New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-12-28
TEI.EGRAPH LITIGATION.
,.,oa AND HATCH SUITS.


bers' w,lIiam Williams and Rufus Hs'ch against
oroush' " ,rr,on telegraph Company and Others Tho
the "o' -, vas brought restrain the company
u nov1ng any dividends upon the SoooV''V0O
:. ,oct issued in accordance with the eohsonu"uon
&c, Iudee Arnoux holds that the payment Oh ui'i
an that part Of the S3s 100000 OF STOCK lSsueo III
spt Of the corporate property OF the AnercSn
P". "a Atlantic and Pacific Telegraph Companies
-, M, n be enioned but that no DIVIDENDS can oe
nrv maid upon the $4,000 600 stock Issued 10 rep
-, the surplus earnings OF The western Chion OOln
- The Hatch suit was brought tc set aside the con-
oudation agreement OF 1881 monon was hlauo ou
s~aav "a revive the temporary injunction, when was
1900 nv Judce Trua1 in accordance wiki the spirit
-. recent decision Of the General TeruI Judge AT
-, holds that the injunction ought TO he reVNeu ~ d
NJ course far as 90 prevent the payment o any
.,v,deuds on the 600 STOCK lssued 70 represent
enc .prplus earnings OF the Western Union company
me- following is the text of the decision IN the Williams
sit; os ,.or
irst,on of the motion even though the opinion may
~ aTeUne-ts OF counsel. The defendant corporation
,hrough TIE other defendants. rs directors, on Dge
CON- On al the capttal stock OF said company paSaOe
on January - next The planln hi.o nS oii ANU on
Ja,ember gave legal NOTICE or TINS appIc9lOh "
~ day wheI this motion was noticed 10 De beaiu n
ln W. were first apprised the company Intended
a. 40 The Court Is not advised and cannot
wise different FROM the ordinary course pursued
Nv rms company IL anticipating ITS demands Nue ~
Ne money in It's treasury TO make such p2ymeR 1t
~ ~ To1ff would be loah to believe that boaIu oi
Director. embracing gentlemen OF lsh ,6 Crt
49, an example Of evasion OF the mandates o! jns our
ho, "a However hereafter he proven mat TINS aCIOu
ss ecn uuusua. aud has been induced oy Les W 'e
decision OF this Cour' on thls I,O.ou, y rseter
, dnd that they have assumed responsloil! etStel
than they now contemplate. Inc gu "a tbot tps
- ,,iou Will proceed upon the assumption tudl tHe
y5 ~ Directors Of the Western Union Coihpah! nave
ed liza awful and awandins spirit ana WIZ u1,yl
min the question submitted 1t upon the i"c's ana Tue
law appcahie theItto. ,. found creat q flculty I'm
mon tgrcment facts IN TIE course ci 'he gum ~ ~
separating tue facts presented 10y ine comp @ "a" m
0syits herein RON tuOse embraced IN the case uee'g
fore decided, IN which he p3utH HeIe'. vac a. ,n
and foF me purposes OF ms mClon' ~ 80 va me
f9c that M the IialcH case the motion 10 maui ~ le
oef-,n pcudiuR tue distinction IS comparatively IHHIf
1Co' % Ia5i,a~v 10 ISL he defendant corporation
entered lao contract Win TWO oiher te.esiat9 en-
patief b, which is capital stocS Wdo increased Iroh
siI6-34 lG f0 sS0OOOOOO and o. the increase So
0, 900 VA, pad IL the stockholders of tne American
Union Telegraph COMPANY, e54OOOJO 10 ':e s'och
holle- NJ tne Atlantic and Pauuc Telegraph ooinptl1
ana Sl5 5265gO was distrl0u.eI a. slge1 u'iIeIiU
amonr stOczhoiers MS e,oo $50 Il - 80 49,, u
b. Tie court to nave been .sSg Iss1cu o% pr+
tie question Of It's legal creation 20 og I Iea,g
after decided. For whether ms l. ,esai ''I ..
lGei While this decision stands 10 must DE- ssshmedto
vgrscd. .ud upon he OASIS tuIs 4ec.o-o' - ~.
Niue. was said anon the argument t'oet ,ie i1.H
uoA b.lue uou'' ga S 9yyn- III -,uou 10
4 Lot uee,-sdr, decide lbs question: OA .Ae It1
ff a me scTs Of tue defendant tueren complained Of
by the llaiutn we're tuly a4tAoEi1ea oy a", 4R I
couyuilu and an order vac made vacL ~ auu "ll.0
lis Tie temporary orteI o. II nucson tleieHPo Lte
o. lie Court and prior reversal Of me SAID u!s
peIt the tai number OF sIale, OF the cIp!t-.
