New-York tribune., 1907-01-26
NEW BLOW AT G. N. R. R.
FILTERED STOCK CHARGE
Minnesota Brings Suit to Annul
Charter Of Parent Comm pany.

81. Paul Jan. 25.-Attorney General Young
began mandaInus proceedings to-day in the su-
prene Court TO compel The St Paal. Minneapo-
rs G. Manitoba Railroad Company 20 show cans.
why It's charter should not be forfeited This
company, formerly known as the Minnesota a.
Pacific Company, is the parent company Of the
Great Northern Railway Company. and the
Great Northern is Joined In this issue, as it is
the owner OF the Manitoba sconpany-s stock.
Chief Justice Start ordered the writ TO be issued.
and directed that return be made on April .
next.
Attorney General Young has given out a digest
OF the allegations in the complaint, which goes
into all the transactions OF the Great Northern
Railroad Company, with its constituent COM
panies, forming the merger known as the Great
Northern Railway Company Attorney General
Young says in part:
We have begun an action in the name of the
state against the St Paul, Minneapolis g. Man
itoba Railway Company to compel forfeiture OF
it's charter, for the reason that ever since II
transferred its railroad with all its equipment
and appurfenances 10 the Great Northern Rail-
way Company, February /. 1890 Il has
ceased 10 perform the functions for which IL
was created, and has therefore forfeited it's
right TO exist under our laws as railway COM
psny- We have Joined the Great Northern Rail-
Nay Company as party 20 this action, because
81 is the owner OF all the stock OF the Manitoba
company, ana for the further reason that in
the alleged purchase OF the property and assets
of the Manitoba company by the Great North
ern company. a very large amount Of watered
stock was issued by the latter company which
claim is void under the law OF this state,
upon which the public are now, and ever since
ffs issuance have been having large dividends
We ask that the stock be declared void and
the payment OF further dividends thereon be
prohibited.
We have proceeded with deliberation IN this
matter on account Of the magnitude OF the in
terests involved and the great importance OF
panies affected. The Great Northern company
was created by the stockholders OF the Mani
toba company. and al the time Of the transfer
of the properties the stockholders In both COM
panies were identical 1t seems that the Great
Northern company was. created solely for the
purpose Of making II possible TO initiate the cap
italization or the system by making a sale OF
the properties TO the Great Northern at a price
in excess Of their value. II is easy to see why.
under these circumstances the Great Northern
company should pay a premium OF SoeooOOO IN
purchase of stock of the Manitoba company
When the gross earnings tax railroads was
raised from 3 TO 4 per cent in 1905 the Great
Northern company refused TO pay the Increased
rate on that portion OF fits road in this state
which originally constructed by the Min
nesota q Pacific company. The latter com
pany had a charter from the territory. in which
il was provided that the company never should
he called upon 10 pay more than 3 per cent on
its gross earnings. The company became bank
Tupt. and in 1879 the Manitoba company pur-
chased its road and franchises, with the ap-
proval OF the Legislature. and ever since the
purchase the Manitoba company has claimed
that it acquired by the purchase the same i'm
that the Minnesota & Pacific had
Last March, when the taxes OF this road for
1860 became cue the Great Northern, which
operates the road under an alleged lease. from
the Manitoba company. paid only per cent,
ana soon afterward the state began an ac-
tion against II for $4,000. being the unpaid
! per cent OF fts taxes under the new law. In
that suit immunity from any increase above
per cent in its taxes is claimed under the char
ter Cf the Manitoba company by virtue Of the
rights il claims TO have acquired at the pur-
chase Of the road in 1879 The suit is not Yet
.ff ,ag ha vaf1 zowa for will
be due in a few days, and there will be an
additional amount greater than that above men
TONED IN dispute for that year.
We are convinced that the Manitoba COM
pany is no longer entitled TO exist a railway
company. and that the speediest way to dis
pose OF its claim 10 exemption from the rate
~ taxes paid by other railway companies is
20 have its charter wiped out in which event
the Great Northern will be obliged 10 pay taxes
per cent the same az other companies
We are also OF the opinion that the Great
Northern should NOT be allowed 10 continue 10
pay dividends watered stock and that IL
should be required 10 show whether the large
amount OF stock which appears TO be fictitious
has any right 10 further recognition as part
OF its capitalization.
This suit win involve also the question Of
tie company's right TO create lot of subsid-
iaIy companies, composed OF its own stock
holders. TO build extensions. and then issue
stocks and bonds at will without any public SUI
perVisIOn, and also the right Of the Great North
ern company 10 divert the proceeds OF the sale
OF its capital stock 10 the purchase OF the stocks
and bonds Of such subsidiary companies.
Representatives in this city OF the Great North
srn Railway Company said yesterday that they
did not believe the Minnesota courts could annul
the territorial charter under which the railway
company is operating. The So. Paul, Minneapolis
& Manitoba Railroad Company got this charter
IN 1851 81 is said, ths OF the Manitoba
& ST. Cloud. The stock OF the s.. Paul. Mime
spolls e. Manitoba issued in 1873. In 1890 the
bulk OF the stock exchanged for stock OF the
Great Northern on the basis OF twenty-five Great
Northern shares for hundred Manitoba shares
There are still outstanding $500 shares OF the
Manitoba company. the Great Northern officials
say. and they are widely scattered, some being held
IN Europe. These the shares the Great North
eTn did not get when IL took the Manitoba,
but these shares have per cent premiums guaran-
ieed. One effect Of the annulment of the Manitoba
charter IL is said. would be 20 cause the rever-
son OF these shares 20 the Great Northern.