St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1893-02-10
The ShreWd- Wisconsinite
Argues the Mineral Rail-
road Case S17
And Charges the Directors
With Evident Intent at
Fraud.
The Case Turning on the
Claim That Browne Held
No Stock.
Charged That the Deal Was
Changed Since Suit Was
Begun.

The injunction case of William L..
Brown. of Chicago. against the Duluth.
Mlssabe d Northern Railroad Com
pany, the directors and others, was
partly argued before Judge Nelson
yesterday. There was an able array of
counsel on each side. Judge Shaw, of
Minneapolis, argued the motion to dis
miss the bill of injunction, and was
supported by Gen. Moses E.. Clapp on
the proposition. An extended argument
was made on the motion to dismiss OH
the theory that Mr.. Brown had no right
to bring the action, for the reason that
he does not appear to be a stakeholder
in the company: the stock which he
claims has not yet been transferred on
the corporation books. 1t was also
claimed that the bill does not recite the
facts nor show sufficient cause for an
injunction.
Charles W. Bum, of counsel for
Mr. Brown, argued that this is case
for the interference of the court. He
asked that the court restrain the di-
rectors of the railroad company from
selling or issuing 'bonus" stock to G.
w. Wetmore. of New York, or to any
other innocent purchaser for the pur-
pose of carrying out any scheme as
outlined in the bill Of alnt. He
also asked that the court restrain the
company from issuing stock to directors
of the company and that the directors
should be required to surrender bonus"
stock already issued so that it may be
Cancelled. He claimed that the corpora
ton should be restrained, and COM
batted the proposition Of the opposition
that a suit against directors and con-
tractors does not give the court juris
dction over the corporation. The argu
ments of Judge Shaw Oh the side Of the
directors and of Mr.. Bum on behalf of
Mr.. Brown were chilly characterized by
statements of law points and presenting
authorities. and were technical in the
sense that they were able eXpOsitlOns of
the law ana principles OF equity.
Hon. John G.. Spooner addressed him.
self to the court in behalf of the com
plainaut, Mr. Brown, and characterized
the dealings in strong language when
presenting facts and reasons for grant
ing the desired injunction. He began
by saying, The sound of my voice has
long since lost his charm to me, and |
will refrain from any introduction or
preliminary argument. and 20 at once
into the issues of the cause" The
astute attorney and able politician then
went to the bottom of the case, and
ding up some strong statements. lie de-
clared the scheme OF the directors to be
as bold fraud and as transparent
one as he had ever heard OF
read Of. The propositions OF
the bill of complaint stand undenied,
and it charges fraud. The company
was organized with a capital stock of
s., 600, 600 and like liability of indebt-
edness. A contract was made with
Donald Grant to build about fifty-two
miles of road. Grant was to be paid III
stock worth about 100000 at par and
5000, coo in bonds. Mr.. SpOoner declared
that this was only surface proposition
| or contract. The stock and bonds were
never to be delivered to Donald Grant.
as appeared by the contract, but 1T was
| the intention that the directors
should construct the road under a sub
contract. A construction company was
| formed, which went in with Grant to
build the road. The capital was to be
furnished for the construction as
| follows: Donald Grant was to furnish
one-ffth of the needed money, FOley
Bros. & Guthrie one-ffth, ID. w. Grant
one-ffth, and A. s. Chase tW0-hfthS.
1t was known to the officers OF the COM
pany at the time the main contract, as
we'll as when the Sub-contract was
| made, that the construction would only
involve all expenditure Oh S5SU,UU0. Inc
bill charges and it has not been denled,
that the directors were to receive Sol l.
600 of stock. which was not earned i'll
the construction, and it was known that
it would not be earned, but was IN
tended as as a naked gift to the d.
rectors. This Senator Spooner charac--
terized as fraud upon the state and
upon the complainant.
Senator SpOoner then made another
charge to the effect that the directors
had changed the course proposed by
them after the beginning of this action.
| 1t was charged in the Old bill that the
ldfrectors had contracted to sell S2,OU,-
| 600 worth of stock and S66l 900 worth of
bonds at the price of S1,6O0,0UO, the
stock to be put in at so cents on the
dollar.
An amended bill of complaint has
been prepared on behalf OF Mr.. Brown,
which charges that the directors nave
changed their plan to eVade the charges
of the old bill The contract has been
made to sell stock and bonds. 1t is now
| proposed to sell only 100000 worth OF
stock and to put its value in the contract
al par. but there is to be added to THIS
| 81. COG. 600 worth OF bonds. The Wnole is
| to be sold at the contract price or sl.6OO,-
| 600. 1t is alleged that this change mas
| been made by resolution of the board OF
directors, who are determined to perpe-
i trate a fraud upon the stockholders Ill
carving out the original terms OF the
contract to sell the bonds and stock, this
| safe being to the same parties named i'll
the ORIGINAL contract of sale. Inc D0ndS
are to be sold at 80 cents on the ooiiar.
MIR. Spooner declared that the direcl-
ors nave been IaithleSS; that MS client
owns certificates of stock and IS entitled
| to equitable relief to prevent the wrong
| full and ultra vIres action of the direct
ors. which will iniure Mr.. Brown by
| fraudulent acts.
1t came out in the course of the argu-
ment that G.. W. WetmOre. of New
| York. is the person to whom the stock
and bonds were entrusted to be sold.
Mr.. Wetmore is the right-hand man OF
| the RocketellerS in the deal.
Special Sale.
Special Sale of mems fashionable,
tailor-made, perfect-ftting Trousers at