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Elinore McDonough

Galveston, Texas

May 25, 1927

At a called meeting of the Directors, held on Friday, Oct. 25, 1878, "The President stated that he had received from the County of Galveston the Fifty thousand dollars due for the balance of their stock subscription, being $8,000 in cash and $42,000 in County Bonds". The second stock certificate issued to Galveston County, No. 223, for 4,500 shares, is dated Dec. 28, 1878.

These county bonds were sold at a premium of 2-1/2% but the proceeds, together with the $8,000 in cash received from the County, was not sufficient to pay off the immediate obligations of the Company, leaving it indebted in various amounts to some of its own directors, particularly to Messrs. H. Rosenberg, C. E. Richards, R. S. Willis, M. Kopperl, and Moody & Jemison, Marx & Kempner, and Wallis, Landes & Co. Construction work was accordingly stopped, and a notice was published in the Galveston News soliciting a loan of $250,000.00 to be secured by a first mortgage on the property of the road. Payment was to be in ninety days. This amount, it was thought, would pay off all the Company's indebtedness and complete construction and full equipment of the road to Richmond.

The advertisement asking for the loan of $250,000.00 had been published in the Journal of Commerce, New York City, and in the Boston Post, as well as in the Galveston News. The only offer received was from Mr. George Sealy who stated that he represented the following residents of Galveston:

Ball, Hutchings & Co. M. Kopperl
J. J. Hendley Somerville & Davis
R. S. Willis H. Rosenberg
Moody & Jemison Wallis, Landes & Co.
H. Kempner Chas. E. Richards
S. Heidenheimer Isidore Dyer
Julius Runge Le Gierse & Co.
John D. Rogers Leon & H. Blum

The proposition of Mr. Sealy was accepted at the meetings of both the Stockholders and the Directors, on Dec. 14, 1878. The Company's note was executed to George Sealy under date of Dec. 16, 1878, for $ 250,000.00, at ninety days, secured by a deed of trust on the entire property of the Company, bearing the same date, and naming Robert Mills of Galveston as trustee.

At the Directors' meeting of March 20, 1879, the following resolutions were adopted:

"RESOLVED, That on and after this date all parties desiring to subscribe to the capital stock of this Company shall at the time of subscribing for the same pay to the Company the face value of the number of shares subscribed for. And no stock shall be deemed to have beeen subscribed for until the par value thereof shall have been paid to the Company".
"RESOLVED, That the President be authorized and instructed, to call in
person or through the Secretary, on each delinquent subscriber to the Capital stock of the Company and demand of each the payment of arrears on subscription; or propose to exchange a release of obligation the delinquent relinquishing to the company the amount paid and the Company releasing the delinquent from the balance of the subscription".
"RESOLVED, That in all cases where parties refuse either of the above
propositions, notice of sale be given in accordance with Sec. 9 of the Charter".

As the Railway Company was not able to meet the note to Mr. Sealy on its maturity, the Trustee under the mortgage sold the entire property of the Railway Company at public outcry before the courthouse door in the City of Galveston on April 15, 1879. Mr. George Sealy bought the property for $200,000.00. The Trustee's notice to the Directors of the sale, is spread on the minutes of the Directors' meeting of April 17, 1879. A resolution adopted at that meeting recited that the sale included "all chartered or corporate rights, franchises, and privileges of every kind and description whatsoever of said Company". It was also resolved:

"That the present corporate organization of said Company constituted by this Board of Directors does now cease and determine, and that the right to such organization devolves upon said Purchaser and his Associates".

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