It appears that as long as Northwestern Mfg. and Car Co. of
Stillwater, Minn., operated, they lost money. Finally, in 1886, the
company was forced to reorganize, becoming Minnesota Thresher Mfg.
Co.
But even though the company lost money, a pair of stockholders,
Thomas Lowry and R.B. Langdon, who each held $25,000 worth of
Northwestern stock, declared six dividends of two percent to
themselves and a couple of other choice stockholders.
The new company wanted that money back, so they brought suit
against Lowry and Langdon to recover $3,000 from each, the amount
it was claimed had been wrongfully paid out as dividends.
Officials within the new company were irked that Langdon and
Lowry had combined their claims with other parties. Those combined
claims against Northwestern totaled $1,700,000, which meant that
when Northwestern ceased business, the amount it could pay out was
much lower – 10 cents on a dollar – than if the claims hadn’t been
made.
Minnesota Thresher was still indebted to pay $3,500,000 in
losses from Northwestern’s debacle, so it made no sense that some
of the principal stockholders of the old company should be getting
dividends when everything else was losing money.
In 1889, Minnesota Thresher Co. filed another, similar suit,
against H.H. Porter and R.R. Cable, who had received $12,000 and
$2,000, respectively, for dividends. “It is claimed that the old
Northwestern Mfg. and Car Co. paid the amounts to the defendants in
dividends while it was in an insolvent condition,” says
Farm Implements and Hardware (FIAH) in
their October 1889 issue.
Meanwhile, a suit was laid against Minnesota Thresher Co.,
trying to get the forfeiture of the charter and franchises of the
company. The Minnesota Supreme Court, however, decided, as FIAH
says in February 1889, “The real object of the proceeding, however,
as was claimed by attorneys for the thresher company and
substantially conceded by the counsel for the state was to prevent
the company from asserting by actions in the district courts of the
state its various claims against the stockholders mentioned,” as in
the suits against stockholders mentioned earlier in this
writing.
A fourth suit was filed in 1889 by Theodore Converse, receiver
of the Minnesota Thresher Mfg. Co., against John B. Myers of Boston
to enforce liability of a stockholder for the debts of the
corporation under a law passed in Minnesota in 1899. The law was
found unconstitutional and Myers not guilty, as he was a
stockholder before the law was passed, and the law could not be
used retroactively.
Stockholders were not pleased with all this lawsuit business.
When the stockholders meeting was held in February 1890, according
to FIAH, “The meeting was followed by the publication in the
Pioneer Press of the statement that a
movement was on foot to put the company into liquidation. This
statement has been vigorously denied by the officers who state
further that the present management is acceptable to all except a
small minority of the stockholders, and that at this meeting the
unissued stock was subscribed for and the business shown to be in
an exceedingly prosperous condition. … The Pioneer
Press report is credited to a disgruntled
stockholder.”
In the end, it appeared that Minnesota Thresher Co. could not
collect the dividends that had been paid out, because the
Northwestern Mfg. and Car Co. was not responsible, since it had
been sold to a receiver. There is no evidence the receiver was ever
sued. More than likely, following a fiasco of threats of company
people being replaced, as reported in the Pioneer
Press, thoughts of suits were dropped.
