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0 STRUGGLE FOR CONTROL OF THE NORTHERN PACIFIC IS ON Continued From First Page. nounce the order in which the at torneys for the Securities company -would be heard later, and it was agreed that each side would have not to exceed an hour and a quarter in closing; the preliminary arguments to occupy about an hour each. MR. EVARTS OPENS ARGUMENT. The preliminaries having been com pleted Maxwell Kvarts was the first to address the court in behalf of the petitioners. Mr. Kvarts discussed the historical features of the case at some length. He interpreted the ruling of the United States supreme court to mean that the Northern Securities com pany must distribute its stock to its original owners; the court said the Se curities company had gained no title in the stocks and was simply a holder, the title being in the original owners. Harriman was bound by the decree as though he had been party to it. When the time came for the distri bution of the stocks held by the Se curities company the Harriman inter ests, he said, discovered that the plan of distribution was hostile to them and Would give the common control of two competing railroads to a group of men even more strongly than under the old order in which the Securities company held the stock. He contended for the right, as trus tees for stock put into the Securities company, to recover what they had put in and the difference between what they had paid in and what the Securi ties company offered them. The dif ference amounts to more than a million dollars annually in interest. To give his clients the right to in tervene, he contended nothing- is need ed but a mere statement of the case, the powers conferred by the Sherman anti-trust legislation being designed to the court all the powers of equity. To wholly suppress the effect of a combination of railroads, he contended, it was necessary to distribute the stock to the parties from whom it had origi nally come, and declared his clients would not be forced Into a combination which he believed illegal in the face of an act of congress. The speaker cited a supposititious case and argued that the same principle ap plied to the procedure being attempted by the Northern Securities company, the only difference being that one case governed individuals and the other cor porations. While only a bailee of the stock, the Securities company was seeking to distribute it as though it had title, and theory of ownership could not be sustained in view of the decision of the supreme court declar ing the company unlawful. The court was virtually in control of the proper ties of the company, and constructively of all the assets of the company, as much as though a receiver had been appointed. The only way in which the stock could be touched except by the act of the court, was being avoided by the Securities company. The prin ciple that a decree of a court, where property was involved, could be in voked to secure a just distribution, was doubtless true. This court, there fore, had jurisdiction, and had a right to hear and determine the petition for Intervention. KNOX NOTICE IS ANNOUNCED. Just as Mr. Evarts had closed his argument. Judge Sanborn interrupted the proceedings to ask the attorney if he had knowledge of a notice from the United States government that it stood squarely on the decree of the supreme court and would insist on the carrying out of its mandates. District Attorney Haupt read the notice from Attorney General Knox and when he had con cluded, Attorney Guthrie said: "In view of the fact that the attorney gen eral has made us parties to the Htiga tion, the ends of justice require that we be heard. It does does not lie with the attorney general to say that we shall not be heard. We are entitled to a day in court." The notice of the government's posi tion was the event of the day's pro ceedings, and created a decided sensa tion in the court room. It was taken to mean that the Securities company would have the strong arm of the fed eral government in its effort to ratablv distribute the stock of its company among its shareholders. Elihu Root, counsel for the Northern becunties company, followed Mr Evarts. and spoke for nearly an hour and a half. His argument covered almost every conceivable phase of the case. He attacked Harriman for shar ing m the formation of the company as a director and then attempting to gain a preference over the other sharehold- n r;Y? Vif p-rofits- The decree fc ]im lted to the jurisdiction of the court and the necessities of the case. The court he said, was not exercising general equity jurisdiction, Harriman had op posed the suit of the attorney general and now asks to modify the decree on the very questions on which it was de termined. He insisted that the distribution of the shares on the ratable pl an WO uld not create a control of the Northern Pacific but the Harriman plan wou,S create a combination of two parallel and competing roads-the Northern Pacific and the Union Pacific—and argued against the theory advanced by the petition of constructive controL The court could not become the ad ver n svtni^ ?' the Pr°Perty ta cont™ versv and in conclusion, he charged Srss" twi -h bein& particeps ™m- dollars I IT S tO Wr6St the lniIlio" dollars his attorneys spoke of from the shareholders of the Securities corpora! Mr. Root was most effective In his arfs Ulof enth/ eST ing tO n°ne °" arts of the orator, but his discussion of the issues involved In the great case was clear, lucid and conW t many In the audience. He was f?Jv congratulated by his fellow counselors at the conclusion of his argument Mr. Root Discusses Issues Former Secretary Root said in part cution of this decree that a furtw n es e" and Piercempany by **** Har"f™n The most marked characteristic of the action which this court took was the purely negative character of the relief awarded. The decree finds two matters of fact, one that the defendants entered Into a combination or conspiracy in re straint Of trade and commerce, the other that the stock of the Great Northern and the Northern Pacific companies claimed to be held and owned by the de fendant, the Northern Securities com pany, was acquired and is held by virtue of that illegal combination, and then proceeds to the negative provisions: