New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-03-04
nrrTINE OF TIE CASE.

OUTLINE OF THE CASE.
me case IS That Of Lucus Hendrlck "eeuen ana otuei
rptcb holders OF the first mortgage bonds OF the 81
panl and Pacific Railroad Company against that corpo-
ration gtappsars from the papers that the piantn'
hold SIC OF bonds. which we're sold for the stpu-
lated purpose OF building the extension lines OF the o.
auI and Pacific Railroad, ana that they we're secured
IA, thu property OF these lines William @. MOorhead
as tho trustee under the mortgage, and was also CON
rnctor for building roads The proceeds OF the Sae
Of the bonds thus into his hands as trustee anu
we're expended by him contractor Moorhead was
partner inSthe New-York house OF Jay CooSe Co'
having An interest OF about 90 per cent aud partner III
tho London house OF Jay Cooke. McCuloch Il Co.. III
which he had an interest 10 or "a cent In About
wear after che sale Of the s5OO) of bonds the money
rave out after about onethird Of the rails had been
aid large number of rails. some new and some olu
which then remained on hand were turned over oy
Moorhead 70 Jay Cooke & Co. for advances OF money
Tney In turn turned them over % Jay Cooke McOunoon
Co. These rails were in NewYork. Buffalo, Duluth ana
Nav Orleans The bondhoders claim that the iron was
bought with their money for specific purpose; that
part u the proceeds of their bonds was used on paris Vi
the road IN which they have no interest ana Wmch are
not covered by their bonds, and that Jay COOKE NC
Crllooh Co had Que notice that the iron was theirs
because Moorhead being partner his knowledge is IN
law tho knowledge Of the firm In the course OF the SUIT
brought by the bondholders last November, ii became
usessar, 10 trace iron and provide by an injunction
against being sold otherwise placed beyond their
reach 70, this purpose order was obtained from inc
Court requiring Francis o. French OF the firms OF Jay
Cooke & 20. aud jay Cooke, McCuuOch Co.. aud
Nathan Chandler OF the firm OF John Munroe C0. oil
y,arts and New-York, 10 make affidavit IN answer 10
questions pat by Messrs EYarJs, o0uIlmaJu * CAoa'e'
attorneys for the plaintiffs.
In the sffdays made In consequence OF this order,
,nsgers " certain important questions were refused on
he GROUND that they would be IN violation OF business
.oo1leuce A further order therefore granted on
Fab 10 recurring the witnesses 70 appear before VIM.
"a sieriing referee, and submit 20 an examination.
Ftsr the ahIayts and the dispositions the following
facts appear
AT tho Of the panic In September last Jay Cooke
& Co. The FIRST Division Company, and the Northern
Pacific Railroad Company all went down together The
Secretary Navy had large balance IN the hands
Of Jay Cooke. McCuOch & CO-abOut 100000 IN all
FOE payment Of the naval forces 10 European waters
Mr. MoCuIoch arrived in NewYcrk soon after and
made strenuous exerons TO obtain funds to prevent the
5Oud2n house from going down and also to prevent
Secretary R,besOn from removing his account from
them "a Mr French testified II was important to the
London firm continue this account for two reasons
first tho balance useful TO them, and secondly, II
che Unted satca had Withdrawn the account the credit
OF tho house would have been destroyed at once
all over the world. The warehouse receipts, &C.
representing the iron, had been deposited with
effect them. but the negotiations failed on &C
count OF the opinion Of two lawyers that under
cent Judge Blatchiord the property
safe from the creditors OF Jay Cooke Co. The nego-
tsoos having failed, the warehouse receipts repre-
senting the iron. were deposited by Drexel Morgan
Co. 90 Oct 10 1873 with the firm OF John Munroo Co.
a trustees for the person q persons who should
have a title to them. They were sfterward
Delivered % George r Cutter. naval paymaster,
on the order OF the Secretary OF the Navy.
After several interviews between McCulloch and Secre-
tary RObasOn the latter consented retain the Govern
with the house Of jay Cooke, McCulloch
Co. and received large number of securities, among
which about 1000 tons Of iron, part OF which was
In Buffalo part in Duluth aud part in New Orleans
Ts iron 10 York retained for the purpose Of
enecting OF 100000 sterling. which hcCuloch
knew would bo needed By his firm IN November. This
further advance obtained from Secretary Robson
aud the documents representing the iron were handed
over 70 Mr. Cutter on Secretary Robesons order
The terms OF the deposit with the Secretary
Of the Navy not known TO Mr.. French
but formal document was drawn up by Mr. Robson,
which the believed secured the continuance OF
the amount then deposited and to be deposited with the
hr tor tho Navy Department Since this iron, consist
ing OF rails and old, has been in tho possession OF
the Government a part Of it has been sold and the
money reoave1 By the Secretary Of the Navy his
account Among other lots one Of old rails, which
were sold at tho pTlCe Of1unk.
Mr. French said that the claim which Mr.. Robson has
upon the thus scattered through the country
announced 10 the Treasury Department and that
the people whose the iron stands cannot
a rail without orders from Washington Since tbs
o. 10000 left In the hands OF Jaw Cooke, Nc
Cuooh & Co. and the 100000 has been RENTED to
them not than about 92O00o have been paid out
BY that firm account Of naval drafts.
Tue following correspondence shows the exercise Of
the right OF ownership in the rails by Secretary Robson
NAVY DEPARTMENT wAsHNGToS. Oct. 81, 1873.
Eessrs JOHN MUNRoE & Co., NeU-fOrk
GENTLEMEN Please deliver iron rails held Tor account,
sdvisod by you 70 Pay Director George f. Cutter,
Ssw-York GEO. M. robson
Memoranda:
New rails. Tons io,0S II
Old rails ....................TOns 4y55I IL U II
OFFICE OF JOHN MUsRok Co., !
BARgBes. No. WALL-sr., NEW YORK, oct ~ 1917,
m Hon GEo. M. robson, Secretary OF me Macy
Washington, ID. O. 49,. 49,. a..
wa beg 70 advice that We have handed over 70 ray
Dreoor Geo Of this city the iron rails therein
rfsrred TO- and hold his receipt Tor the same very To
speeti"V' your JOIN MUSRoE Co.
MA clsimed by the plaintiffs attorneys that the iror
hIo,iny 70 their clients and secured from their bonds
n be recovered from the Secretary OF the Navy on tht
ground that though the warehouse receipts are regular
negotiable paper aud therefore perhaps secure III tn'
hands Of au Innocent holder the Government can main
tain no claim 70 them "a It's officers havo legal gh
roosve securities for loans II this plea does not hold
good. they claim the Government must exhaust ia
claim against tho other securities which Cooke Co
had right 70 pledge before using the property OF then
clients.
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