The New York herald., 1874-08-17
THE CALIFORNIA PACIFIC RAIL
ROAD.
Milton 8. Latham's Answer 70 the Suit
Of Michael Reese-S7, ,O0O, 900 Involved.

Milton 8. Latham's Answer to the Suit
Of Michael Reese-S7 ,O0O, 900 Involved.
SAN FRANCISCO, August 15 1874
On the Ttb inst. Michael Reese sued the Calil0r-
MIA Pacific Railroad Company. Milton s. Latham
and Others, to recover $70OO.0 900 on account OF 81
legged fraudulent transactions.
To-day Mr. Latham flied separate answer He
declares that until within two days oil the nstitu-
ton Of the suit Reese had never been an owner or
holder OF any stock In the California Pa
cidc Company, and has been induced to
lend his name TO the Central Pacific Railroad
Company in bringing this action; that the real
parties are the Central Pacific Company, and thas
the action prosecuted entirely by them; that all
the allegations OF fraud made by Reese against
defendant are UNANIMOUSLY false; that he
never was interested with ROelofsen, Ryder
and others In building the roads OF
the California Pacific Company and never had
any shares OF stock except few issued In 1870 in
order to enable him to become director in
the company; that while the California
Pacific extension was constructing Roeiof
sen and Ryder applied to The London
and San Francisco Bank for loan
and Latham assisted them to obtain 1t elsewhere,
for which service he received twenty bonds OF the
company. realizing therelrom $1S0OO, which is all
the interest ne ever had in either company; that
in January, 1870, defendant became mem
norma Pacinc Railroad Company, consoli-
dated; that at the time sand company was
ager, and defendant was also agent ana represen-
tatlve OF the holders OF large amount OF the cap,
G noe by OF ss TeoDg %
tine Eastern States and Europe; that lor the
sole purpose Of protecting their interests and
without the slightest interest OF his own, direct
or indirect, defendant became member oil the
Board OF Directors OF the railroad company on the
stn Of June, 1870; that shortly thereafter appca-
tfOQ made DV the contractors fOr the COnSCluC-
ton and equipment OF the California Pacl1c Exten-
sion Company for release from the obligations Of
their contracts. said application was based upon
their oner TO surrender certain notes OF the Call
forna Pacific Railroad Company which had been
deposited in the bank OF which the defendant was
In charge for sale Keeping and the defendant hav.
ing hscertained the utter inability OF the contract
orB to complete the railroad OF the California
Pacific Railroad Extension Company, and acting
with hts directors voted Tor the release OF SAID
surrender and cancellation 0l said notes; that in
March. 1871, the company issued bonds to the
amount Of 100000 sterling as the Income bonds
and which were transmitted TO London and taken
In good part by the owners and holders OF the
capital stock of tue company. The proceeds
amounted TO 81 1852 2s4, all OF which was accounted
Tor to the company lie gives an account OF the
purchase Of the property OF the Calliornla Steam
Navigation Company horsh pacc hslroaa @ ana ,l
on the contamination OF these sales the Central
Pacific directors became directors OF the purchased
companies. This was before the bonds were Issued
and 1t was understood that on their issuance all
the companies would be consolidated. Stanford
q w. WeTc sO uebeTIulueu w OWu duu COubIOl bHC
California Pacific road, though knowing IT'S IN
debtedness OF $s,42l,0oo, that they promised
Latham ii he would visit New York and obtain
the consent of the stockholders wnom he repre-
sented and personally assume all Obligations over
tho sum named they would on his return from
New York give him their note for s250,o0o
he went to New York, procured the consent
OF the stockholders TO the terms OF the
proposed sale, aud also the consent
OF those in Europe. On his return TO California
the company Issued bonds to the amount OF
$1,000, ,000 secured by second mortgage on the
companJ's property, which bends were TO be guar
anteed BY the Central Pacific Company. Alter tue
issuance OF the bonds the directors resigned and
Stanford, Huntington, Hopkinson and others were
elected directors and its capital stock was deiiv-
cred to Stanford and his associates. He says that
with the exception Of a note to him OF Stanford
ct al. for $250,000 they never paid dollar ior the
76,10l shares obtained by them. stanford n Co.
have refused he says to pay interest on the bonds
OF the California Pacific, and have caused the COM
pany 20 confess Judgment tor $1,394, 900 on It's
promissory note one day old in Mvor OF }. b.
Hoggin, Of this city, through whom they are trying
to obtain perfect title 10 the California Pacinc
Railroad. In round numbers the total obligations
OF the Vallejo system may be put down at
$4,000 oo0 and it has been suggested that the best
thing for the bondnoders will be to foreclOse and
take possession of the roads themselves.