The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1893-05-12

contest or undetermined, that a suffi-
Gent amount to cover the same be de-
posted in court to await the result OF
the litigation.
acknowledgement OF interest on the
bonds secured by said trust deed. so as
to equalize the amount Of interest upon
all the bonds sold.
Third-Payment of the principal Of
said bonds; or II not sufficient. payment
of all the bonds sold pro rata, and upon
the bonds pledged pro rata amount
upon the debt for which the same were
pledged.
Fourth-Payment pro rata on the
bonds secured by the trust deed OF the
cable company OF July IS, 1890, made
to the plaintiff, that is, the bonds
fret sold by the Pacific company
in the interest OF for the benefit of the
cable company in the aggregate includ-
ing the principal OF the bonds secured
by the trust deed to Alvord and Brown,
not to exceed the sum OF 81, 800, 900, and
| If upon the return of the sale and the
| application of the proceeds as in the
foregoing paragraphs described, it should
not have been ascertained what bonds
issued by the Pacific company are 80 en-
| titled to be paid, that then the proceeds
applicable under this head be deposited
in court until the same be determined.
Fifth-To the Judgment creditors, hav-
! ing liens against the property OF the
cable company in the order that the
same were docketed.
ILLINOIS CREDITORS KNOCKED OUT.
The cases OF Edward Russell We. Pa
cific Railway company ct al. and the
| Northwestern National bank of Chicago
vs. VIM. Alvord ct al. were also decided.
| The cases were tried conformity by Judges
| Van Dyke and Wade, according to a
stipulation by which each judge might
| decide the case assigned to his own
department, in case they disagreed.
Both judges, however, agreed in their
views about the points involved, al
though they each wrote elaborate
opinions.
The case of the Northwestern National
bank We. VIM. Alvord, ct al, brought in
Judge Van Dykes court, was an action
by q creditor of the Pacific Railway
company, foreign corporation, to en-
force againts the defendants, as stock
holders in the corporation, the direct
liability created by the statutes.
The case of Edward Russell We. the
Pacific Railway company, tall, brought
in Judge Wade's court, was a proceed
ing in equity by the plaintiff and inter-
| venors therein as ere ditors of the de-
fendant company, an insolvent corpora
| ton, against this other defendants as
stockholders of the company, to have it
decreed that said stockholders pay in
the balance of theirunpaid subscriptions
for stock, as trust fund for the benefit
of the said creditors, and that it be ap-
| piled to the payment of their claims.
Vor Duk a.
reached the same conclusions in their
| opinions but by different lines OF reason
ing, concurring on all the principal
points.
A history of the Gable company and
the Pacific company is given by each.
The indebtedness on which the action
in the case of the North western Nation
al bank was founded was loan of $780,
900 by the bank to the cable company
in June, 1889, it giving four notes OF
$25, 900 each, October Is, 1889, the bank
/ took the notes OF the Pacific Railway
company in lieu thereof, and July 81.
| 1890, the company took up the 100000
note, giving its own in lieu thereof, the
one upon which the action was predi-
Gated.
By the law of this state each stock
holder of a corporation ia individually
and personally liable for such proper
ton of its debts and liabilities as the
amount of stock or shares owned by
him bears to the whole subscribed cap
itsl stock or shares, and for like pro-
portion only OF each debt or claim
against the corporation.
By the law of Illinois stockholders of
q corporation are only liable for pro
rata share to the extent of the unpaid
81 =
the assets OF the corporation.
One of the questions argued and sub
mitted to the court was the sale and
transfer, or attempted sale and transfer,
by the Los Angeles Gable company to
the Pacific Railway company, and twas
assaulted as being illegal and void on the
ground that il was contrary to law and
against public policy.
Alter long and thorough discussion
of the laws OF the two states and the
corporations in question, the court says
that the first question as to both actions
is whether the defendants were stock
holders OF the Pacific Railway company
and further, in the one action, whether
they were such stockholders when the
indebtedness of the corporation first
accrued and while it was doing business
in this state; and in the other action,
whether the shares held by the defend
ants in such corporation are paid up
stock, and the court holds in conclusion,
as follows:
"For the reasons herein fully stated
we hold that the scheme to organize a
foreign corporation to absorb the proper
ty and plant of the domestic corporation
and supersede and take the place of the
same is illegal and void, and that all the
transactions founded upon the same are
also illegal and void; that the defend
ants, therefore, in law are not stock
holders Of the Pacific Railway company,
bet remain stockholders of the Los An
geles Gable com pany.
Further, that if they were stockhold-
ers OF the Pacific Railway company they
became such under the agreement for
the absorption Of the cable company by
the Pacific company, which agreement
provided that the stock received by them
in the latter company should
be fully paid up, and if
the transaction in question
| had been authorized or sanctioned by
law, the consideration was sufficient to
uphold this agreement, and that in any
case they were not stockholders in the
Pacific Railway company when the in
debtedness against the corporation fret
accrued, and while it was doing business
in this state.
at results, therefore, that they are
| not liable in either action, and findings