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

First That the million-dollar note was en-
titled TO credit Of $3.50 600 and hat all interest
on the same had been paid.
Second. That the Western Development
Company has divided twenty-one millions or
therea bouts in dividends and had on hand at
the time of Colton's death property worth
twenty millions, subject to an Indebtedness of
Sll ,316497 %.
Third That Immediately after the death of
Cotton the Pacific Improvement Company was
formed by the defendants for the express pur-
pose of superseding the Western Development
Company, and which, since the assignment to il
of the contracts etc, of that company has
earned twenty millions of dollars or thereabouts
from the business diverted from the Western
Development Company by the defendants BY
these acts the defendants sought TO deprive the
partnership OF such earnings and to depreciate
the assets of the corporation, and so to en-
barrass the plaintiff and defraud her.
Fourth. That the Western Development Com
pany was never insolyent, but had always been
prosperous.
Fifth. That her stocks and bonds were of
greater value than defendants had represented,
and that defendants had always known their
representations to be false. They had been ap-
praised much higher in the Hopkins estate, in
which appraisal the defendants had been con-
suited. This inventory had been retained by
the defendants. and she was not allowed 10 con-
suit it.
ALL BUSINESS ASSOCIATIONS TO SOME EXTENT
FIDUcIARY.
| Sixth. That Cotton did not hold the 4OS shares
of K. NJ. c. d |. Co.'S stock in trust for the de-
PENDANTS and Mark Hopkins, but that stock
! belonged wholly to Cotton and was worth Si0-
| 500.
Seventh That Cotton was not indebted at
! all to the r. NJ c. & /. Co. or to the W. d. Co.,
as defendants had charged, and had not appro-
priated any money from either corporation, and
such were created after Colton's death to coerce
| her into executing the contract.
Eighth. The exhibits of the condition of the
| Western Development Company were false and
untrue and the property undervalued by the
direction of the defendants to deceive the plain
! tiff as TO the true condition of her husband S
! affairs. These alleged misrepresentation,
| threats and discoveries contain all the charges
against the defendants, and upon such of these
as appear to be established she must recover, if
at all.
| Appended to the complaint are Ex. D and E.
| d contains list of the Interpretations or in
| debtedness charged against Cotton in favor of
| the Rocky Mountain Coal and Iron Company
and the Western Development Company. is
| a list of the assets of the Western Development
Company, with the values appended to each
| item.
Limiting our inquiries to the issues made in
| the pleadings or at least to such as both under
| stood, or ought to have understood, to be at
| issue, the inquiry which naturally suggests it.
| self first is: What relation did the parties to
| the aSsailed contract bear TO each other at the
| time it was executed? Were the individual de
| PENDANTS the trustees of the plaintiff and We're
| they charged with certain duties to her in those
| transactions which prevented their dealing as
| strangers, and the performance of which
would render the contract void at her option
| Ii seems to me quite obvious. to begin with that
| the relations between Cotton and his associates
| in regard TO the various enterprises inaugurated
| and carried on by them in pursuance, neces-
sarily, of agreed plans, and for definite purposes
were to some extent fiduciary.
| business association can hardly be imag-
| ined, the purpose and character OF which and
| the modes of carrying on which, implied and
necessitated greater degree of actual conf
| dence than that which evidently existed be-
tween Cotton and the individual defendants.
Certainly Elk. A does not state fully the purpose
of the contract then made, nor the character of
the services the parties to it were expected to
render. They agreed with each other that they
would all serve certain corporations, but they
did much more, and much more must have
been definitely understood by the parties when
they executed that contract Why should they
contract with each other that all should serve
certain corporations? How could they become
employers unless the corporations would en-
ploy them, or how could these individuals CON
tract for the corporations to the salaries to be
paid? Evidently they had agreed to cooperate
| with each other IN acquiring the control of the
corporations, and they agreed TO co-operate
| afterwards in their management This imnIiad
| accord, consultation, agreement in an obiecT tC
be accomplished, working with and for eseb
ployment, mutual agency Perhaps there was
no definite plan agreed upon in all its details
but there was evidently a system of roads for
the Pacllc coast and such transcontinental lines
as they might be able to control. In detail they
must have been indefinite, subject to fre0ueul
change and adjustment as all should agree
| from time 10 time.
GROWTH OF THE RAILROAD SYSTEM.
