The San Francisco call., 1910-09-15
HIGH FINANCE IS
ATTACKED in SUIT
Millionaire Accused of Using
Dummy" Directors to De-
fraud Land Corporation
County Line Company Stock
Holders Sue John H. Spring
for 100000

OAKLAND. Sept. l4.-Methods of
high finance. which are termed con
spiracy' by his former business asso-
cistes. are attributed 10 John H. Spring.
reputed millionaire and president and
chief owner of the Spring construction
company, in suit involving nearly
100000 which was hled in the superior
court today.
The story told is involved, including
several transactions. but the gist of
the accusation against Spring is that
he organized a corpora ton for the de-
Telopment Of Berkeley lands, sold $780,
600 worth Of stock in ii on the under
standing that the corporation was to
get 200 acres of land from him at it's
actual cost, but in fact sold the land
at twice its cost with the assistance of
directors who are called his dummies,
tools and agents"
HELD ON OPTION
In addition TO this. the cost" to
Spring is alleged to have been a paper
cost. Without putting UP any money
he is accused of receiving 100000 in
cash and of saddling the corporation
with mortgage for $57,65O, all in the
course of a few months.
John C HILL Frank Morris and W.
II. Shadburne are the men called
Springs dummies" in the suit. The
action was brought in the name of the
county Line company, a corporation
which Spring was alleged to have or
ganized for the purpose OF selling to
IL land that he had not vet acquired.
and which passed out of his control
only last April The plaintiff asks
Judgment for s215,30 and interest
against Spring. and demands that a
mortgage in his favor for S57,s50 on
the Berkeley land be cancelled
About January 1.-1907. the complaint
recites, Spring conspired to organize
The corporation and sell TO it land
which he did not yet own. He secured
options on two tracts Of land in West
Berkeley and the city Of Ocean Shore
now Albany, aggregating 200 acres,
from the Realty Syndicate, at $1,000
an acre Part OF the payment was TO
be ia the shape Of two mortgag ges. on
January 2l. 1907. according 10 the COM
plant, he organized the County Line
land company, with capital stock of
100000.
MADE DIRECTORS
Neither shadburne. Hin nor Norris
owned a share OF stock. the complaint
sets forth. although they were made
directors. Spring offered the 200 acres
a
$4,000 an acre, half to be paid in cash
and the other half in mortgages to
him. Stock in the company was sold
10 subscribers between January and
April, 1907, with the understanding, the
complaint reads, that the land was tc
be sold by Spring to the company al
its actual cost. The company was ther
10 cut it up and sell il in small lots
By April. 1907. the entire issue of stock
had been sold and the subscription paid
IN. Spring, Shadburne. Hill and Nor
ris, as directors voted to buy from
Spring on his terms. and actually paid
him 100000 in cash. according TO the
company's present officials. and ex-
ecuted mortgages for the balances OF
the payment.
AS a matter of fact the complaining
company declares Spring paid to the
Realty Syndicate, after he himself had
been paid, only $71,1T5. assuming a
mortgage Of SI12,525 for the balance
The difference between the aggregat te
of these two sums. which is s1S47OO
and the 100000 which he charged the
company he created. is the amount sued
for, in addition TO the mortgage which
the company gave him when the pur-
chase was made.
INVESTIGATION MADE
Spring continued in control of the
County Line company's affairs until
about April 1. this year. during all OF
which tine the other stock holders OF
the company say they were in ignor-
snce Of the transactions whereby
Spring had acquired the tracts of land
from the Realty Syndicate and turned
them over to the County Line company
An investigation was then started
which resulted in the suit.
During the three years in which the
AFFAIRS Of the company were controlled
by Spring. most of the work of street
improvement made in the tracts. which
were opened UP and sold rapidly. was
done by the Spring construction COM
pany.