Year: 1868




UNITED STATES CIRCUIT COURT.


70 Chicago, Rock Island and Pacific Rail.
road Case-Charge Against the Directors.


The further argument In the case OF Hatch vs. The
0Aicaso Rock Island and Pacific Railroad Company
was resumed yesterday morning before Judge
0latchf0rd.


ExJudge Porter addressed the court on behalf OF
she plaintiff He said the issue OF the case before the
court was OF greater importance In the city OF
New York than it could be in any other city in the
world The questions involved were of the most
vital Importance, not only TO in their ordinary
pursuits or lille, but to women and children whose
means ol present support and future existence de-
pend upon whether or not the trustees OF this corpo
ration shall be at liberty TO violate with impunity the
sacred trusts reposed In them AMI sacrifice the pro-
perty coniaed 10 their care. During two years they
mad permitted only TWO meetings Of their own board
OF directors, and in that alone they were unworthy
0l confidence. Not only were the trustees false but
they acted as gamblers, and sold the stock OF the
shareholders at nominal price, injurious to the
company they were bound to protect and In open
Violation OF the law provided by Congress to apply
Die fraud he tcounseD had to contend against
1agrant in operation and carried out to an enormous
extent by the executive committee In the persons OF
Tracey and Dow, who kept up running fire, and
sometimes In single rounds but always with ruinOus
results TO the proprietary Of this corporation They
Hooded the market with the stock OF this company;
tIiey deprecated the value OF Its shares from 9s to
o3, and then defy us to purchase they challenge
20 bring them into court, and they will meet US
there with the abest counsel at the bar and COM
PEI us to pay The fees. Counsel charged that John
r. Tracey was the principal actor IN this nelarious
proceeding; that he had gambled in the funds or
the company and challenged those who trusted
him to bring him into this court or into any other
court, and into several courts, and then ride or In
the security that he had costs TO pay, but that
The costs to be incurred in defending himself must
be paid by the shareholders whom he has betrayed
He tcounsel) was not speaking upon the morality OF
Wall street, but he would speak upon the fact that
man who Rambled upon the shares or this company,
who sold shares which he did not possess, perpe-
rated acts OF dishonesty and not stopping there he
went further and proposed TO raise another million
10 enable him TO carry cut his system OF gambling,
and by these acts he proved himself to be man not
u be trusted. At common law his acts would be
regarded as breach OF trust in each and every in
stance OF his guilt His general good character Is no
defence OF his guilt. His friends may say that he Is
IN honorable man; we say he has committed breaches
OF trust and ought not to be trusted. Ills acts had
been destructive TO the company. AS trustee he was
1alse TO his trust; his morality as gambler was
lax morality, and, false In fact for he knew full well
thxt breach OF trust was violation OF the charter
~ which the corporation was established. For the
construction OF the Pacific line ol road 1t was pro-
posed TO raise S5,000,000; whereas, with the daily
increasing revenue upon the working OF the line III
operation, that enormous increase to the capital
STOCK OF the company was not required. From Il
statement made by Mr.. Dow or Mr.. Tracey, or both
of thefn 1t appeared tnat when this Increase oil capt.
tai had been projected 1t was set forth that the
Gaiilc on the road was equal to sixteen per cent
nae was paying a dividend of ten per cent that
was not the Intention OF the directors to extend
the line from Des Moines direct, but to do 1t gradu





with the dividend. And yet IN the face OF this state
Ment and before the lapse Of one year the dividend
became reduced to seven Ler cent and the value Of
the shares in the market became deprecated from
nnety-eight to ninety-tnree per share. He c0unseD
commended tnat the project TO raise The hve millions
pany, and he would SHOW thai 1t was not required.
The old shareholders possessed their line with paid
mp capital 0l $ySOU,UOu. They were the owners OF
SallfOad which was admitted Oh all hands to be
the most complete and most prosperous line on the
continent bf America, paying u dividend or ten





shan million, with every element OF prosperity and
prospective success under the faithful management
OF Board oil Directors chosen by themselves. There
was then no necessity TO issue shares for
or hve millions 10 their capital. 1t was gambling,
Plnnder1ng project and the process OF plunder had
been carried out and the system OF gambling had
Seen carried out. Gamblers were regarded by law
as r0gue and yet those parties come into this court
and soy that they should not be rebuked by the
Judge IN the administration OF the law. He con-
tended that those men, John f. Tracey and Mr. Dow,
were guilty OF breach OF trust, and had violated
the law further by refusing the shareholders access
60 the books OF the company. They were bound by
aaw TO exhibit the books OF the company and to al
aord every Information which shareholder might
SECURE.


on behalf OF the defendants, In the course OF wnicn
he cited multitude or authorities to sustain the pO
ti0n he had taken at the outset in opposition to the
motion for the Injunction. He adverIed TO The critt
cisms made upon the conduct OF the directors. He
said that those criticisms were unjust-that they
were not warranted by anything that had transpred
IN the case-and that he had as he believed,
sngwn to the satisfaction OF the court anu
u every impartal-,ninded person that the
directors Of the road, IN all their actions, had
done nothing more than they were authorized
20 do under the powers conferred upon them by their
deed OF Incorporation. AS to the charge tlat the
directors had not held meetings Chicago, he asked,
Would IL for O moment be contended ON the other
side that II company started IN New York for
the formation OF u line OF steamers TO China the
directors Of that company could not II tney peased,
hold meeting upon the quarter deck OF one Of their
steamers Saturday afternoon and there consult
upon the best means Of advancing the interest oil
their company


The arguments closed at five O'Clock, at which
hour the Judge took the papers and reserved his
decision.