Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1885-10-10


stock. 1t all belonged to such persons as they
permitted to hold il and to no others. All were
their employees.
The dividends to such were undoubtedly I'M
derStood TO constitute extra compensation. This
was expressly so with Cotton who was told
ina. one hundred dollars per month was a suf-
nclent salary, because the stock would pay
Central.
Naturally, each would know what proportion
OF the whole stock he should hold The divi-
bends were monthly and generally were one
dollar for each share of stock
Al each dividend each would be reminded of
the number of shares he held. On the page
where each signed the receipt was also DISPLAYED
the number held by the others. There on the
same page, where each signed, il was shown
II the theory of the defendants he true the ev-
idence that Cotton had no more than his Just
proportion.
1t is not to be believed. either. that Cotton
would have risked this or the others over
looked it,
There were always some shares held by trus
tees, and II is suggested that Cotton kept por-
| ton concealed by being held by others
II IS evident. however, that the defendants
and Cotton assumed the right TO say who might
! become owners; that none held stock without
/ their permission. 1t is fair, therefore TO con
! clude that they knew who really owned the so
called outside stock. At all events they must
have known how much of this outside stock
they had permitted, and knowing his own
! holding, each knew or had the data for know
| ing, whether he had as much as no ought to
/ have had. They would not in al probability
| overlook so material a matter rs a disparity OF
two hundred and fifty shares to each
| The theory, then, OF this unequal holding is
| not admissible.
1 1t is too plain that they have divided among
themselves on different basis, which they re-
| cognized too often and acquiesced in TOO long
| 10 be now set aside on this showing.
| But that does not quite close out this question.
Alter the division in1ST3 Cotton purchased three
| hundred shares more from the estate OF Deuel.
| which he held undivided at the time of his
| death
Was this acquisition also subject 10 the con-
tract with Cotton that he should buy on jointac-
! count
AT the time of the division the entire stock OF
! the corporation had been purchased or was held
1 by parties who were expressly permitted 10 re-
tam the stock by defendants, and plaintiff con-
tends that under such circumstances the diviS-
| ION was final settlementupon tull performance
| OF That contract; all having been acquired there
was nothing further to be done.
! The stock which the five principal owners per-
United Others to retain is spoken of BY witnesses
| and counsel as stock outside the arrangement
| between Crocker and Cotton. Therefore, il is
| commended any one could buy up this stock and
hold Ii as outside stock to which the associates
| had no Claim. But certainly there is another
side to this. The stock paid a very large profit
| upon the cost. This came from the Central.
The defendants assumed all the time and Cotton
| assented to the claim, that they had Il right to
these profits, or to say who should share in the
GOOD lilllg- only their employees were allowed
thisprivilege. Deuel. was an emplOye but he died.
| Evidently 1t was not desired thar stock in this
practically close corporation should really pet
where they could not control 1t. 1t would then
not be within the reason of the permit to hold
outside for 1t would no longer serve their inter
ests to allow others 10 get the benefit OF it. and
they might be embarrassed by It.
| QUESTIONABLE LETTER OF coLroN's.
But if it were doubtful whether this stock was
purchased for joint account, the letters and acts
OF Cotton seem TO remove all doubt. At the
time of the division Cotton was negotiating for
its purchase, and confessedly for others as well
as for himself. The transaction, however was
not concluded until December p, 1873 On the
10th OF December Cotton wrote 70 Becman, who
was attending to the matter Tor him at Evans
ton, as follows:
"How are you getting along with the Cotton
stock matter with Frost? l hope he Will close il
up soon, as he agreed tn, so can get the matter
OIL my hands. / don want Ct uuO lying there
idle. What does he say in Justification of his
contract? reported to parties that I had
bought 1t, and part OF the money belongs to
them, and they begin to act as though there was
something wrong on my part, rs they can't get
the stock and have sent the money You and
know 1t is all right. but it places Inc iu a bad
position, having told them had bought and got
| their money"
It is suggested that this letter was evidently
written to hasten the business. and that plainly
some of its statements are untrue Defendants
do not claim to have furnished any Of the
money, and if they had, and were getting anx-
ious about it, they would never have permitted
| Cotton to retain the stock through any neglect
! to look after it. This view places Cotton in q
| very unenyiable light Few people would justi-
| ~ such positive nlsstatemeuIs. In regard to
the money, il IS ike many another uucE planned
matter III the case. il is not very positively
stated that any complaints had been made
about the matter by his associates. and this may
have been purely imaginary, tUt plainly this
letter affords sufficient grounds III the matter
which were before doubtful, 20 turn the scale
. against Cotton.
