The daily Argus. (Rock Island, Ill.) 1873-1877, 1874-06-13
TROUBLE BREWING FOR THE ROCKFORD,
ROCK ISLAND AND ST. LOUIS ROAD.
4 Chance for Good Long Law Suit.
From the Chicago Times 18th.

act character of the bill in chancery which |
was filed in the United States circuit court
on yesterday, praying that first mort
gage on the whole line may be foreclosed.
THE COMPLAINANT
in this bill is the Union Trust company of
New York, and the case is stated some
what as follows: Previous to the 18th
day of June, 1868, the Rockford Rock ISL
and and St. Louis Railroad company had
become hard up for funds, and some ar
engagements had to be made for raising
money to complete the road which was
then in process of construction. An ar
rangement was accordingly effected where
by the company to was execute first mort
gage or trust deed on the first and second
sections Of the road and a certain portion
of the third section, covering all that por
| ton of the line between Rockford and
roint near the Mississippi river opposite
Burlington, Iowa, to secure the payment of
its bonds to the extent of $5,0O0,00O
| This mortgage was executed on the date
above mentioned to the Trust company as
trustee, and duly placed on record in all
the counties of this State through which
the road passed. Then
THE BONDS
which were to be secured by this mortgage
we're prepared and duly signed, but before
to mortgage the whole line from Rockford
to st. Louis, and issue bonds for $4,000
000 instead of $5,000,000, as at first pro-
posed. Accordingly new mortgage was
| drawn up, executed in due form to the
Trust company. as trustee, and placed on
record as the old one had been.
The bonds were then issued in a series
numbered from | to 5000, each for the
principal sum of $1,000 payable in the
year 1918 in gold coin of the United States.
These were to bear interest at the rate of
7 per cent, payable semi annually, in gold.
The purchasers of these bonds were also
given the privilege of demanding and re
ceiving 200 English pounds for each bond
at maturity and English pounds for in
terest when it became due, if he preferred
it, and with this understanding the bonds
we're put in the market and sold. For con-
venience, however, the Trust company re
tanned possession of 1898 bonds for 81 ,00O
each, and smaller ones ranging from 500
to $500 were sold in their stead, and the
proceeds of their entire sale was paid over
with the understanding that it was to be
used in completing and equipping the
road. TIME ROLLED ON
until the month of August 1871, arrived,
and the bond holders continued to be hap,
py But on that date halt years inter
est became due and it was not paid
Neither was that which fell due on the Isl
Of the following February. But on the Isl
Of the following July the company made I
, proposition for partial settlement and q
contract was entered into with the Trus
company whereby the holders of the bond,
were invited to accept half their face value
} in the preferred stock of the road, allow
half their bonds to be cancelled and draw
interest on the other half at the rate of
per cent. Some of the stockholders &C
cepted this proposition and others held ou
against it, preterring to keep the bonds al
5 they were and take their chances for the
, interest.
But even this arrangement has apparent
ly tailed to bring the company the needed
relief
DEFAULT HAS BEEN MADE,
as the bill alleges in the payment of tn
interest since February, 1873, and TIL
bond holders are becoming dissatisfied
Even those who accepted the preferre'
stock are in as bad fix as the others, an,
ment Of their bonds.
There also promises to be some Difficult
ty about
PRIORITY OF CLAIM,
those holding the first issue,or those bond
numbered from | to 5000, claiming to b
secured by a first mortgage, executed Jun
j 10, 1868, and demanding that their bond
e be paid in full before the others receive
-. l. ~ l. r Il
). bers insist that all are secured only by tn
S mortgage of Oct, %, of the same yea
I and that all should share alike. just wha
: may be exact justice in this case the con
: plainant does not undertake to say, but ez
presses willingness TO leave the who
matter to the court.
: Still another difficulty promises to arts
: from the fact that the road is
n NOT PROPERLY DESCRIBED IN THE MORT
GAGE.
That instrument speaks Of road runniu
from Rockford to St Louis via Cevelanc
Il Rock Island, etc, while the fact is that tn
}, line starts at Sterling, which is 50 milt
Il from Rockford, without any connection /
i rail whatever. 1t does not touch Clev
y land, either, passing some 40 miles to I'll
) east Of that place. But since the trac
= was not laid on the line Of the original su
} vey, as was intended at the time the NOR
gage was executed, this complainant thinl
a ought not to void the mortgage, as tn
), would be a direct fraud on the creditor
). who accepted It's security in good faith, ar
s ought not now to be detrauded by any tecl
g nicalitY
n After stating further that
n THE GROSS EARNINGS OF THE ROAD
n since its completion have not exceedt
more than 81, 100000 per annum, and q
l. leglng that this amount has not been pro-
t. erly applied either to the improvement
k the road or the payment of the interest
IF those bonds; and after making furth
/, assertion that the assets of the concern a
e being badly handled and recklessly waste
n the complainant expresses its desire
e have the mortgage foreclosed. 1t has BET
d urged, it says, to make this demand by Il
holders Of upward Of $2,00O,0O0 worth
T. these bonds, and being actuated by a d
y sire to fulfill its trusts and see even iusti
! done to all these bloated bond holders,
- asks the court to order the road aud all
~ branches, appurtenances, rolling stock al
- fixtures Of every sort to be sold at on
u and the money applied to the payment
Is the bonds.
/ An amusing anecdote of Kaulbac
u the artist, is told about his interview wi
u the Saxon Ambassador in Rome not mai
Z years ago The Ambassador who h,