Show inuTcAsEocsIo l Straw Paper Combine Question Ques-tion Passed Upon LOWER COURT IS SUSTAINED I 1 I I j United States Supremo Court Affirms I i Decision of Court oC Appeals in Seventh Circuit which Issueda De 1 crco Allowing Foreclosure and Salo I 1 in the Case of Harry W DIckerman vs the Northern Trust Company in the North District of Illinois Opinion by Justice Brown is Washington Jan 22A decision was rendered In the United States Supreme cbirt today In tho case oS Harry W DIckerman vs the Northern Trust company This was a bill In equity filed iriytho Circuit court for tim North district dis-trict of Illnols by the trust company against the Columbia StraW Paper qojjipany lo foreclose a trust decd ojC thirtynine paper mill properties located lo-cated In nine different States The Court ot Appeals for the Svonth circuit cir-cuit Issued a decree allowing the f ore1 blosur6 ami1 eKleaoia this decree waS affirmed by todays opinion which was hnmded down by Juslfte Brown In passing1 upon the case Justice Brown took cognizance of the organization organiza-tion of the Paper trust and that the objection ob-jection that tho Circuit court should I have allowed the ansAver to be amended for the purpose of showing that the organization or-ganization of the paper company was jfirb of a scheme to form a trusL Justice Jus-tice Brown held however that the purpose for which the corporation was originally organized could not become h riiatcrial Inquiry So long he continued con-tinued an the corporation existed it had the power to create a mortgage find when that mortgage became due fhe trustees had a right to foreclose Another point raised was that tim Circuit court erred In holding that the cAidcnco did not support the contention conten-tion that there Is a liability against the bondholders who also hold stock that is not paid for to the paper com pany amounting to jiuutni ana which Indebtedness should be set off against the Indebtedness on each bond Thls proposition involved the real merits of the case and was discussed at length the point being that the bondholders should be held for the difference dif-ference between the amount paid for the thirtynine mills and the amount they subsequently turned over The opinion reviewed the effort made in JS02 to organize a paper trust to comprise com-prise seventy mills Inter this trust bnly thirtynine mills entered but the capital was not reduced In this connection the court reached the conclusions that the mlllOAvners were to be paid principally In stock that Emanuel Stein who conducted Ihe transaction had no personal title to the property ho pretended to sell lhat the corporation Aas organized by jLhc parties who had but twelve shares Out of 30000 shares that Untermeyer who drew Steins proposition of sale loa lo-a corporation was the only responsible stockholder in that corporation that ihe papor mlllOAvners kneAV nothing of the proposition to sell to the straw paper I pa-per company that the stock Was fixed at 5000000 upon the Idea that seventy mills Would Join In the combination whereas only thlrtynlno Joined that but S7SS000 were paid for the properties proper-ties and that 2113UOO of stock was distributed among the persons who got up the corporation without any distinct dis-tinct consideration being received that the mlllOAvners received stock which was worth but onehalf the value of that which they supposed they would receive and that they were defrauded In that amount 1 But notwithstanding the assumption oC fraud tho court held that this fact could not affect the validity of the bonds as a whole the right of the trustees to foreclose orgive resource against the Innocent bondholders Continuing Justice Brown said that I as this was a suit of stockholders tho declaration that the shares are fully U paid up and unassessable Is a valid one If an action by the corporation would not He to recover the unpaid part of the subscription then such unpaid part cannot bo deducted from the bonds With reference to the charge of fraud In the organization of tho straw paper company Justice Brown said We II are not disposed condone the offenses of those who through Beard and Rams del of Buffalo and their assignees Stcln as their agent purchased these plants CQV 2700d and Immediately thereafter Avcnt through the form oC repurchasing of their Own agents In fact of thienselvcs the same properties El proper-ties at S5000000 Bound ag these promote pro-mote s Averer to deal Cajrjy and honestly honest-ly with the stockhOlders in the new corporation cor-poration they were guilty oC apparently apparent-ly Inexcusable conduct in excluding the rfilllOAVn6rB rpni nil participation putting in their own clerks as directors andpaying1 off the mlUrOAvners In Block which wasreally llttlemore than half oC the value they must have expected ex-pected to receive If they were able to secure options on only thlrtynlno of tho seventy mills they should have known the fact or at least given those millowners the bejioQt of the surplus stock It was difficult to see how Justice could be done by reversal and the de crec was affirmed Justice Shlras and Justice Pcckham concurred In the result but held that theQuestionof fraud was Irrelevant to Jthevifisue 1 |