First, that the Northern Securities company, its officers, agents and servants, are enjoined from acquiring or attempt ing to acquire further stock of either of these railroads. Second, that the Northern Securities company be enjoined from voting the stock they have already acquired. Third, that the Great Northern and the Northern Pacific be enjoined from permitting that stock to be voted. Fourth, that'these railroad companies be enjoined from paying any dividends I — Elihu Root Explains Origin of the Northern Securities Company. upon the stock that has been acquired, and Fifth, that the raihvay companies, their officers, directors, servants and agents be enjoined from permitting or suffering the Northern Securities company or any of its officers or agents to exercise any control over their corporate acts." And there ends the operative provisions of the decree. Decree Limited to Thou Shalt Not. What is the execution of that decree which is limited to 'Thou shalt not?" which directs nothing to be done by any one whomsoever? What can be the ex ecution of that decree but obedience, but refraining on the part of the defendants and all their agents and servants from doing the things which are prohibited? And so long as the defendants, their servants and agents refrain from doing the things which your honors have com manded them not to do, what further execution of the decree is possible? Your honors were proceeding under a peculiar statute. You were not exercis ing general equity jurisdiction. You were proceeding under the fourth section of the Act of 1890, which was in its terms pro hibitive, which said, "Thou shalt not," and only "Thou shalt not." Having invoked that authority on your honors' part and having by the exercise of that power brought before you here a corporation of the state of New Jersey, the attorney general in his bill prayed not only the prohibitory relief which was expressly authorized by the statute but prayed also that your honors should direct that the stock of the Northern Pacific and Great Northern companies, which had been vested In this Northern Securi ties company pursuant to what he alleged and what the court has now found to have been an illegal combination, should be re turned to the persons from whom it orig inally come. The attorney general in that prayer, go ing beyond the express authorization of the statute, when your honors came to draft your decree you refused the relief that he asked—for the return of the stock of the Northern Pacific and the Great Northern to the persons from whom it came—and made your decree square pre cisely with the limitations of the statute. No interference Necessary. And it stands, therefore, in this court and in this case upon your honors" de cree—now affirmed by the judgment of the supreme court of the United States— that no interference with the conduct of the affairs of his corporation was neces sary to the full exercise of your honors' jurisdiction except "Thou shalt not do thus and so." The five things which your honors said shall not be done stand upon your decree, and upon the judgment of the supreme court affirming it as all that it was necessary for your honors to do to prevent the violations of the law complained of by the government in this cause. Your honors were not, however silent upon the subject of the attorney general's prayer for a direction that this stock be returned. Refusing a decree that it be returned, the opinion upon which the decree was based, after describing the relief that would be given, proceeded to say, "And finally, permitting the securi ties company to return and transfer to the stockholders of the Northern Pacific and Great Northern companies any and all shares of stock of those companies which it may have received from such shareholders in exchange for their own stock." That is to say, your honors said, 'We will not, and it is not necessary for the purpose of vindicating this law' to make any direction about what this corporation shall do with its stock We will prevent their exercising the illegal control which restrains competition and we will do it by injunction, and it is not necessary to go beyond that and give any direction about what they shall do with the stock they have received, but while we will not order it, we will permit it " Refused to Order Return of Stock. Then when you came to the decree I observe that so careful were you to re frain from interfering with the affairs of this corporation beyond the prohibitions necessary to vindicate the law that in stead of using the word "permit." which was used in the opinion, the language is changed and you say, "but nothin^ herein contained shall be construed as prohibiting." So that your honors did not make yourselves the source of authority for the return of the stock; you not only refused to order its return, "but you re frained from making yourselves the .source of authority for its return and consequently disposed of that branch of the attorney general's prayer by saving that nothing whicb you did do should be held to prohibit the corporation making such a disposition. * Now, our friends come Into court and they ask that you make a decree- they ask that they be allowed to file a peti tion in intervention, to the end that they nlay ask your honors to make the decree which you, refused to the attorney gen eral. Mr. Harriman, the petitioner here was a director of the Northern Securities com pany. That company, it appears by the papers before you and upon the records in the cause, was first organized by the filing of a certificate of organization in the state of New Jersey on the 13th of November, 1901, and on the 14th of No vember the organization of the board of directors of the company as it continued in the transaction of its business was made, and upon that day—upon the first day of the corporate life of Ihe corpora tion—Mr. Harriman became a director and remained so throughout the entire period of its existence until this present day, and that company, under the direc tion of the board of which this petitioner was a member, appeared in court and op posed tr- * very decree for which they now aak«v THE ST. PAUL GLOBE. WEDNESDAY, APKIL 13, 1904. This applicant did not merely stand silent while this litigation was waged and Bee tile attorney general