The morning call., 1894-04-21
1T WAS ILLEGALLY LEVIED.
How the Brothers Wanted Thing
ALI Their Own Way.
PLAIN TALK FROM THE BENCH.
They Should Restore the Railroad
Company Its Money and Mort
gage Bonds.

Judge Seawell has decided against thu
the brothers Jo0st in the injunction SUIT.
brought by stockholders of the San Fran
cisco and San Mateo Railway Compa to
restrain forced sale OF their stock under
an assessment of 50 80 share to meet re-
qurements for the completion of the rail-
road.
The case has attracted widespread at.
tention, especially as the brothers Joost
have figured before the public recently in
more than one action in connection with
the electric road. The history of the pres
ent case is this: In January, 1891, the San
Francisco and San Mateo Railroad Com
pany was formed, and in October of the
same year the S. S. Construction Company
was Incorporated, presumably for general
purposes, but in reality for the purpose OF
completing the forty miles of road which
the San Mateo company proposed to build
The directors of each company were al.
most the same persons, the Joosts having
the practical control OF the S. 5. Construc-
ton Company.
The con tract which the companies mad
with one another was to the effect that the
S. S. Company should complete the road
on consideration of the transfer of
the railroad company; 70 per cent OF these
bonds were not TO be handed over until
thirty days after the completion of the
work.
On October 80, 1891, C. c. Butler entered
into an agreement with the Joosts to lend
the construction company 100000 with
which 10 complete the road, as the latter
company appeared unable TO fulfill its
contract. The loan was secured by PROM
Issory notes indorsed by the Jo0sts aud by
electric railway bonds, and as a bonus
Butler received 5000 shares of the railway
stock and $500 shares in the construction
company.
The agreement was carried out. but the
road was not completed as promised. and
in September, 1898. an assessment OF 81 so
share was levied on the stockholders oil
the railroad company for the completion
of the road. Against this levy several
stockh oiders made vigorous protest, ana
the attention OF the Joosts was called to the
fact that the original first mortgage bonds
had been handed over to the construction
cOmpany-i. e., the Joosts themselyes-ln
advance of The contract and IN violation Of
the terms of agreement.
Seeing the danger of the sale of delin-
quent stock, several injunction suits were
brought against the JoOsts in the Super or
Court. L. c. Butler and his partner, NJ.
A. Turrlll. sued to have the assessment set
aside, as did j. A. Waymire iD an other
complaint. and j. Douglass Sanders and
j. b. Muirhead i'll third. The complaints
charged the Joosts with fraud and with
endeavoring by bogus assessment. which
they them elves did not intend To pay, TO
force the stock of the other shareholders
to become delinquent, and so obtain the
control they desired.
In Buffers case tender was made in
lieu of the payment of the assessment OF
tah haEd
railroad company. This tender was re-
fused, and in his decision yesterday Judge
Seawell decided that the tender should
have been accepted, especially as the
Joosts themselves set off in lieu of pay
ment claims against the company amount
ing to S19,691 II. Equality is equity
says Judge Seawell, land il the Joosts can
set off. SO can Butler"
In Waymire's case a demurrer to the
complaint was sustained on the ground
of error in the pleadings. The plaintiff.
however, is permitted to amend his CON-
plant.
But it is in granting the Injunction asked
for by j. Douglass Sanders ct al that
Judge Seawell decides that the assessment
was altogether illegal. The Judge ex-
presses himself in no measured terms OF
the peculiar tactics adopted by the Joosts.
He says:
This contract. although nominally be-
tween the two corporations. was really
made by the directors oil the railway CON-
pany with themselves. Behrend JoOst and
Fabian Joost, partly In their own names
and partly in the names of others, man
aged the affairs of both corporations. Their
interests as Stockholders Of the construc-
ton company came into conflict with their
duties as directors OF the railway company,
and as usually happens IN SUCH cases, W hen
temptation came they yielded TO IL, and
preferred that which seemed to be their
pecuniary interest to what was clearly
their duty. The alleged necessity
for this assessment arises from the facl
that the railway directors have, In dSre-
gard of the contract and of their duty,
made full payment to The construction
company in advance of the compile
ton of the road and largely IN ex-
cess of the amount due for the work
done. 1t is clearly now their duty,
instead of attempting to collect their as
sessment, to restore 10 the railway com
pany the money and bonds of which il
has been unlawfully deprived as above
mentioned. No EXPLANATION or excuse
whatever Is attempted of the fact that
while it is the duty of these directors aud
| it is in their power TO assess themselves a.
| stockholders of the construction company
| they have prepared to assess The stock
| holders Of the railway company.
1t is not an unfair inference, from de-
fendan's' own affidaviis. that the Messrs
! Joost now hold bonds of the railway
company, which were nlawlully delivered
to The construction company. To an amount
| equal to the floating Indebtedness of the
| former company. Ii this be so it is the
duty of the Messrs. Joost to restore such
bonds to the railway company"
| In conclusion Judge Seawell orders sha
| in the case of Butler and Turrill an in
junction issue as prayed for oil the plain
| tiffs depositiug 10 cour' the coupons spoket
of as rendered and filing an undertaking
in the sum of $1,000. La the case of San
| ders and Mhirhead be same order is madr'
with the undertaking fixed at $500.