Iowa County democrat. [volume] (Mineral Point, Wis.) 1877-1938, 1900-03-29

NATIONAL Electric MauuldCluFiuS tOm-
pany case has been decided. Judge
Vinje who tried the case for Judge
ONeil. announced his decision yester-
day 1t is victory for the creditors.
The case is one that has attracted very
wide attention in this part of the
state. 1t grew out of the failure, in
May, 1898, OF the National Electric
Manufacturing company, corporation
organized at Eau Claire in 1888, to
manufacture electrical machinery. Its
stockholders included many Of the
wealthiest men of this city. May %,
1898, the company was thrown into the
hands of a receiver. Ralph L. Rust,
who had been the secretary from its
organization, was appointed receiver
and X. II. Hayden and T. +. Frawley
became his attorneys. AT the time
Of the failure the company had assets
of the nominal value of some $500 900
and liabilities aggregating over $780,
600 The receivership ran until Dec.
so, 1897, when an order was made by
the then Judge Bailey discharging the
receiver. His report showed that the
assets OF the company had all been
consumed in the expense of the receiv-
erShip, except about $4,000, and this
sum was ordered by Judge Bailey to
be distributed among the receiver and
his attorneys as compensation for SER
vices they having already been paid
some $4,000. Not cent was paid to
any general creditor but large sums
had been paid to some OF the stock
holders on the alleged ground that
they had loaned money to the COM
pany and taken security therefor, and
they claimed the benefit of such Sc
curity.
Judge Bailey's term expired Dec. 81,
1897. and Judge O'Neil succeeded him.
Immediately thereafter, number OF
The creditors filed petition in the
circuit court, alleging conspiracy and
fraud in the conduct Of the affairs of
the company for time prior to the
apointment Of the receiver, and in the
administration of the receivership, and
prayed that the orders entered by the
the circuit court during the receiver
ship preferrng certain of the stock
holders, and particularly the orders
entered Dec. 80, 1897, might be vacat-
ed and set aside. and that the whole
matter might be opened up, and that
those guilty of the alleged fraud might
be made to pay back, FOR the benefit
Of the general creditors, the property
hat they had thus Illegally obtained.
Judge ONeil after exhaustive argu-
ment lasting a number Of days, or
dered that the proceedings should be
opened up and that the creditors
should be given an opportunity to be
heard. shortly thereafter the cred
tors filed an amended and supplement
tai complaint, and joined as defend
ants in the action Fitzgilbert, Ralph
+ Rust, T. +. Frawley, H. II. Hayden
and some others. The case was final
~ brought to trial August 10th last,
and continued. with certain intermis-
sions, until the evening preceding
Thanksgiving. There were 80 days
consumed upon the trial.
Il is understood that Judge Vinje
has spent, since the close Of the trial,
I large portion Of his time upon the
Ease, and the written findings filed by
him cover over 200 typewriter pages.
He finds, among other things, that,
before the action was brought for the
appointment of r. Il. Rust as receiver,
It was agreed between Fitzgilbert,
Ralph +. Rust, II. II Hayden and T.,
r Frawley, that the action should be
so begun in order to prevent pro-
needing by the general creditors, and
also to secure To the defendants the
lull control and management of the
assets Of the company and to pre-
vent an equitable division of the same,
and to enable the defendants to pro-
cnre for themselves an unlawful pref
arence for the payment Of these claims.
and also to secure to themselves large
sums OF money out OF the assets OF the
corporation for pretended services rela-
tive to said recevership, that the APP
pointment OF Rust was procured by the
defendants as a part of the conspiracy;
that he retained as attorney e. r..
Frawley, and at that time, or lmmedl-
ately thereafter. disclosed to Frawley
the nature and scope Of the conspiracy
and that Frawley aided and abetted in
its execution, that the recevership
should or could have been closed in
one year and a half that the defen-
dants named, and the corporations in
which they were interested, filed their
claims without In any manner disclos-
ing that they held any Of the assets Of
the corporation as security to them
selves and that none of the general
oreditors knew. prior to the filing Of
the receivers report, as TO the manner
n which the estate had been admins
tered or that its assets had been so
nypothecated.
The court further finds that a large
amount in value Of the assets Of the
corporation had been illegally disposed