The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-02-12
THE COURTS INSTINCT.

Judge Bdker-Nny 10 you put youiStiL
In the seemingly embarrassing position by
saying you wish to repudiate 40 shares of
stock if you are bona fide purchasers? II
you can show that all the wrong occurred
before you purchased the stock i do not
see how you can select sixty shares and
say they are good and the other 40 are
not. The court is in need of the best ar
gument you are able to make on these
questions. The moral instincts of the court
are with you. should be glad if L could
act on my own sense of justice. but 1 have
to obey the law, no matter how harsh it
may be. / feel that there ought TO be some
way of getting relief and want to hear the
best argument you are able to make. /
will give you plenty of time for the argu-
ment if il takes the balance of the week.
Mr.. Walace-Church x Co. bought two
hundred shares of Citizens street-railroad
stock in June. 1895. after the annual meet
ing of stockholders in May. The next meet
ing OF stockholders was held in May, 1896
During the year the stock had gone up
and down in the market. 1t was not until
after the annual meeting of 1896 that
Church x Co. were advised that some of
their stock was tainted. In July they filed
their original bill. which had to be amend
ed. and which amendment had to be
amended to meet the objections of this
court. They have proceeded with diligence
At the time they brought the suit the de-
PENDANT company was insolvent. a Judg-
ment would be of no value to the plaintiffs
for no claims of theirs would be allowed
until all the creditors of the company had
been satisfied. Nor had the plaintiffs any
right TO sell their stock to the company.
If they had undertaken to unload a
third person they would have been morally
guilty of wrong doing. There was only one
thing To do-to bring the facts before a
court of equity and have undone, as far
possible, the wrongs perpetrated and at
least realize from the sale of the property
much possible for those entitled to
no Tcr rod yA7f
care. The prayer was that the court take
possession OF the property of the defendant
company ana II necessary, TO appoint
receiver. The amended bill was filed in Oc-
tober. In the first bill it was not shown
whether the increase of stock was by sep
arate and different certificates so as to be
distinguished from the original stock or
whether there had been such cominglng
of stock that the old and new could not
be distinguished. We raised the question
as to whether all should not be cut down
to the original $l,50O,0O0. On the theory that
IL should. We asked the cancellation of
seven-tenths of our stock. We believe that
the original stock is valid and that the
S5.OOO shares subsequently issued are invalid
because issued in a way beyond the power
OF the corporation to issue them.
COMPANY'S RIGHT TO ISSUE.
Judge Baker-It is undoubtedly fact
that the company did have the right to
isue $4,000 shares of stock. The company
did make the increase from 1900 to $4,000
shares and not in a way 10 receive any
gain by IL. So far as the company Is con-
cerned the $1,000 shares are just as valid
as the 1900. But bona fide purchaser in
the open market stands in a different light
than man who receives stock as a gift
from the corporation. The latter can be
compelled To pay the face value of the
stock received gift. But the man who
buys in the open market cannot be sued
by creditors of the corporation unless IL can
be shown that he was connected with the
fraud.
Mr. Wallace-But he is responsible if he
discovers the fraud and does not expose IL.
MIR. Wallace here read two or three de-
cisionS to sustain his point that the plaint-
iffs in the case would be responsible TO the
of their stock. Judge Baker did not think
the decision sustained his point and asked:
DO you know Of any rule of law where
by any innocent purchaser of property,