The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1901-12-17
N. p. PREFERRED
Argument Heard ON Proposed In
junction to Prevent Retirement.

Argument Heard on Proposed In
junction to Prevent Retirement.
Special to The Journal
New York, Dec. 17.-Justice Scott in the
supreme court to-day heard arguments of
counsel in return of the order issued by
Justice Beach Dec TO-, directing the
Northern Pacific to show legal cause to-
day why the temporary injunction issued
Dec. 10, restraining until further order Of
the court the company from retiring the
preferred stock of the said Northern Pa
CHG Railway company on the first day Of
January, 1902, under or pursuant to the
resolutions Of it's directors, adopted Nov.
Ii, 1901, should not be continued The
suit for injunction was brought by George
q. Hackett and Charles A. Chase Of Penn
sylvania, and by Wolf Bros. & Co., of this
city. Wolf Bros. & Co. asserted the firm
held 10000 shares Of preferred stock of the
Northern Pacific. Hackett said he held
600 shares Of the company's preferred
stock. Chase said he held 1000 shares.
The plaintiff also asked the court to issue
an order requiring that preferred stock
holders shall have equal rights and priv
ileges with common stockholders in buv-
ing bonds to be issued by the company
under resolutions of its directors, adopted
Nov. 13" Cochran, Moore & HeIdreth
appeared as counsel for the plaintiffs.
w. H. Cochran. counsel for the plaintiff.
said that at a meeting Of the directors
OF the defendant company, Nov 13, 1901,
they voted to retire all preferred stock
Jan. 1, 1902, at the par value of 500 a
snare, and to give notice Of such retire
ment to the holders Of preferred stock.
He said that at the same time the di-
rectorS also voted the issuance at the rate
OF per cent of debenture bonds of the
Northern Pacific to the amount Of SIS 0OO.-
OoO to provide funds necessary for the re-
t1rement of the defendant companys pre-
ferred stock Cochran also said the di-
rectors by resolution provided that IL
bonds should be convertible into shares or
common stock Of the company. The law
yer asserted that the action of the di-
rectors by "drag-net resolution was in
violation of the rights of each and every
one of the preferred stockholders and that
the resolutions were null, void and OF no
legal force or effect as the directors
were without power or authority to adopt
or carry the resolutions into effect.
These resolutions" exclaimed Cochran.
are drag-net resolutions, passed for the
purpose Of foOling the public The direc-
tors had no legal right to pass such reso-
lutions, changing the entire nature Of the
corporation. The stockholders were not
heard, were not permitted to vote The
directors assumed to exercise power
which they did not have. Directors can
not change the entire nature of a cor
poration. Whether this is an increase or
decrease of stock it is not lawful. The
directors cannot make such conversion as
they attempt to make without the vote
or approval Of stockholders"
Daniel Lamont, vice president of the
company, was in the court room and list
ened attentively to the argumeAts Fran
els Linde Stetson, counsel for the COM
pany, occupied chair next to Lamont.
Cochran asserted there was nothing in
law or equity which authorized the direc-
tors to give greater privileges to com
mon stockholders than to preferred stock
holders.
THE object Of the scheme on the part
of the directors" exclaimed Cochran, ''fs
to put the company into the hands Of the
common stockholders so they can get abb
solute control of the road and divide large
profits. 1t Is stock -jobbing scheme"
Stetson opposed the application He
said the plaintiffs were in no position to
ask for an injunction, as they had be-
come stockholders since the passage of
the resolutions. They had right to try
their suit, but not to an injunction.
This suit lis hne sequel to the fight
waged last summer between Morgan and
Kuhn, Loeb & Co. and which resulted in
the union Of those financiers in the North
ern Securities combine Preferred stock
was heavily bought at the time Of the
Northern Pacific corner by the Hartman
crowd, who were trying to force Hill to
admit them into the Burlington board.
The Morgan-Hill men sought to retire
preferred stock under vote of stockholders
but the Hartman men refused to surren-
der the stock. Then the Northern SA-
curities was organised.