The morning news. [volume] (Savannah, Ga.) 1887-1900, 1893-05-16
WITH JUDGE MAC DONELL.
Argument on the Demurrer in the De-
benture Suit Completed.

Be Heard on the Merits Of the Case
Messrs. Alex. c. King and Walter G.
Charlton Argue for the Defense and
Col. Garrard for the Mercantile Trust
Company.
The question of the demurrers to the
suits of the Mercantile Trust Company
and Mrs. Annie G.. Cam against the Cen
tral Railroad and Banking Company on
its certificates Of indebtedness aggre-
eating nearly S3.0O0O00 is now in the
hands of Judge MacDoneu. He viii
probably render his decision to-day.
Judge MacDonclls decision will in
volve some very important and interesting
points If he sustains the demurrer the
cases will be carried to the state supreme
court by the attorneys for the plaintiff
The question, however, will turn largely
on the character of the contract con
tanned in the certificates of Indebtedness.
On the one hand il is a question as to
whether the contract is in the nature of
note, and whether in indOrSing the re
organization plan the board of directors
of the Central implied their intention to
exercise the option expressed in the con
tract; and, on the other, as to whether
the contract is merely an optional one eX-
ercisable al the pleasure Of the company
which has never yet seen fit to exercise
it, and whether IL is in the nature of a
mere scrip dividend, which the company
could have issued or not as they saw fit
MR.. KING ARGUMENT.
Mr. Alex. c. King of Atlanta opened the
argument for the defense when the case
was taken up yesterday morning.
MIR. King stated that the contract was
one made under the laws of the state of
Georgia, and that it was to be construed
by the laws of this state.
"The cardinal principle of its con-
struction - he said, lis that the court
should put himself as far as possible in
the position of the board of directors Of
the Central railroad when they originally
issued these certificates, and that he
should construe them according to the
meaning that the parties thought they
had at that time.
If that could be ascertained it would
be declared, and no technical nor arti-
fetal rule of law which might apply in
other Jurisdictions can be allowed to alter
that meaning. In constituting the words
of the instrument the code prescribes
that the ordinary and usual meaning of
such words shall be given, and that the
situation and surroundings of the parties
shall be looked to-"
AN APPLICATION OF THESE RULES.
that this case showed these facts: In
1881 the board of directors, as shown
by their resolutions, found them
selves with d sum of money,
which might have gone to dividends, in
vested in betterments, thus increasing
the value of the property. 1t was con-
coded on both sides that the directors
had the right to spend this money for
bettermcnts and never to declare it as
dividends or give anything to the stock
holders therefor; but they thought while
they had the right that they would give
these stockholders certificate represent
ing this increased value which had gone
into the property.
They had no money TO pay such a div
idend with. They remembered that the
time had been when they could not pos
sibly have gotten on If they had been
compelled to distribute dividends, and So
while giving these certificates which they
were under no sort of obligation TO give,
they reserved to themselves the same
right never to pay them, which they con
fcssedly had as to the fund which they
represented, and made them payable at
the option of the company just in the
same way that the dividend was originally
dependent for its existence on the option
of the company.
If in the exercise of a sound discretion
the company ought not to pay these GER
Gates left it absolutely 10 the viii of the
directors not to pay the same.
IT WAS SCRIP DIVIDEND.
"The certificate is in effect scrip not
enfOrCible until declared due in the option
OF the company, ana if never declared due
it is not colloctable, except in a winding
up OF the company, in the same way that
stock is not collectablc, though in such d
distribution this script on certificate Of in
debtedness would be entitled to full pay
ment in preference to stock
He then insisted thaU this did not pre-
vent any question calling for the court to
endeavOr to give a meaning 10 this paper
TO save it from being void, but the naked
question was whether it was valid as
debt now enforcible by suit, or valid as
scrip to be collected, unless the company
should elect to pay it on final wind
ing up.
He also contended that even on the
plaintiffs own declaration he had
amended himself out of court. He in
voked The action of the Central railroad
through the reorganization committee,
as declaration by its agents, the reor-
Panization committee, that these Ccrtif-
icates were payable and that they had
thus called them in for payment, and says
that if he relied on the action of the reor-
ganiZatiOn committee he could not adopt
1t IN part and repudiate it in part. If he
accepted their call of these certificates
for payment, ne said, he was bound by
the terms OF payment which their call
prescribed. That the statement in his
own petition was that they had called for
them to be deposited with said committee
TO be paid off in full by the exchange
of other securities, and if he adopted
and accepted that declaration, his rem
edy was to go and get mis- new securiti
from the committee, and he showed him
self to be not entitled to ask for Judgment
from this court for money and that it
came with very bad grace for the Mcr-
camille Trust Company to be setting up
this agreement calling for deposit and a
receipt of new securities. and now coming
into this court and trying by quick
Judgment, to get an unholy preference
over his fellow certificate holders and the
other creditors of the company.
COL. GARRARD's ARGUMENT.
Col. Garrard contended that the Cen
trail railroad did nothing peculiar OF,
unique in drawing the contract found in
the certificates OF indebtedness, and he
cited decisions to prove chat the directors
through their Endorsement Of the rcor-
ganization plan had given announcement
OF their intention TO pay these debenturCs.
as the supreme court has said they are
paNable either In money on, i'm al lpf, a. 0olrs