ask for this re lief and jour honors refuse it, but by the presence of one of the petitioners in the board of direction of the defendant the Securities company, they opposed the granting of it. And now, .the decree hav iiiK Kone forth and having been confirmed by the supreme court, he comes in and asks your honors to reverse your former decision. He asks your honors to reverse the decision by which he was defeated, to make the decree that he opposed your making, to go beyond—and not merely go beyond the limits of the final decree." but to reverse and modify that decree upon one of the very questions which was in issue and was determined in the original cause. Satisfied Attorney General. The careful limitations which your honors placed upon your judgment were of Infinite satisfaction to the learned at torney general when he came to the bar of the supreme court, and upon those limitations he based in his argument there an answer to my friends, represented through the board of directors of the Se curities company, when they asserted that your decree ought to be reversed because of the want of proper parties in the orig inal cause. Nevertheless, if It appeared to the court in any way that something was about to be done affirmatively which would amount to a violation of the negative provisions of the decree, of course your honors have jurisdiction, in the execution of the decree, to make such appropriate order or issue such appropriate process as may be necessary to prevent it. My learned friend says that a plan of distribu tion of the assets of the Northern Securi ties company will be in effect a violation of the decree. Why? The distribution of the assets of the Northern Securities com pany cannot be a violation of your decree, for it is putting out of the hands of the corporation, whose holding of those as sets you have declared to be illegal, the assets themselves. It cannot be a viola tion of your decree which condemns the holding of stock by the Northern Securi ties company for the Northern Securities company to part with it. But he says the return of this stock in the way in which it is proposed, that is, by equal distribution among the stock holders, will put into the hands of the persons who were originally concerned in getting up the Northern Securities com pany the stocks which they contributed or the stocks of these two railroad corpora tions, so that still those individuals will have the control of these two corporations. The first consideration that arises on that proposition is that that would seem to be the concern of the complainant in this cause. It would seem that if a pro ceeding open and public in its nature, as is this, appearing upon the petition to be initiated by a circular sent to all the thousands of holders of stock of the Northern Securities company, published in the newspapers, known all over the world —if a proceeding of that kind were darn ed to be in violation direct or indirect of the prohibitions of your honors' decree, that the complainant in this bill, the dis trict attorney and the attorney general of the United States should come into court and ask your honors for appropriate proc ess to prevent, such a violation. Harriman's Right Questioned. My learned friend representing Mr. Har riman and Mr. Pierce and the Oregon Short Line company does not carry in his new-found anxiety for the enforcement of your honors' judgment a strong presump tion of disinterestedness. What business has he here moving this court for process for the enforcement of this decree? Is it customary for courts of equity to permit strangers to the litigation to come in and undertake to instruct them as to what process they shall issue to enforce then decrees? But, passing that, it appears upon the papers which have been handed up, first, that the course proposed by the Northern Securities company is the course which is dictated by the plainest considerations of fairness and justice on the part of the directors of that company towards all the persons who are interested. What is it? It is a distribution among all the stockholders of the company of the assets of the company, beginning, for the pur pose of continuing the corporation, to make the distribution with a reduction of the capital by 99 per cent, leaving but 1 per cent, and the distribution of the 99 per cent of all its assets equally among all the corporators. Now, my learned friend, Mr. Guthrie, says that is not fair. Why not? Isn't it in accordance with the contract that he made? What are the rights upon the certificates of stock he holds as com pared with all the others who became parties to the contract of incorporation, but the right to an equal share in the property of the corporation upon its dis solution, or upon any event which calls for the distribution of assets? Now, it is true that he may prefer a sale and distribution of cash rather than a distribution in kind. But is that a question affecting the execution of your honors' decree? That is the question for the stockholders of this company to dis cuss and thresh out among themselves in the tribunal which has the proper juris diction of the winding up of the corpora tion of the state of New Jersey. Under the laws to which my learned friend's client, equally with ali the other stock holders of the Northern Securities com pany, have submitted themselves by their contract. The proposed action of the cor poration is in accordance with that equal ity which is equity, and at present what the corporation is doing is to call a meet ing of all the stockholders in order that they may pass upon the fairness and justice of that method of distribution. It would be a violation of your honors' injunction restraining this corporation from voting this stock or exercising any influence over these corporations, in a suit which charged the formation of the corporation as an illegal combination — that it would be a violation of your in junction for the stock to be put in the hands of a number of individuals who. my friend says, would combine as individuals —that is, would make another combina tion as individuals for the purpose of controlling these roads. Judge Sanborn Interrupts. The Court (by Judge Sanborn): Let me ask you a question right there. Suppose that this stock was about to be trans ferred to