Page:Federal Reporter, 1st Series, Volume 7.djvu/404

 392 FBDBRAIi BEFOBTEB. �not this suggestive of the inference that, although it has been proved to be of great benefit in Great Britain, it is "new" in this country, becanse it has been regarded as without neces- sary legislative authorization ? �I am, therefore, of opinion that the issue of "deferred bonds," as proposed, is without warrant of law, and that the order of November 18, 1880, ought to be revoked and a pre- liminary injunction granted, and it is so ordered. �BcTLEB, D. J., concurring. I propose to consider oue only of the several aspects in which this case has been presented. Are the contemplated acts charged in the bill ultra vires — inother words, have the defendants lawful authority to do what is proposed by the "deferred-bond seheme?" As de- scribed in the president's "plan for financial re-organization," in the directors' and receivers' petition to the court, of No- vember, 1880, and in the i^rospectus subsequently issued, and as illustrated by the sample before us of certiflcate or bond to be delivered to subscribers, it proposes an issue of $34,300,000 irredeemable income bonds of $50 each, at the> price of $15 per bond, with interest at the rate of 6 per cent, on the face value, payable annually out of such surplus earn- ings as may remain after defraying expenses and affording dividends of 6 per cent, to the common stockholders, with a right to share equally with such stockholders any balance that may remain after 6 per cent, is thus paid. In the lan- guage of the president's London address, of December 23, 1880, it proposes to give — �" To every one who will pay $15 an obligation for the nominal value of $50, wWch is never to mature — ■with no liability on the company's part to pay the principal, and which shall entitle the holder, after the common shares have had a dividend of 6 per cent., to all that is earned up to 6 per cent., and thereafter to a further dividend paripassu with the common shares." �That the defendants have power to borrow money is not questioned, and could not be. The plaintifs assert, however, that this is not a proposition to borrow money, but a seheme to sell stock. The defendants claim that it is strictly a prop- osition to borrow — conceding that, if it is not, but virtually ��� �