St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1889-09-14

the stockholders and bondholders OF the
First Division company by which the
directory was constituted in the interest of
the bondholders and IN March, 1876. Mr.
Farley took possession of these properties
as general manager for the company, tempo
rarily, at least controlled by the bondhold-
ers. The arrangement between the bond
holders and stockholders did not work out
as expected, and in October, 1875, the trus-
tees in the mortgages took possession, con-
tlnuing Mr.. Farley as general manager for
them. The agreement was made, according
TO complainant's testimony. curing the year
1876 and while he was in possession of the
st. Paul company's property as gen.
eral manager. Mr.. Farley was at
the time gentleman past sixty years
Of age, having spent most of his
active life in the state of Iowa, engaged part
OF the time in mercantile enterprises and
part in railroad business. Important trusts
had been placed in his hands, and he had so
managed these trusts as to win the conf
dence of those SO placing them. He was Sc
lected by Messrs. Kennedy q Co, who have
had experience in railroad matters
IN IN Iowa, to act as receiver OF
their selection was approved by the circuit
judge of this court, himself citizen of Iowa,
and doubtless familiar with Mr.. Farley's rep
utatlon. Now the agreement was, as claimed,
to purchase the outstanding bonds or ma
lorlty OF them, and, as complainant expresses
It, inherit the properties at the foreclosure
sales. 1t was Mr.. Farley's duty, as receiver,
not merely to preserve the property
in his hands, but to so manage it as to make
1t as productive as possible, and so realize as
much as possible for the bondholders. Is it
probable that man so situated, with his
years of experience in railroad foreclosures.
and owing such duty to the bondholders,
would enter into secret arrangement with
third parties for the purchase of the bonds,
an arrangement which made it for his inter-
est to reduce the market price OF the bonds?
Is it probable that such man
WOULD DELIBERATELY CLOUD
the record of his life and burden the dis
charge OF official duty with the adverse and
potent and ever-presslng weight of private
peeuniary interest? The question we are
now considering is not that of his present
testimony, but. standing back III the year
1876 could 1t then have easily been believed
that Mr.. Farley had entered into such con-
tract? Surprising the situations changed,
and in 1876 an effort had been made
to remove him from the reeeigership
on the testimony of two witnesses that
he had made such contract, he positively
denying the same, would not the court have
been SLOW to believe him guilty of such de-
reelection Of duty? Would not the presump-
ton OF innocence, strengthened by all the
weight OF long life OF probity, have borne
strongly in his favor? Is the probability any
less when it is he that affirms and another
that denies? Nor is this a case where some
merely technical rule is infringed. something
whose wrong only legal mind can perceive
The commonest intellect is not too dull to
perceive that such contract produces con-
slant conflict between duty and Driyate in
terests. Officially it was his duty to improve
the property and increase the value Of the
bonds: as proposed purchaser it was to his
interest to deteriorate the property and de-
crease the value of the bonds. So l affirm
that all the probabilities make against the
story of the contract
Again, looking further into the contract it
appears that complainant was TO furnish no
money and assume no pecuniary risk, all Of
N 1rrjch nA o,,6
Messrs. Hill and Kittson, his contribution be-
ing limited to advice information and assist
ance Now, the scheme was no trifie. and
could not be carried into effect without large
sums OF money. majority of S2S, 900, 600
OF bonds cannot be bought for song even il
they are sold at very large discount
In fact, the prices at which they were bought
ranged from 1874 to 70 per cent. Now it is
common experience that when undertak-
ings are entered into in which large sums of
money are needed, the men who furnish the
money and assume the pecuniary risks take
the lion share of the profits. and the one
who furnishes none must be very potent
factor IN carrying into success the undertak-
ing before he receives an equal share. And
here may well be quoted the exact language
used by the parties. as testified to by Mr..
Fisher:
MIR. Farley told Mr.. Kittson that he had
no money. He said: L have no money, Mr.
Kittson.' Mr.. Kittson said: 'We don't want
you to furnish any money Mr.: Hill says:
HOt IQ6n MI. HILL explained
how they would get the money. He went
over this thing again, about Mr.. Smith. his |
relations, ETC., with Mr.. Stephen, the presi- |
dent of the Bank of Montreal, and it was |
through that channel that they were going |
to get the money. Then Mr.. Kitttson says: |
We will furnish the money, Mr.. Farley. we |
don't want any money from you What we
want of you is your judgment and advice,
and we will attend to the rest of it, "
And to the same effect, though not so fully |
in detail is the testimony of the complainant |
himself. This leads us to inquire what, ac-
cordIng to compliments account was the |
consideration, and what were the induce
ments which led to this promise of an equal !
interest. It's claimed that complainant origi- |
mated the scheme; that he was possessed of |
information not belonging to defendants in
respect to the properties. their membranes.
the holders of the bonds, and the
prices at which they could be OBJ
tanned, and had means and facilities
for aiding in the negotiations not accessible |
to the defendants; that he had acquired
large reputation as railroad manager, which |
rendered his connection with the project one
of value. Both complainant and Mr.. Fisher
in their account of the various interviews
which led up to the agreement, and the one
in which the agreement was consummated,
pictured themselves as
ORIGINATING THE ENTERPRISE;
as first suggesting 1t to the defendants and |
the latter as having or pretending to have
their attention called for the first time to the
it that the defendants, realizing that he was |
the originator of the scheme felt themselves |
under sort of moral obligation to take him |
in as an equal partner. AS against this sug- |
gestion of reasons and considerations, the de- |
PENDANTS show by testimony independent of |
themselves, and which is net open to |
suspicion, that in 1873 and 1874. |
more than TWO years before complainant !
claims to have suggested the scheme Don |
aid A. Smith, the representative of the Hud- |
son Bay company's interests in this country |
anxious to have line of railroad extended |
northward and in the direction of his COM |
panyS property. had his attention called to |
this incomplete line from ST. Paul northward |
toward that property; that at his instance |
Messrs. Hill and Kittson made investigations |
as to the situation Of the railroad, its |
prospects and membranes, and that |
the acquisition Of this property was
by them matter of consultation and |
consideration in connection with Donald A. |
Smith couple of years before, as com
plainant says, he suggested the matter. 1t is
not pretended that during these years any |
definite scheme as to the acquisition of this |
property was determined between these par
ties. and for that matter complainant does
not pretend that in the interviews between |
himself and defendants definite plan of &C
QUESTION was determined upon, but simply |
that the bonds were to be acquired and the |
purchasers to inherit the property at the
foreclosure sale 1t is strange that
the defendants, who for two years had been
considering the matter and had awaited
themselves Of the opportunities furnished by |
the records Of the courts to ascertain the |
amount of the encumbrances, the residence |
of the Dutch committee and the number of
bonds held by it; whose business relations in
a transportation way with the railroads
enabled them to become fully acquainted |
with their condition; and whose attention
had been directed to them by one who had
manifest interest as the representative of the
Hudson Bay company, should pretend to be-
as complainant and Mr. Fisher assert en- |
tirely ignorant and act as though the sug-
gestion was then first made to them They
certainly were not ignorant of the situation,
and it is hard to believe that they pretended
to be. Neither is any matter shown by
complainant of which he had knowledge
which was not matter OF public knowledge
through the records of the courts, and easily |
ascertainable from those records and bond
transactions and reports at bank, whose
cashier was, of Hill, a special and intimate
friend To think for a moment that the
picture drawn by the complainant of the
magnificent scheme first unfolded be-
fore the astonished eyes of the de-
PENDANTS the acquisition of the bonds,
and through them Of the railroad
nrOnprfv in view 0f the