Clipped from US, New York, New York, New York Times , April 14, 1915
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: WABASH DIRECTORScTO REPAY 16,000,000;i *lt;;p'hSuf-V! |it*aiJ upoC. J. Could. Jeffery, and Pierce''-Defeated in the Actionlenlt;of James Pollitz. |ci.*flcVlt;1 thlt;OTHERS ON BOARD LIABLE?0.1A ppellat; Division Says False Entry«*of $22,460,757 in ReportSShows Bad Faith.• i, it • 1••«‘1*1«The decision which was handed downby the Appellate Division last Friday. y [ in the rase of James Pollitz against the , Wabash Kailitmu Company imposes one ; of the latgest judgments for individual liability on record in the courts. accord-lug to lawyers, it holds that George J. | s Gouhl. K. T. Jeffery, and Winslow 8. j Pierce, as Directors of the Wabash, are} .liable for and all interest*from October. It* 13. tlt;* be paid back into }the treasury of the Wabash Company,} now In the hand* of receivers. The jtotal judgment amounts to nearly $«».-:11,mi*. % i- flawyers commented, on the probability |jof ;t division *f this big judgment in I- . A * - _ l-l . a i . A .#cast it were sustained by the highestcourt. The plaintiff sued only the three :Directors of the Wabash whom he could Wrw it. a New Voi k State action, j l.s Tuere were thirteen Directors when thew?r« commit-ted Mr fJouM# Mr. Jeffery, ^riuPierce if ultimately forced to pay thegc, iko'ioi into the Wabashhung action against other direct-co UK* t»r shi ma ucuon ftKtunpii uv,v' 7* .i-.fr v?o rata contributions to themerit Mr Pierce is chairman of]judgment Mr Pierce lthe -Hoard • »: Directors of the aoasn gHailr. ad «’otnpany. and is heading the. . .... i-onrrnniie. Mr. * :«• 1• •1.AV • movf ititMii to reorganize. Mr *Utfui.l in Mr. Jeffery a'8® “re 81,11 1 ^onmnwdlai, to the «£urtty j*hnld#m of the Waba*h would be the.'•ff. Ct on the contemplated reorganiza-tlun «f the Wubasli if tin* « ompunN «treasury ware suddenly enriched to the}extent of i*..**».'** Ij \lt;rinwall Hodge, attorney for Mr 1(iPoll 112, said he thought the payra^1 lwould greatly benefit the ^r'curity hol' -ors and render unnecessary and lmalldmv nubile foreclosure of Hu ':.a ; lt;C2*«hP» iccunll., Aecor.lh.«tp th, «hn.-h reorcanuEHtlon plsns about /is needed to rehabilitate-the ™Ur‘fld and hft it out of receivership A lt;b n* . -Site plan which .alls for an »■ment on tiie stock is expected to be an- j no u need within a few days. »Suit Marled In IfHMT*.The Pollitz suit dates back to H0t.Mr Pollitz owned 1 .«*-» shares of Wabash stock, which be had purchased at$21. In 1«»7 the Directors, retiring mu- j i turing obligations. Issued sjn.fk’iH.IW n refunding bonds and $15,ir*;,bS» each In preferred and* common stock. rheso new securities were exchanged for outstanding debenture bonds amounting to niv I2S.M-I ,*lt;*«». Mr. Pollitz contended AIf10lose new- issues were void to the extent A»— * * * 4j^» i$ britiK tho ct I f ferciic*' h#»- Alurn the abli gut toms retired nml the aj” — —ew securities He wanted tin* .lt;_J-i vv a* a a t • * i * * • ’fit (i jftnfffi to the Wnbn*l» tronnuryAtB*1 ft*The State courts sent the ease to the ( nited States tjtretill Court and this «•*, urt decider! in favor of Sir. tiould. Mi, • j efferv. • and Mr. Pierce. Mr, Pollitz cok an appeal tlt;» th«* i nited States dr- UCourt *»f Appeals, which sent the \i*r back t»» the State court* for .i hear«k Thus it returned to the supremeJustice. Ikonnslly In tietober. -»r; decided tii.it th» entire issue of j K• vv selt;*urities was illegti. init he also u•Id that Inasmuch a* Mr. Pollitz was‘HI IflUI ***** V. ----7 , *only coinplalnaiijte h* i;et onl.Vjcnli.vjtluul relief and l*itlt; iialiii uas‘m ... . * ^ i «• tii immun! i!