The Ogden standard. [volume] (Ogden City, Utah) 1902-1910, 1909-04-21

/
ter company was organized with a
capital stock OF two hundred thousand
dollars. but mono OF the stock was
ever subscribed. except the twenty
thousand dollars. The AFFIDAVIT ap-
pended to the articles OF incorpora-
ticn shows that each subscriber has
pail the amount Of the subscription
to his stock In cash. but as matter
| OF fact, as the testimony discloses. no
money WAS paid whatsoever by any
stockholder, though David Eccles. who
as heretofore stated. was the trustee
for himself and associates. conveyed
to the Ogden & Northwestern Rail-
road company the railroad running be-
tween the springs and the city, the
consideration named In the deed be-
ing five dollars.
| Thereafter the directors Of the Og-
| den G. Northwestern Railroad com.
| pany, acting under the authority CIV
Ell them by the stockholders. author
lied the president and secretary to
I issue bonds in the sum Of forty thous-
and dollars and to execute a trust
deed of the railroad and all the things
appertaining thereto. TO secure said
bonds. which was accordingly done.
these bonds being designated In the
| testimony as the first Issue. Ii ap-
| pears from the minutes OF the COM
| pany, which were excluded from evil
Gence at the time of the trial, but
which It seems TO the court now
| should have been received in evidence
| and which have been considered by
| the court in this dccision-that these
| bonds and the trust deed to secure
them were for the purpose of purchas-
| ing the railroad and Its equipment
from David Eccles for the sum of
twenty Thousand dollars in cash and
forty thousand dollars in bonds, but
ii is obvious from the testimony that
these entries In the minute book are
fictitious, for the reason that as a
Icatter OF fact the twenty thousand
dollars in cash was never paid to
David Eccles, and though the bonds
according to the testimony of the trus-
tee In the trust deed, who is plaintiff
in this action. were delivered to Mr..
Eccles. still they were by him dis
tributed amongst the persons who
were the original owners of the prop
erty in proportion to the amount
OF his subscription for the purchase
of the road.
1t Is absolutely impossible to figure
out that there was any consideration
whatsoever for the issuance of these
bonds or to regard them in any other
light than as gift to those who were
the owners OF the property. prior to
the Incorporation and as a sort of
prize premium to them for becoming
stockholders. II is doubtful, indeed,
as to whether or not tho testimony
sufficiently shows a delivery of these
bonds and the trust deed securing
them. The testimony shows that after
the bonds were issued and the trust
deed securing them executed. the trus-
tee appointed by the trust deed signed
the same, accepted the trusteeShip
and signed each of the bonds There.
after the trust deed was recorded by
the defendant company and remained
in Its possession until shortly before
the trial of the action was had. But
the testimony does show that tho
bonds themselves were delivered by
the trustee to Mr., Eccles, who dis
tributcd them amongst the stockhold-
ers While, therefore, II is question
able as to whether or not there was
sufficient delivery of the trust deed
herein In question, still inasmuch as
the bonds were delivered and the
trustee signed the trust deed, | am In
clined not to base my decision upon
any failure OF delivery, but rather
UPON failure of consideration. 1t is
certainly very strange, II the bond
holLcrs looked upon these bonds as
genuine. that they should have paid
SO little heed to them during all the
years that have interviewed since
their issuance and delivery The wit
ness, Kircher, who was the only wit
ness testifying in behalf of the plain
tiff upon this subject. was unable to
tell which bonds of the lot belonged
to him. and there is nothing In the
record to show that any OF the other
holders have any more definite knowl-
edge with respect to theirs. 1t is, In
deed, impossible TO tell in exactly
whose possession these bonds have
been during this period and the hold
erS made no effort whatsoever even
to collect the interest which was due
upon them.
The conclusion is irresistible to the
court that these bonds were not only
Issued without any consideration
whatever, but the only purpose they
could possibly serve would be to con
stitute lien upon the property of the
defendant railroad company superior
to that OF any subsequent judgment
creditor, and such is the use sought
to be made OF them In this action,
for the defendant Smith undoubtedly
has valid judgments unappealed from
against the defendant railroad com
pany and yet if these bonds are con-
s;dered prior lien, he has little hope
of collecting the same.
1t is true that counsel for the plain
tin make the point that some of the
present holders Of these bonds may
be, so far as the testimony discloses,
not the original subscribers to the
stocks to whom the bonds were given
but bona fide purchasers for value
from such stockholders, and that they
cannot be deprived Of their rights be-
caase of any lack of consideration be-
tween the defendant company and the
original bondholders, or because of
any fraud which may have been con-
nected with the original transaction