Increase in Western Union stock declared legal

The Injunction Set Aside.

THE INCREASE Of WESTERN UNION STOCK DECLARED

LEGAL — THE DIRECTORS RESPONSIBLE FOR THE $15,000,00

IF THE STOCK HAS BEEN ILLEGALLY DISTRIBUTED.

In the Supreme Court, Chambers, in this city, on Wednesday last, Judge Ingraham rendered a decision in which he denies the motion to continue the temporary injunction recently obtained by W. S. Williams, restraining the Western Union Company from allowing any of the $15,526,590 of stock of the company issued at the time of the absorption of the American Union to be transferred on its books. Judge Ingraham says that the General Term, as he understood it, decided that the increase of the capital stock to $80,000,000 was legal, but that the distribution of the $15,000,000 of stock among the shareholders of the company was illegal.

He adds that the directors of the Western Union Company must be considered under the statute as liable to the company for full par value of the stock, if they have distributed it without consideration. This liability is imposed by the statute as a penalty for violating the statute which provides that the stock of a corporation shall not be issued except for value. If, therefore, the plaintiff should succeed in his action, the directors must be adjudged to owe the Western Union Company $15,000,000, and the stock which they had wrongfully distributed would be regarded as fully paid, and therefore valid stock, It thus appearing that the plaintiff would not be entitled to a judgment cancelling the stock illegally issued, it would not be proper for the Court to grant a preliminary injunction restraining the transfer of the stock during the pendency of the action. Judge Ingraham also holds that the proper parties are not before the Court to declare the stock issued invalid, as it appeared that a large portion of it had been transferred to innocent purchasers who are not parties to the action.