The Cairo bulletin. (Cairo, Ill.) 1???-1928, 1907-06-15
.F|NANC|ERS JOIN
HARTMAN FIGHT
PLAN SUIT TO COMPEL UNION
PACIFIC TO SELL STOCK IN
coMUETlNG LINES.
ALTON DEAL AFFECTED
Together With Other Roads--Pra.
ferred Stockholders Want $780,
100000 Worth OF Securities
Put on Market.

New York, June H. AccGr riding tc
information given to the press tonight
by the senior partner Of one of Iht
greatest law firms In the financial dis
trict, combination Of financiers has
been formed and will stand behind
legal proceedings shortly to he begun
In an effort to compel the Union Pa
cific Railroad Company TO dispose Of
Ian the stocks in parallel or compel
ing lines recently purchased by the
Union Pacific Company.
RI & the intention of these finan-
cie.s. says the attorney. TO take no
action until the stockholders have
voted IN favor Of the mortgage and
bond issue In the meeting called for
Saturday In Salt Lake City. If the
stockhs lders approve the bord issue,
the suit will be begun both In the
state and federal courts.
The exact date of filing II has not
been decided on, the attorney says,
but the suit viii probably be on rec
ord by July 10, on which date the
right OF stockholders to subscribe to
the bonds will expire.
This suit will be in substance an
action to restrain the Union Paclie
from executing any mortgage 10 Sc
! cure the proposed bond issue, or, II
the mortgage be already executed
then to restrain the issce of the bonds.
The suit VII also demand that all
stocks in question be disposed OF i'm
mediately
I, The Law in the Case.
The legal principles relied on ia
litigation, The attcrney srafes, ara A.
follows.
"a Where directors of railroad
company commit a corporation to the
purchase of securities in violation of
the law and in consequence of this ac-
ton the corporation incurs floating
debt the courts will restrain execu-
ton or delivery of any mortgage lien
made with the intent to procure
money TO defray the purchase price.
(2) The court will Furthermore
compel the company to liquidate the
Indebtedness thus unlawfully incurred
by sale of securities so purchased and
attempted to be held
CD In addition, when it appears
that as a result of transactions, ille-
gal in themselves, corporation can
not continue to pay dividends on lis
common stock except as a result OF
execution of a mortgage lien and sale
of securities Hereunder, the court will
at the instance Of a holder of pre-
ferred stock enjoin both the execu-
ton OF such lien and use of he funds
of the corporation for such purpose.
Precedent in Northern Securities.
Precedents relied on in this suit are
found in the Northern Securities liti-
CATION and in the permanent inJunc-
ton recently issued against the Calu-
met & Hecla Company by the United
States circuit court in Michigan for
bidding the company to hold stock
of the oseeola and Tamarack Mining
Companies.
To such an extent has this principle
been carried that in the Calumet d
Hecla, case the company was enjoined
from owning mines. 1t was the same
principle that defeated Hartman
when, after the Northern Securities
case had been decided, he sought
through the United States supreme
court to upset the Hlll plan bf distri-
buting the stocks.
Sticks which the Union Pacific will
be compelled to dispose OF if this It'll
CATION succeeds were purchased at a
cost of about 800 00O 600 and include
shares in the San Pedro, the Illinois
Central the Alton. the Atchison and
the st. Paul railroads. These stocks
are selected because they are believed
to be clearly within the law forbidding
ownership of securities of competitive
lines.
These roads compete with the I'm
ion Pacific or. as in the case oil me
Alton and the Illinois Central with
each other. New York Central ana
Baltimore & Ohio are not to be in
ciuded in the lit CATION. as the case Is
not 50 clear as to them.
Preferred Stockholders Sue.
Complaints viii be a group of pre-
ferred stockholders representing about
5000 shares of stock. The law firm
having the matter now in hand would
be instantly recognized as high author
ity on railroad law. as it hase figured
in some Ct the most sensational litiga-
tfons ever seen in the United States.
its senior partner is a man high in the
councils fthe nation.
In bringing this suit. the complain
ants have in mind the logical outcome
of what Edward H. HarT man. Henry
II. Rogers. Henry Clay Prick. and VII
liam Rockefeller are doing. They fear
that If the men who nov control Union
-. - rrrn grn nfn aukfrh the