The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1873-03-13
BOSTON, HARTFORD AND ERIE.
The Attempted Berden Mortgage Foreclosure
Causing Erie to Rise in Its Majesty-A
Grand Array Of Legal Talent in Judge
Shepley's Court-R., H. and E. Cannot
Shake or the E. r. shackles.


Shake OF the E. r. shackles.
BOSTON March r. 1873
Erie Vs. Hartford and Erie has occupied the at
tention OF Justice Shepley in the United States
Circuit Court to-day. The Erie Company have ap-
Piled for an injunction to prevent foreclosure on
the Berden mortgage claiming that they lent
money to pay the interest on the Berde bonds
with the understanding that the receipts OF the
road should be used for its equipment; that said
receipts were NOT SO used; that, therefore, they
have claim on the road for such moneys so ad-
vinced, and that II the mortgage Is foreclosed the
road will go into the hands OF new corporation,
which may not be willing to pay the debt Of Its
predecessor. BREEZY, the Erie Railway Company
claim q prior lien on the road, and say that Its
mortgagers have NO right to speculate until
their debts are paid. There is large ana
imposing array OF legal talent General b. f.
Butler, Judge B. r. Curtis. Messrs. X. Graves and
MacFarland, ofNew York. represent the petitioners
In the case, and the respondents are represented
by Messrs. W. G. Russell, Thornton X. Lothrop and
Bishop. Other interests connected with the case
are in attendance, as follows:-Mr. Charles Brad
ley, OF Providence, represented the assignees in
bankruptcy; Mr.. Charles Allen represented the
Commonwealth of Massachusetts, Judge Z. X
Hoar represented Mr.. N. G. Munson, Messrs. Bart
lett Il Storrow represented Mr.. Sidney Dillon, and
Mr.. Richard Olney represented w. G. Farwell & Co.
Mr.. Olney read petition setting forth that the
mortgage was void, because the 10000 bonds OF
$1,000 each provided in 1t were never legally
issued, inasmuch as Mr.. Eldridge was ineligible
to the presidency OF the company. He therefore
prayed that the bonds be cancelled, and that '''N
RECEIVER BE APPOINTED AT ONCE
Ine Court ruled that until 1t should appear that
the petition could not be received
Argument ensued between counsel ending in
the placing OF the petition on le, subject to future
General Butler said that certain afidavits had
been examined and time wsuld be needed to an
swer. as they don't deny any OF the allegations OF
the BILL but set up new matter He said the prop0-
sition OF the Berdell bondhoders is to organize
new corporation, to which shall be transferred all
the rights OF this corporation. He asked time to
send to New York and other places to procure affi-
funds was only known to the Hartford and Erie
directors by information received within the last
Mr.. Russell said the proposition now is that the
Erie Railroad did not know OF the misapplicatiOn
OF funds until within ninety days. II this be SO, it
delay now 1t will cause great deal of mischief;
such property as this is unfinished and un-
equipped everywhere, and must be injured. Ger
tainly they might have been aware Of that Then
as to the other affidavit, 1t simply shows that the
tngs in the State courts, and that corporation Is
bound by the acts Of Its managers.
At the request OF the Court Mr.. Bishop read one
set forth that the road would be badly damage by
delay. The rails will be laid from New Haven to
will be needed then to complete connections and
add to the eQuipage OF the road. TO the best Of
his knowledge and belief there has been no time
since August 1870, when one or more of the d.
rectors OF the Boston, Hartford and Erie Railroad
Company has not occupied similar position In
the Eric Railway Company
The Court allowed the hearing to proceed, giving
the counsel al opportunity TO Qle afidavits.
Mr.. GRAVES ARGUMENT.
Mr Hro orOoa and m INN tha ant
for tho Erie Railway. He reviewed the powers
vested In the company under its charter, which
ner np e has the sst o pu4cSas
railroads between Fishkill, On the Hudson,
and Boston; it has the right to buy and have Its
bond or claim OF any sort which may exist against
any property Of any cornoratlnn 9: reed 4 may
purchase me HHee..aell mortgage was mortgage
other mortgages which rested upon the various
pieces OF road forming the line The mortgage
sellor OF the Erie Railway There was commngling
between the Hartford and Erie roads. After the
Of ese oads 9a% Deea rga
Dudley s. Gregory and the Counsellor DAVIS
were members. They ascertained that
EIGHT MILLION DOLLARS WOULD BE NECESSARY
TO construct the road. They came to the Legisla-
ture OF Massachusetts, and, in conjunction with the
directors OF the Boston, Hartford Erie Railroad
assured the legislative committee that tine Erie
Railway would endorse s4,000000 Of bonds II the
State Of Massachusetts, would furnish $4,000 OF
bonds, which Massachusetts, did. The $7,000,0 900
bonds thus raised and the sale OF the bonds gave
them resources sufficient to begin the work. In
July, 1868, the Boston, Hartford and Erie Railroad
had arrived at the stage where they were ready to-.
go on providing they could sell the 900 Of Erie
bonds, and the Erie Railroad were conferred with.
Contracts had been made for the performance OF
the work. The trustees Of the Erie Railroad prom
ised they would furnish that money To build the
road to Waterbury, and the Erie Railway. acting
upon that contract, did buy the bonds and
furnish the money They had right to believe
that they could trust in their own officers. Had
the work been done the Erie Railroad would have
been amply protected
EVERY SINGLE STEP TAKEN by ERIE
shows that they appropriated money for that spe-
cifc purpose, and relied upon o faithful perform
ance OF the trust. Immediately on It's arrival at
Boston over one million dollars of money were
appropriated In the purchase Of the underlying
in buildings and railways and purchasing steam
boat lines The trustees are to-day striving to
take the benefit OF the investment made by this
mlsappropriated money. There are large amount
OF other bonds exchanged for Berdell mortgage
bonds The allegation Is that S., 600 900 have been
diverted from their original intended source;
THE ROAD Is NOT BUILT,
the money Is gone, and Erie finds itself with its en-
dorsement on the bonds Till the year 1900, which
amounts to ST. 100000. Now the trustees claim they
on March IS proceed to An organization to put out
stock and to call bOndholders together. They
ignore all coupons and throw out all interest and
say we will give any one bringing us ten bonds ten
Mr.. Graves argument continued after the noon
recess until past two O'clock when an adjourn
ment was had till tomorrow morning. First in
order then will be the argument Of counsel for the
trustees, then the counsel for assignees, followed
by arguments OF counsel for individual parties.
urday.