Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-09-18

/ Iype-WTitten pages. II lie llTSL part .
1T is devoted to setting forth the fact
regarding the incorporation of thu
IChicago, Rock Island & Pacific Rail
road company, recently formed in low;
with a capital Of s125.00O000, for
period of fifty years. The facts as t,
the formation of the Rock Island com
pany in New Jersey and other detail.
of the reorganization plan are also Sc
forth.
The first question Attorney Genera
Mullan takes up is whether the Chi
cago, Rock Island & Pacific Railroad
company is organized for lawful pur-
pose under the laws of the state
Attention is called by the attorney
general to section 1907 of the code
which provides that ANY number OF
persons may become incorporated for
the transaction of any lawful business
but such Incorporation confers no pow
er or privileges not possessed by natur-
| al persons, except as hereinafter pro-
vided."
In the acquisition of the stock of the
old Rock Island Railway company by
the new Iowa corporation, no law of
the state has been, or will be. violated
or contravened and the act of the cor
poration in obtaining the same is not
ultra wires.
Upon the transfer of the stock of the
Chicago, Rock Island & Pacific Rail
way company to the new Iowa company
the latter becomes the actual owner OF
all the railways and railway property
owned by the Chicago, Rock Island &
Pacific Railway company. The legal
title thereto, Of course. remains in that
corporation, but the new Iowa company
as the owner of all of its stock, is in
fact the owner of all Of its property.
and as the owner of its stock, it be-
comes vested with the power of con-
trolling the corporation, electing its
board of directors and of exercising all
other powers which stockholders OF a
corporation may lawfully exercise"
The fact that the seventy-five mil
lions of stock which it receives from
the stockholders Of the Chicago, Rock
Island & Pacific Railway company is
pledged with the New York Central
Trust company as security for the pay
ment OF the seventy five million dol
lars of per cent bonds issued by the
Iowa company. in nowise affects the
right OF that company to vote the stock
and exercise it rights as holder there
of.
What has been said to the rights
and powers of the Iowa company as the
holder OF the stock of the Chicago,
Rock Island & Pacific Railway COM
pany, is equally true of the New Jersey
corporation. It has lawfully acquired
the stock of the Iowa corporation. It
has the right to own and hold the
same, and to exercise all of the rights
and privileges OF Stockholders of that
The attorney general proceeds to the
most serious question involved as fol-
lows:
The most serious question involved
Is whether the state may interfere to
prevent the issuance OF the stock and
ponds of the Iowa and New Jersey
for the reason that the ar-
gregate amount thereof proposed to be
issued exceeds the market value of the
STOCK OF the Chicago, Rock Island &.
Pacific Railway company which the
iowa company receives therefor: O,
whether it may by quo warranto have
! forfeiture of the charter of the Iowa
company declared. on the grounds tha
such act is ultra wires and against mn
tc policy.
The seventy-five millions of gold
oohus issued by the Iowa company and
secured by the deposit of the stock of I
me old Rock Island Railway Company
ire undoubtedly worth their par value.
Inc stock of the New Jersey company.
transferred to the shareholders of the
Did Rock Island Railway Company, I'M
1oubtedly have some value.
The market value of the stock of the
Chicago. Rock Island & Pacific Rail.
way Company, at the time of thu,
making OF the contract referred to. was
about one hundred and fifty million
collars. In consideration of the trans
er of this stock to the Iowa company it
proposes to cause to be delivered to the
stockholders Of the old Rock Island
company one hundred and TWENTY
even millions five hundred thousand
It its face value, OF the stock of the
New Jersey company, and seventy-five
Millions Of the bonds Of the Iowa com-
,any.
Is this transaction such a violation
y the laws of the state or of Its public
'olicy, as declared by It's statutes and
ourts. as will authorize the state to
Interfere by legal proceedings
Inc questions raised in these in
luiries are answered in favor of the
tock Island. On the point whether ..tt1e
ssue of stocks and bonds of the New
ersey and Iowa companies for the ac-
of the stock OF the old Rock
sland company is, at their face value.
Q largely in excess Of the market val
e of the stock acquired, that the trans j
ction is opposed to the public policy Of
he state" the attorney general looks !,
nto the question as to what constitutes i
he public policy of the state. He says:
The consensus Of the judicial ex- ].
ressions upon this question is that the
ublic policy of state must be deter :
1ined by the statute and judicial de-
isions of that state. and not by the :
pinions of individuals, no matter how ,
minent.
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