud would not receive the sums requisite
as earnings TO pay said dividend or any part thereof
and resolved That the said divdend should be paid
the 18th day OF July 1876
The plaintiff charges that the sum Of $12h 900,
coived from the International Ocean Telegraph Com
pany, not a DIVIDEND but the proceeds OF sale
exchange e $499 900 worth OF preferred stock IN
said International Telegraph Company, upon which
was guaranteed an annual dividend of SIS, O00 Tor
equal amount OF common stock, upon winch dlvi-
dends payable or likely to be pad, which sale or
exchange parting with the assets OF said company
pledged for the payment OF the plaihtin's bonds
He also charges that instead OF paying or contracting
TO pay about 100000 in order to obtain
control OF tho southern and Atlantic Tele-
graph Company the Western Union has paid
or contracted to pay $32o,o0O Further, the complaint
shows on information and belief that owing to the
rivalry OF another company, the rates have been
materially cut down, IN some instances much Al
twenty-five nor ccntum thereby esscnipg the receipts
below the amount estimated for in the early part Of
June 1876 The amount OF $2 900 placed the report
of the telegraph company, the plaintiff claims very
much less than tho actual amount requisite Tor tho
construction reconstruction account; that the
average quarterly expenses tor The last
been about Sla9 $50 Tor each quarter He also charges
that the defendant has contracted for 100 miles OF
wire and requisite material and labor which will cost
the sum OF about 5000, 000 which sum Is not included
in said estimate, and that wncn said sums paid
there will remain nothing legally applicable TO the pay
Ihent OF said declared dIvidenI
WHEREFORE THE PLAINTIFF CHARGES
that the ,yment the 18th day OF July next II made
a. earnings, will be waste OF the assets OF the West
ern Union Telegraph Company aud violation OF the
rights OF the plaintiff. both as bondbodcr and an
owner OF tho shares Of SAID comrany, and would be
contrary to equity and good conscience. and would
rreparabe injury to this paintln nnd would be
company In that behalf; and therefore TO the
end that justice may DO done. the plaintiff
Western Union Telegraph Company ana that its officers
and agents. attorneys and lis co-defendants as the
truth, or disbrrsng agents who be intrusted
with tho money of the sa'd defendant or SAID
dividend or any part thereof, be restrained and
joined from the payment OF SAID dividend any part
thereof or OF any dividends whatsoever for said quar-
Ter and that reference may be had to ascertain the
true financial condition OF the said telegraph company
and the rights Of the paintin be protected the
premises, and that the said plaintiff may have such
other and fur her relief as to the Court may seem
mcc.
The complaint Is duty verified by Mr. Dowley In
his verihoaiion he says he stock holder and bond
holder OF the company ard that be has examined tho
printed reports ot said company and believes them
he genuine. and that tie statements his paint
as purportng to be from said reports, he believes
r.
ley also appears among the papers, but ,s little
than rciteraton OF the allegations in the Complaint
WILLIAM oRroS's AFFIDAVIT.
Various afidavils IN answer were submitted, but
that OF Mr. William Orion president of the company,
embodics all the points OF the defence He says that
far rs the compla laint and AFFIDAVIT OF the plaintiff
herein allcge, intended To alcgc to convey
the dea that the dividend declared by the directors OF
the company on the 7'h day OF June, 1876, rs not
represented by the actual net earnings OF
tho company Tor the period covered by said
dividend, the same are incorrect and untrue.
The TACT s he that The Western Union Telegraph
Compan rs now possession OF $500 720. when sun
remains to the company after the payment OF al! cx
pcnses OF the business by which sad money earned
and after payment ol the proporonate share Tor the
period covered by said dividend OF all accruing ndcbt
edncss The Western Union Telegraph company's in
debedncss is represented Wy bonds to the amount Of
So ~" lO, payable at long pcrodsto w.t. 81 COL l60
payable IN sterling money IN the year 1900 81 900 900
payable in currency, also In the 1900. which said
currency and sterling bonds are unsecured by any
pledge oi property, MS IL apparently intended 10 be
stated by the plaintiffs affidavit aud complaint and are
simply promises to pay upon the terms mentioned IN
said bonds, without any security; aud also
tho further sum OF sl.4ss,oOo OF bonds known
The 'Buding Bonds," which are specially secured
upon the real estate Of the company. situated at he
corner OF Broadway and Dcy street. Ia the city OF New
York which last mentioned bonds are the only indcbt-
edness Of the company IN any, way pledged Tor the
security Of sny OF ns Indebtedness. Except tie
bonded indebtedness above mentioned The company,
Mr. Orton says, Is wholly free from Indebtedness. hav
ing no floating ndebi cdncss not beng borrower of
money, and being cash buyer OF all supplies and poy
ing at regular short periods usually q month ali its
current expenses OF business.
The plaintiff, Levi A. Dowiey, the AFFIDAVIT says, is
not according to she stock books and rules aud by
laws OF the company stockbodcr therein, no stock
ever having been transferred to him upon the books
OF said company The company, goes on, us the
owner OF property, real and personal used by II 10 the
business OF teegraphine and including ~ s33 miles and
upward oi telegraph iinc and l7g 2I miles and
upward Of telegraph wire, which properly Is repre-
sented by = capital stock OF al 07s,4l0 OF which
stock the company owns by purchase Of the same In
the Market and Iayncnt therefor In cash
the amount OF about 81. $50 OUO, which stock
IL held It's treasury subject TO tho
use OF tho company whenever necessary, and
winch said stock the present market price thereof
nearly or quite sufficient 10 pay all the Indebtedness OF
the company OF every kind whatsoever besides other
conversipc assets not nccessa<y to the WORKING OF hc
companys lines or business, worth about 81 800 900
II IL not true that the defendants tho Farmers Loan
and Trust Company and the Union Trust Company. Or
either OF them, hold any moneys OF the defendant.
AhnM I'll H.