80, n said COMPANY the issue Of which WAS 0y SAID
iufupot3n sought oe restrained vac "ln me e6ct
tT of 3out 400 shares ssued uy said company TO tIe
rs M NE at thereto aud sucn stock mas since be-
come vIde, distrlDn ed and has pa-sc MO lne uands
Oh v-rv arge number OF persons wuo have purchased
IL, sam, in reliance upon said 1ecisloA. $500,
II AL tAese purchasers 9Ods.t rely u4s upon sdu uoc
SION they lad -ctua and not constructive nouee Of s4e
action AMI therefore bought al tAeT peril Win ia.
knowledge Of the consequences OF !eEr4sS 20 ln.t
Tie consideration so stronsy uIred ID! lne
counsel the ,fec, g. al injunction uIon NE hLocsn
sar lcrs is destroyed 10y ms siadd7t II "eIe 10y
~. and decision IN oEsUIe 20 '-o IT M
10 le made eventually, me course OF WIsdom "Ou!u oe
10 make 20 the earliest possOe uOneuI IoI 'Ne 1u-tl
tnc time that Ella ses ana me Lore 'c - &c
suJ transfers 10 be made the uOIt Qleu 10 &c
iuste an max restitution, ana the LABOR or separating
Tie bad FROM tLe Ioo- VII ueveSa4l-5 -. y, 80 & ,t
w lind therefore that there s III THIS objection no scn
equty as VIII prevent the Court rom passing upon the
question before IT, Tue schuy4r case ana otneIs 'ae
have since Dee uecdtt ID lhe lou OF Appcas s.,
not parties tho action such al injunction should noi
b granted for tuey, not ocng Oound thereby "OuIS
tgcrcupou vcX and haTass this corporation Win mui
fipcity Of actions for their dyuenGs II such actions
were commenced, Jr u none AHd actu+lf Deeu U.F'H
in auticjpttou thereof the company could II al Olnl
bus bill which tue rights OF s several ttocAHuIueIs
Could ne &c ,oI,-V - 90 adg - .[y Tor mat tur
corporation was sbundantly aOc 10 make sood 10 MIN
In /. iury he might sustain. However sprcous this
nav seem Oh examination, Il "a not mrrercOus %,
iectlon Fer the corporation pays out lnls dividend
~ rn.sa v 40 nave II, legal ugnt receive IT, II thereby
Ir0 t4g'. becomes mp0T ersued and payment Of tae
H. sustained D, eaca slockholder TO Ens sti further
De letes the corporations treasury. The amount so
far "A lie plain N Is concerned Is insiMncan, but IN
liz total aggregate OeooEes exceedingly important
ne Judgment OF Genera Term " this court Is that
the IL j2G59O ISSUED 10 the stockholders wac Illegally
ISSUED and 0ad nothing to represent H. Inns
capacity Of the company. 4 was alleged 10
10 an accession Of the company property
had taken pace through IoLs term oil years IL
nd therefore. been source Of revenue wicA was IN
changed this respect oJ TINS stock dlNIGehu, Ih7
Court were unanimously % opinion lAt mo s'OeA nas
ILLEGALLY Issued u assent 10 ms decision, as thit
branch Of he court ls bound 70 49, N4et enycl mus Ge
given tuui Can We say IL ls true tHa' IL was cs-
EsueJ but ID give Al. the rights ana privileges q
rruliue Stocks IA.s would Do TO nu.liiy tAe decision
II Illegally Issued, this stock IL the eye u the
law, has no existence lis transmission from one
be- cannot yitaUze Il. Il acquires rights, even II
yauly created While n The ldEGs o. the corporation
specj the mat e. under consideration All tAe present
holders knew, according TO NJ Green that the speca
theTeOm they knew uat mere existed some difference
o. opinion among the JUDGES VINO composed tne cOutI
and they tnat the OIigial ORDER OIoadc the 4su
~ - T mai If lie in ipen of he -pscIaIr ,rm
were reversed. ana oiigL.I injunction OrUer rein
slated tney be deemed 10 be holders OF certificates
Of ,tck that had never been Issued Tn.s j. poe.
tou oay 3, thIs reversal stock must DC deemed
De un.ssutd and as such not entitled 10 participate III
Any dyldeud that might Gneredei have been declared
A. appears from the several opinions ~ the Court
tace was no. tie same unahnnty IA rerpect 10 ine
Otacr stock that there respecting Tie STOCK dividend
auOuu there was perfect heInOay 10 the conclusions
aud Judgment Ins part of the transaction was TO he
avoided because II Violated az express stature I'D one
oYAi0n, AID because was al msep%raDe part OF the
contract IA bOtJ OlulOns NOW, Eclt "Alsts an equity
Court take notice o. Inc property OF the
American Union aud OF the Atlantic and Pacific Com
Lanirs was la possession OF the Western Union Itlr-
Ilepa Company, anl was used ~ them IA earning the
proposed dividend Inc contract Of sale having
been fully contaminated, tEegciore, until The
Contract - wnoly Tesc nded AID the property
received by the defendant corporation 70
Restored former owners. tdrre is Natural equity
tat holders 81 that which represents ttat
property should receive the share OF the D. onte which
property had prcsumpVey earned In this respect
the vi the TRIAL court are imp UItInt that the
property u the Western Union Company worth is
capital ANA that he property acquired Was worth
the purchase price Ter each part were pro tdt0 OF
equal value, its dividend rng power equal The
fVtl0n for an injunction against he payment of any