The San Francisco call., 1896-01-18
HINGES ON A CONTRACT,
The Main Issue in the Consoli-
dation of Two Local
Railroads.
A HINT AT SMITHS MOTIVE.
Alleged to Have Been Actuated by a
Sense of Obligation for Pecu.
mary Favors.
A HINT AT SMITHS MOTIVE.

| NOrtn racine halfway company anu IHe
North Pacific Coast Railroad Company
will depend entirely upon the interpreta-
ton by the courts of certain contract
made between A. w. Foster, Andrew
Markham and Sidney V. Smith, joint
owners OF $4,000 shares of the stock of the
San Francisco and North Pacific Railway
| Company.
Should the contract be declared valid,
| the same influences that have successfully
shaped the course of the San Francisco
and North Pacific Railway Company for
| the past three years will continue in power
and the road Will maintain its indie
| pendence.
Should the contract be found to be in
valid, there will be new board of di-
| rectors chosen and there will be an ar
rangement effected for the joint operation
of the two roads named.
Briefly stated the situation is this: The
capital stock of the San Francisco and
North Pacific Railway Company consists
of 10000 shares. Recently $4,000 of these
shares came into possession of the North
Pacific Coast Railroad Company the pur-
chase of this block of stock, for about
$500, 900, being made with the ayowed
purpose OF securing control of the San
Francisco and North Pacific Railway Com
pany and operating the two roads under
one management. The remaining $4,000
shares are owned or controlled jointly by
a. w. Foster, Andrew Markham and Sid
ney V. Smith, in equal portions; that is,
each has the right to vote Il, 900 shares,
Sidney V. Smith is in favor OF the joint
operation scheme and desires to cast the
vote OF MS IA 900 shares so as 70 bring
about the object desired by the North Pa
cific Coast Railroad, but his two colleagues
are opposed to the scheme, and in order TO
prevent Mr.. Smith from voting for 1t the
injunction proceedings now pending IN
the Marin County Superior Court were In
stituted. This action is based on the fol-
lowing contract or agreement:
WHEREAS, Arthur w. Foster, Andrew Mark
ham and sidney v Smith have bought from
the estate OF J. NJ. Donahue, deceased. AZ 900
shares OF the stock OF the San Francisco and
North Pacific Railway Company and desire
and have agreed among each other that said
| stock shall for period of five years from this
| date be reserved from SALE except under the
conditions hereinafter stated, and that they
! shall retain the power during that time of vOt-
| ing the stock so to keep control of the cor
| poration from passing to persons other than
! themselves and those who shall with them or
as their assigns become owners of portions of
| said stock,
Now it is mutually agreed between said
| Foster, Markham and Smith, that they will
during said period make no sitles of said 40 600
|
and restrictions hereinafter stated, and that
they will retain the power to vote said stock in
| one body, and that the vote which shall be cast
by said shares, whether tor directors or for
| any other purpose, shall be determined by
| ballot between them or their survivors. In
| order to eftectuate this agreement ii is further
| agreed that in making any sales or assignments
OF any of the said shares respectively belong
ing to them the said Foster, Markham and
Smith will cause persons buying from them, or
any of them, to enter into written agreements
to the effect that they and their assigns will
| not cause their stock TO be transferred TO them
| on the books of the company but that they will
! during said period allow the same to remain
| on the books IN the name OF said Foster, Mark
ham and Smith, as the case may be, and that
| said Foster, Markham and Smith shall have the
! right TO vote it as aforesaid.
1t is further agreed that all the foregoing
! stipulations, covenants and agreements shall
| be binding upon the heirs, deviseeS, legateeS
| and personal representatives of the parties
hereto just as if they had been specifically
| above mentioned.
| Witness our hands in triplicate this 22d day
! of March, 1898.
In the following letter to his colleagues,
written on the 14th inst, Smith repudi-
| ated this contract:
| Messrs. 4. ". Foster and Andre,C Markham
| DEAR SIRs: Referring to your letter to me of
| this date inviting me 10 be present at meet
| Ing with yourselves to determine how certain
! shares OF the San Francisco and North Pacific
Railway Company shall be voted at the com
| Ing STOCKHOLDERS meeting, L Deg 10 notify you
| that shall not attend such meeting; that do
| not recognize, and on the contrary, that deny
| that the agreement mentioned in your letter is
| or ever was binding any of the
parties to it; that now hereby withdraw from
| said agreement; that now protest and shall
| always hereafter protest against your taking
| any action whatever under said agreement, and
that shall not accede to or be governed by
| anything which you, or either of you, may do
or attempt to do by virtue thereof
In the complaint filed on Thursday the
! mo tive for Smiths action is ascribed to
the fact that he is under obligations to
the principal stockholders of the North
Pacific Coast Railway Company ''for pc
cuniary advances made to enable the said
| defendant Smith to acquire his interest in
the shares of the said San Francisco and
North Pacific Railway Company"
BY agreement the further hearing of the
injunction proceedings which was set for
to-day has been continued for week.
| The election of directors of the San
Francisco and North Pacific Railway Com
pany is fixed for Tuesday, but it will not
be held until the injunction proceeding gs
are disposed of.
Speaking of the matter yesterday Sid
| ney V. Smith said he was in favor of the
| joint operation of the two roads. Whether
| by consolidation or other method is an
| open question to be determined. There are
many ways of furthering the end desired,
| he said, without resorting to actual consol-
| lQatlOn. Ills lQea is 10 90 away Win un-
| necessary competition and expense. He
expects the injunction proceedings to be
short, and believed they would not occupy
more than a dav. He refused to give the
grounds on which he would seek to have
the agreement made with Foster and
| Markham declared invalid
| President Foster of the San Francisco
and North Pacific Railway Company ex-
pressed great reluctance TO speak of the
| matter, saying it was now in court and he
did not care to say anything till the mat
ter was decided. He stated, however, that
no attorney to whom the agreement in dis
pute had been submitted could see how it
! could be held to be invalid. He also stat
ed that he was acting purely in the inter-
ests of the stockholders of his road in
opposing any agreement for a joint opera
| tion with the North Pacific Coast Railway
| Company. He claimed any such arrange
ment meant curtailment of the service
to the people along the road and a possible
reduction OF the wages of the employees of
the company, and that he was strongly
| opposed to any such measures. He
would favor any plan, ne said, that