Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1890-01-03
The Supreme Court Has Affirmed Judg
Temples Decision.

Temples Decision.
SAN Francisco, January 2d.-The Su-
preme Court has rendered decision affirm
ing the judgment and order denying new
trial in The case of Cotton vs.. Stanford-a
suit which has been pending about six
years. The case was originally tried before
Judge Temple, of Sonoma, by whom judg-
ment was rendered for the defendant.
The opinion of the Court is written by
Justice Patterson and concurred in by JUS
tices Mcfarland, Sharpstein, Works and
Chief Justice Beatty. Fox, not having
heard the argument, and Thornton, being
disqualified, did not participate in the de-
cision. The opinion gives the following
succinct history of the celebrated case
From the 9Th day OF October. 1874. down to
the tine of his death. David D. Cotton was as
sociated with defendants in the ownership, con-
troll and direction of certain corporations. Prior
to that time defendants and Mark Hopkins had
been the principal owners of the stock OF the
Central Pacific Railroad Company, the Southern
Pacific Railroad Company, and of various other
subordinate and connected railroad compapies.
and also of the Contract md Finance Company.
They had associated themselves together for
the purpose of securing the cooperation nj d
assistance of all in the furtherance OF certain
railroad enterprises, and of such others a, they
should from time to time agree upon. In pur-
suaucs of the terms of their association and
agreement they had invested respectively Iarae
sums OF money, and were giving their time and
labor 10 the management and direction of the
corporations aboye-named, and to the acqui.i-
ton and control of other corporations which
they desired to operate in furtherance of the
general schemes they then had and might there
after have in view. Being desiIous iof securing
the aid and cooperation of another associate
negotiations were opened with Mr.. Cotton,
whom the defendants had known for several
years prior Ihereio-which ended in an agree
ment between him and them that he should
haannaa i'm fhar, s,,l f1-.,
as they had heretofore been associated with
one another. By the terms OF this agree
ment with the defendants and Mark Hopkins,
Mr.. Cotton was to have 10,O0O shares of the
capital stock of the Central Pacific Rail-
road Company and 20,000 shares of the capi-
tai stock of the Southern Pacific Railroad Com
pany in consideration of the sum OF 81, 900, coo,
for which sum he gave his promissory note
with interest at per cent. per annum. payable
on or before October 5, 1879. All dividends on
the stock were to be applied as payments on
the note. 1t was agreed that Cotton was to
share in the proportion that his stock bore to
the stock issued III all responsibilities damages,
penalties, etc. and to share in all the liabili-
ties of the Central Pacific southern Pacific and
Contract and Finance Companies. the same as
If he had been associated and connected with
them from the time of their organization. On
the 10th OF December 1874, they organized the
Western development Company, the affairs of
which cut most important figure in the con-
troversy. The capital stock of this company
was fixed at s5 600 900, of which Stanford
Huntington, Crocker aud Hopkins each took
two-ninths and Cotton one-ninth. General Col
tons interest in all other properties acquired by
the associates came to him through this eorpor-
ation-the Western development COMPANY
except that which he held in the lone Coal and
Iron Company-which had capital stock of
Sl,l00,C0l divided equally between the associ-
ates-and that which he held in the Colorado
Steam Navigation Company, and in the Occi-
dental and Oriental Steamship Company. He
was also one OF the original incorporators of the
sOnthprn Pacific na nf Ariy rar1-
lied in 1876, and held $4,000 shares of the capi-
tai stock thereof.
In 1876 the parties made ard executed new
agreement, which they antedated as of October
5, 1874. This agreement differs in some material
Statement Of faets By the ena fers 81 m this modi
fed agreement the stock sold to Mr.. Cotton was
pledged as collateral security for the payment
of the 2l,000000 note, and it was sgreed that
neither party should sell his interest in the con-
tract without the written consent OF all parties
thereto.
