St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1893-01-26
A COURT SAYS STOP!
MeSSaba Railroad and Iron
Kings Enjoined by Judge
Nelson
From Carrying Out What w.
L. Brown Says Is a Big
SWindle.
The Chicago Man Claims He
Is to Be Euehred Out Of
a Million,
And That the Others Are Pre-
pairing to Corral Stock
Illegally.

William L. Brown, of Chicago, is after
the directors of the Duluth, Messaba IL
Northern Railway company aud several
persons who had a contract 10 build a
section of the road in st. Louis county.
Mr.. Brown practically charges the di-
rectors of the road with being NapoleonS
of finance, and has whetted his knife
and started in to chop his way INTO GER
tam deals. With this purpose in view,he
has placed the United States circuit
court at his back. 1t is claimed by
Mr.. Brown that the directors have ac-
Quired 5000, 1000. aud even much more i'll
stocks and bonds without returning
quid pro quo. The board of directors
of the Duluth, Messaba & Northern
were to hold meeting on Monday III
Duluth to dispose of a large block of
stock below par. Mr.. Brown, through
Lusk, Bum and Haley, attorneys of
this city, prepared a voluminous bill of
complaint, and went before Judge
r. r. Nelson, OF this city, and
secured6 temporary injunction.
which was served on Monday and made
returnable at the federal court house
in this city at 10 a. IN. today, when
motion to perpetuate the injunction
will be submitted. The defendants
named are the Duluth, Messaba &
Northern Railway company, James L.
Hale. S. R. Payne, Roswell FL. Palmer,
Alfred Merritt, Leonidas Merritt, G. c.
Merritt and NJ. d. Merritt, of Duluth;
K. ID. Chase, Albert S. Chase and Don
aid Grant, of Faribault.
BY the temporary injunction issued
Monday by Judge Nelson. Messrs. X.
d. Chase. James L. Hale. S. r. Payne,
Roswell IL. Palmer and the Merritts as
directors are restrained from voting,
selling, assigning or transferring any
stock held by them in the railroad
named, which was originally issued in
consideration of the construction of the
railroad, and are restrained from par
ticipating as officers or directors or
agents of the railroad or any other way
forwarding or assisting any issue, sale
or delivery by the railroad company any
of its corporate stock without the cor
poration receiving par value therefor.
The directors named are also ordered to
appear today and show cause why they
should not be enjoined from doing the
things complained Of.
Story of the Case.
The story told in the complaint at
great length is in substance as follows:
The Duluth, Messaba IL Northern Rail
way company was incorporated May 26,
1891, with capital stock of S5.000,000.
The road was to run from some point on
the navigable waters of Lake Superior,
or st. Louis bay of the st. Louis river,
or some point Oh constructed
railroad connecting with the wa
tiers named - taking northerly
course, the road was to run to the
northerly boundary OF the state of Min
nesota. On Feb. 16. 1892. bonds were
issued to the extent of $l,30G, 600, paya-
Die in gold of the United States coin
age in thirty years, with interest paya-
BILE in gold coin, at the rate of 6 per
cent. The company then proposed to
build section of road from near the
mouth of Artichoke river, ill st. Louis
county, and extending in Il northerly
direction to the property OF the
Mountain Iron company in section
8, township IS north, OF range Is west
in ST. Louis county. On Jan. 80, 1892,
the railroad company entered into an
agreement with the Mountain Iron
company. the Biwabic Mountain Iron
company and Donald Grant, by which
part of the road was to be built. BY
this contract it was agreed that the di-
rectors Of the railroad would issue first
mortgage bonds to the amount of $780,
QUO, upon which the interest was
to be guaranteed. and s945,0OO OF
pad-up common stock. These shares
of stock were to be guaranteed.
Then the Mountain Iron company and
the Biwabc Mountain Iron company
were each to issue bonds in the sum Of
100000 secured by paid up stock. The
stock and bonds were to be placed III
the hands of trustee to secure the pay |
ment of the contractor for building the !
section of the railroad. Then on |
Jan. 20, 1892, Foley Bros. IL
Guthrie, who are railroad COLI
tractors, and Albert S. Chase joined |
with Donald Grant to construct the road |
under the name of a construction COM |
by which the bonds and stock we're |
placed in the hands Of the trustee, the |
construction company was to furnish |
the money to construct the road, as |
agreed by Donald Grant and the rail- |
road company. 1t was agreed that the |
construction company was to receive |
100000 face value of the railroad
bonds of the first mortgage issue
1888, 333 of the face value of paid-up
common stock of the railroad company,
$500, 900 of the fully paid-up common
stock of the Mountain Iron company,
and 100000 face value of the fully paid
up stock. of the Biwabik Mountain Iron
company. All this stock was to be de-
livered for the construction OF the rail
road. The Chases were to furnish three
fifths of the money for doing the con-
structlOn.
Browns Interest.
The way that William L. Brown, or
Chicago, got mixed into the matter was
through Foley Brothers and Guthrie.
These gentlemen received one-fith of
the stock ana bonds, namely, they re-
ceived S240,OO0 of the Meteorological
bonds of the railroad and $126,666 of its
paid-up common stock. Foley Brothers
and Guthrie sold these stocks and bonds
to William l.. Brown few days ago, or
more definitely, Jan. II, 1898, for cash.
Mr.. Brown claims to have bought the
stock believing it was issued in good
faith. The building of the railroad was
done by the construction company, and
not by Donald Grant. of which fact the
railroad company was aware. Mr..
Brown then proceeds 10 charge in his