another holding corporation just created in the state of New Jersey and that fact was brought to the attention of the court, would it not be proper for the court to take some action to prevent that? Mr. Root: I have no question that it would be proper. Whether it should be by the intervention of an outsider at the foot of this decree or by independent bill for the restraint of a new and separate combination is another question. But there is no question but that 1t would be within the authority of the court to do that. The Court (by Judge Sanborn): Now, what is the difference, in your mind, be tween that proposition and the proposition made by the intervenors? Mr. Root: The difference in my mind between that proposition and the proposi tion made by the Intervenors Is, that the intervenors are alleging an entirely new and different combination, in the future; not a simple continuance under another form of the same violation of law whicb your honors have dealt with, as would be another holding company. , But they are sitting up the fact that the vesting of title in a number of individuals will lead to a combination in violation of law. How can your honors accept a set tlement of that kind regarding these in dividuals? Has there been corruption of blood? Have these individuals lost their rights as citizens? Are they proscribed? Have they been deprived of the right to hold stock? Is th<>re any presumption that Mr. Hill, Mr. Morgan, Mr. Kennedy, Mr. James, are violators or are to bo violators of the law? Your honors have held that the formation of a corporation for the purpose of holding this stock Is in itself acquiring the power to control and tht refore la illegal. But the holding by these individuals is acquiring no power to control except through some future conspiracy or combination between them which will bo in violation of law. And you are not to presume that, you are not to assume that they are not competent to hold securities and to deal with them lawfully. And you cannot take any such vague and general assertion on the part of these applicants as to what these gentlemen will do in the future as (he basis for making a new decree against them. No Foundation m Fact. But, to go beyond that, the papers which have been filed hero .show that there is absolutely no foundation in fad for the statement that this distribution will vest in this class of persons the control of either of these companies. This distribution will result in scatter- Ing to the four winds the stock, the hold ing of winch by this corporation has been adjudged to be the source of power to limit competition, and therefore a vio lation of the act. VVell, how do we stand upon the pe titioner's proposition? What he asks your honors to order in lieu of this distribution of the assets among the stockholders ac cording to their rights, is that there shall be returned to the Oregon Short Line the entire amount of Northern Pacific stock which was originally delivered to the Northern Securities company by him; and that be says was $37,023,000 par value of the common stock, and $11,085,000 par value of the preferred stock, and this preferred stock, he says, was transferred tinder an understanding and agreement that it should be converted into common stock, which he says has been done. So that he asks you honors to order that there be banded back to the Oregon Short Line, to be put with the Equitable Trust company, which is trustee for an issue of bonds by the Oregon Short Line com pany, so that it must remain in block, not subject to distribution or sale, $78, --108,000 of the stock>of the Northern Pa cific company. The capital stock of the Northern Pacific company is $156,000, --000. The $7fc.000,000 which he asks you to order into his bands is, therefore, a large majority of the stock of the North ern Pacific, it appears upon the records of this cause that all, or substantially all of the stock of the Oregon Short Line, which is to receive this $78,000,000 of shares of the Northern Pacific stock is owned by the Union Pacific company. If-your honors will look at the map, which is a part of the record upon which you made your decree, you will find laid down the route of the Union Pacific com pany, including the Oregon Short Line which is theirs through owning all the stock, and ilw? line of the Northern Pa cific and Great Northern companies, in cluding the Burlington, owned one-half by each of them, and you will see that by the same rules which your honors have applied in the judgment in this case your are being asked to put into the hands of .the Union Pacific company the absolute control of the parallel and competing line of the Northern Pacific. Give Control to Union Pacific. I take it that there can be no question ot the authority and the duty of a fed eral court to shape the execution of a judgment which prohibits one control of parallel and competing lines by compelling another control of the same parallel and competing lines. *our honors wlll Perceive that this whole Northern Securities company arose out of the effort to prevent the Union Racine company from acquiring control of the Northern Pacific. Having gone into that venture and having failed, the Oregon ohort lAne, the Union Pacific, now ai! ii y.our honors to make an order which snail insure success in the plan of re straining competition and acquiring mo nopoly which was untimely interfered with by the formation of the Northern Se curities company. And it is this "which my learned friend considers to be appropriate as a reason for allowing him to intervene in this case against the will of all the parties to the cause; and it is to accomplish this that he wishes your honors to go beyond the limits of the decree which you have made and to reverse the decision which you have incorporated in that decree The constructive custody and control of the assets of this corporation on the part ot this court can arise only by the grant ing of his petition. As I read your honor's decree you have carefully, ex industria refrained from interfering with the affairs of this corporation beyond the point where you considered it necessary to in terfere for the vindication of this statute and you have made a decree which is purely a decree in personam. lou have made a purely in personam decree. You have not