The enterprises entered into and carried by
these associates during the lifetime of Mr.. Col
ton were OF stupendous magnitude, involving
face values amounting to hundreds OF millions
of dollars The success OF their schemes de-
pended upon many things In the midst of
theiI most important operations both Mr.. Hop
kins and Mr.. Cotton were taken from the asso-
citation by death the former on March 20, 1879,
the latter in october following. The bond Of
friendship which had bound the five associates
together was OF the strongest kim, and the con-
fdence which one reposed in another had 10
limit.
Soon after the death of her husband, Mrs. Col
ton-this plaintiff--began to make inquiries as
to the interest of the estate in the various cor
porations with which Mr.. Cotton had been con-
nected. In his last will and testament Mr.. Col
ton had recommended that if his wife should
desire The assistance of anyone in the settle
ment of his estate, his friend, s. NJ. Wilson, and
his Secretary, Charles E. Green, should be
called in as co-executors Mrs Cotton, being
4 1a.1 1tYlix ix-arc ap1 n
her husbands affairs, called upon and secured
the services of Hr. Wilson to aid her. Negetia-
lions were entered into between plaintiff and
defendants for settlement. During these ne
gotiations the plaintiff became suspicious Of the
motives and conduct of the defendants, be-
lieved that they had manipulated the books to
deceive her, and that they were unworthy Of
trust or confidence. Nevertheless, after thor
ough examination of the books and many in
terYiews with defendants, a compromise agree
mtnt was entered into on the 9th day OF
August, 1872 by the terms OF which certain
stocks, including los shares of the Rocky
Mountain Coal and Iron Company, were as
signed to defendants, the 81 ,000.000 note was
cancelled. and all the liabilities of the w. d.
Co. and other corporations were assumed by
them and the estate of Cotton was released
therefrom.
About two years after the execution of the
compromise agreement plaintiff discovered
many errors in the calculations upon which the
compromise had been made. she thereupon
served notice of rescission and demanded a
new accounting A complaint was drawn up
charging the defendants with Misrepresentation,
concealment, etc., and after several interviews.
to wit, on May u, 1882. plaintiff commenced
this sction for a rescission OF the compromise
agreement of August y, 1879, on the ground
that said agreement had been produced through
false and fraudulent representations made by
defendants during the course of the uegotia-
tions which resulted in the execution of the
compromise.
1he answer denies the charges of fraud, al
hot hofa fSf m
defendants were made by them in good faith,
believing them to be true, and AYERS that Col
ton, during the time that he was connected with
the W d. Co. fraudulently appropriated to his
own use certain large sums of money belonging
TO said company and to those defendants.
Alter trial, lasting nearly two years, before
Hon. Jackson Tempie-who was at that time
Judge of the Superior Court Of Sonoma county,
and who has recently left this Court on account
OF illness findings and Judgment were rendered
in favor of defendants. From this judgment,
and au order denying the motion for new
trial, the plaintiff has appealed
In passing upon the points raised by the
plaintiff on the motion for new trisl, the
Court follows closely the reasoning and
findings of Judge Temple. In fact that
jurist's decision is sustained at every point
1t is affirmed that Stanford, Huntington,
Hopkins and Cotton were not partners in
the legal sense, but their relations as rail
road builders and managers of corporations
were of a confidential and fijuciary char
acter only. The death Of Cotton dissolved
these trust relations within the meaning
of the Code, and Mrs. Cotton only sue,
ceeded to his interests. She did not and
could not have succeeded to the relations
which her husband bore to the railroad
magnates As matter Of fact, she did moi
depend on their statement OF the condition
of her husbands affairs, but she called in
Samuel NJ. Wilson, distinguished layer
and Lloyd Tevis, skillful fnancier, tc
procure settlement. They expended six
months in examining Colton's affairs and
finally succeeded in effecting compromise
which Mrs. Cotton accepted, and with hel
eyes open and by the advice of her advisers
signed. The Court positively refuses, q:
did Judge Temple, to rescind an agreemen
made in this way, either on legal ol
equitable grounds. The opinion state:
that the plaintiff does not show that anl
fraud was perpetrated on her; on the con
trary, every facility for examining into th'
accounts of the railroad corporations man
| aged by the deceased. were offered he,
agents. The Court finds nothing else
either in the law pleaded or the evidence
upon which to grant new trial.