Daily globe. [volume] (St. Paul, Minn.) 1878-1884, 1881-04-12
FRAUDULENT CONTRACT.
Decision of the Supreme Court of Inter-
est to Railroad Contract Manipulators.

Decision of the Supreme Court of Inter-
est to Railroad Contract Manipulators.
WASHINGTON, April lin the supreme
court to-day decision was made in the case
of Thos. Wardell, appellant, VS.. the Union
Pacific railroad company, ct al, appeal from
the circuit court of New York for the district
of Nebraska On the 10th of July Oliver
Ames, president of the Union Pacific railroad
company, acting by direction of the executive
committee of the board of directors, entered
into contract with Wardell and Others
by which the latter were empowered to occupy
and work, upon extremely favorable terms,
coal lands belonging to the company along
the whole line of the latter's road. Shortly
thereafter q stock company under the name OF
the Wyoming Coal and Mining Company,
was duly organized. with Wardell and num-
Der of directors of the Union Pacific company
as its leading stockholders, and to this cor
poraton Wardell transferred his interest. With.
out consideration, on the 18th of
March, 1874, the officers and agents of the
Union Pacific company seized the mines,
books, papers and personal property OF the
mining company and have held and used them
ever since. Warden sues under contract for
damages resulting from such seizure and from
the attempted abrogation of the contract.
The railroad company sets up as its main de-
fense that the contract was valid on account
of fraud; that it was executed for the
company by the executive committee
of its board of executors, the major
ity of whom by previous agreement were to
be equally interested in it; that for that reason
it's terms were made favorable to the con-
tractors, and SO unfavorable to the railroad
company as to enable the contractors to make
large gains at the railroad company's expense,
and that the organization of the Wyoming
Coal and Mining company was a mere device
to enable those directors to participate in the
profits of the contract, which, as agents of the
railroad company, they had executed, and
which as contractors they proposed to make
money out of.
This court holds that argument is hardly
necessary to show the utterly illegal and inde-
fensible character of this contract. 1t was q
scheme to enable the directors, who author
| lied 1t, to divide amongst themselves and the
contractors large sums of money which should
have been saved to the railroad company.
| All arrangements by the directors of the rail-
road company, by which new company was
formed as auxiliary to the original one, with
the understanding the directors of the orig
inal company, or some of them, shall take
stock in it, and then that the contracts shall be
given it in the profits of which the directors
| as stockholders of the new company shall
share, are so many unlawful schemes to en-
rich their promoters at the expense of the
stockholders and creditors of the original
company, and they will be condemned when
ever they are brought before the courts for
consideration. Complainant Wardell can de-
rive no benefit from q contract, tainted as this
| is with fraud, or sustain any claim against
the railroad company for its reparation. The
decree of the court below affirmed with costs.