The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1893-12-10
Hearing on the Order to Show
Cause Before Judge Zane.
THE FIRE CHIEFS DIAMONDS
JUDGE ZANE MAKES AN ORDER IN
REGARD TO THEM.
Mrs. EnsGuist's Novel Grounds for
Seeking Divorce-Justice Halls
Successor Will Be Appointed by
the County Court Probably on
Monday.

The hearing in the suit of the First
National bank of Deadwood, S. D., VS..
the Groesbeck company. on order to
show cause why the company should
not be restrained from disposing of its
shares and from incumbering other of
its shares by giving them as security
for loan of 100000, came on before
Chief Justice Zane yesterday morning,
occupied the greater portion of the
day and was continued until tomorrow
morning. Attorneys w. G. Hall and E.
B. Critchlow represented the plaintiff
and Attorney Arthur Brown appeared
for the defendants.
On motion the First National bank
of Park City was made party plain
tiff TO the suit.
The order to show cause was issued
on a complaint filed on Nov. "a, de-
tails of which we re published in The
Herald at the time of filing.
By the proceedings taken it is sought
to have a decree of the court adjudg-
ing that the action of the board of di-
rectors of the Groesbeck company on
August %, 1898, in declaring a stock
dividend, and all acts of its officers
and agents, are null and void; that
every defendant holding any shares of
to surrender the same, that they be
cancelled, and in case any shares of
stock so distributed should not be
recovered that the value thereof be
aScertained and the defendant directors
compelled to respond in damages 1t
was also prayed that the defendants
be restrained from encumbering the
real property of the corporation by
mortgage, deed Of trust o. otherwise,
pending the hearing, and in accordance
with this latter prayer Judge Zane at
the time the suit was brought granted
a temporary restraining order.
The statement by counsel for the
plaintiffs was to the effect that be-
tween the 1St day of Dec, 1892, and the
LIST day of Feb, 1898, they loaned to GER
tain of the stockholders of the defend
ant company large sums of money and
that they hold as collateral security
1850 of the 1900 shares of the said
company's capital stock, which the de-
| PENDANTS represented as being worth
$25 per share. That since February
1898. by various wrongful and improper
acts on the part of the directors and
| officers of the company, the capital
! has been wasted and impaired and
| converted to private uses, and that the
| business Of the company has been un-
profitable to such an extent that the
shares are not worth more than Sis
each. It if further asserted that John
A. Groesbeck, president of the COM
Pany, was permitted by the directors
about January l, 1893, to convert to his
own use seventy shares of the capital
stock of the Deseret National bank
of Salt Lake city, to the value of $lS.-
200. such stock being a part of the as
sets of the GroeSbeck company, where
as the directors knew that he was
wholly insolvent. 1t is also alleged
| that on August % the board of direc-
tors of the company met and declared
a dividend of 26.716 per cent. per share
and that 1850 shares of stock were
wrongfully distributed as payment tc
the stockholders of the dividend men
toned, when on the said date the com
pany had no assets and was possessed
of no property in excess of its CAPITA
stock of $500. 900, being compelled to Dor
row $4,000, and that the so-called stock
dividend was declared and paid on
fraud Of the rights and interests OF
creditors. 1t is likewise claimed thai
the officers and directors are now nego-
tiating to obtain a loan in the sum OF
100000 and that they intend giving q
mortgage or deed of trust on their reai
estate to secure the same, when in fact
no necessity exists for borrowing over
SIS, 900. It is to prevent this that thf
proceedings are taken.
The defendants deny all the alIega.
tons and allege that they are album.
dainty able to conduct their own bust
ness. That the action was brought al
the instance of minority of the stock
holders, who wish to rule in spite Of
the majority. They also deny that they
iare negotiating for loan of $500. 900 OF
that they have any intention of so do
ing, and aver that the plaintiffs have
set UP no legitimate cause for an &C
ton in equity.
The taking of testimony was con
cluded when the court rose and the ar
guments will be made tomorrow.