dealt with the res *all- Lnder y°ur decree it was com petent for this corporation immediately to sell all the property that it had, and that would have ended it. It is also competent tor it to distribute .all the property that it has, and that will end it. What the corporation Is proposing to do i s neither the violation of your decree nor in execu tion of your x d.ecr«e. It has no relation to your d«»cr*e. efcept that that decree had the effect M, make it unprofitable for it to continue to held the property. Your honors intended that it should make it unprofitable. I ask your honors whether you have de cided that it was riot necessary to the exercise of the jurisdiction under this statute—decided itin the face of the pray er of the attorney general's bill, and after your judgment has been affirmed by* the supreme court of the United stages— whether you are prepared to extend the jurisdiction under that statute to turning this into an administration suit and un dertake to wind up the affairs of this J\ew Jersey corporation in this court in Minnesota. By your decision it is unnec essary to the exercise of the jurisdiction. By your decision it is unnecessary for the vindication of the statute, for the pur poses—and the sole purposes—of which you have been enabled to bring this corpora tion*,^ere: an&. jt wi!l te a ffreat and startling extension of the claim to federal jurisdiction over state corporations. Foreign to the Purpose. It is quite apparent the kind of right which they wish to assert is one which should be asserted by independent bill; involves the assertion of new issues; it involves the introduction of new defend ants. It is foreign to the purpose and foreign to the decree in this suit. " They are nqt claiming rights as share holders. They propose to repudiate any right as a shareholder of the Northern Securities company. They say to your honors the effect of this transaction into which we entered with Messrs. Hill and Morgan and Kennedy and James in the making of this corporation have now been held to be such that we are entitled to get back the property which we put in, and we offer to hand back the certificate of stock that .we got. They; repudiate the relation of shaneholders. They are not here as members of a class. They are here asserting a separate and independ ent right of action against.this corpora tion, never represented by any class here And upon what do they base it? My learned friend does not put it out in his petition; he does not state it in his brief But it is that he has entered into- 1 an il legal compact. If it was not illegal, what right has he to get back the 'stock that he sold? So he comes into court asking your honors to relieve him, a party to an ille gal contract, and to come to his aid and make a decree .that he get back what he has parted with. What is the rule? That a court of equity will not lend its aid; that from such a contract as that, such an agreement as that, no right arises; that in such a situation the right of the defendant is the better, the right of the possessor is the better; that courts of equity leave property and property rights where they lie. Is not he particeps criminis? Is not he in pari delicto? Is not the transaction exe cuted? If not. why not? What remained to be done i n the transaction? Control was vested in the corporation, the whole transaction was completed, the control was exercised. .Your honors have come in and killtid Tt.;*f It was born, it lived its life, it met^LMdeath. - Was he not in pari delictcra ,£& > man Who was a di rector of uj&\. 'orporatjon on the first day of its life,": artieipated in every act, original corvt wit or. one of the largest shareholders ;at the stock, through the holding of -yA |@ it was -enabled to exer cise its illeKJJLiiabntrol. Now, I saiftflflt a person coming fn and trying to break riito a litigation from the outside upon a Snowm»dS that kind, upon such ground, commends-himself not at all to a court of equity. But suppose i your honors were to say. \Y«» wJ^-^rideavor to find some ground on *Wfmki an exception may bo made to t-hUHJaik I—tills1 —tills general rule—that the court wtffrVot afa a party to an exe cuted illegal transaction. Waited for the Chance. Always in tact exceptions dopend upon the ultimate proposition that the parties are not equally guilty. Mr. Harriman and Mr. Pierce cannot plant themselven on any Buch ground as that. But whenever the courts do««Mlert*ke to give any relief upon such a «rnrtml of exception, they also do it in order to ;i^oirt gross injustice and Iliey always copTcTe'r the equities of till parties to the transaction, and you would find in the first place thai these gentlemen arc not penitent, not repenting when the attorney general filed his bill not repenting when your honors pro nounced your jedgiferit, but waiting to take the last chance of success, stood by, an<l they saw t}ie stock of this eorpoia <i<Mi .sold in the open market, sold all over the world, f )V thousands, by millions of shares, to thousands of persons. And what are they grfking now? They are ask ing that your Honors as a court of equity shall give to them especial advantage over these persons who have been induced to come in by their conduct and buy certificates which assured to them an interest in the property that they had put in the hands of the Northern Se curities company. They ask your honors now to come and take the Northern Pacific away. It has gone up. Other property of corporations have gone down. They will get an ad vantage by it. He tells your honor it makes a million difference. Where does the million dollars come from? It comes from the general shareholders of this corporation who are to have taken from them the interest in the million dollars in order that it may be given back to the Oregon Short Line and Mr. Harriman, who was a director, and sat and saw this going on. But that is not all. It appears by the certified extracts from the minutes which are before you, that on the 22nd day of January, 1903, Mr. Harriman was present at a meeting of the board of directors of the Northern Securities company which authorized the sale of 75,000 shares of the stock of that company by the company for cash. Now. your honors will perceive that if my friend gets back this great block of Northern Pacific