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Judge Thayer Pointedly Criticises Management of Kansas City Concern. SPECULATIONS ARE DENOUNCED President Stilwell and Directors Alleged to Have Used Funds to Promote Their Own Enterprises. Judge Amos M. Thayer of the United States Circuit Court, granted the application for a receiver for the Guardian Trust Company of Kansas City, recently made by John W. Gates and other minority stockholders, yesterday. The order names Francis M. Black, former Judge of the Supreme Court of Missouri, receiver of the trust company, and stipulates that he take immediate possession of all its property and assets. Ilis bond was placed at $100,000. In his opinion, the Judge spoke pointedly in criticism of the manner in which the trust company's affairs had been conducted. The motion for the appointment of a receiver was argued before Judge Thayer, in chambers, on November 26, by Counsel Frank Hagerman, L. C. Krauthoff and Max Pam for the complaintants and Judge J. E. McKeighan, Judge J. McD. Trimble and Thomas L. Chadborne, Jr., for the defendant. It was alleged by the complainants that A. G. Stilwell, president of the trust company, with the Board of Directors, mismanaged the funds of the company, and diverted them to furthering enterprises in which they were interested. In part the opinion is as follows: "The present motion was filed by mlnority stockholders to correct abuses of administration and to obtain the appointment of a receiver because of mismanagement of the company's affairs and various ultra vires acts committed by directors and managers, who were in active control of the corporation. These acts, it is claimed, in substance, have led to dissipation of & the company's assets and brought it to the verge of insolvency. How Company Sustained Loss. "Counsel will understand that the order 1 made herein is not based upon the theory 1 that the bill is one filed by the complainants to cancel and rescind their 1 stock subscriptions on the ground of fraud or upon the theory that the complainants a are in a position at this time to maintain I such a bill, although no decisive opinion 8 need be expressed upon that point. Be1 tween November 4, 1899, and January 4, I 1900, the company's finances were in a bad condition. The Court concludes that operations should have suspended at least for the time being. The real grievance is that the 1 defendant company committed acts in exI cess of Its corporate powers and by 90 at doing sustained grievous loss. "Proof shows with reasonable certainty that the officers and directors have made a practice of organizing other corporations y to engage in various enterprises of a C v highly speculative character, which the money of the trust company was used to \ forward. The fact that officers. directors 0 and employes of the trust company gene erally served as directors and officers of I such subsidiary companies and have held ( stock therein leads the Court to conclude C that the money of the trust company r should not have been used to purchase the R stock and bonds of such concerns and to 1 supply them with capital. 11 "In addition to this the defendant company has made large investments In realty a apparently without a shadow of authority d under its charter. Furthermore, the Court e entertains no doubt that the defendant n company has paid out one, and probably 0 several dividends, out of its general funds 11 that were never earned, such payments beS ing made for the purpose of allaying suse picion as to the condition of the company b and creating a false impression that it was N in a prosperous condition. V "A trust company performs many ImC portant offices and duties in a community and does so better than could any inditl vidual or copartnership. but it was never R intended that a trust company should go ti into the market as a borrower of money in M large sums on its notes, to be employed in a speculative ventures, as the defendant comP pany appears to have done.'
