The New York herald., 1877-10-12
THE COURTS.
Facts and Legal Conclusions in The Quick
silver Mining Company Suit
ARREST UNDER THE STILLWELL ACT.
Important Decision Touching the Rights
Of Tenants.
ARREST UNDER THE STILLWELL ACT.
CURIOUS BANK LITIGATION.


Supreme Court General Term IN tho suit OF George
L Kent va The Quicksilver Mining Company was
speedily withdrawn nfter having been given, and tho
result was that tho opinion OF Judge Daniels. cmbody
ing tho decision of the Court was very incompctcy
stated from second hand reports ts purpose AZ
on this account thero has boon considerable misap
prchonsion and doubt concerning the propositions
decided by the Court in this thcre Ia given below
synopsis OF tho opinion, from which u will appear
that although the Court decides that the company
not authorized by Its to preferred stock,
yet tho which voted for the ISSUE Of tho
Same, and upon tho faith OF which the money was
paid, debarred and ostopped equity from ques-
tionng contcsting tho legality OF such preference
sharcs
Judge Daniels opens his opinion by stating tho
facts OF tho case; that the plaintiff tho Of
common and preferred shares tho capital stock of
the Quicksilver Mining Company, Instituted this
action TO restrain tho issuing OF further shares OF pre-
fcrrcd stock; that the company was chartered by tho
Legislature of this Stato that In 1870 tho company
found itself embarrassed by debts ana tho want OF
funds, and being unable to borrow money to relieve
Its necessities that 1t proposed to its shareholders
plan for securing money by means o preferred Stock
which plan was TO substitute, In place OF common
shares to all who should advance So on o share Of
common stock; that this plan received the assent
and appreciation OF tho holders OF 1858 shares,
shares OF o460; that the advantages proposed
TO be secured to Inc OF preferred shares
the payment OF seven per cent interest annually from
tho 1st ot May 1870 the earnings of tho CON-
pany upon each share ana equal participation with
the common shares IN the residue Of yearly
iDgs; Tor tho purpose aording an opportunity
Tor the exchange OF the common into preferred shares
oco IN this city an closed by the Board Of Directors
whenever, In their opinion, the interests of tho
onsned y - 20 on ns
1870 the timo designated by the directors, and that
during that period AZ 9l3 shares OF common stock
surrendered and tho same number OF preferred shares
taken in their place on tho terms proposed by
the directors Tho opinion in further preliminary
explanation OF the facts proceeds TO state that Feb
ruary 70, 1874, at meeting Of the stockholders,
other resolution was adopted by vote OF ~ $50 CON-
mon TO 20 035 preferred shares extending hold
OF the 0S7 shares OF common stock the right 70
convert them into preferred shares for the OF $5
and interest thereon from February "a, 1870 to 10
paid upon each share that tho time Of the adop-
zion OF this resolution Tor the conversion OF tho residue
OF the shares the earnings of tho company had been
sufficient enable pay por cent IN tcrest
on the preferred stock already issued aud to a
dividend upon both classes Of stock; that 1t was
not proposed, however, to distribute these earn-
ings until after the holders OF the common
were secured an opportunity TO convert their
shares into preferred shares, and that to
prevent that privilege from being extended to them
this action was instituted Having thus made clear
Judge Daniels proceeds a. length TO discuss the legal
ity OF the action taken Dy tho company holding that
the same was In violation of its charter and citing
copous authorities in support Of this ruling. He thus
holds that the shareholders who consented tho
preferred snares might % Issued should pc precudod
by their own contract from denying thor binding
lidty, citing also various authorities this point
The opnl0n closes iollows-"IL has also been
urged IN the plaintiffs behalf that by closing tho books
the directors terminated tho authority gwen
by the assonting shnreowners 10 issue pre-
forrcd stock. Ana such to have boen tho
understanding OF the parties ut the time when tho pre-
terrcd shares issued; Tor the certificates con-
tuncd the statement that h, preferred stock Gu
tIlled to interest tho lst day OF May, 1871, and
annually thereafter to be pald out Of the
OF the company Tor each year. ut tho OF per
cent per annum, provided much In tho year pre-
cedng shall havo bcen earned. Should there remain
surplus OF earnings after payment OF the said
interest upon tho preferred stock then this surplus
shall be divided among the hOdcrs OF the preferred
anu common stock. 1hc agreement nas been plainly
stated here that the existing preferred mon
shall alone share In the surplus after paying the
interest the preferred shares issued
luton OF 1870. THAT could bo tho residue
OF tho common can itsuli st be changed into pre-
fcrred shares; Tor portion VI the earnings In that
event Will be applied 10 pay the interest the newly
Piled by way OF dividends those which
nave already acquired this preference and that would
be violation o the agreement stated IN the prefer
once certificates. Ii they were lawfully issued u
scquenty follows that the earnings agreed to be ap-
proprated 10 them by way of dividends cannot i
without violation oil the agreement be taken from
them and supplied by way OF interest other shares
aiterward promoted TO similar preference. NC
Laughn vs. Detroit Railroad Company, Mich, 100
The judgment recovered In tho restra ned the
company from creating other preferred shares and
from paying any OF its earnings any newly
issued preferred shares wnie tho plaintiff continued
TO be tho owner OF the common ana preferred shares
OF its stock. No direction given rs to how the
fund held as It's net earnings should be distributed.
and such direction required for the PURPOSE or
fully dispo.ing Of the appopl taken in this case. As
lar us the judgment extended clearly correct,
and IL shouid, therefore be Affirmed with costs"