AT first of course, the Central Pacific and the
Southern Pacific were matters Of chief interest
and; perhaps, have continued TO be still. theS
are but parts of a system of roads which theI
have contemplated and have built and con
structed. Their projects have probably grow
with their enterprises, and been fred1entll
changed. Necessarily, they have been in con
slant consultation, and as each new schem,
was determined upon, each seemed to have haC
| his the work
party then decided for himself whether h,
would go into it. There seems to have been n,
power in the majority to commit any one to /,
project until he had approved it. The rule wa
as laid down in one of the letters-in what we az
we should all agree. They, therefore mus
have had at the time the contract was signet
on october D, 1874, some general idea of the en-
terprise they were embarking in, and each die
embark in the enterprise in the belief of IN,
Willingness of the others and in confidence of tn,
integrity and fidelity of each The adyantag,
gained or sought was cooperation and III,
essence of the contract and of the reln
ton was confidence and reliance uDol
each other Thus filling the very definition
OF trust, they formally agreed to give thei
| services TO certain corporations, but they evi
| IDENTIFY meant that they would assist eacl
other IN controlling and managing the corpora
tons IN such manner as would make the cor
porations serve themselves. But they eyidentl,
had plans beyond the scope of any existing cor
poratIons, and when they agreed to serve certain
corporations, named and unnamed they also in
tended to- create such new corporations las il
the course of events they should find necessar-
or deem advisable to the realization of III,
larger scheme which transcribed all the corpo
| ratlonS. The contract really meant that al
should assist in these designs. As Directors o
employees OF the corporations named in Exhibi
A. they could not organize other corporations
The Western Development Company owned
all the stock IN various other corporations bu
none of these other corporations were or coulf
nave been organized through its corporal,
action or by its stockholders acting as such
The parties, therefore, evidently intended Il
secure the co operation of all in matters enti7el,
beyond the province of any corporation TheI
agreed III effect to consult and conformity II
organize new corporations and to inaugurat,
new enterprises as they should all agree IL i
not OF cons equenee whether such an agreemen
! could have been enforced They voiuntaril,
acted upon it, and we are now concerned witt
the consequent relations. In the management
OF the completed roads also it was evidently i'm
Tended tnat the services rendered the particular
corporation should be different from those of I
mere employe of that corporation
Inc branch roads were to be run as such sub
ordinate to the principal-and it will be seen. OF
may De from this evidence, that leases wcr,
made and rentals fixed entirely in reference n
other matters than the value of the use of m,
road to either of the parties to the lease. Thu
one snort road which only earns during III,
| year the gross sum of about $4,000 is leased +,
the Central for $4,000 10 enable it to paw inter
est on ITS bonded Indebtedness. The characte
! OF the western Development Companv--thn fir
| corporation organized after Cotton Joined III,
defendants, and which was formed 6ecansa' W ~
ms accession, and took the place of the Contrac
and finance Company-further illustrates III,
relation of these parties.
FORMATION OF THE W. D. co.
1t was incorporated in December. 1874 for III.
declared purpose ''of carrying on the constrnc
: ton, manufacturing, mining mercantile mo
chanlcal, banking and commercial business !,
all Its branches, receiving deposits of mone,
ana ioalinS the same; purchasing holding an;
owning real property, improving and selling th
same the construction, leasing and operating a
! all kinds of public and private improvemenfs
such as railroads, wagon roads, bridges ferries
wharves, shuteS piers, telegraph lines canals
bitches for drainage, agricultural MINING navi
CATION or other purposes; buying and selling an,
constructing all kinds of public and prlvat
dwellings; buying and selling and dealing in nj
kinds of public and private stocks, bonds an,
! securities" N' CIV
The range Of powers in this corporation seem
to nave been made as large as possible that
might become, as near as a corporate nod,
: could, the universal factor of the parties eSsd
e1ated by the agreement of October. A. d IS7l
u does not represent, by any means. ali tba
that association evidently intended but il show
the great variety OF enterprises they then thoupb
l 1t possible they might engage in and that cor
poration, in enterprises or speculations wsst III,
one distinctly understood purpose of that asso
citation. '''O
, But as ii is claimed that this corporation wa
itself a partnership, nasquerading under n cor
2 porate mask, or if not partnership il was a
5 such character as at least would and did a
, itself constitute the stockholders trustees fo
each other, we Will examine it a little NOR