The Daily bulletin. [volume] (Honolulu [Hawaii]) 1882-1895, 1890-11-19
THE SUGAR TRUST FLOORED.
Two Receivers Appointed by
a Judge Pratt.
1t Cannot Legally Hold the
7, ust Assets.
Plan Of Re-orgaEGtzation.
Bad Financial Showing Dividends Paid Out
Of Borrowed Money.
orset Fall tn Certificates 1
SAN FRANCISCO. Nov. 6. 1890.

SAN Francisco, Nov. 6, $780,.
A history of the litigation leading
up to this point should be interest,"
ing to Hawaiian planters, whose con-
nection with the Sugar Trust, through
the American Refinery Co., has been
intimate. When the New York Court
of Appeals decided that the Sugar
Trust was an illegal organization,
participation IN which would forfeit
the charters of the various corpora
tons merged into it, the Have
meyers, Searles aud their associates
went before the Supreme Court of
Kings County with petition setting
out that the petitioners had acted
unlawfully as organizers and trustees
of the Sugar Trust, that by said
unlawful acts they had become
possessed of much valuable property
of which they could not divest them
selves and could not legally retain,
and therefore prayed the Court to
issue winding up order with author
ity to distribute the assets to the
holders of certificates. AT the same
time plan of reorganization was
agreed upon by the trustees, and
arrangements were made with the
Central Trust Company of New
York and Kidder, Peabody & Co.
to carry out the details and finance
the new sugar combine. The plan
was to deposit sugar certificates with
the Central Trust Company for the
purpose Of reorganization and to
issue deposit receipt Of the Trust
Co. for the same. The financial
part of the business was to be en-
trusted to Kidder, Peabody & Co.,
who were to receive S5O0,0 for
their name and services, and Mr..
George G. Magoma, member of
porators of the new Company, to be
styled the American Sugar Refining
Company, the other incorporators
under the law of New Jersey being
H. o. Havemeyer, I. A. Have
meyer, F. o. Mattbiessen, j. E.
Searles, Jr., William Dick and j. B.
Thomas.
Meantime the trustees were mani
pulating Wall street, specializing in
certificates, and using their exclusive
knowledge to enrich themselves at
the cost of outside holders of sugar
stock. In this speculative game the
trustees passed the October divi-
dend, points having been given out
beforehand which are alleged to
have been used in the interest Of
favored operators. Certificate hold
ers became alarmed and disguised
with the methods of the Trust, and
an injunction was obtained prohi-
biting the trustees from distributing
or disposlng of any property in their
hands belonging to the Trust. AS
the trustees absolutely refused to
permit an inspection of their books,
or to issue financial statement, the
feeling of dissatisfaction became in
tensified, and an application for the
appointment of receiver was made
in Kings County and agreed before
Judd Pratt last month.
During argument an affidavit by
John E. Searles, Jr., treasurer and
secretary of the Trust was read in
which he attempted to meet all OBJ
jections to its management, claimed
that the refusal to issue financial
statement was in the interest of all
certificate holders, urged that the
proceedings in court delayed re-
organization and prevented the publi-
cation of financial statement, and
denied that Kidder, Peabody & Co.
were to be paid half million for
their services by the Trust-they
were acting as financial agents and
would be paid by the certificate
holders, which in this case is dis
tinction without any difference.
Counsel for the opposing certificate
holders agreed to an immediate
amendment of the injunction to en-
able the plan of reorganization and
financial statement to be made forth.
with. The Trust asked for delay il
publication, but this was not acced.
ed to, and the Court amended his
order in accordance with the stipula.
ton. The result was the publca'
tlon of the only balance sheet whict
the Sugar Trust, with q nomina
paid-up capital of sixty millions, hal
ever published. 1t is a curiosity II
its way and created an exceedingly
bad impression on Wall street
which then became conscious of thu
fact that ii had been systematically
duped and imposed upon by thu
Trust managers for over three year
past. The price OF certificates ha'
been kept up by the payment o
! large dividends, Us IL now appear
! in great part from borrowed money
and by the statement that there wa
always between six and seven mil
lion dollars In the treasury 10 "hgh
spreokels" and assure oonlinuon
dividends, The reports and halane
! sheet appended 10 the plan Of organ
lgall0p shQs that this MAS . gr0s
! deception On August 81, 1880
> there sas only 1919 ,ps7al IN ~