The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-01-04
SECURITIES INJUNCTION VOID.
I. =. COJRT or APPEALS IPSFTS
III iRRIUiN CONTENTION.
Court Divided TO Majority Opinion
Holds That the Northern Pacific
stock Was Sold Outright--Iiarriman
Interests Are Expected to ApneaI

PHILADELPHIA. Jan 3. The nited States
Circuit Court of Appeals today handed
down its decision in the Northern Securi-
ties injunction case, setting aside the TEN.
porary injunction restraining James J.
Hill Of the Great Northern Railway Com
pany and J. p. Morgan from distributing
Northern Pacific stock put into the Northern
Securities Company on II pro rata basis.
The effect Of the decision il a victory for
the Hill-Morgan combination over T. H.
Hartman. who will nov probably lose
control of the Northern Pacific Of which
he had placed a controlling interest in the
Northern Securities Company. John &.
johnson. counsel for Mr.. Hill commended
that when the Northern Securities Com
pany was formed the Northern Pacific stock
was sold outright in return for shares in
the new company
Mr. Hartman claimed that the Northern
Securities Company was merely a holding
company or depositary for stocks involved
and that the real owners of the stock con
tinued TO be those who turned it over TO the
nav concern.
The case WA heard by three Judges
Acheson. Dallas and Gray. The opinion
which covers nineteen typewriter pages,
was written by Judge Dallas Judge Gray
wrote dissenting opinion. The case grew
out Of the attempted distribution of the
Northern Securities stock after the Govern
ment declared 1t an illegal combination
The decision read
o. It appears from the opinion Of the
learned Judge below that in granting the
injunction he was naturally influenced by
the consideration that the questions IN
h., ,-ta.paH
and doubtful and thus "a decision by him
denying the Injunction would If made
not he renewable ON appeal.
We think that upon the ground he was
justified in recurring that the sfGfU quo
should he preserved, and the subject matter
Of the controversy be withheld from dis
Cusson until the opinion OF tins court
could be obtained But now the sub
stantial rights OF the parties only need bee
considered and whet her the injunction should
stand or be- dissolved ought. in our judy
ment to be determined upon the merits
and without further delay
There have been cases II Il true. in
which il has been held that where the court
OF first instance has unreservedly eXer-
cised its discretion in granting or refusing
n preliminary njunctioa H. acton ought
not to be iuterfered with hv an appellant
court unless there il some strong reason
Tor il.
But 10 tho circumstances those rulings
ar. inHpposite Attentive reading of the
opinion of the learned Judge of the Circuit
Court haS satisfied W that he regarded the
fact that an appeal could not lie from
denial of the Injunction ~ Of controlling
unportduO. and that his decision Wa made
with the und' = tanding that the deiendau;
below would b. eut,tied to evoke "a complete
ADJUDICATION of the entire controversy 10y
this court and We think that reason and
justice demand that such an Adjudication
shall not be further pos poued.
The Injunction complained OF preclHdes
the enjoyment of right- Of ownership IN
property Of great value the ia"~ upon
which the propriety &c UNFOLDING II de-
ponds are unquestionahly disclosed in the
record before US and the principle hyV Inch
the legality Of the order awarding 1t must
I've tested are induhitable and may be as
readily applied now as AT any time here
after.
The only substantial question j. ~ TO
whether the decree below Wa accOrdaui
with law, and that question this court could
not refuse 10 determine without ~ enec'
reuouncing the apI~lat" jurisdiction
which Congress has expressly conferred
H. apteil-ee averred ia their bill and
their counsel conteudcd IN argument That
the shares of railway stool, ~ question we're
ACQUIRED bv the Securities company under
and subject to an alleged agreement which
will be presently and particularly referred
Co. Il would hold them ~ custodian, de-
pository or trustee. and that tlie legal ana
equitable owners ui the said shares OF rail-
way conpanlcr were and are me several
parties who originally exchanged the sam"
for stock ~ the Northern Securltie- Com
panv or their assigns
-On the other hand the appellant. the
Securitics company insist that II acquired
tho railway shares referred 10 hy absolute
purchase thereof aud that con-egueniiy. II
became aud H. now Invested with 'h" eQuit-
able a. we'll a. the legal title thereto.
The issue thus presented is of primary
Importance. and the proofs leave 'l- 10 doubt
A. "a the facts upou "iu'h % must %" n'-
terrniued. That "a" transaction, H least
II, form and prlma facie in substance, Wis
one VI purchase and sale l. manifest. TN"
resolution which authorized the acquisition
Of the railway stock on behalf Of the Saclifi- /
ties company wae adopted 10y ~ bond 81 :
directors az a meeting of which Mr ifarn- .
man was present a. . member 81 ihe board /
and the only authority II conferred was 10 /
purchase said stock ~ the Aggregate pH'e I
Of sol i07 500 payable. A. 10 ~ 4Hl s'i there
Of. in the fully paid up 30. non -a~-e0Sapl' |
shnres Of the capital 81 TX Of this COM
tauy a. par and a. TO s., alo - IN ~ 10.
1T j. obvious that this resolution con-
templAted n purchase and not l-uilueIt .
or trust, and that II accurately stated the .
nature and terms 81 the contract which I
Was actually made by and with the Secui1-
tie- company Is uneduivocally shown hy
what was done in pursuance ui n
The railway shares were Internationally [
AZ 81 gned 10 that company he prco specl-
fed in tho resolution was paid 10y u. this
payment was made partly IN cash ana purtly
in sharel OF it's own stock Tor which cor
porate certificates in the ordinary form
werO given.
The agreement thus act up was not M
accord with the documentary evidence
referred to- and 10 establish IL eNstcnoe
a clear preponderanoe Of proof should
at least H. required; whereas IN our opln-
ion il oonclusiyely appears that no such
a greene II was ever made. MIR Harrl-
man himself has distinctly testified that the
Northern Pacific stock IN question was sold;
that the transfer was not an exchange
that he principally negotiated the sale,
and that there was not attached 10 TIE
negotiations any condition eXc"pt "a to
price and to the same effect Is his affidavit
in this case in which he depo-ed that he
was urged by Messrs. Morgan and Company
To dispose Of the Northern Pacific stock
held by the Oregon Short Line company
and that they further stated thai upon
the organization Of the proposed hold
ing company il would be prepared 20
purchase the holding II the stock nj ih"
Northern Pacific owned los the Oregon
Short Line and pay therefor IN The toch of
the holding company.
These statements OF one of the COM 2
plainant~. having most knowledge ~ IN"
subject confirmed rs they are by tho other
evidence. make 81 quite impossible 30 br-
lieve that the railway stock was received
ha IA b