New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1904-05-24
CLOSE MERGER ARGUMENT
Controversy OOer Title to Stock
Put in by-Harrimdn and Pierce.
lay TELEGRAPH TO THE TRIBUNE. ]

closed their oral arguments on the application for
injunction restraining the carrying out OF the
proposed plan for distributing the assets OF the
Securities Company before Judge Bradford this
evening. II agreed that counsel should have
two weeks to file supplemental briefs the ques-
lions raised in the argument John G. Johnson. OF
Philadelphia, and W. D. Guthrie. of New-York.
the only lawyers regularly heard to-day. but
Judge Bradford. EHhu Root. r. V. Lindabury. b
L. Stetson and the other counsel frequently be-
came involved in discussion of the questions at
issue.
John C. Johnson. who appeared for the Securities
Company. supplemented the argument made by
MIR. Root IN Newark last Friday The Northern
Securities Company he said. stands on its pos
session Of property given to il by the complain
ants. who are now seeking to destroy that property
as an asset and TO Vacate the Securities Companys
Ute The controversy. he said. not one be-
tween the stockholders of the company, nor did
IT involve any charge that the directors had ex-
ceeded their powers. The case rested solely on
question to title to property.
Mr.. Johnson argued that no ground exists under
the bill Of the compliments for equitable relief;
that there was no executory that could be
attacked; that the compliments bill was insult
hcent because Il made no averment Of title; that
even Il It were otherwise the decree on which the
compliments rested their case did not entitle them
TO the relief sought; an action could only
be maintained where the compliments showed the
doing OF an illegal thing; that the bill was in yio-
lation OF the settled rules of equity: that even
IL the complainants allegation capable OF
support in all other particulars they had lost their
opportunity TO secure relief through laches. the
conplainants could not under the principles set
tied by the United States courts claim an interest
IN the new shares OF stock which they
never owned.
Mr.. johnson said that after the compliments had
voted 10 acquire this stock what they actually
bound themselves to do TO tie up the Great
Northern and Northern Pacific stock so as to make
II impossible for any holder Of Northern Pacific
shares TO get them back after placing them in the
control OF the Northern Securities Company. Then
they forward with claim for SIS coo GOO which
they efterward reduced to 81 10000 The difference
he argued. was because 100000 Of the stock had
been paid for IN cash. and he asked what to
become OF the cash contributors who he assumed,
were 10 bs left in the cold.
In reply TO question by Judge Bradford TO
whether the cash paid for stock had been put in
while the merger plan was IN process Of develop
rnent Mr. johnson replied that money for stock
had been subscribed afteTwsrd, and when the d-
rectors OF the Northern Securities Company had
bound themselves 10 the Joint holding of the sew
eral properties q single property. When
sold his shares OF Northern Pacific and took North
Securities stock NJ johnson contended that he
gave Up every vested right he had in the stock of
the Northern Pacific. and thereafter had no sep
arate ownership IN any particular asset OF the
holding company.
Mr.. Johnson cited the testimony Of Mr.. Harri-
man. showing that the negotiations for the sale
OF the northern racine STOCK had been conducted
with J. p. Morgan & Co. and that when the sale
Of stock agreed Mr.. Hartman was vaguely
aware that II to go into a holding company.
He also read a statement OF Mr.. Hartman that in
the negotiations he not influenced by any I'M
Outstanding that the stock was TO 20 into holding
company He referred TO a resolution Of the di-
rectors OF the Northern Securities Company show
ing that sS7.coO0cO OF and 81 1900 OF pre-
ferred stock were to be acquired for about $751;
100000 OF Northern Securities stock and 100000 in
auth md
johnson argued that II constituted a complete sale
leaving Mr.. Hartman without any rights 10 his
Northern Pacific stock. No man. he said could
come into a court of law equity and demand the
return OF property he had placed with another in
pursuance OF contract receiving consideration for
such property, when he elied on a decree that the
contract was in itself violation OF law.
Mr. Johnson was followed by w D. Guthrie who
summed up the case for the compliments assailing
the position taken by Mr.. Root and Mr. Johnson
He characterized Mr.. Johnson's argument as in
tended TO inhame and distOrt the real points OF
the controversy by taking advantage of the enor-
NOUS Issues at stake and the conditions resulting
from the decisions Of the federal courts Had il
been an ordinary case, Mr. Guthrie said he had no
doubt that both Mr. Root and Mr. Johnson vould
nave devoted themselves 10 answering the pert-
nent questions raised by the court as TO the owner
ship OF the stock. rather than trying TO make II
appear that the complainants and the Northern
Securities Company had been equally TO blarna in
the transaction.
Mr. Guthrie contended that the syndicate 10
GUIDED only twenty persons and that il would no
~ easy matter TO ascertain to what each was en-
uteo In 800. he said, Northern Pacific stock was
not scattered There were S42OOoc0 OF stock held
oy the Morgan-Iain syndicate and S37oocoO by Har-
rirnan and Pierce for the Oregon Short Line
me court asked whether Morgan and Hill were
sci holding the $42OOoOO0, TO which Mr.. Guthrie
replied that II would have TO be determined 1be,b
~ Ihey were actually doing or were holding il as
trust lie said the principal argument against the
compartments was the enormity OF the eubarrass-
naent they were going TO create and explained that
MS clients had to confne their claim 10 81 600 600
instead OF Ss00'ooo, because the difference had
been paid OF In cash.
Maybe" continued Mr. Guthrie IF we couId get
at the true facts. would be entitled to s7s oo 0o
We anticipated that would be met by a cry of
inconvenience If 100000 was 10 be tied up But
the fact is there would be no loss and no incon-
venienoe BY the tying up Of the Northern Sc
cur1ties stock II would mean only the passing Of
one coupon. should an Injunction issue restraining
the oisul button for the three months required 10
reach anal determination Of the case"
Judge Bradford asked IL he contended that the
decree q the Circuit Court. sustained by the
United States Supreme Court, Of itself directly
oonno the stockholoers on the question OF the C.
QUESTION OF stock. and not merely by way of argu-
~ % Etscssssary qeouctlon from that decree
Ar. Guthr1es reply was that the stockholders
Were necessarily bound by the decree and could
tay II covered he SAID eveyv sa gsen ~ IeIh
Judge Bradford inquired if Mr.. Guthrie would
latter said he would. decidedly.
ne court Inquired whether the sole object OF the
the interstate commerce rules.
20 the United States court had to- or did estsSlep
by us oecree that the merging of stock was a.
as matter OF equity pleading" inquired Judge
Brao.oro can you properly plead the decree or
apart from that decree?'
.tb oqr cOnol l,Is was answered Mr. Guthrie.
Ina, Inat we COULD NOT seek 10 establish any fact at
taM al variance with the legal proposition in the