Omaha daily bee., 1896-08-20
AMERICAN BAR ASSOCIATION
Convention of Leading Lights of the Law
Opens at Saratoga,
DISTINGUISHED JURlsTs IN ATTENDANCE
President storey's Annual Address
Treats of Reform in the Legal
Reconciliation of bankrupt
Railroad Corporations.

ing Of the American Bar association today.
When Lord Russell, Sir Frank Lockwood
and Montague Crackenthorpe, together with
their ladies, entered the hall they were
greeted with hearty applause. Judge
George S. Batchellor escorted them to seats
at the front and near the platform. The
president of the association, Moorfeld
Storey conducted Lord Russell Sir Frank
Lockwood and Montague Crackenthorpe
to seats on the platform. Among others
honored with seats on the platform were
J. Randolph Tucker, Edward j. Phelps. Will
liam Allen Butler, Henry Hitchcock, Austin
G. Fox, Charles Claflin Allen Francis Rawle
and James c. Carter.
President Storey called the association to
order and delivered his address. The ad-
dress Of the president was upon The Most
Noteworthy Changes in Statute Law on
Points Of General Interest Made in the Sew
eral States by Congress During the Pre-
ceding Year" as required by the constitu-
tion. He pointed out that the legislation
in different states, though widely separated
and representing both the oldest and newest
civilizations, strongly showed the essential
unity of this country in dealing with the
same problems that confront all the states.
He pointed out that while the past year
has been marked by much discomfort among
the people that the laws show only pro-
found peace and general prosperity. Dis
content does not affect legislation.
Another noticeable point is the rapid
growth of a disposition to assert the gen
eral interests of the community at the eX-
pense of Individual freedom. The under
lying principle of socialism, that every
thing that a man owns he holds for the
state, is asserted more and more frequently.
The statutes OF every state contain laws that
would seem unwarranteble invasions of
private rights not many years ago. Such
legislation is the collateral inheritance tax,
the graduated income tax. the graduated tax
on the estates of deceased persons when
adopted, and the character and number Of
the uses for which money is now raised by
taxation
RAILWAY REORGANIZATION.
The most important and longest part of
the address was devoted to railway re-
organization; it was based upon statute
Of Kentucky, which for the first time at
tempts to deal with this subject and which
the address considered as a step in the
right direction, as it enables the courts
to protect the interests of investors by
making every reorganization of a railway
the subject of judicial investigation and Sc
curing for every interest a hearing, The
address pointed out that the great railway
systems of this country have been built
up and equipped with borrowed capital
Many of the securities represent invest
ments of more than their face value. Capt.
tai stock has been frequently issued with
out payment, often bonus to go with
the bonds. In this way the money of credi-
tors has been invested and the control of
the property retained by the debtor-the
railway company. The failure of railway
company finds the managers united and
fully prepared for the emergency which
they inevitably have foreseen, while it finds
the creditors scattered, ignorant and
frightened and entirely unready to act
What has happened in practice? We have
seen the managers, while stoutly denying
up to the last moment that any such step
was contemplated or that the property was
in any way embarrassed, secretly prepare
bill in equity and without notice to any one
interested file ii in a court of the United
States, asking foT receivers. AS a matter of
fact, in every case the proceedings have
been collusive. The managers of the in
solvent company have controlled both sides
of the litigation. The selection of receivers
is a matter of the deepest concern to a
great many persons There should be no
undue haste in the choice of such officers
restraining order will hold everything
until after notice and hearing, leaving the
property meanwhile to be managed by its
officers as before. Every bankrupt or in
solvent law that we nave known has left
the choice of assignees to the creditors. and
no reason exists for not applying this rule
to railway receiYerships.
The former officers are interested in
maintaining the system which they have
brought together, they hold lucrative posi-
lions which they do not wish to lose they
are deeply interested parties. Such men of
all others, should be disqualified to hold the
scales between conflicting interests nor is
there any practical reason for their selec-
tion. The receiver can employ them as the
corporation employed them, and thus get the
peneht OF their skill and experience. Yet
with scarcely an exception, whenever
great railway has passed into the control of
the court, the creditors have first learned the
fact through the newspapers
CREDITORS ALWAYS SUFFER
After long and expensive contest the
seii -constltu ed committee apl ears and bond
holders are offered their choice between
contest conducted at great disadvantage
ana expense, and the acceptance of such
terms as may be offered While in theory
they need not accept, in fact they do not
dare 10 refuse The expense of the re-
organization has been, in many cases, en-
ormous, and in fixing it there is no one TO
audit the accounts, no one to represent the
creditors, who suffer while their trustees
profit.
Proceedings like this are very evil
example. Many man sees the savings of
a lifetime swept away by the mismanage-
ment OF a corporation, and sees the managers
continue in charge in spite OF all opposition
that creditors can make. To the reckless
use OF power by the managers of great
downfall, we must attribute much of the
discomfort, the hatred of capital and
capitalists, of corporations and their officers
which underlies the movement which now
eXcites our alarm.
II is to the courts that we must loolr tor
protection. Their authority rests peculiarly
on the respect Of the people for their absn
lutte impartiality, and in the long run they
cannot preserve that respect unless they
observe the well settled rules of Judicial
procedure and unless they respect and en-
.orce every legal claim. Parties must he
eft TO determine for themselves whether
heir interests will OF win not be served by
he assertion OF their rights. The moment
hat the courts undertake to vary their con-
racts or deny their rights. The moment
confidence OF the community receives a
ihock and no man knows upon what he can
ely. II the courts had always refused TO en-
ertain these applications for receivers when
made by the debtor corporation, or even II
hey had selected impartial receivers and
acilitated the enforcement of every agree
nent railroads would have been re-
more promptly and on more
basis than is now possible while
he confidence OF the community in the
Efficiency OF the law and the sanctity of con
racts would have been far greater. Judi
'ial action which impairs the obligation of
contracts is more dangerous than any statute
which aims at the same result. When the
'ourt through its officers undertakes 10 |
manage railroad for years and that chiefly |
Without hearing the questions which arise |
n its operation; when II appoints these
'heeIs and In so doing grants the final