He had then three hundred shares, which he
ought to have divided. lie was of course en-
titled to retain one-fifth. This Left in lis hands
two hundred and forty shares which defendants
! and Mark Hopkins were entitled 70 demand
upon paying the cost price. They represented
to Mrs. cotton that they could claim four hun
dred ana eight shares and on that representa-
ton she assigned that numbero Of shares 10 them.
The difference is one hundred and sixty-eight
shares, said TO be worth par or $1,000.
Was this q misrepresentation, and has the
| plalntlH been mlsled to her injury The mis-
! representation, if any, cOpsisted III GrOckers
version of the agreement with Cotton that there
was TO be a disparity IN amount of stock held by
each. Computing with this as a. basis, Wilson
found, or they found and 50 represented, five
hundred and ten shares still undivided. De-
| Quoting ColtOn's fifth. there were left four hufe
dred and eight shares to which they had right.
This was clearly misrepresentation, whether
intentional or not. 1t was not true as applied to
the transaction, and was relied upon. IL is said
that Wilson knew all the facts and circumstances
upon which they based their claim, and there
fore was not misled but might have formed his
own opinion as to its validity. But a material
circumstance was the statement of Croker that
the rights of the parties with reference to the
stock depended upon this alleged contract with
Cotton under which he represented the stock
was acquired. In effect, we find this statement
was untrue. Certainly Wilson had q right to
rely upon this representation and lac did rely
upon II. Defendants, therefore, must be held
responsible for it, even though Wilson may have
had the data in his hand from which lie might
have discovered the impTobability OF the story.
THE CHARGES AGAINST COTTON.
I next propose TO notice, very briefly, the
charges against Cotton in connection with his
alleged Indebtedness to the Rocky Mountain
Coal and Iron Company. a very large portion
OF the time occupied by TINS long and tedious
trial has been devoted to the matter and there
has been manifested the greatest amount Of in
terest and feeling | pro. Ose because of the
lobViOus unpleasautness Of the subject, to saw as
little about the matter Us possible, ana yet pass
upon the issue raised.
1t is claimed by the plaintiff that the defend
ants represented to her that COltOaWls indebted
TO the Rocky Mountain Coal anI&fou Company
IN the sum OF elSl,SOO 80 Tor moneys which Col
ton had frauduently appropriated aud embez-
lied, and that Elk. d. is n correct copy of these
alleged liabilities of a similar character 10 the
Western Development Company Tor about $40 -
600. 1t is also averred that the defendants
threatened that unless their demands were COM
piled with they would attack the reputation of
Cotton and would disclose such facts, and bring
such charges against his honesty and integrity
as would blast his reputation and memory
This threat has reference to these charges of
ENLIGHTENMENT. She AYERS that since the COM
promise she has discovered that Cotton was not
So indebted. and had not embeszled the said
sum or any sum, and had not frauduleutly or
otherwise appropriated any money, and that the
claim OF defendants that he had was false and
simulated and created for the purpose of coerc-
ing her into an unfair settlement The plaintiff
says that these alleged threats to publish charges
against her husband, coupled with the fact that
lack of time to answer or disprCVe them was
the real cause of her accepting the terms
Afflicted and stunned as she then was by the
unexpected bereavement, she was ready to sac
rihce anything toprevent this charge from being
made public.
IL is well to note, preliminary, here that this
statement, Exhibit D, except the alleged indebt-
edness 20 the w. ID. CO. Is made mp entirely from
the books of the X. NJ. G. Il /. Co.
This company and these books had always
been under the special supervision of Cotton
one set of books was kept at the NINE in WyO-
ming Territory; another, and the principal
ones, at Coltons office in san Francisco.
The bookkeeper for the greater part of the
time at san Francisco was his brUther-iri-lay
brother of plaintif), and for the remaining
period his nephew.
He frequently had the books laid before him
for his personal inspection.
lie was president, manager and treasurer of
the company.
None of the defendants had ever seen the
( books prior to Colton's DEATH and they knew
very little OF the affairs of the COMPANY After
! Mr. Colton's death the books were Submitted
to an expert, and the charges in Exhibit D were
4 the result.
EXAMINATION OF THE COAL co2pAHY's BOOKS.
The expert was Mr.. Gum. who was an officer
q Va uFlfW aE