Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1885-10-10
hat She could but realize that litigation at that

that she could but realize that litigation at thai
tlme meant insolvency for her However yalu
aole her stock in the various corporations and
the bonds obtained under me dividend, might
| Teally be II she were able 10 hold them, they
knew that she could not hold them. but mus
surrender to pay her Indebtedness to themselves
at any price they chose fix for them or in Other
words, although ner property might posses
great yalpe, yet as no one would buy it or loan
! upon 1t, because it had no market value, and
also because its future value would depend
largely upon their future management, because
OF tne agreement between themselves to act to
gether therefore, she was completely at theil
mercy; that they did purchase at their OWL
terms, and within few months were able tC
Tsallze profit of many hundred per cent. upon
The trade. Notwithstanding her known distress
and inability to discharge Coton's Obligations
tney stood upon their cold lights as the alterna.
i've OF their offer, and counsel has used express.
slVe language when he says "'Tis Arctic
rights"
know, of course, that the situation may be
very diHeTenily stated, but / have sought tC
snow the eircum stances of alleged oppression
rs strongly for the plaintiff rs possible Now il
the legal positions assumed by counsel be in
ali respects sustained and the relation of the
parties held to be fiduciary it may be that these
circumstances would of themselves authorize a
leSelsslon of the contract but, unless there did
exist some such relation, cold rights are con
trolling matters in Courts of justice. 1t seems tC
me the simple question is, did they take
grossly oppressive and unfair advantages 81
hef necessities or distressa There was no weak
ness-at least no mental weakness-on the part
OF plaintiff. She did not rely upon the defend.
ants. She did not think she had a RIGHT 10
feiy upon them as her trustees and she knew
that the terms proposed were unfair and on
presslVe. she believed they were rObbing her.
hhe mad able and faithful advisers; there was
no coheeaAnent or lack OF disclosures, and no
Misrepresentation, save with reference to the
loo shares OF X. NJ c. & |. stock of which l
nave spoken. There were no threats which
g0ui9 or dlG induce her to execute the contract.
II becomes very necessary 10 inquire whether
mere was gross inadequacy OF consideration
Tor the compromise.
ADEQUACY OF TIE CONSIDERATION.
Here, as l have already had occasion several
Times 10 repeat, 1t IS very difficult TO Judge the
transaction. as should be done us matters then
STOOD ii IS very difficult to consider the cues
ton thoTt, 10 some extent, regarding it in The
llSnt OF after events. II requires great effort
70 place ourselves III the positions of the parties
then occupied. anc look upon the prospects md
possibilities and uncertainties as they did md
in reason must have regarded them We are
prone 10 hold the defendants responsible Tor the
gilt OF prophecy.
The properties are all of u class that are very
1uctuating and uncertain in their values. even
AFTER 2 marked value has been ascertaincd1y
actuai safes ms Is StTiklngiy shown here fIpm
the iact that Central Pacific stock at one tfIue
as shown by the evidence was selling at gIc & n
rate that the defendants could then apnarcrIt !,
have realized profit on the 2OGO0 shares.lf
Central alone, which belonged to Colton's estat >
after paying the note OF about three-quarterltf
n million OF dollars. Wilson, after making IN
qulrleS, concluded that if this stock were lion
soid, together with an equal amount of South
ern Pacific stock it would lack at least n half
million vi paying the note.
Before the trial closed il was stated in Cont
thai il was again selling at a rate which would
nave LEFT Il deficit on the note.
indeed, while the ease was on trial Junn o
1851, the plamtlH presented to the Court l,tr
affidavit to the effect that the defendants wfsre
on the BRINK OF insolvency, Notwithstanding
the great value attributed to t1est. spcuritiess
and without apparent reverse or disaster a.
eept the existence Of one of'th0,e panics which
seem almost periodically 10 couYuise the con-
But 1t Is interesting on this question of ado
quacy TO inquire how market was made for
these securities. The most important item III
this species OF property consisted of Southepr
Facnlc bonds. The PLAINTIFF claims they wera
worth @cents, because they were taken at that
rate by defendants themselves from themselves
TO pay their own debts to the sinking fund enI
because OK few sales now and then-at least
appaTently-on the stock board Yet few
weeks before COlton's death he consented to LET
the W. ID. Co offer Stanford 60 cents for the
three million dollars OF them. 1t is impossible
that they should have offered Stanford less than
market value If IL had any-or much less than
The value which the parties themselves deemed
then fair price.
