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

we place on the stand an expert. Now, what
must ne know to make him an expert? Why,
! simply what the securities have sold Tor, and
acquaintance with the market sufficient to en-
/ able him TO say that at a certain time they did
bring, or would, if offered probably have
brought so much.
These experts are not required to know any
thug OF the properties represented by the securi
ties. II is really fact TO which they are called
what did they sell for? 1t would require T,
| very different species of knowledge in an ex- !
pert TO tell what certain stock would bring |
II offered, it having no market value estab- |
/ lished.
! The elements which make up the value of |
railroad stocks are very numerous and uncer- |
tain In the best secured stock OF the kind there /
must necessarily be large margin of uncertain |
ty. When we have determined what the securi- /
ty ought to bring we all know that we are still /
far from knowing what it viii bring. II this |
We're determinabe quantity, stock gambling 4
would cease to be Synonymous with dealing in /
stocks. The evidence abundantly shows how /
delicate science the manipulation and hand /
ling of stocks and other railroad securities has 1
tecome, and how difficult the task of creating I
and maintaining market for il. The contract \
with the syndicate 10 sell the 5. Z. bonds proves
both that previously there had been no market |
tor the bonds, and how difficult it is to dispose I
of the securities, even with contract assuring |
the continued solyency of the securities, which /
seems almost like taking a bond of fate.
no MARKET VALUE FOR THE STOCKS OR BONDS |
In short, there being no market value for |
these stocks and bonds, any statement as TO |
value was necessarily 4 mere opinion And |
all the circumstances show that ii was so re |
garded- Why could not Wilson find out the |
values from some one else? of course, because /
they had no established market value, and when /
1t was said that no one knew except defend |
ants, as is still said and constantly repeated /
here during the trial, It must mean, not that |
there is any absolute value which they refuse |,
to communicate, but they are in a condition to |
form an opinion better than any one else IL |.
the word value had reference to the product |
iveness of the stock or the earnings OF the |
roads Wilson seems 10 have been fully informed |
on the subject. Nor did the plaintiff or Wilson |
accept or rely upon these values. Wilson'S |
memoranda, made during the negotiations |
show page after page of computations upon diff |
ferent bases
He says he regarded them as estimates. In !
fact, all the way through the controversy was |
over these values He regarded them as too |
low. These values meant the terms proposed /
| by The defendants. Wilson demanded more; !
ana, 10 enforce his views, always insisted thai !
the values were too low. And finally when |
IN despair, he communicates his fsiura ia 1
Mrs. Cotton, TO get better offer he saws /
they seem relentless immovableand inexoratle /
ana assume that they know values better than /
others.
By this he says he means that they stood upon |
their values, and therefore upon their Offer In |
other words, they stood relentlessly. i1nsnov- |
ably and ineXorably upon their values as a basis
OF settlement.
This was Wilson's complaint against tbem
II was what he attempted to move them from
IL was the very bone OF contention. Plaintiff |
Gld not rely upon them: 1t was her grievance |
that defendants would adhere to them.
But the compromise itself shows that II was
not made upon the basis of these Valuations
An additional consideration of 5000 600 in : p
bonds was paid, worth, according to the valua
ton in Exhibit Z, $40, OO0-as Cotton only had
one-nluth interest in the W. D. Company ii |
would imply an increased valuation of over one
million OF dollars, If we apply the increase to |
that company alone; and here certainly was the |
controversy, outside of the charges against col
ton. 10 which | have before alluded And in |
any event, this additional payment shows that
1t was a lump settlement and not made upon
any luea that they knew the exact balance |
Wnich ought to have been coming. or knew the |
value OF assets or amount of liabilities.
Here was raise at the last moment of more
than one million of dollars on the balance |
which it was claimed would be left afTer the |
liabilities were discharged or if il were n sIlr-
render OF a portion of their asserted claim |
against Cotton, the showing is equally import |
ant. one party claimed, in addition to the con- |
ceded property, one million of dollars; the |
other party Will give nothing A compr6mise |
was erected by paying SIN, 600 Could anything |
show more strikingly how the parties realized |
the uncertainties IN the transaction?
PLACING S. P. STOCK on THE MARKET.