stock, which he says is worth a million dollars more than what he would get by a fair and equal distribu tion of the assets of this company among its stockholders, he gets it away from the purchasers of that stock, and the stock that was sold upon his resolution gave to each purchaser a certificate of interest In that property, as in all the other prop erty of the corporation. Now, was it ever heard that a court of equity should permit a participant in an illegal transaction to come in and have the aid of its process to take away from the persons whom it has lured into it. property which they supposed they owned? And you are going to be asked to give a preference to one of the prin cipal participators in the original Ille gality as against the comparatively In nocent persons who, by his conduct and by his express action, have been led to come into the transaction. Lovett for Petitioners. Upon the reassembling of court after the noon hour, R. S. Lovett opened for the petitioners. He said: We take it that in determining the question—the question now before the court—the court will not look beyond the petition and its own records in the suit in which it is sought to file the interven tion; that the court, upon application for leave to intervene, will not go into any question of fact that may be raised by af fidavit, but will decide whether, assum ing the application to be true, the peti tioners make a prima facie case entitling them to the relief sought. If such prima facie case is made, then we take it that the defense that may be interposed, the reasons that may exist, if there are any, why the relief should not be granted, es pecially the reasons that arise upon Tacts not before the court, will be determined only after the parties have an opportunity to examine the witnesses and take the testimony in the regular way. When the court comes to take the proof (if we are granted leave to inter vene), we shall have an opportunity to ex amine Mr. Nichols, the secretary of the company, and also the holders of this stock, the stock of the Northern Securi ties company, and we can then deter mine—especially upon an examination of the persons or some of the persons in whose name the stock is registered—we can then determine whether or not it is true, as Mr. Nichols states, simply from the record as secretary, that those inter ested in the formation of the Northern Securities company, those individuals who were defendants in this suit, will own only 23 per cent of the stock of the Northern Pacific and about 20 per cent of the stock of the Great Northern; be cause I take it that Mr. Nichols' affK davit is limited to what his records as secretary show with respect to these facts. So the question as to whether there will be the injury resulting to those who bought the stock that was sold for cash, which the learned counsel predicted, if the course that he asked the court to follow is adopted, the court will have an opportunity to inquire into these facts and determine what other assets the Northern Securities company has and whether any injury will result to. any one from the restitution of this stock instead of the distribution of it as proposed. Questions of Fact. So with reference to the relations of the Union Pacific to the Oregon Short Line and the location of the lines of the Union Pacific and the Oregon Short Line and the Northern Pacific, those are questions of fact, and that is a question which we make it not only may be but must be deferred until we come to the proof in support of this petition, because, we take it, that the court will not go into a trial of that question by affidavit or other wise upon a mere application for leave to intervene. As to whether the parties are in pari delicto. whether the petitioners partici pated in an illegal transaction to such an extent as to deprive them of the right to the relief which they seek, is also a ques tion of fact arising, we take it, after the intervention was filed. There are other questions suggested by counsel, that, as it seems to us. are merely questions of fact to be determined after the petition is before the court. Our contention is that when the attor ney general of the United States filed the petition in this suit and invoked the juris diction of this court, and when this court rendered a decree granting the relief pray ed for by the attorney general, certain re sults followed; certain rights accrued, or were affected, and certain responsibilities developed upon this court which, under our view of it, are not controlled by the attorney getieral. He set the machinery in motion. By his proceeding, or by his application rather, he had the Securities company declared illegal, and we contend that certain consequences attended his action and resulted from that proceeding that are not under his control; certain rights were affected—our rights as be tween Northern Securities company and others —and that certain responsibilities, as I said a moment ago, devolve upon this court which this court must deter mine for itself. We maintain, in the first place, that the very object and purpose of this pro ceeding was to determine the right of the Northern Securities company to the stock of these railroad companies. That it was necessarily so. If the Northern Securities company rightfully acquired this stock, if it owned this stock, it was entitled to all the property rights ordi narily incident to an ownership of stock. There was necessarily involved, as the very foundation of the petition filed by the attorney general, the proposition that the Northern Securities company did not own this stock and never legally acquired it. That was the foundation of the bill, necessarily so under our view of it. That was the controversy that was presented by the petition of the attorney genera] to the court: Does the Northern Securities company own this stock? Is it entitled to exercise the rights of ownership? The at torney general said that it was not, be cause it was acquired for an illegal pur pose and was held for an illegal purpose, and therefore it necessarily followed it could not own it. Issue Is Explained. Now this court took jurisdiction of that controversy thus presented by the peti tion; took jurisdiction of the controversy between the attorney general on the one hand