The Saint Paul globe., 1905-04-04
Securities Company Is Upheld
on Every Point
CLAMOR IS NOT TO DISTURB
Complainants Must Be Content With Their
Share of the Ratahle Proportion
of the Assets

WASHINGTON, April 3.-In the
United States supreme court today the
chief justice handed down the opinion
| of the court in the case of Hartman
svs. the Northern Securities company, I.
the decision in which was announced
Several weeks ago. The motion for the
immediate issuance of the mandate was
denied, the date for issuance being
fixed for April II. After stating the
case, the chief justice said:
In the present case complainants seek
the return of property delivered to the
Securities company pursuant to an exc
cuted contract of sale on the ground of
the illegality of that contract, but the
OF equity, Justice or public policy which
justify the courts in relaxing the rigor of
the rule which bars recovery. The cir
cult court DEGREES and the action of the
attorney general of the United States put
at rest any question that the ratable dis
tribution resolved upon was in violation
that the delivery to complainants of a
majority of the total Northern Pacific
stock and a ratable distribution of the
remaining assets. TO the other securities
stockholders would not only be In itself
inequitable, but would directly contravene
the object of the Sherman actand the
purposes or the government suit.
Would Smother competltIon
The Northern Pacific system. taken in
connection with the Burlington system, Is
| competitive with the Union Pacific sys-
! tenn, and 1t seems obvious to us, the en-
tire record considered, that the decree
smother that competition. The superior
| equities as against complainants present
| claim, of the many holders of Securities
shares who purchased in reliance on the
belief that they thereby acquired a
ratable interest in all assets of the Secu-
rites company. are too plain to be. ig-
| nored. The Illegal contract could not be
made legal by -estoppel. but the owner
| ship of the assets, unaffected by special
| interest in complainants, could be placed
beyond dispute on their part by their con-
duct in holding the Securities company
| out to the world as unconditional owner.
And, without repeating in detail what
| right of rescission of the executed con-
| tract of Nov. Is, 1901, even If rescssion
could have otherwise been sustained.
had been lost by aSQuiescence and lacheS
at the time this bill was filed.
Stock Widely Distributed
| Since the transfer of that date Securi-
ties stock had passed into the hands Of
| more than $500 holders, many of them
| in Great Britain, France and other parts
Of Europe. Nearly a year after the filing
sold for cash. complainant Hartman
concurring. Some months after Harri-
man nan and Pierce and the Oregon Ore g Short
| to the Equitable Trust company, notwith-
| standing the decree Of April g. 1903.
| They stood on their rights as sharehold-
! ers; and 1t was not until after March %.
/ 1904, when defendants board of directors
| resolved upon ratable distribution that
complainants undertook to change an
/ election already so pronounced as to be
| irrevocable in itself in view OF the rights
| of others.
| We regard the contention that COM
| plainants are exempt from the doctrine
1 in pari delicto because the parties acted
| in good faith and without intention to
| violate the law as without merit. With
! knowledge of the facts and of the statute
| the parties turned out to be mistaken in
4 supposing that the statute would not be
| held applicable to the facts. Neither can
plead ignorance of the law as against the
| other, and defendant secured no unfair
| advantage in retaining the consideration
voluntarily delivered for the price agreed.
l With full knowledge of that intention the
! proceedings of the two companies follow
| ed in November, 1901, and the absolute
and unconditional sale and purchase, as
we hold the transaction to have been.
Purchase Cannot Be Disturbed
| We find no evidence of any express
| agreement that complainants should be
| entitled to the new common stock. and
! 1t was certainly not the natural increase
/ of the old stock, but the result of the
| exercise of the right of subscription. The
| purchase by the Securities company was
| on its own account and not In trust and
| purpose at the clamor of the parties in
! pari delicto. And there is here no offer
\ of the restoration of the status quo IL
| that were practicable.
Doubtless it became the duty OF the
Securities company to end situation
| that had been adjpdged unlawful, and this
could be effected by sale and distribution
| in cash. or by distribution in kind, and
| the latter methods was adopted. and
| wisely adopted, as we think, for the
! forced sale of several hundred thousand
shares of stock would have manifestly in
| volved disastrous results. In fine the
titles to these stocks having Intentionally.
| been passed, the former owners or part OF
| them cannot reclaim the specific shares
| and must be content with their ratable
| proportion of the corporate assets.
| Decree affirmed; cause remanded to
| circuit court with a direction to dismiss