Page:Federal Reporter, 1st Series, Volume 7.djvu/406

 394 PEDBEAL BEPORTBB �nature of his relation to the company and its property. His situation would be similar to that of a silent partner in a commercial firm. The proposition, therefore, is for the sale of interests in the capital of the corporation — a sale of shares, shorn of the privilege of voting, with the right to dividends regulated by contract. It -would seem that the defendants contemplated, in the beginning, a sale of stock in the usual form, calling the transaction by its proper name. Testimony taken by the master tends to show this. The absence of power to make such sale, and the apparent impossibility of borrowing money at the usual rates, and by the usual meth- ods, and the obstacles interposed by usury laws, doubtless led to the change of plan, which, however, is little, if any- thing, more than a change in name. �The original thought and purpose have so far remained in the minds of the projectors, that the annual payments con- templated are still called "dividends," as appears by the "plan for re-organization," the directors' petition to court, the "prospectus, " and the preaident's London address, while the scheme itself is described by them as an "issue of stock," and called such in the circular (known as Exhibit K,) wherein, it is said, this �"Issue of stock, with such prospects at $30 per $100, ought to produce a large bonus to such shareholders as may desire to sell their allotments, as its prospect of dividends is much better than those of marij existing Ktocks standing at a higher priee." �The English precedents which appear to have suggested �this scheme, were, so far as we have been referred to them, �all sales of stock in the usual form. In his London address �the president said : �" This scheme is not a new one. Other companies in England have adopted this plan before. Within the last flve or six years, according to a statement furnished me, the London, Brighton & Southeast Eaiiway issued £1,500,000 worth of ordinary stock at 45 per cent, of its par value. The Grand Trunk Railway of Canada issued £7,500,000 of ordinary stock at £22 88. 1 am told that the Manchester, Bheffleld & Lincolnshire Com- pany has issued £1,100,000 of ordinary stock at 60 per cent., and therefore we are not the flrst company to adopt a new scheme, which has been her- alded by a good many people with a vast amount of ridicule." �Thus it appears by the statements of the president not ��� �