The morning news. [volume] (Savannah, Ga.) 1887-1900, 1892-05-15

Georgia Company. and afterWard when Tn
Terminal company absorbed that by the latter
BY means of this voting power the Iermina
company was now the master of the destlnies
the Central railroad and its president and ooarc
of directors had become direction which wa!
in the control of the Terminal company, and,
need be, removable by 1t.
In pursuance Of the scheme this directions on
july l. 1891, leased for ntnety-nint
years the Central Railroad and Banking Com
pany of Georgia and all of its property nomln-
ally TO the Georgia Pacific Railroad Company
but really to the Richmond aud Danville Railroad
Company both of which are under the control
of the Terminal company which now directed
the operation of all the Central properties with
the most disastrous results to the immense and
vital system which it had thus possessed.
This lease and the proceedings of those
in charge of the control of the Central
attscked by the original bill A temporary
receiver appointed. While
this officer was proceeding to take possession OF
the assets OF the Central Railroad and Banking
Company, the Georgia Pacific and Richmond
and Danville Railroad comDanies threw up the
lease and formally abandoned the possession OF
all the properties. At the hearing OF the rule 70
show cause why the injunction prayed for should
not be granted and the receiver appointed, after
an investigation la ting through several days.
the court, Judges Pardee and Speer presiding,
granted an interlocutory order appointed re-
ceivArs TO take charge Of the properties and
assets of the Central Railroad and banking
Company and all subsidiary railroads and
steamship companies.
The order directed an election for board of
directors to be held on May 10. 1892, and it en-
joined the Central Railroad and Banking Com
rany from receiving the vote OF the $4,000
shares of stock controlled by the Terminal
company and held by the Central Trust Com
pany of New York. 1t provided, however, that
IN case there should be transfer OF that stock ID
good faith it might be voted, provided that the
court approved the genuineness and legality OF
The proceeding now before the court is
brought 10 nave that order modified, so that
the stock may be voted by the Central Trust
Company and counted in the election on Mon
day next The motion involves the control OF
the Central Railroad and Banking Company OF
Georgia and all the millions of property which
constitute its assets. The Central Trust Go n
pany is party defendant to the original bill,
and, in the opinion of the court. might well b.
held to be bound by the former adjudication.
Its counsel were present at the hearing. The
cause had been continued in part upon the ap-
plication of its counsel they stating that they
desired to be heard. 10 being insisted, now
ever, that the situation of this stock has been
changed since that Judgment was rendered, the
court has heard its application. There is now
presented on the part Of the Central Trust
Company two written representations, one
signed by the Georgia Company, by t. w Scar
borough, president, and the other by the Rich
mond and West Point Terminal Railway and
Warehouse Company, by John A. Rutherford.
second vice president. These representations
both recite the fact of the deposit OF the 10000
shares of Central railroad stock with the Cen
trail Trust Company for the purpose OF securing
the bonds above mentioned, and they both con-
tain this further statement:
1T may be claimed that the adjudication by
your honorable court bears the construction
that this company shall not exercise the right
TO vote upon the said stock reserved by the
said deed of trust, and in view of such decision,
this company yields, transfers and surrenders
any right which it possesses or possessed to
TO vote upon the said stock or any part thereof
at the election of the shareholders of the
Central Raj road and Banking Company
or at any adjournment thereof, in favor of
the said Central Trust Company representative
of the said bondholders, the legal and equita ole
owners OF the said a. 900 shares of stock. In
making this surrender of any right to vote upon
the said stock the Georgia Company represents
20 the court that it has not entered into any
rangement, bargain or understanding of any
kind or nature whatsoever with the said Cen
trail Trust Company in respect TO the exercise
of the voting power upon the said stock by that
company, and that it will not make en-
deavor to make any bargain, contract or
arrangement and that the said Central Trust
Company shall be entirely free, Independent
and untrammeled, so far as the said Georgia
Company is concerned, from any direction, in
reference or control in the exercise by it OF
such voting power.
The representation of the Terminal company
purDorts only 10 surrender the voting right in
Q 200 shares Of stock. Both representations ire
strict a transfer of the voting right reserved by
the Terminal company to the election TO be held
on May l6, 1892, or at any adjournment thereof.
II is difficult to perceive how this instrument
differs in any matter of substance from an or
binary proxy. The transfer of the Georgia
Company of its right to vote the stock Is not
considered by the court material, for that
company really has no control over the stock
TO which a court of equity will pay any atten-
ton. The Georgia Company has been wholly
absorbed by the Terminal company, but the
Terminal company omits to make any transfer
of the right to vote the 900 shares of stock in
question, and limits its representation TO the
court to 2, 40 shares, which il has presumably
acquired from sources other than the Georgia
Company. IL follows, therefore, that as TO 49,
600 shares of this stock the condition is pre-
cisey the same when the court enioined the
Central railroad from receiving or counting it.
for the reason that it had been purchased and
held in violation of the laws ana constitution of
Georgia. But, as we have seen, the transfer of
the Terminal company relating TO 1900 shares
is nothing more than a proxy, and the Terminal
company being enioined from voting the stock
directly, il cannot be permitted to vote it by
proxy, unless, indeed. IL is thought proper to
set aside the former judgment OF the court In
this respect.
There appears to, be no consideration what
ever for this transfer. The Central Trust Com
pany of New York holds this stock merely as q
naked trustee TO secure certain bonds for which
10 was pledged collateral security. Now
when those bonds were issued the stock thus
pledged had attached to 1t no voting power Of
which either the trust company or the bond
holders had the right to avail themselves Its
voting power, therefore, was no part of their
security This transfer, even If it was eficacious
TO convey the voting franchise OF all the stock
would be merely an attempt to engraft upon
the trust a new feature which the beneflciaries
of the trust did not seek or expect at the time
of its creation, The voting of the stock was
epjoined because it was deemed by the court
that il would bring about public wrong the
gravity of which cannot well be foretold. IL was
further deemed 10 threaten the continuance
and perhaps the aggravation, of the illegal and
Injurious results it had already accom- lisned
II the Central Trust company was wholly
relieved of any entangle ment with the perplexed
and chaotic condition which the voting power OF
this block of stock and the illegal reckless and
destructive management its exercise has entailed
upon these properties, the court would even
then hesitate long before it would avoid the in
junction which was the outcome of the most
anxious consideration by the learned circuit
judge, and by the district judge, merely because
the Terminal company enjoined from
voting itself, had gratuitousy conveyed
TO the trust company the power which
the latter apparently had not
desired, and which was in no sense part of
the contract with its bondholders. But the
Central Trust Company is not, in our opinion,
In anv view proper party to vote this stock
any authority for the exercise Of such a power
1t is what it name imports-a trust company
and was well said of one of the counsel in
the arguments If the Central Trust Company
springs from the passive position of a
naked trustee into the active operation
of a great railrosd system" the court must be
clearly satisfied of its authority by law to do So
If it may do this, it has within its gift the ap-
pointment of every officer of this vast railroad
system from president 10 fagman, and all the
vast and most important powers of the railroad,
powers in which the people of states distant
from the Office Of the Central Trust Company
fNfaY1d lNy