The morning call., 1894-09-09
GUILT OF WILLARD
Robbed the Northern
Pacific.
OAKES DID NOT KNOW IT.
There Was No Reason Why He
Should.
HOW THE PROPERTY WAS nILKED
Finding of the Master in Chancery
in the Case Submitted by
the Receivers.
HOW THE PROPERTY WAS rlILKED

IepOIt Is ouikY uOcument, covering 153
closely typewriter pages and containing
about $1,000 words. 1t is a complete vic
tory for the receivers. the Master exoner-
ating Thomas F. OakeS from every charge
preferred against him, but Henry Willard
Is found guilty of having made unlaw full
gains as a director Of the Northern Pacific
Railway Company. A synopsis of the
Masters report, showing the various find
iDgs, follow:
First-The Master finds that Thomas F.
Oakes had no pecuniary interest in and derived
no personal advantage or gain from any of the
matters referred for investigation.
Second-The Master finds that Henry Wiz
lard, director Of the Northern Pacific Railroad
Company, made unlawful gains by the aequlsl-
tion OF the Northern Pacific and Manitoba Bay
Railroad Company bv the Northern Pacific
Railway Company 10 the extent of 1868, ,69I 20.
Third-It is found that Mr.. Oakes did not
know and was rot bound to know that Mr.. VII
lard was interested in the Northern Pacific and
Manitoba Railway or that lie was making any
unlawful gains by the acquisition OF said rail-
way by the Northern Pacific Railway Comnany
AS sequence the Master finds that Mr.. Oakes
was not bound 10 take any measures to prevent
Mr. Willard from making such unlawful gains
nor for the protection of the interests OF the
Northern Pacific Railway Company in respect
thereto.
Fourth-During the four fiscal years ending
June 80. 1898, the Northern Pacific Company
made savings under its contract with the
Rocky Fork Coal Company to the amount of
Sl.093, ,56l 90, an average OF over S475, 900 per
year for each of the four years
The Master finds in the fifth coun that
William 7. Bull, Charles r. Barney,
james B. HeggeD and Charles B. Wright.
directors OF the Northern Pacific Railway
Company, were interested in the Rocky
Forks ana Cook City Rsilway Company
and directors of the Rocky Fork Coal
Company, and in the acquisition by the
Northern Pacific Railway Company of the
stock of the Rocky Forks and Cook City
Railway ana in the contract made by the
Northern Pacific with the Rocky Fork Coal
Company.
6. The Master finds that no directors OF the
Northern Pacific acquired unlawful gains by
the acquisition by ihat company of the Rocky
Forks and Cook City Railway or by the ar
rangement made with the Rocky Fork Coal
COMPANY.
Z. The Master says be cannot find as TO these
subjects of investigation that Mr.. Oakes was In
any respect disloyal 10 his company or It's in
terests.
8. The Master finds that the Chicago ter.
MINUS BAOpCA tiSo NOok INC OIIRiudl parties IQaI
were interested at the time they were turned
over to the Chicago and Northern Pacific Com
pany 1926 .783 90.
8. The Master finds that the Oregon and
Transcontuental Company received SIS,-
100000 of the bonds Of the Chicago and
Northern Pacific Company and that it is possi-
bic to trace the disposition of all OF them ex.
cept three bonds. These bonds are uuac-
counted for.
On pages 134 and 135 the Master states
the account with the Oregon and Trans
continental Company and shows that it
received from these bonds $15, ,667, ,S79 So;
that it paid out for these properties and
for expenses, etc, $15, ,68i, ,O85 ~, leaving a
balance of $1S6, 798 90 unaccounted for on
the debit side of their account. That is
swelled by these considerations The Mas
ter charges the company with having paid
1880. 900 for the station, which was in
bond the same as all other items in the
account on a cash basis; reducing these
bonds to a cash basis, the same as the
others, 80 per cent, would increase the
debit side of the account $135, OOO more.
Furthermore, he finds that the SAL, 900 of
bonds that were delivered TO Baxter,
treasurer. for the purpose of finishing the
station. should be charged up and would
increase the debit side of the account to
the cash value of those bonds at 90 cents,
S44, 900.
The testimony shows that they had
only paid in cash $S5O,0O0 in the purchase
OF the station. The Master finds that there
are $4,000 of the bonds that were deiv-
cred to Willard upon Mr.. Wegg's order. but
are entirely unaceounted for except that
they were receipted for by Mr. Willard
through Colgate Hoyt The Oregon ana
ntinentsl Company in all its trans
actions relating to the acQui itiOn of the
several Chicago terminal properties, acted
as the agent for the real party in interest,
whoever they may have been. This is in
dicated by the agree ements of January,
1890, with the Wisconsin Central Company
as shown by the records of these transac-
tinns. Considerable Testimony was given
tending 20 show the disposition made by
the Oregon TraDsconlinental Company
of the moneys it had received on account
of these properties, but the Master says he
shall not attempt to further trace such
moneys or look into the accounts of the
Oregon and Transc0ntinental Company. as
he has reached the conclusion that for the
purposes of this inves iga alton 1t is imma-
teTial whether such moneys were sent or
who received them for reasons which he
then states.
Messrs. Colby and Hoyt were the only
members OF the Northern Pacific board
during the year 1889 and 1890, in which the
transactions under review took place who
apparently had any direct interest in the
Chicago Terminal. They acquired such
interest long prior to the time when they
became members of the North ern Pacific
board and at time when they owed no
duties TO the Northern Pacific Company,
The Northern Pacific Company did not
furnish these bonds and was in no degree
liable for them. 1t is true. by its lease of
April 1, $780, with the Wisconsin Central
system il had assumed all the covenants
and agreements made by the Niscon In
Central Company with its terminals and
thereby had agreed to pay the Chicago and
Northern Pacific Company, in addition to
a fixed annual rental of S350,000, a suffi-
cient sum to pay any deficiency on the first
mortgage bonds OF the Northern Pacific
Terminal Company, not der we'd from
other rentals. There was not direct
promise to pay he interest due on these
bonds, and hence no right of action upon
the covenants or agreements existed
against the company.
The agreement of the Northern Pacific