and the Northern Securities com pany and its shareholders on the other, as to whether or not the Northern Se curities company owned that stock. That involved the question as to whether or not it owned the stock that was deposited by the Oregon Short Line, which stood in the name of Ilarriman and Pierce as naked trustees. That was an issue neces sarily involved in this suit ami the issue of which the court took jurisdiction. Now the. court found as a fact (stated not only in the opinion, but in the de cree) that the Northern Securities com pany acquired the stock, "and is now held by it in virtue of such combination or conspiracy in restraint of trade." This court determined, by its decree in this ease necessarily, that no title to this stock ev#r passed to the Northern Se curities eompanv because it was legally incapable of acquiring the title, because the effort to acquire it was in pursuance of an Mega] purpose, was for an illegal purpose, and its holding of it was in ful lillment and in pursuance of that pur pose. We maintain that the injunction of this court went further than the learned counsel for the defendant stated this morning. But there is another important pro vision—a very important provision of the decree. The Northern Securities com pany was also enjoined from exercising or attempting to exercise any control, direction, supervision or influence what- soever over the acts and doings of said railway companies, or either of them, by virtue of its holding such stock there in. Now, that, if the court please, under our view of it, effectually ties up that stock. It cannot vote it. It cannot receive dividends upon it. It cannot ex ercise any influence, even upon these cor porations, by virtue of that act. Now they would seek, apparently, to eliminate this provision of the decree in reference to the restitution of the stock. Under our view of it, that was not an idle act of the court. Didn't this court take practical cus tody and control of this stock by its decree in this case—not of the Northern Securities company? And right here I may stop a moment to say that we are not asking the court to wind up the Northern Securities company. I may say, as far as my own opinion is concerned, that in view of the purposes for which the court found it was formed, the court J 1 Attorney William D. Guthrie Hears Attorney General Knox's Notice Read. would have that right and that power; but we are not asking that this court wind up the Northern Securities com pany and dissolve it, nor is any one else, so far as I know. But we are ask ing the court to dispose of the stock of the two railway companies, or particular ly of the Northern Pacific (in which we are'interested) in the way and in the only way consistent with the decree of this court as we view it that it can be dis posed of. Now, after the Northern Securities company is divested of the stock of the Great Northern or of the Northern Pa cific, it is still a live corporation. The action that they propose to take is not of itself a dissolution, but merely a re duction or an attempted reduction of their capital. Should Not Vote Stock. Now, this court having determined that the Northern Securities company should not vote the stock, should not enjoy divi dends upon it, should not exercise any influence or control whatever by virtue of it over the affairs of these railway companies—after this court had decreed that it had no title to it because it de creed that it was acquired for an illegal purpose, it had taken practically the control and the custody of this stock. What could they do with it? Why, counsel say they might have sold it. Might have sold stock that this court had decreed that they had never owned? Might have sold a stock, which accord ing to the opinion of this court and the decree of this court as we understand it, and according to the opinion of the supreme court of the United States, they never owned. We don't think they could have done that. It is suggested that this provision of the decree here with refer ence to the restitution of the stock does not enjoin that disposition of it. Was it necessary, if your honors please, for this court to render an injunction restrain ing the defendant from selling stock that the court found that it did not own? We should think not. No injunction was nec essary to prevent it from selling the stock, so far as the government was concerned. But we contend that this court had taken control of that stock to such an extent that it was brought into the constructive custody of this court. Now, why was it necessary for this court—it must have been, the court must have deemed it necessary—why was it necessary to incorporate in this decree a provision authorizing the Northern Se curities company to restore this stock to those who deposited it? Didn't the court conceive that it had control of it? Did the court intend that the Northern Se curities company should be free the day following- this decree to organize a new combination of those behind the Northern Securities company and sell this stock? The court did not certainly intend that any such action as that might be taken. But the court realized that it had in its cus tody—under its pi-actical custody—this stock. Its jurisdiction had been invoked for the purpose of breaking up this com bination. But it is said, why didn't the court en join the restitution of it? Probably the contention was made that because of the number of stockholders and the disposi tion of the stock over the country and the transfers that have been made, it might be impossible to restore it in all cast's to those who deposited it or to their as signees. The great question before this court was the validity of the Northern Securities company, its right to own thus stock. This court determined that ques tion ami knew that an;ippeal would be taken to the supreme emirt, and it might very well be that the court determined to wait, or that question might very well be deferred until the decision of the main question as to the validity of this corpora tion, and then the further execution of the decree would come before the court. We submit that under the terms of this decree they had no right to sell this Stock. This court did not add a provision here, "But nothing herein contained shall be construed to prohibit