The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1872-07-23
THE RAILROAD CASE.
THE ARGUMENT AGAINST THE PETI-
TON FOR BANKRUPTCY


THE ARGUMENT AGAINST THE PEII-
TON FOR BANKRUPTCE.
Curious Condolences Between the
plunderers and the Petitioners-The
Question OF Jurisdiction and the
Question OF Insolvency.
The bankruptcy proceedings upon the pc
tition of Daniel E. Scanned, of New York, In
re, the Greenville and Columbia Railroad
Company, we're continued yesterday morning
n the United States District Court before
Judge Bryan; Messrs. D. T. Corbin and Geo.
D. Bryan appearing for the petitioner, Messrs.
A. G. Magrath and C. D. Melton and John 7.
Rhett, of Columbia, for the railroad company,
and Messrs. Porter & Conner, Simonton q
Barker and John D. Pope, OF Columbia, Tor
various creditors.
The argument on behalf of the railroad
company and In opposition to the decree Of
bankruptcy was begun by Mr.. John Rhett.
He said that he proposed first to state some
figures relative to the late management of the
road. In April, 1871, long before the pres
ent direction of the road assumed control, the
debt of the road was officially reported to be
s2,Ol0,O00 and the amount Of second mort
gagx bonds issued was s6s,500. Their next
report was made December 81, 1871, and
showed the debt there to haye Increased to-
$2,40s, ,ss7, and the amount Of the second
mortgage bonds to $4,000. making an In
crease OF over $400, 900 In the debt of the road
In thoee few months. Soon after that exhi.
bit, on-the 9Th of January, 1872, the present
direction of the road came into power. They
proceeded to investigate the affairs OF the
compaay, and soon found that the treas
ury was empty. Examining Into the cause
OF the startling increase of the debt
they not only found no explanation OF
the increase that had been reported, but they
also found that instead of ss7, 900 OF the second
mortgage bonds being out, bonds to the
whole amount of the second mortgage, viz /:
$l,60O, 900, had been Issued. OF these, ABOUT
$500, 900 were said to have been pledged to the
Commercial Warehouse Company; $500 900 had
been paid by the directors to themselves
through the pretended purchase of the myth
cal Continental Telegraph Company, and the
remainder had been just simply stolen with
out any form or ceremony. They imu ediately
employed counsel to examine into the affairs
of the old board and to re-establish the COM
pany in It's former and proper position, but
the facts were 30 entangled In mesh OF
fraud that they could not be found out at once.
The investigation had been pursued, however.
and large amount of the stoled bonds had al
ready been restored by the guilty parties. There
was every probability that more woGld be
restored, and he was certain that If they were
not interrupted they would be able to detect
and punish all the thieves and compel them
to disgorge. The company had In the mean
tirS been sued for interest on the coupons OF
the bonds Of the road, judgments had been
obtained, and some of them had been paid TO
prevent the seizure of the property and the
stoppage of the business OF the road. With
the success of those suits, other suits had
been brought and other judgments obtained,
but the levies upon the property OF the road
had been restrained by iDjunctions. Then the
State had commenced a suit for tho
foreclosure of Its two mortgages, amounting
to $3.000,OO0. Now there came two
creditors of the road who attempted to
force 1t into bankruptcy. One of them brings
his petition upon q small amount OF coupons
belonging to bonds fully secured by mortgage
and BY the guarantee Of the State. The other
brings his petition on small amount OF non
mortsaged bonds, and the only effect that the
success of the latter party's petition could
have upon hfs own bonds would be to make
them not worth the paper they were printed
on, To allow such a petition would be to
stretch the provisions of the bankrupt act far
beyond It's intended scope, and beyond all
equity, and to make 1t nothing but mighty
engine of oppression. He would say nothing
against the petitioners. He knew neither Mr.
Scanned nor Mr.. Madder. Doubtless like
Brutus and Cassius, they were ''all
honorable men," But 1t was not for
the court to make any distinction Of
persons, and suppose the thieves who
had stolen the bonds of the road had taken
those papers, and used Mr.. Smith and Mr..
Jones as the petitioners, and had come Into
court with an effort to force the road Into
bankruptcy. There could not be plaiuer
case of the letter of the law being appealed to
to defeat the ends of Justice. The counsel on
the other side had Indignantly dtsclaimed
having any connection with any other parties
than their clients, and he was inclined to be-
lieye them. Their presence In the court
should be sufficient to prove that they had no
such connection; but they could not undertake
to say what relations might exist between
their clients and the guilty parties. There were
several striking condolences In the case that
would seem to show that some Intimate relar
tions did exist between those parties. For In
stance, Klmpton appeared to be the CHIEF
among the offenders In the case OF the Com
mercIal Warehouse Company affair. Now the
papers Of the Commercial Warehouse Compa'
ny had been produced In court by the counsel
for the petitioners, and the very fact OF their
possession by the counsel appeared conVlnc'
Ing of some Understanding between them.
The counsel had also In their possession and
had nut In ,,VIdence letter which had been