New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1902-11-01
THAT MATTHEW'S GROCERY STOCK.
LAWYER SHOWS THAT IT WAS CoLLAT-
ERAL OF THE SORT CONTINUALLY
ACCEPTED BY BANKERS.
To the Editor OF The Tribune.

To the Editor OF The Tribune.
Sir: Ex-senator Hills attack Governor
Odell seemed to fall harmless until he dug out
OF the State archives a written consent by the
Governor TO a stockholders meeting to reduce
the capital stock in the Matthews Grocery Com
pany. reciting that he was the holder of the
stock in question. This. the Tammany counsel
Tor charges. is conclusive evidence OF Governor
Odell's being the absolute owner of the stock
and not the Pledge, holding 1t merely as col
lateral security for the payment of the loan
which it is conceded he made to Matthews. in
dvidually, and not to the company in payment
for the purchase of the stock
This latest discovery does not in the least
alter the legal relations OF the parties 70 the
transaction, as Mr.. Hill. lawyer, knows full
well, which are those of pledgor and Pledge.
The loan was made in substantially the same
form hundreds OF thousands of dollars are
daily loaned in Wall Street by bankers on the
pledge hypOhecatiOn il is often called OF stocks
as collateral security. The ex-senator admits
in his Schenectady speech that If the certificate
OF stock had been issued to Matthews and by
him assigned to odell. it would have been all
right a loan, but that the fact OF its being
issued directly to the Governor changes the
character of the transaction and makes him
the buyer of the stock. while II is clear that
neither of the parties so intended nor does the
law hold. 1t is quite apparent that the rea-
for issuing the certificate directly 10 the
Governor was-the stock not yet having been
issued by the company-to save the necessity of
a transfer assignment by Matthews TO him.
and every lawyer knows that IL Mr.. Hill had
been the company's counsel he would not have
advised against such issue for the purpose OF
collateral security.
Legally the title to the property pledged-here
shares Of stock-never passes to the Pledge
Governor OdelD. IL being in this respect like
that OF a mortgage of real estate. where the
holder has only lien and never the title. un-
less by foreclosure. Even the ex-senator would
not pretend that if Matthews had given the Gov
eTnOr a mortgage on his house at Newburg 10
secure the same loan. the latter would have
the Governors name appears on the DOCKS or
the company A stakeholder. and that this in
some way makes him the owner OF the stock,
the answer is that the intent of the parties and
the rule OF law govern; and even II he had re-
ceived dividends on the stock, II would not be
in the least inconsistent with his holdings as
Pledge. The rule with banks and brokers is
like transfer of stock as collateral, that the
transfer. which is usually held by the Pledge in
blank, until an approaching dividend, is then
filled up and the stock actually transferred on
the books OF the company and the dividend paid
10 the Pledge. for which, however he must
always account TO the owner when the debt is
paid and the stock retransferred; and none Of
such money lenders by the act of transfer, prob
ably ever supposed that his legal relations with
the borrower had in the slightest changed-by
the transfer and dividend. AS with mortgages
on real estate "Once mortgage, always a mort
gage" so the rule is, once a pledge, always a
pledge. Whether dividends were paid on the
Matthews stock held by the Governor does not
appear. but II paid he did not receive them,
interest was regularly paid as was agreed when
the loan was made.
Another amazing discovery has been made by
the ex-senator that THE stock was no security
whatever" in this he assumes that the loan
made to the company, whereas the fact is
indisputable that II was made to Matthews in
dividually: but. admitting that it was made to
the company, does not the fact that the Gov
ernor could at any time after default In its
payment, advertise and sell the stock, and
thereby at once realize his money, instead Of
being compelled TO await the laws delay. afford
any security? II not, the bankers OF this city
who loan hundreds OF millions have made a
serious blunder in preferring stocks pledged
collateral as being the most desirable security
attainable. LAWYER
New-YOrk Oct 81 1902.