The herald., 1898-02-16
BURST B00MS
Rouse Echoes Unpleasant
to Listen To
SUPREME COURT OF ILLINOIS
TACKLES THE CASE OF ouE
CABLE ROAD
Delinquent Stockholders Ordered to
Pungle Up the Full Amount o.
the Capital Stock
A..oc,ate ted pre.. specIal wire

Associated Press Special Wire
CHICAGO. Feb. .15.-The stockholders
Of the Pacific Railway Company must
pay the creditors and bondholders OF the
corporation the amount of the imitation
Of the stock The Supreme Court OF the
Illinois has rendered this decision In af-
firming the decision OF the Appellate
Court, which held that the stockholders
were liable.
The case is remanded to the Circuit
Court with instructions to compel the
creditors to prove up what Is due them,
to compel the stockholders to show the
true value Of their stocks and then to
command them to pay to the creditors
the balance due. The amount involved
is said to be something like $1.000.000.
though the exact amount has never been
ascertained. The case has been in the
courts Of Illinois for several years, with
results first in favor OF the stockholders
and then of the creditors. The opinion
Of the Supreme Court Is final, ana the
order of the lower court Is but formal
process to secure a final settlement. The
stockholders are all. or nearly all, Chi
cago capitalists, while the creditors ins
clude several Of the banks OF the city.
Among the former are mentioned c. b.
Holmes, John j. Mitchell, James L.
Houghteling, Morton B. Hull ana Alex
Geddes. Holmes was the president OF
the Pacific Railway Company. All OF
the foregoing were directors.
In 1889 Holmes formed a syndicate
which purchased horse car line in Los
Angeles. A company was organized un-
der the title Of the Los Angeles Cable
Railway Company. and the work OF
Transforming the line into a cable ROAD
was begun. The original figures had
said that 81, 100000 would be enough to
build the system and put 1t In operation.
but the syndicate found that $2,000,000
| would be required. A new organization
| was then arranged and the title OF tho
Pacific Railway Company was adopted,
capitalized at 81, 500, 900 and incorporated
under the law of the State of Illinois.
The bonds Of the company were taken up
| by many of the Chicago banks, with the
understanding, as the creditors attor-
neys have repeatedly asserted in the
courts. that the capital stock was paid
| up in full. Subsequently rival road
entered the field in Los Angeles and the
boom went to pieces. Under these con-
ditions the company failed with neavy
indebtedness. In reviewing the case the
Master in Chancery reported that only
about 80 per cent of the stock of the cable
company had been paid up. Certain OF
the stockholders of the old Los Angeles
Cable Company, who had exchanged
property and stocks in that concern for
shares in the Pacific Railway Company,
| together with the holders of bonds,
brought suit against the stockholders
for the recovery of the amount of the in
| fiation of the stock. The case was fought
| through all the lower courts until 1t
reached the State Supreme Court, which
yesterday decided that the stockholders
must pay the creditors and bondholders
of the corporation the amount of the in
fation Of the stock. In affirming the
opinion of the Appellate Court and re-
manding the case, the stockholders are
practically left without recourse. By
| the opinion an important question in law
Is decided as to the liability of stock
holders for the debt of the company. For
the first time in the history Of the Illi-
nois courts the point has received an ex-
haustive decision.
Love levels all things-with the possible
exception of the head.-Chicago News.