The Republican journal. [volume] (Belfast, Me.) 1829-current, 1886-01-21
The Meaning Of it.

To THE EDITOR OF THE JOURNAL: What
do our railroad directors mean? Are they acting
in good faith or otherwise? At their unani-
nous request a special meeting of the stock
holders was held last week, and yet when the
stockholders met not one of the directors had
a word to say as to the object of the meeting
or any explanation to give of their reasons for
calling it.
And their anxiety heretofore manifested to
follow the law strictly. and to do only what
they can legally dos this real or feigncd?
They recently asked the opinions of three
lawyers as to the meaning of late vote of the
I municipal officers mot deeming it necessary to
ask them what they meant.) and whether the
directors could legally adopt and enforce it.
But they don't ask the opinion of even one
lawyer-not even Mr.. Drummond-upon the
question whether they can legdUy withhold all
dividends for five wears and place the rental in
sinking fund to provide means to pay the
debt due in 1890 Are they afraid to ask Mr..
y. for his opinion? DO they fear that he would
being constrained by the decision of the
court in the suit they themselves brought-->ay
to follow the law, why do they not give effect
to that decision: When they went before the
court they said the company was not able to
decide whether il should pay a dividend to the
preferred stockholders OF three per cent. semi
annually, or retain the same is a sinking fund
to pay said debts" They also asked to be
allowed TO pay the money then in the treasury
II urI Il
the Court should order, and be discharged from
all responsibility" They said they then held
S10,S6G which they were ready to pay to the
parties legally entitled thereto. They also
said that the city claimed ''tha. all the rental
to accrue under the lease before the debts Shall
become due, will be required to pay interest
and the amount of said debts when they sever
ally mature; that no part Of said money Shall
he divided among either class Of stockholders,
but shall be kept to meet said debts when they
mature"
And the following is the reply of the court
to these requests. 1t is clear. it is not strange
they don't dare to ask legal advice as to the
meaning Of it, or as to the legality of their
present course. Let every intelligent and fair
minded citizen read it and decide whether these
directors are obeying it or not.
After full consideration of all the evidence
and theories presented 10 lis we incline to the
conclusion that the directors would he lustiii.
III refusing 10 make any further dividend until
enough money has been accumulated from the
rent ami the sinking fund to Fay the note to the
CITY U1 Belfast. " hen the COMPANY receives
the rent due III MAY. 1SS1. it will have money
enough with which to pay the note and few
thousands more.
here are quite significant reasons for draw
me Inc at the point indicated. The note may
We'll be considered is given for Temporary pur-
poses IN anticipation of rents receivable. The
company really has no credit which would
enable II to renew the note. ina>nuch as lis
outstanding mortgage covers all lis property.
II looks as though the note represents sort of
forced loan from the city and a> given for
money that could not have been obtained from
any other source. the city borrowing ii for the
purpose OF loanln@ it. being induced To do so on
account OF her Immense interest involved as IL
stockholdcT. She now asks for her money, be-
M unwilling to renew the note and She j. en-
Titled To It's payment. The corporation would
lllld 1t difficult to borrow it elsewhere 1t
would look like borrowing money to pay diVi-
dend>.
There are much more forcible reasons for the
corporation 10 hold its mOneved resources in
reserve until the note to the city is paid. than
there are for afterwards continuing the same
poiIty until the debt Of $50 900. due i'll 1890. is
paid. The two debts stand upon different
i"olihg The latter is bonded mortgage debt,
no part of which is due. and which undoubtedly
can he wholly or partially renewed when it be-
comes due 1t fairly represents a part Of the
Original cost ut constructing the road The
company has thirty-tiVe wears or more OF As
>ured rent with which ii can pay the amount.
II h;> no other debt. after paying the note to
tlt Guy, present on prospective. 1t has evident
y regarded that amount as a permanent or
standing interest bearing Indebtedness 10 re-
i"W the mortgage. or "A portion of it, when it
becomes due. We think would he regarded in
mercantile sense a. a reasonable. safe and con-
>eWaiNe calculation. The preferred stock
ioIderr We're to have e;iui-anula, dividends, If
earned. ineN should have them il they can be
discharged without the least peril TO the com
panl or any Of it> crcditor>.
After reading the foregoing extract from thc
opinion Of tht court 80 explicit and 50 control
Ling, can amy one honestly have any ,ioult H. 10
the action OF the court when it is asked to en-
force it decision: The court says the >toc,Irold-
er> should have dividends if they can be paid
without the least peril to the company OF any
of it, credtors.' and they declare explicitly
that this can be done. And the directors and
the municipal officers say the same. They say
that dividends can be paid without peril TO the
company or its creditors. They have declared
in favor Of, ana are ready to pay. pro RITA
dividcnds-which the court tells them they
can't do-and they refuse only TO declare the
dividends which the court says they can and
must make, because they say, in direct an
tagonism of the court, such dividends would
be expressing TO the non-prcferrcd stock. In
other words they refuse to declare dividends
simply and exclusively on account of the nom
preferred stock, and not because of "any peril
to the company or its creditors"
INQUIRER.