The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-12-13
THEIR LEGALITY DISCUSSED.
Judge Wallace Hears Arguments
of Both Counsel.
THE CASE ORDERED SUBMITTED
Unusual Proceeding of Trying a Case
the Day After the Filing of
the Complaint.

Superior Judge Wallace heard argu-
ments Of counsel yesterday in the suit
brought only the day before by the Mar
ket-strcet railway consolidation against
l. w. Hellman and others to determine
the legality Of the Issuance of million
dollars worth of bonds by the new COM
bine.
The suit in question was fully described
in the columns of yesterdays CALL. 1t is
what is called an agreed suit. in which
both parties agree upon the questions of
fact. but disagree upon the questions Of
law involved. 1t is an arbitration be-
tween booksellers and bond-0uyers; the
former, meaning the directors of the COD
solidation, being anxious to place their
bonds; while the latter, who are defend
ants to the present action, will not think
of negotiating the bonds unless they are
secured by the absolute knowledge that
the bonds are valid.
Joined with /. w. Hellman in defending
this amicable suit are Paul Barth, the Ne
vada Bank. the Bank of California and
a. NJ. PARROT. 1t will be remembered
that these parties, having some doubts as
to the legality of the foundation of the
bonds in question. resolved to take the
opinion of leading counsel on the matter.
Attorney T. l. Bergin was selected to
draw up a report upon the matter, and
after due consideration the eminent coun-
sci decided that the issuance of the bonds
was illegal and void. He presented his
clients with an engrossed statement of his
objections TO the scheme and his reasons
thereto
Acting upon this advice the intending
buyers of the bonds refused to have any
thing TO DO with them, and matters were
brought 10 a standstil. Finally the par
ties agreed among themselves to bring a
suit on friendly terms. the plaintiffs seek
ing judgment to the effect that their con-
solidatiOn was perfectly organized. that
the issuance of their bonds was valid. and
10 force the defendants to acce pit the bonds
in question and to pay the plaintiffs
100000 therefor. On the other hand, all
the defendants seek is to be dismissed
from the suit with their costs of action.
W. F. Herrin. John E. Foulds and Will
liam C. Belcher appeared as counsel for
the railroad and Robert 7. Hayne repre-
S6nted the defendants.
Jude Wallace had just adjourned the
regular morning session of his court for
the noon recess when John E. FOulds of
counsel for the combine and his opponent.
Robert 7. Hayne. slipped into court with
a copy of the complaint-the suit having
been signed by the presiding Judge to
Judge Wallace-and demanded an lmme-
date hearing. Judge Wallace, who does
not indulge in such frivollties as lunch,
Hrra nd ho oil
ant case went to trial without further
notice.
There were no witnesses. no interested
spectators. The whole affair was a ques-
lion of law. and the two attorneys simply
argued from their points and authorities.
Haynes argument in opposition to the
railroad scheme was practically synopsis
of the objections presented by Attorney
Bergin in his report. 1t was Representa-
to The court that the proposed issue OF
bonds was 81, 500, 900; that the outstand-
ing Indebtedness of the consolidated CON-
panies amounted to S7,035, 600; that the
capital stock only came to SIS, $50, 600, SO
that when the bonded indebtedness OF the
Powel-stree and Ferries and Cliff House
railroads were taken into consideration the
excess would be found TO amount to abou,
S4375,O
In this way it was claimed that the
authorization of the directors for the issu.
ance of ST., 100000 was invalid. in that il
authorized the increase of the con so liGated
companies bonded Indebtedness to an
amount exceeding the capital stock, q
thing which under the statute was oil
itself impossible, and, if executed, void
upon its face. In this way Mr.. Bergiu
had figured out that no authorization fol
the issuance for more than $40, 465, OOC
bonds could be legal.
Then. again. exception was to be taken
10 the bond issue from the fact that at the
stockholders meeting only 1877, 240 share:
of stock were represented. OF these only
S971 were voted, while 1913, 269 shares were
voted by proxy. This proceeding wa:
argued to be contrary to law. Another
objection was to the inclusion in the com.
bine of the Potrero and Bay View Rail.
road, which. being incorporated originals
only as street railroad, did not possess
the general powers to entitle it TO member
ship in the consolidation.
In answer to these arguments Attorney
Foulds had great deal 10 say. He said
in the first place, that surely the directors
of g consolidation like the present one haC
the power to issue bonds. It was impos
sible to expect that the stockholders of al
the various companies included In thu
consolidation could meet together to dis
cuss the proposition.
The argument concerning the Potrert