New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1868-12-03
PUTTING 4 RAILROAD INTO BANKRUPrCY
Argument of Il. @. Billings.
FREMONT AND THE opEIousAs ROAD

To put or not to put the New Orleans,
0pelousas and Great Western Railroad in
bankruptcy. was submitted yesterday, be-
ing argued for the last time by E. G. Bill
iDgs, attorney for Paul W. Conant, one of
the petitioners. Mr.. Billings said that this
was a question to be decided upon legal
principles, and not upon the effect or re-
suits which would follow. In the course
of his argument he would discuss
this last proposition, and he hoped that
the results would be beneficial alike
to the bondholders, stockholders, and to all
other parties iu interest. He, in his argu.
ment, discussed the proposition that rail-
road corporations were included in the
bankrupt act among those capable of COM
mitting ''acts oi bankruptcy" and this cor
poration had been guilty, fraudulently
suspending payment of its commercial
paper for period of more than fourteen
days, and that the payment of the creditors
named in plaintiffs (Conant) petition was
fraudulent preference. Instead of max
ing these payments under decision deliy-
cred by Judge Blatchtord, United States
District Judge for New York, the course to
pV PhlEuCu OJ tl1C CUHiDduJ WhS
to present a petition for their voluntary
bankruptcy. As they had failed to do this,
their error was fatal.
The interest coupon was note at hand
passable on delivery, and consequently
commercial PAPER. He discussed at con
siderable&e66th the tender of fifteen hund-
red dollsTs made in open court, arguing
that this tentSNwxs made for the purpose
of defeating sAa provisions of this act and
of inducing as plaintiffs to discontinue
their suit. This move was as fatal as any
of the rest. Upon the question whether or
not this corporation was insolvent, he said
that the general accepted defuition of the
term Insolvency must prevail that it was
not after the payment of all their debts
upon general winding up of the affairs of
the company that constituted their solven-
cy, but whether in the ordinary course of
business they could promptly pay their OBJ
legations.
Ii this definition were correct this COM
pany that had outstanding near six hun
dred thousand dollars of past due interest
coupons was insolvent. He referred to the
fact OF the bonds being worth only 64lc on
the dollar. If the assets of the COM
pany were as valuable, said he, as the
officers Of the road would have us be-
lleve, how could capitalists in London,
New York or New Orleans, be so lost
TO their self interest as to be willing to part
with them at that rate of discount The
reason they are so much below par was the
consciousness on the part of capitalists that
the road was "hopelessly in debt"
de showed that the estimate made by
the officers of the road in their TESTIMONY Y
| given IN this case was too high Y valued :
that the debts owed by the companv,
amounting to S2,2000O0, were a certainty,
| but that the assets, representing a little
over three millions, were based upon opin-
ion. Those in the interest of the roed bro.
! pose that instead of putting the road into
bankruptcy the method which they sug-
gested should have been adopted Mr..
Billings discussed the praeti ability of
| these several methods ad seriatim. What
would follow should Mr.. Morgan be per-
mitted to sell his road under the process
of the Sixth District Court?
1t would give no title, determine no
rights, and purchasers would be few when,
upon consultation with any attorney, they
would tind this state of facts to exist. Could
the road be leased? No; for this debt of
S60O,OO0 of past due interest coupons
would hang upon it like "the Old Man of
| the Sea" never to be shaken off. Besides.
there were $4,000 of coupons due every
six months, and where could the lessee be
found to saddle himself with this indebted
ness, constantly accruing, aud to run for
twenty-one years? General John c. Free
mont, with whom negotiations were entered
into for the lease OF this road, stated that
he "would not enter into any arrangement
to pay the large and constantly increasing
Indebtedness" So has resulted all other
negotiations.
That there was but one way for this COM
pany to rid itself Of this mass of cumber-
some debt aud that was by going into bank
ruptcy. 1t was the most efficient act; would
accomplish all practical beneficial results /;
for the sale or lease of the road could be
made immediate, and do that which all have
tried for the past six years to do in vain.
He then entered largely into the pure tech
nIcalities of the law, and on conclusion, the
great case, involving so many interests and
such large amount, was submitted to the
court for decision.
FOURTH AND SJYTH DISTpIrT CnTpTS