The New York herald., 1879-08-05
THE SPRAGUE LAWSUIT.

HOUSE.
BY TELEGRAPH TO THE HERALD.
NEWPORT II. L., August 4. 1879
very important decision rendered to-day in
the United States Circuit Court. 1t the long
looked for decision in the equity case of William 81
Hoyt of New York. versus Amasa Sprague ct al. and
Charles G.. Francklyn. of New York. ct al. versus
same. which was originally heard by Judge Shipley
and after his death by Judges sewell and Fox.
ALLEGED.
The plaintiffs the grandchildren Of William
Sprague, the elder. who was the junior partner i'll
the original firm OF A. W. sprague. They allege
in their brief that Fanny sprague. the widow of
Amasa Sprague the elder. who appointed ad-
ministratrx of her husbands estate upon his de-
cease. and Mary Sprague the widow OF William
Sprague the elder, who was appointed his admins
trarix, failed of administration. Moreover, they
allege that no settlement of tho accounts of the
original firm of A. * W. Sprague was ever procured
In the meantime however tho business of the original
firm carried on and extended by william Spraaue
the elder, who, in 1856. took into co-partnership
his son Byron and his nephews Amasa and Wilam
but after William, ST., died. i'll 1856. Byron, Amasa
and William. his son and nephews, still carried on
the business and in 1862 obtained charter author
izing them to form corporation under the name
of the A. & w. Sprague Manufacturing Company.
poration. with other acts which they name in their
brief was part of a scheme the part of the de-
PENDANTS keeping possession of the assets of the
original firm and preventing the plaintiffs from
coming into possession Of the property which is
rightfully theirs heirs OF William Sprague the
elder and it is in order to obtain the share which
William the elder had in the original firm that they
brought suit
NO SUPPORTING EVIDENCE.
The decision of the Court would fill nearly two
colsnns of the HERALD. The hardships of the case
on one side that the complanants should have lost
q large estate by bad investments not originally
made by them, and on the other that the creditors
of the manufacturing company should lose large
part of the property to which they gave credit were
brought the notice OF the Court by able counsel.
and as these considerations balanced each other
there the difficulty in considering the case
in its purely legal aspects. The Court decided
that it found no evidence to support the
numerous charges Of fraud, over persuasion of the
Administrative. &C., but that. on the contrary it was
clear that there had been of those not nfrequent
family arrangements by which property in trade
or manufacture has been kept together for the sup
port and benefit Of all concerned. 1t was the opin
ion of the judges that it was the probable purpose
of the compaluants grandfather, in forming the
partnership on his deathbed, to have the business
continued precisely as it had been continued. but.
out his wishes in q legal manner, the property OF
the complanants, while they were minors, could
not lawfully be kept in the business.
FRAUD APPARENT.
Numerous authorities cited to show that bill
could not be supported the charges were not main
tanned The Court did not understand that there
was absolute rule i'll equity that the bill should
be dismissed il the charges OF fraud were not
tanned, and it was the opinion that much of the
fraud charged was intended to be considered legal
| result of admitted lacts. The bill, and more
| espe cally the briefs and the arguments in
ftrfh To IN an n m
| onerous relation OF trust than WAS supported by
any authority cited by counsel or which they (the
| Judges) able to fnd Partners were quasi trus-
tees for each other both before and after dissou-
| ton and when one partner retired or became bank
rupt or died both parties or their Representatives
more than that they must account to each other III
icraty. Upon the death of William Sprague 1T was
.Guuty OF the surviving partners to pay to his ad-
ninistratrix the actual value of his share OF the
| joint property, when and as 1t might be
| realized by due vigilance and without undue
| sacrifice. They also decide that the administrative
had power settle with the surviving partners on
such terms as in the exercise good faith
to accept. The argument, therefore, that there is
| some specially legal mode of accounting was not
sustained. The administrator was the personal rep
resetative of the deceased partner and had all his
power of settlement except that being trustee for
| the next of kin. he can give away nothing. The
| charges OF fraud and concealment were not sus-
| tained nor was it true that both OF the referees
| were attorneys tor a. W. Sprague, they repre-
senting different interests and il was the opinion
of the Court that the share assigned tie guardian
was assigned with good iath and diligence. and
with full opportunity for investigation. ana was
| large as. larger than. the amount which a
court OF equity would have given.
APPOINTMENT OF GUARDIANS.
| The Court dwels at great length upon the law of
nations in regard to the appointment Of guardian
TOR nonresident minors. the latter residing Ill New
York. Mr.. Hoyt being at the time q member OF the
| now bankrupt house OF Hoyt, Sprngue n Co.
| law passed by the Rhode Island Legisla-
ture i'll 1868 which by implication excluded
certain stocks from being the proper subjects
of such investment. 1t passed to meet this
especial case, but had it passed at later period than
the general law then the Court would strongly IN
cline the opinion that it would be void AS making
special exception to general law. lhe settle
ment, therefore, was both lawful and honest; it
gave Il full share to the guardian, and the decd con-
veycd the corporation title free from trust to
account further 10 the compainants. In conclusion
the Court remarked that the fact was not without
Importance that the and disasters which have
brought the corporation to bankruptcy appear to
have happened long after the settlement OF lo65
in all probability after the youngest of the COM
painants came OF age. The bill charges the fault
to have been IN the management of the corporation.
in which each OF the complanants was an ownor
Tor more than six years after becoming sal ju,ts.
Defendants attribute the misfortune to the revuison
of business which occurred in 1873, but whichever
party right in respect to the causes of niisfor-
tune the Court thinks II very doubtful whether a
court of equity could permit stockholders to ex-
change their position Tor That Oh secured creaitors
under such circumstances. even II there were no
statute OF limitations in the case The Court there
fore dismissed the bill with costs
EfFEcr DECISION.
What effect the decision will have upon the gen.
eral creditors of the house OF A. W. Spraguc will
in this state and also liz New York where the greater
part of the paper OF the firm is held The decision
will enhance the value OF the paper, for whine the
suit pending it was hard work to dispose of 1t
a. any price. 1t sold as low as sixteen
cents, and 1t has gone beyond twenty-five
cents since the firm became embarrassed. The
plaintiffs in the above suit inherited onesixth of tue
immense estate hers at law, anu AZ IL was generally
conceded that they would gain what they desired
viz. the payment OF their claim in priority to all
Others and further that tho rate deed was effected
with trust in their favor. the paper depro lated
in value and the of the property unable
to dispose of II requested, tor the beneht of the
general creditors, he not being able to give n
clear title. 1t is evident that the tirm well
the creditors. who, for long time. rs
announced in the HERALD have been demand
ing their claims. Will be benefited by the uncx-
pectcd decision. The Spraguos through secret nts
purchased a large amount OF the paper while 1t was
selling at it's lowest figure. and they will be able
TO realize something handsome by tho transaction.
Other parties who purchased the stock will also be
benefited and there will be general rejoicing among
the great mass of creditors representing over
SS00O.OO0 of Indebtedness. The future movements
of the creditors, who have been endeavoring to OBJ