The Daily bulletin. [volume] (Honolulu [Hawaii]) 1882-1895, 1890-11-18
THE SUGAR TRUST FLOORED.
Two Receivers Appointed by
Judge Pratt.
1t Cannot Legally Hold the
t. ust Assets.
Pla& of Re-Organ ixntion.
Bad Financial Showing Dividends Paid Out
Of Borrowed Money.
Great FAN in Certificates I
SAN Francisco, Nov. 6, 1890.

SAN Francisco, Nov. 6, 1890.
Judge Pratt of the Supreme
Court, Brooklyn, before whom the
winding-up petition was presented,
rendered an important decision on
the 3rd instant, in the litigation
arising out of the proposed re-orga-
nizalion of the Sugar Trust. He
ordered the appointment of two re-
ceivers, and held that the trustees
were not in legal possession of the
trust assets, and therefore could not
distribute them. Following is the
ruling as reported in the San Fran
cisco Chronicle, which has favored
the trust throughout its entire fight:
New York, Nov. 3. --Judge Pratt
has handed down decision in the
sugar trust case, in which he says
that receivership is necessary and
that two receivers should he APP
pointed. The receivers will take
possession of all the properties and
moneys of the trust. 1t is under
stood that no person identified dir
ectly with the trust will be APP
pointed.
The Judge gives the two parties
to the suit until Thursday to agree
upon two persons to be appointed as
receivers.
The decision is rendered in the
cases known as Cameron against
Havemeyer and Havemeyer against
the Brooklyn Sugar Refinery Com
pany. The Judge justifies the orig
inal injunction restraining the plan
of re organization, but says it has
been superseded under the consent
of both parties. AS the plaintiffs
say in their own bill, if the original
trust agreement be void, certainly
they ought not to attempt to per-
form the duties which its language
imposes upon them, because such
acts would constitute offenses against
the law which would subject the cor
porations composing the trust to a
forfeiture of their charters.
The Court holds that the original
stockholders of the corporation, hav-
ing delivered their certificates to the
trustees with authority to issue trust
certificates representing the undi-
vided interests of the original stock
holders, are estopped from question
ing the title of the purchasers, and
the holders of the certificates derive
their title from the stockholders of
the corporation, and not from the
trustees, who have merely the au-
thority derived from the stockhold-
ers. But it is not necessary to de-
termine where the legal title is, be-
cause the trustees concede in their
bill that they hold it for the benefit
OF the certificate holders. The de-
PENDANTS therefore are in possession
of property belonging equitably to
others, which came into their hands
under an agreement void as to the
main purpose for which it was made,
and which they cannot legally use
for the purposes for which 1t was
placed in their hands. They are
utterly powerless to convey and give
it in good faith or distribute it to
the rightful owners. The object of
the trust having failed, each certif-
cate holder has right to ask that
the affairs of the trust be wound up
and that he shall have his share of
the joint property.
His Honor knows no way by
which that can be accomplished ex-
cept by the unanimous consent of
the certificate holders, or upon APP
plication to the courts. In the
meantime the disposition of the
property is vital question. Shall
it be used so as. to endanger the
corporations, or be taken by the
Court and held intact for all of those
interested? "Shall this vast amount
of property be left in the hands of a
board acting without defined duties
or restriction, without legal autbo-
rity and subject to only the will or
discretion of majority of Its mem
bers?" 1t is conceded that at some
time the Court must appoint some
person to dispose of the property
and divide the proceeds.
The certificate holders ask for an
immediate settlement of the trust,
and the trustees claim that the pro-
per time has not arrived, as there is
} u plan of reorganization. Their
answer is that receiver will not in
terfere with proper plan of re-
organization. Indeed, in case sa-
tlsfaciory scheme for reorganization
Is proposed, his Honor saw no rca-
son why the certificate holders com
posing IL may non have their sharr
Turned over 10 them, always leaving
/ enough property In the hands OF thc
! receiver To meet the demands of the
creditors and the certificate holders
who do not come into the neM
scheme, The Court continues
Both parties may submit n0minar
lions for the appointment Of repeiY
ars with The proposed orders Of Ibis
deofee on on before Thursday neat
+, tbs nominations 10 DO Ion With lhI
+ clerk The amount ~ bonds silI b.
. hasd y Tho Tins " pamlng tbs ~
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