The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1884-04-28
EMF KENNEDY'S RAILWAY.
A Transparent and Very Stupid Sham
on the Verge Of Dissolution.
The SO-CalIed Company Has No Legal Organ
izatiOn and No Board of Directors
Operations in California,
Ban Francisco Chronicle, April 2l.

pie ana Tor Jne people, Is Jne nlOSI transparent
and stupid. The Peoples Railway Company is
an Indianapolis organization, Emf Kennedy be-
ing its protector, promoter and president 1t
was organized in July, 1883, and filed its So
called articles of incorporation in alleged con
formity with the laws of Indiana. The project
contemplates the building of network of rail
roads all over the United States with the money
Of the people, who are at liberty to subscribe to
the stock at the rate of per cent of the par
value for the so-called first series. Emf Ken
nedy, president, has kindly undertaken to re
ceive the subscriptions and build the road, if
sufficient money shall be forthcoming.
These subscriptions are now being
licited and collected with the aid of So
called local boards, organized in places
where the anti-monopoly feeling is pronounced
enough to make people willing to subscribe to
anything that promises them relief. In this
manner 500, 900 has been collected, of the ex-
penditure of which there has been no account
ing. 1t is now attempted to put upon the
market 500, 000 900 in bonds ION faith and faith
alone" the company having no tangible property
except promises and Office furniture, and FOR the
protection of the public the true standing and
condition of the company and its president should
be known. The most important fact then, is
that the company never organized in con
formity with the laws of Indiana. It's articles of
incorporation do not state the amount of capital
subscribed by the incorporatorS, collectively or
individually, nor the number of directors con
shutting the Board of Directors, that it is
a company organized to construct, and
maintain railroad, the purpose of the company
being stated to be ''to organize system to Sc
cure uniformity in the manner of selling rail
way stocks and bonds, dividing them into de-
nominations that will reach the capital of the
producing public for the building equipping, or
buying railroads now built and forever owning
In its corporate name, and maintaining with
necessary appurtenances thereto complete
system of railroads by the people, etc." what
ever that may mean.
OF this company Emf Kennedy is the self
styled president, for as matter Of fact, although
a board of directors has been elected and denom-
mated in the incorporation articles, the board
has never elected president. As such presi-
dent, Mr., Kennedy has transacted the whole
business of the company. directly in the face of
the law of Indiana and the articles of incorpora
ton But worse than that, he has had, in these
illegal transactions, not even the support of the
board of directors Under the laws Of Indiana
the board is the governing body Of railroad
corporation. 1t alone can open subscription
books, make bylaws and manage and dispose of
the business affairs of the company. The board
as organized in indianapolis consisted almost
wholly OF Eastern men, and when Kennedy
came to this coast to commence building his
road, it was, Of course, impossible to bring the
board with him, Therefore the original board
OF directors have never met and no attempt was
made to bring them together until Sept %
1883. when five out of the thirteen members
obeyed a call. Five not being quorum, Ken
iedy, the selfelected president, cooy declared
she places of six directors vacant, and filing
their places, managed to get Il board Of eleven
which met and authorized him to issue $40 000
900 in bonds, at such rates as he should see fit
to place them.
AS brilliant as this financial coup appears on
its face, it becomes still more brilliant stroke
of managerial genius when considered in con
nection with the seventh clause of the charter
which places the responsibility of uttering these
bonds specifically in the hands of the board of
directors. This same clause restricts the bonds
to per cent interest, Notwithstanding which
fact the bonds, as they ready for SALE guaran-
tee 10 per cent year. 1t another brilliant
idea of president Kennedy to send messen
ger 70 England to negotiate them It cost him
s., 100 and, the messenger came back as we'll
supplied with the scrip when he left Next
the placing of the loan offered to the Safe
Deposit and Trust Company. Their attorney at
once discovered that the railroad company had
no legal existence no president, no board of di
rectors, no bylaws, no property, railroad no
franchise and not even "A contract-nothing ex-
cept the survey of few miles of an inlpracticable
route into the hills. OF course it declined to
stand sponsor for the bonds, Even then the bond
proposition was not abandoned. KENNEDY had
bonds printed in denominations of $50. payable
to the bearer at per cent. semi annual interest,
diil began 10 clICuldLe lnNltdtOnS Tor SuDSCllD
tons up to March % at half their par value
$25 for $50 bonds. 1t is not known whether he
has managed to sell any at that rate to the pco-
pie by the people and for the people. 1t might
perhaps, be considered that Kennedy not being
president all his acts are of themselves void and
illegal and that there is, therefore no further
occasion to show additional irregularities and
violations Of law. However, in view of the fact
that third parties, the shareholders of this
mythical company, Interested Il few addi-
tional facts may be stated Kennedy invites
them to subscribe and issues receipts which
under the law, only the board of directors can
issue He placed $50 shares at the rate of $:}2 80
taking So. 80 cash down. But evidently the sub
scriptions did not como in fast enough, and then
arose the practice to take part cash and
promissory note for the remainder thus giving
preference to those who could not be made to
yield up their hard earned coin in any other
manner,
1t did not dawn upon Kennedy until few
weeks ago that all his acts-his sales of stock
the expenditure of the money received the at
tempted issuance of the bonds--were illegal acts
and little short of obtaining money under false
pretenses, and that he in fact had not even the
authority of director the whole incorporation
difficulty which did not trouble him at all lie
called another meeting of the Board of Directors
and this time managed TO get three of the
thirteen named in the charter He had de-
terlnined TO do things well, and although he is
not president and has, therefore, no power to
appoint he did appoint ten additional directors
thereby surrounding himself with full board
The majority of these were California men,
all of whom had confidence in the enterprise
and had proved it by subscribing to the stock.
To them Kennedy submitted resolutions an
proving all his acts and giving him further
powers to do and manage as he pleased
Unluckily for himself but fortunately
for themselves, there were those among
them who demanded to know what they were
called upon to approve. They demanded fnan-
sial exhibit Kennedy refused TO give it, pro
testing that he blp TO have IL Dpa don,
short a notice, but he told them that the com
pany owed him $l2, 900. In return they refused
to approve his acts Further inquiries resulted
and it was then discovered that he not being
president. could not appoint directors; that tho
latter could not approve his actions, and that the
whole WIS but glltterinn hullhle rnaz l.,l1st