The Minneapolis journal., 1901-12-18
v. 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. 1S.-Justice Scott in the
supreme court to-day heard arguments of
counsel in return of the order issued by
justice Beach Dec. 10, directing the
Northern Pacific to show legal cause to-
Gay why the temporary injunction issued
Lee. IO, restraining until further order of
the court the company from retiring the
preferred stock of the said Northern Pa
cine Railway company on the first day of
January, 1902 under or pursuant to the
resolutions Of it's directors, adopted Nov
10, 1871, should not be continued. The
suit for injunction was brought by George
E. Hackett and Charles A. Chase of Penn
sylvanla, 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
oOo shares of the company's preferred
stock. Chase said he held 1000 shares.
Inc pIalntlH also asked the court to issue
an order requiring that preferred stock
noIoers snail have equal rights and priv
lIeges with common stockholders in buy
ing bonds to be issued by the company
unoer resolutions of its directors. adopted
NoN. 10; cochran, Moore & Heldreth
appeared as counsel for the plaintiffs
W. H. Cochran, counsel for the n1aintiff
SAID tnat at meeting of the directors
or the defendant company Nov. 13 1eO1
they voted to retire all preferred stock
Jan. j, 1902, at the par value of 800 a
snare, and to give notice of such retire
1nent 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 S75. 900 =
600 to provide funds NECESSARY for the re-
tlrement of the defendant company's pre-
1erred stock. Cochran also said the di-
Tectors by resolution provided that the
Oonos shouid be convertible into shares Of
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
1egaI force or effect" the directors
were without power or authority To adon+
or carry the resolutions into effect
These resolutions" exclaimed Cochran
are drag-net resolutions, passed for tbe
purpose Of fooling the public The direc-
tors had no legal right to pass such reso
lutlons, 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 cam
not change the entire nature of cor
poration. Whether this is an ipcrease or
decrease OF stock it is not lawful Tho
directors cannot make such conversion as
they attempt to make without the vote
or approval Of stockholders"
Daniel Lamont, vice president of tba
company, was in the court room and LIST
ened attentively to the arguments. Fran
els Ltnde Stetson, counsel for the com
pany, occupied chair next to Lamont
Cochran assert ed. 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 mart
OF the directors" exclaimed Cochran "is
to put the company into the hands of the
common stockholders so they can get ab
soIute control of the road and divide large
pronts. 1t is a stock-jobbing scheme
Stetson opposed the application. He
said the plaintiffs were in no position II,
ask for an injunction, as they had bs
come stockholders since the passage of
the resolutions They had right to trv
their suit, but not to an injunction.
This suit lis kGe sequel to the AobA
Waged last summer between Morgan and
Kuhn, Loeb & Co. and which resuItad 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 IL
admit them into the Burlington hoard
The Morgan-H Hill men sought to retire
preferred stock under vote of stockholders
but the Hartman men refused to surren
der the stock. Then the Northern Sc
cuESties was organized