the sale of the stock by the Northern Securities com pany." Nothing: of the sort. The court pointed to the only method to effectually break up the combination, and that was: by a restoration of the stock to those who deposited it. No Right to Sell Stock. Now. if trip court please, we contend that this court has jurisdiction of the whole subject matter of this suit. We submit that the Northern Securities com pany has no right, under the terms of this decree, to sell this stock, that it can not pass a title to it. We submit that that stock cannot be disposed of except under the decree of this court ami by leave of this court. We submit that by this provision of the decree authorizing the restoration of the stock to those who deposited it, the court indicated unmis takably its opinion that it had this stock within its grasp and its control. We sub- . Mit that it is absolutely necessary for us so long as the Northern Securities com pany and the others refused to apply to present our application to this court and ask its brief respecting the distribution of the stock that it has under its control We submit that in the method that they have proposed, that they have adopted here, following the decisions of the su preme court of the United States and in advance of the sending down of the man date, that they intended as effectually well, I won't say that they intended, it is not necessary to say that—but we do say that the method that they propose results as effectually in the perpetuation of the common control of these two lines as was ever accomplished by the North ern Securities company. At the conclusion of Judge Lovett's able argument, J. Hamilton Lewis, rep resenting the Continental Securities company, entered objections on the part of his clients to the court consid ering the petition on the grounds that it had no jurisdiction. The petitioners must recover, if at all, i n a court of equity. Since the thing for which the origi nal action had been brought had been disposed of, the action is disposed of on the theory that the object aimed at is at an end. An original action would be necessary to distribute the assets of the company and that must be taken in the courts of the home of the corporation, New Jersey. The court adjourned until this morn l? 8" £* 10 °'cloek ' as the attorneys for the Securities company insisted on the right to close their case at the same sitting that the attorneys for the peti tioner closed. Judge Young and John G. Johnson will speak for the defend ants and William D. Guthrie for the petitioners. QUARREL OF BREWERS WORSE AND WORSE Fahrig's Allegations Against the Trust Will Be Repeated in Court. v^S IC£ G?V Aprll 12- - After f™r >ears effort Frank Fahrig, of Chicago, has won from the appellate court a de cision that the story of the alleged brewery trust in Chicago and Milwau kee must be told in court. Judge Bak er two years ago dismissed Fahrig's bill against the Milwaukee and Chi cago Breweries Company of London, in which Fahrig- charged that $2,500 000 was fraudulently spent in controlling the brewing business of Milwaukee and Chicago. The appellate court holds that although the English company was not properly served with sum mons in the case, its alleged American fellow, the United States Brewing company, must respond to Fahrig's ac cusations. Rudolph Brand, president ?£ l}}? American company, and George W. Kellner and Frederick S. Winston directors, must also answer Fahrig's suit. The appellate court declares that the stock of the American company, al though held by the English company. is held only in trust for Fahrig and others and that the courts here have jurisdiction because of having jurisdic tion over the company's properties. Fahrig, who says he invested in shares of the English company and then found that he was denied access to the books of the breweries operating under the company's control, started suit for accounting. He declared the organiza tion of the English company fraudu lent and aserted that by a conspiracy the officers of the United States com pany had diverted the company's funds until his stockholdings had lost 95 per cent of their value. HOBSON MAY CONTEST CHOICE OF BANKHEAD Manager of the Santiago Hero's Cam- paign Hints of Fraud. BIRMINGHAM. Ala., April 12.—Full returns from Alabama confirm the nomination of B. B. Comer as president of the Alabama railway commission. All of the present Alabama con gressmen have been renominated and J. Thomas H. Flynn, secretary of state, will probably succeed the late Charles E. Thompson as representative from the First district. Early returns indicate that a large number of dele gates elected to the state convention will be in favor of an uninstructed del egation to the national Democratic convention. The closest congressional election was that between Congressman J. P. Bankhead and Richard P. Hobson in the Sixth district. Present returns show that Bankhead will be nominat ed by a majority of from 400 to 500. L. B. Musgrove. chairman of the Hobson campaign committee, said to night that he was watching the re turns closely with a view to contesting the nomination of Bankhead on the ground of fraud. CARDINAL SATOLLI WILL VISIT AMERICA In One Respect His Trip Will be With out Recent Precedent. ROME, April 12.—Cardinal Satolli, with the permission of the pope, is go ing: to the United States privately and without a mission, arriving probably in June. As prefect of the congrega tion of studies the cardinal will visit the Catholic university at Washington, and lie will also make a trip to the St. Louis exposition. Several friends of the cardinal who have invited him to their homes expect that his visit will extend over a month. Cardinal Salolli's visit to the United States is considered most important, there being no record in recent times Of a cardinal immediately attached to the papal court going abroad without being' accredited an ablegate. Devery Is After a "Wad." NEW YORK. April 12.—Former Chief of Police William S. IVvery. through his counsel, today filed a for mal demand on Police Commissioner MeAdoo for $35,000. which he alleges is due him as damages for breach of contract on the part of the city. He sues the commissioner as trustee of the police pension fund. 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