«l l»ed out to te $21,0011. she amount paid r hi. stock. Mr. i’oiutz contended the lt;■r hs.-i stock. ..... .......il one.non Should blt;- returned toe treasury, and the defendants In-u,’■itcvi they were not liable at all. • he j j,apellate'Division thus got the ease. , Th* Appellate Division, in an opinion , hrtiten h\ Justice Dowling and con- j i.irr« d In b\ all »f she .luslices. held that i.satice Donnell' was right in holding I,, , i.,n of ex. hanging new securities «vi obligations db-gal Rut the decision nHted furtlsei that the I '.lectors should *Uffl luruwi ****** * • I „ .i ,1 \held I cfipnnsibht for any loss to the ^(|,.rli «’unii'.iM ■ Ju-.ti.-e I fowling figed the loss at $:..lia.H»ni:t4. being n- ,nmi tnr itf»» *»* . i pIti total of Interest fioujM*n^ paid on thiM Nrgi*d Hleml refnntbuK phis In-1 .sv*.. : 11, -1iI.»11,1 u **ri* n Vt'f tM Id I *.t it. No dJvHbaidS Wt i# «¥«M .th«* VVatmwh on the new eomnion mid J !ferieil iitock Issued * 1|*j ^Old Ills llttlfl I 11*4 ••rsUith'f* bowling pointed tipt /that Mr.lH uid jUHt before the Wabash receiver- *P. haul sold all of hte Wsbash stock 1*ept just enough to ^fuHfy him a.s a | ictor. His holdirors had amountedtlI * , K , I . ,11.27r» shares of common stock and vpreferred. Mr. Gould sold his ' ids too of which he had held about n non Justice lt;Jowlin8* stated:'-WM»DThat t»*«- matter was ten handled with eh go-t faittt h» tti«* defendants claimedi/i./ra by th* fa^Z that the surplus of' ,.o 4(00 Iti the new w. 'iiHtea was lt;lt;' -. . • i • . Ills a. (l .■ ,u c. n !,v kkeeplna entry in the «n-Ir[..r■ i ihe WsU.sh Ralirosd I’om-tiv for the year ended June .SO, JOO“. t'in,h»iu. In the .xict of n*a.lh an imrense In the cost or nrnas , was indicated ** lt;22.4iZ, si wherrn* in fact the only increasei«Hlv nude in that item for such year ' .xi. The difference tetweenlM f ;,MU'vV.v:. The dtrrerencv occwernUe sums is *l,u,t the difference in the1 ,r. ! new- «. furid f iesm-d for the re-O Regarding the previous decision In which Mr Pollitz s claim whs Limited toiJJi«JJ4J/jidual relief, Justice Dowling held:•h,- lt;*ourt of Social Term proceeded to 4 that inasmuch a« no other atock-,^r Sl4, plaintiff had endeavored toin ate I t.ik- advantage of tfiesultor | (tfifj t the plan of rxlt; hnnice. *a#» mu*!Hxe-n-f-i t !ia»e iiiquiemed thert/ln anlt;ino f*HP rtunity of rehnbur«*inR }i4,tiI*»7D5«‘!v f'* by mrtmn of the aFOUinting. , ^ *? w the ref re conrlu«1pd that the;ii*iff w*un to Mirh tw neflt h«ill!: NV a W Pditltl* W •WW-e.’r- , — ------ •uuntins would give him. namely, to beevci from the operation *»f the plan and ,reimbursed for the actual value of ids jk together with interest and costs•?S i * For* . k r- iief an I for The judsment car- J W ■ r,v effe 1 no justlftcatPm can »- |,Thin tv it fin individual a* tion(ItR I 11 1 \ ivi, , . . — .«M the plaintiff to^reeover^hl-Kmaiea f.H- st.th «n action he could ■ Itmntn. Thin Im h rrpr^Rtailv#* a« tt »n..formal orlt;i*g is expected within a;i:™ a'i't i. t,will have sixty days within whichnmil. Mr: fierce, whose,firm actedt.e,.: Mr Fierce, wno-e d.i.. ......tt-uneys in the suit, said /,st'T. y no plans could l»c announced yet.*■
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