Los Angeles daily herald., 1889-07-01
The mi-TrOpic Land and
Water Company Sued.
1T Is FOR ONLY 100000.
Appeal to the People to Suspend
Judgment for Short
Time.

Semi-Tropic Land and Water Company,
plaintiffs, vs.. F. G. Howes, Geo. ID.
Bonebrake, Samuel Merrill and the
Semi-Tropic Land and Water Company
10 corporation), defendants.
The document filed Saturday in the
Superior Court comprises nearly forty
pages of closely writtsn legal cap, covered
with the regular lines of typewriter.
The counts are almost as numerous as
the pages.
The allegations are that upon the 10th
of October, 1885, Howes, Bonebrake and
Merrill made q contract with certain
parties to buy several tracts of land lying
below the mouth of Lytle Creek Canon,
near San Bernardino. One of theee
comprised 1856 acres. Another con-
tanned, net, 6, ,43S. 63 acres. The price to
be paid for the lands and water rights
was $45O, 900, of which $50 900 was cash
payment. In 1887, Howes, Bonebrake
and Merrill bought the Morse place, ad-
Joining the others, 2S9 acres. The plain
tiffs plead ignorance az to the price OF
said last uameG tract.
The Semi-Tropic Land and Water
COMPANY was organized February 16,
1887, with capital stock aggregating $3,-
600, 900. Its land holdings in all aggre-
gate about 28, 900 acres of land. On the
10th day of March, 1887, at meeting OF
the Board of Directors, was made pro-
position to sell to the stockholders of the
company some "a 900 acres of this prop
erty, taking in payment therefor 29,995
shares of the capital stock of the COM
pany, 10, 900 shares of which were to be
issued to s. B. Hunt as trustee, to be
held in trust by him as security that
Howes, Bonebrake and Merrill would
nav off at maturity the debts then exist
ing against the property. This PROPOSE
ton was accepted by the corporation,
and by deed dated April 16, 1887, the
three defendants conveyed to the coruo-
ration the lands above described. The
10000 shares of stock were issued to s..
B. Hunt, trustee, as provided.
It is then alleged, on information and
belief, that prior to August /. 1887, the
defendants sold more than $500 shares
of the capital stock of said company, all
of which shares were taken by the pur-
chasers on the understanding set forth
above as to the payment of the debts of
the corporation.
On the 18th day of August, 1887,
while the Board of Directors was COM
posed of Howes, Bonebrske, Merrill
and those who are alleged to have been
in the Board in the interest of these
three, said directors, disregarding the
interests of all other stockholders saving
and excepting Howes, Bonebrake and
Merrill, and for the purpose of defraud-
ing the others, sold to Howes, Bone
brake and Merrill, 111.23 acres of the
company's lands for $50 per acre, while
lands, of similar value in all respects,
were being sold for $500 per acre. IL is
alleged that the defendants had mean
time sold these lands to other parties for
$500 per acre.
Upon the 21st day of May, 1889, the
plaintiffs demanded that suit be brought
against these defendants to compel the
payment of the difference between $50
and $500 for said lands. This has not
been done.
Upon the 9th day of August, 1887, F.
C. Howes asked the Board Of Directors to
withdraw from the hands of S. B. Hunt,
the 10 900 shares of stock held by him
for the payment of the debts of the cor
poration. This stock was sold with 5000
other shares. to what is known as the
hku5db DfuulCdtCy III PtS. w pei
share, and that the proceeds of this sale
the debts of the company. The sale
amounted to $6SO,OO0; Howes, when
he made the sale, is alleged
Syndicate" that the proceeds of the sales
the trustees would be used as stipulated
a. k1A 1ahf 70 fo oil hot
the defendants received in actual cash
for such sale 100000, gold coin. The
balance was to be paid in annual Install
ments. The 100000 shares were de-
posted with s. B. Hunt and A. H.
Naftzger, to be delivered to the "Kansas
Syndicate" according to the above
agreement.
The defendants never have accounted
to the plaintiffs for the above 5000, 900
cash received for the eale of the stock
1t is also alleged that no part of this
money has ever been used to pay off the
corporation debts.
About the 10Th of October. 1887, the
sKansas Syndicate, having a ma jority
of the stock, elected the Board of Direct
ors in accord with their interests. 1t is
alleged that this Board of Directors, in
1915 900 to the defendants, and to avoid
paying Mr.. Pierce and others what was
due on the purchase price of the land,
and in order to relieve the defene ants to
this suit from this obligation, and for
the purpose of defrauding the other
stockholders, ON the 1st dAy OF June,
1888, executed and delivered to Pierce
and others promissory notes of the com
pany for said debt on the original price
of the lands. The obligations thus
assumed by the company aggregate
$273, ,441. .63. or $9.08 per share. For
negotiating this mortgage an attorneys
fee of $1,000 was paid, which is alleged
to have been illegal. The plaintiffs
allege that it was known to the defend
ants that the Kansas Syndicate would be
run after to pay the money due from
said syndicate, and that said syndicate
agreed with said defendants to relinquish
the money already paid by them and
get out Of the company, If defendants
would surrender the notes held against
the syndicate. The syndicate were to
get $4,000 worth of the lands
of the company. 1t is alleged that
this understanding was carried out.
The 10000 shares were to be sold to
defendants for $37 share. 1t is alleged
that the defendants fraudulently in
formed the stockholders that this trans-
action was perfectly legal, and thus the
measure was passed in meeting of the
stockholders. 1t is alleged that this sale
was not legal.
On the 10th day of June. 1889, the