The Somerset herald. [volume] (Somerset, Pa.) 1870-1936, 1886-01-20

considered all the arguments so ably ad
II vanced in support Of this theory. but "
! cannot avoid coming to the conclusion that
as argued for the Commonwealth, the Penn
sylvania Railroad Company is the real par
ty in the transaction. This is clearly showr
by the testimony of Mr.. Morgan, and Mr.
Roberts Morgan testifies that on his sng
gesting to Mr.. Roberts that "the thing could
be carried through ifthe Pennsylvania Rail
road Company was prepared to give bsnds
bearing per cent interest for the amount
paid in on the South Pennsylvania subscrip-
tions." Mr.. Roberts doubted the policy or
the ability Of the Pennsylvania Railroad
, Company, as such, to buy OFF or in any way
TO interfere with what might be rival roads y
whereupon Morgan suggested that there
were plenty of corporations that would do it
and that would work in harmony with the
Pennsylvania" And again he says THE
only thing that was stipulated was that the
security that should be given to the sub
scribers should bear the absolute guarantee
of the Pennsylvania railroad company. As
to what company it came from or anything
OF the kind. that was of course immaterial."
And again II addressed Mr. Roberts be-
canse was acting in harmony in trying TO
get this road out of the way of the Pennsyl-
vania railroad company. 1t was the Penn
sylvania Railroad that was comp mplaining of
the construction of the road" and he assert
ed in the statement that the negotiations
were based on this idea. And Mr.. Roberts
states frankly that they came to talk about
the Pennsylvan Company in this negotia-
ton, simply because the character of the
securities and the condition of the South
Penn road were such that it would, in all
probability be beyond the chartered powers
of the Pennsylvania Railroad Company to
build it, or to purchase the securities
9 ." And be answered in the affirmative
without comment or explanation the fol-
lowing question of the Attorney General.
Therefore, as understand you, the Pennsyl
vania railroad company was the party to
this negotiation, but so far as the details of
carrying il out were concerned, and to be
within the law, you were to use the name
of the Pennsylvania Company, or any other
company that you were connected with
that you might be able to do +? And he fur
ther says that, 'ior all purposes of the trans
actions that were then going on, or discus
to assume that was president OF, and being
eonversed with as Presidento of, the Pennsyl-
yania Railroad Company" And, as we
have already seen, in the letter of AUGUST 8, |
signed by him as President of the Pennsyl-
vania Company, he contracts on behalf of
the Pennsylvania Railroad Company that
the bonds to be delivered shall bear its guar
anty, and that if the principal of the bonds
should mature. it will replace them OF at its
option pay them in cash these being the
only two clauses in the contract which in
volved the giving of anything of value.
In view of this plain and candid state
ment of the real facts of the case, by the
parties themselves, it is impossible, as we
have already said, to draw any other infer
erce than that the real party contracting |
and stipulating for the control of the South |
Pennsylvania Railroad Company was the
Pennsylvania Railroad Company and that |
any title to any stock or securities intended |
to be held in the name of the Pennsy ylyaniat
company was to be mere naked legal title, |
to be held in trust. In other words, that
the PENNSYLVANIA railroad company intend
ed to do, in fact what it feared, was forbid
den by law to do, and therefore attempted
to give the transaction the appearance, in
the eye ofthe law, of being other than it real
ly was. This, of course. cannot prevail in
court of equity, whick looks at substance
without being controlled by form.
PROHIBITED BY THE CONSTITUTION.
1t is further strenuously urged, on behalf
of defendants that even if the Pennsylvania
railroad company be the real party to the
contract, il has not done or stipulated for
anything prohibited by the constitution, for
thereason that the purchase of the stock of
a parallel or competing line is not among
the things prohibited; and the case of Pull
mans Palace Car Company VS.. Missouri Pa
cific Railway Company, recently decided by
the Supreme Court of the United States, and
not yet reported is cited to sustain the prop
osition that the ownership of the stick of a
corporation does not give control of the cor
poration.
We have carefully considered the opinion
delivered in that case, which although not
of binding authority upon the State Courts,
because not deciding Federal question, Is
yet in view of its source, entitled to the
highest respect. But We do not think it sus-
tans the position contended for. The de-
cisien of the question of control was not
called for in the case which was already de-
cided on another and fundamental point
But waving this, the point decided is, {
merely, that the ownership of the stock I
does not necessarily give control of the road. ]
The Chief Justice SAYS, speaking of the
company :--"Practically. it
may control the company, but the company /.
alone controls its road" This distinction 4,
seems very narrow. but it is certainly in '
volved in the conclusion reached. which c
cannot stand unless it is recognized, For a
il is too plain to bear argument that the
ownership of the stock of a corporation car .
ries with it the control Of the corporation. ;
this is merely different way ofstat- 6
ing the truism that a corporation is controll- o
ed by its stockholders That they do it
through the agency Of a board of directors
and other officers does not alter the fact .
All this was well understood by Mr.. Roberts, /,
rs is shown by the stipulation that the cap +
ta1 ctr tol lo .ol eloI L. olo l.
10 insure the control of the corporation of !
he South Pennsylvania railroad company"
and the intention to control is shown by
he condition in the contract that the things
% be assigned were "the securities and con-
racts and control of the South Pennsylvan-
a railroad enterprise :" and the further con-
iition that the assignment of the securities !