II tAcfe hau been "a market value of 30 cents,
II would be equally absurd to suppose they
would have made The arrangement they did
with Speyer K Co.
There had been some talk with speyer & Co.
before the compromise about undertaking 10
sell these bonds but no definite arrangement
was made until long after. 1t was said that
Speyer " Co. stood so well with investors that
any security they undertake to sell finds pur-
ehasers.
The defendants had long been endeavoring to
induce TINS firm 10 undertake tire sale of these
bonds, but did not succeed until January Is.
1850, BY that time the new Constitution had
gone into opertion and confidence was restored.
AGREEMENT WITH sPEYER & co.
speyer & Co. then agreed to purchase one
million dollars of these bonds. But to induce
them to purchase the defendants gave them an
option OF nine millions more at higher fixed
rates. This option is shown by testimony of
the experts to have had Il market value of sew
eral hundred thousand dollars.
Defendants agreed not to sell for one year any
of these bonds TO any one except Speyer IL Co.
Also, to procure lease from the Central Pa
cihc for five years which should be extended
five years longer. unless in the meantime they
made connection betweenthe Southern Pacific
and the Eastern system of roads, and that the
rentals should continue To be sufficient to nay
better than the onerous conditions of this con
tract how difficult il was even in the improved
condition OF the times to sell these securities
Also, the Importance to defendants of an carly
completion of their projected system ofIailwavs
so as to connect with the Eastern system And
how much the value of what they then had
depended upon their ability to go on with
these schemes: and it illustrates the depend
ence of all the values upon the Central Pacifc.
And lastly. TO repeat, it proves conclusively
that at that time these Southern Pacific bonds
had not market value of so cents or even s.
cents on the dollar OF course the defendants
never were able to sell all the securities at the
rates they had been able 10 create for some of
them by carefully nursing and manipulating
hoy h.d
all. Their Golfers were full of them, and the
question was low many the market would
take ct Temunerative rates. And when
their bonds were all sold. it is fair to remember
particularly in view OF the guarantee which
formed part of the consideration OF the com
promise, that in certain sense they were but
their own paper. Under our law rs they
owned all the stock they were individually la
bic for all the bonds. OF course, if roads
We're wisely projected and built they may well
have been worth much more than the cost of
construction; but, neverthelessit was avery seri-
ouS matter 10 be compelled, in order to gain this
project. 10 guarantee, in the face OF threatened
competition, the success Of each one Of these
many railroad enterprises. But in what way
did the defendants use their position as Direct
o'S or truS eeS, to gain any advantage from or
over the plaintiff? They We're creditors OF the
estate. 1t was not unlawful or immoral to col
lect their debt From the fear that the debt
would be collected came all the fear of Wilson
That alone would involve tde estate in insol-
vency. The apprehcnsions of Wilson ana the
pltlltllt NiG tulfCAi LllGtI letiHe OF the
situation. No act OF the defendants induced
these fears unless the representations as TO
values may have lad that effect and that
matter I have sufficiently discussed There
was no threat in regard 10 the collection of the
noe.
DEFENDANTS Dir NOT ADVISE PLAINTIFF TO SELL.
The most thEt could be claimed on this score
from the evidence is that when told that she
could not meet the maturing obligations, thcy
still expressed q wish to have the debt paid
1t is said that II they permitted the mn-essiou
10 exist ana to have its weight. it is the same
in effect rs though caused by them In some
cases this may BE So but il cannot be SO here.
Mrs. Cotton III the beginning, aud before any
representation had been made or any cOntro-
versy arose, determined TO so ont. In this reso-
luton she and her counsel never waycred.
her out for a fixed sum, ami that She should be
free from all responsibility for Indebtedness or
complications. The defendants simply said
whether sincere ornof, Sc We don't wish 70 buy -
She and Wilson insisted. Whether the defend.
ants were sincere or not, what right had she 10
insist alter she had declined o. dcalf | cannot
see what difference it can make rs 10 the mo-
tive ii the conduct be unexplained. As a
matter OF fact they did just what they had
q right to do. They opened their books to
her, directed their employees TO afford every
aid They did not urge her to sell. They did
not represent to her that she ought 10 sell. On
the contrary. they advised her to retain her
property, and promised to DO the best they could
for her IL she would But l DO not zee where
the wrong would be if they had insisted that
their debt be paid. What was there in this re-
lation which could prevent them from insisting
that GDitOn's Obligation should be DISCHARGED p