The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1903-02-06
Complainant Has a Record as
an Opponent Of Specu-
lative Schemes.
SUIT UNDER ILLINOIS LAW
AIIeqed That Public Policy and Consti-
tuition of the State Are Violated
by the Plan Of Reorsani-
cation.

have been sought with much interest.
The bill attacking the plan was fled
ON behalf of Chas. II. Venner OF Bos-
ton.
Mr.. Venner, head of the brokerage
firm of C. H. Venner of Boston and
owner OF 100 shares in the Rock Island
| Railway company, asks appointment OF
a receiver for the railway company, to
whom defendants shall turn over all
original stock of that company now
held by the Central Trust company of
| New York: that the latter company
be enjoined from carrying n erect
the trust agreement which s the basis
of the reorganization scheme, or from
voting any of the stock or disposing
of the same; that the trust agreement
be declared void; that ar accounting
be ordered ascertaining who are stock
holders of the railway company, and
thereby entitled to vote for directors,
| and that the defendants shall be COM
PEELED to answer fully questions set
forth in the bin touching the reorgan-
i~zation, their purpose and interest in
the same.
Minority Is Dissatisfied.
1t is alleged by Venner that he rep
resents fully $780, 900 of the capital
BLUM "a lllS iNoSh. SIlIiN ain 10 rbGiSEAf
of the bill are some big stockholders
! who are dissatisfied with the methods
of the Moores On the other hand the
defendants point out that h Ven
ners are the people who threw the first
stone at the Santa Fe, which indirectly
resulted in placing h a company. in
the hands of a receiver six ear ago,
and recently made an attempt to in
validate the merger of the Pullman and
Wagner companies.
It is charged by the present bill that
the reorganization of the Rock Island
was a scheme to max money at the
expense OF the public, 1t is stated that
the properties of the Rock Island rail-
way prior to the reorganization were
heavily mortgaged; that the capitaliza-
ton of SIS 600 900 represented the full
equity of The company. and that the
reorganization involved issuing, in lieu
of the capital of SIS, 900. 900, securities
to the amount OF $500, 500, 900, and then
committing control to the holders of
a majority of s54, 000, 900 of the pre-
ferred stock of the Rock Island COM
pany of New Jersey, now selling about
$50.
The bill recites that by November
! last there was deposited with the
Rock Island company of New Jersey
67S,539 shares of Rock Island, out of
742,4S1 shares.
Road a Victim.
The terms of the trust agreement
between the Rock Island Railroad COM
pany and the Central Trust
are given in full, and 1t Is declared that
the Rock Island Railway company was
never a party to this agreement. 1t is
charged that Notwithstanding the con-
stitutional provision of the state, that
no railroad corporation shall issue any
stocks or n except for money, la
Dor or property actually received, the
reorganization plan without adding a
single dollar to the value of the prop
erty has issued and Is now attempting
to float securities a~ggregating over
100000, 900.
1t is shown that it is contrary to the
statutes and policy of the state to
permit one corporation to own and hold
stock in another for purposes OF CON
troll. And although railroad companies
may, under certain conditions, hold
stock in another railroad ompan
those conditions do not exist in the
present case. 1t is also alleged that it
is contrary to law to permit a corpora
ton OF another state to hold for con-
troll stock In a corporation of this state,
and that it is not competent for the
defendants to evade this law by the
organization OF a series of foreign
corporations.
" ~ t@lSo 10 JsSlSIIEl .llII
all efforts made by the complainant to
examine the books of the Rock Island
Hallway company met with defeat, and
that information regarding the acts Of
the defendants are kept secret.
J. II. Moore only smiled grimly when
told the bill had been filed. Il do not
care to make any statement" he said.
for the reason that I know nothing
of the bill or of its contents. I sup
pose" he added. that there are many
fellows like the one who asks for this
receivership."
The suit Mr.. Lewis has begun evidently
designs to overthrow the Reorganization
of the Rock Island system, which has
been universally regarded as the most re-
finance. 1t will be recalled that Gov
ernor Cummins undertook to discover a
method by which the state might attack
the reorganization. The whole proposition
was investigated by him and Attorney
General Mullan, and their conclusion was
that. while the reorganization was a dam
not successfully assail 1t.
Plan OF reorganization was as follows:
The Rock Island Railway company Gan
Iowa cerporation( owned the road. The
Moore-Leeds-Reid syndicate bought con-
troll of the STE, 0O0,0 O of stock. Then they
organized the Rock Island Railroad COM
pany Qn Iowa. with SIPS, 600, 600 capital
stock, and the Rock Island company Din
New Jersey with $96 ,0N,00 common and
S54,VU,VW preferred stock. The stock of
the old Rock Island Railway company
was deposited with the Rock Island Rail-
road company; while the stock Of. the
Rock Island Railroad company. in turn,
was owned, entire, by the Rock Island
company Ghe New Jersey end). For ev-
cry 500 share of Rock Island Railway
stock deposited the depositor was issued
$lO0 of the 4 per cent gold bonds of the
Rock Island Railroad mpa 500 of
the common stock of the Rock Island
company and $40 OF the common stock OF
| the ROCK Island rlmnanV The IN rfnr NJ
the Rock Island company provided that
the preferred stock should elect a ma