In addition to these considerations. as shall |
have occasion TO show in another Connection |
the values or estimates in Exhibit E were pres
ent values if sale of the assets were necessary |
for immediate liquidation, and were merely /,
speculative /; and both parties at the time fnlly
understood that If they were able to hold them |
much larger price would, in all probability be
ultimately realized. Now it seems to me that
the three Exhibits Z, H. Douty and the invent
DRY OF property turned over 10 the Pacific I'm
NA~A-N
them, came as near showing all that the books
would disclose on the subject as could possibly
be got at. This is all that Wilson could have
understood them as purporting to show and as
already stated, no one could have been better
informed than Douty as to the probability that |
the showing was fair one. If l am correct in
my construction of the provisions of the code |
concerning trusts, there were no active duties |
due from the defendants to the plaintiff in con |
sequence OF any tdueiary relation, beyond that |
Oh NH disclosure ana fair dealing. They were
not bound to give her counsel or advice-nor
ike an attorney-at-law, were they bound to see
that their diligence was not surprised in their
service OF their beneficiary In other words if |
they informed the plaintiff of what they them
selves actually knew of material facts and af-
fordcd her other opportunities of investigation
such as they themselves had, they fully dis
charged their duty. But it is contended that
there were material facts known to the defend
ants which were not disclosed. Among these |
perhaps the most important is that they had
been negotiating with certain parties in New
YORK Tor the sale of the bonds of the Southern
Pacltc and the stock of the Central Pacific II
appears that 1t was left to Huntington to pro-
vide for the marketing of their securities II
was ms haDlt, as soon as an issue OF bonds was
provided Tor, to begin to talk up and TO prepa re
the market for them. Some of the S p bonds
had been sold in the market but in small o11an-
titles, and under such circumstances that in
the OPINION OF the experts, no market value was
established. Speyer IL Co. prominent dealers
there, had been spoken to about them and the
question OF their validity had been submitted to
u hrln OF attorneys who were usually consulted
by Speyer IL Co. There is some little doubt
whether this talk with Speyer & Co. was before
the compromise, but III all probability it was be-
lore No arrangement or contract Of any kind
had been made, however at the time of the
compromise. About i've months after the set
tiement a contract was made with Speyer & Co.
LOT iDe SAFE OF bonds to the amount of one
million OF dollars, with an option of nine
millions more, at price much above those set
out in tx. f. About the same time a syndicate
was formed for the sale OF G. F. stock at seventy
There is no averment in reference TO This mat
Ter IN the complaint, but on the trial defend
AM attention was called to the claim of plant-
IN IN reference to It.. Wilson says he had no
adequate idea of this contemplated arrange
ment. It does appear. however that Wilson
know that efforts We're then being made IN place
these securities on the market.
THE PLAINTIFF NOTIFIED.
He was distinctly Informed of this. under cir
cuInstanees which made it manifest that it was
not mere streettalk. Now there was, 50 far as
disclosed, nothing fixed, definite or certain
which they could have informed Wilson or the !
plaintiff OF. If Wilson had deemed the matter
OF Importance, he knew enough to put him
upon inquiry And apparently he did know
about all he could have been told. Fvery one
knew they would be sold as soon as q fair price |
could be obtained and this plainly taken
Tor granted, both by Wilson and Teyis They |
had then no contract, and but for the BOOM
as il has been called, probably would not have
had
Another matter, concerning which it is
claimed there was not n full disclosure is that
there was due the Western DEVELOPMENT Com |
pafy from the Northern Railway S6S7 coo for
work done, which they intended to allow and !
which was allowed within "A week after the
compromise, and 10 pay which the Northern ,
Railway ued Clio bonds of 81 600 each with |
back coupons sufficient to make up the amount
mere IS no evidence that this allowance was
contemplated al the time of the compromise |
but II tranSpired so soon after as to suggest it,
The Western Development Company had
built the road and turned ii over to the North
ern Railway Company. After the W D. Co had
practically gone out OF existence the roadbed
above Benicia sank. The Pacific improvement
Company filled the stump at IL cost of SIS 600 |
This was charged to the W. d. Co. on the idea,
presume, that the roadbed had been inner
fectly made, and therefore, that company mad
not completed the construction. 1t was charged
to the expense account of that supposed con |
tract. Proceedings were inaugurated after the
compromise to recover from the Northern Rail
way S6S7 900 for this expenditure of SIS 900
Douty, as President of the Western Development
Company, WAS ordered to write letter to the
President of the railway making the claim
The same authority requested W V Hunting
ton, President of the railway, to have the claim
allowed. The claim was allowed, of course |
and the bonds and coupons issued, the order
admitting thst the claim one of undoubted
merit. The officers of the corporations were all
really employees of the defendants aud |
the defendants and Mark Hopkins then owned
all the stoek-at least, practically. Regarding
this as really an allowance of a claim. il was
rnroflv