New-York tribune., 1874-12-01
A RECEIVER FOR ERIE.
~ ORDER GRANTED BY JUDGE WEST
BROOK.

II will be remembered that in July, 1874,
John c. Angel began action In the Supreme Court
aesluss tho Erie Railway Company and its directors
wherein alleged among other things that by the au
ees association OF tho Company which were parts OF
tho fundamental law. the Company was restrained In
the following particular:
"No new mortgage shall be created on the property
covered by the existing mortgages OF the and
Erie Railroad Company, unless the intention 10 create
the same shall published some newspaper IN the
c,tv ~ York for the ten weeks next before the
annual election OF directors"
The complaint alleged that notwithstanding this re-
stricton AID without having given any notice prior 10
the annual election In July, 1873, the Erie Railway COM
pany made mortgage in the month OF Feoruary' 1913
whereby they mortgaged all their property, including
the property formerly belonging to the YORK ana
Erie Railway Company the sum OF sS0oOOOOO
which mortgage also provided that 1t should stand ana
a lien to secure S0,OO0Ooo convertible Dohus
Heretofore issued by the Company Mr.. Anglers am
davt now alleges that the said slOOOOOOO convertible
bonds were issued according to law but In violation
of law because tho articles OF association OF the COM
pany provide that floating debt shall be created ex-
cept working supplies and materials expendeu ih
the operation OF the road, unless by vote OF three
fourths Of the directors meeting called for the pur
pose and that three fOurths of the directors
were present when the conVertioie Donus
were authorized the meeting calied
for that purpose. Mr.. Angel also complained that
certain large dividends, exceeding s3COOCo had Deeh
declared and were being paid out Of the capital OF the
COMPANY He also complained that the Company In
violation of law had appropriated s1OOOooo with when
its then President Mr.. Watson, had purchased coal
lands in the State OF Pennsylvania In his own name
He complained further that the Company III 'olaon
OF law had purchased 5000 shares OF the Bualo' Ne"
York and Erie Railroad Company at sacrince ot us
property OF about 100000. He now supplements thS
allegation by stating that tho purchase OF that stock
70 Erie RlilWay Company
TO control the election for directors OF the Buffalo, New
York and Erie Railway Company; and that having thus
obtained control OF the direction OF that road, IL
caused that Company to make q new mortgage
upon its property to the payment of sOOooOCO
OF bonds issued under It, and that the Erie Company
Illegally guaranteed the payment OF the Donds that In
this way the Erie Company being in possession OF the
road and property Of the Buffalo, New-York and Erie
Railroad Company and being itself insoyent could not
pay the obligations which 1t had assumed; that thus
the new mortgage upon the Buffalo, NcwYork and Erie
Railroad Company lab to foreclosure, ana 50 the
Of the road would forfeited and destroyed and
the Erie Company would be unable to go into the cltes
OF BuIlo and Rochester, thereby entahns and render
ing useless large expenditures OF money In and about
those cities for railroad purposes. These expenditures
has been made out OF the capital OF the Erie Railway
Company. Mr. Angel relied largely to sustain these
allegations upon facts stated by s. H. Duhan' iate
auditor Of the Erie Railway Company.
After beginning his own action Mr. Angel applied to
the Attorney General of the State to have an action
begun III the name OF the people OF the State against
the Erie Railway Company and Its officers 10 suspend
certain directors and officers OF the Company the
ground that they had performed these Illegal acts, and
TO accomplish other results OF which might
be doubtful in his own suit The Accomplishment
accepted the brief and brought the in the name OF
the people is further alleged that at the time OF the
acceptance OF the suits by the Attorney the
. ,I,a hoH mil an
Messrs Turquand YounCs & Co.. and Messrs. Quilter,
Bail & Coz accountants, of London, TO come to New
York and carefully investigate the affairs of the Com
pany. Their examination had not been completed at
the OF the hearing before the AttOrney'General
It has since been completed and their report made To
the London Banking Association. One OF the facts
stated IN their report. as alleged by Mr. ADge Is that
the payment of tn said dividends was wholly
unusifed by the earnings Of the Company, but they
had found that with the exception of certain items
which they could not determine, there was about
surplus earnings Of the Company in the period
for hich dividends declared and so the payment
OF the dividend the preferred stock was thought to
be justified. The items which these accountants could
not determine among others Of the payment to
BischOffs shelm GOdschmidt of 100000 account OF
expenses incurred ousng Jay Gold and his directors
from the manag cement of $40 depreciation in rolling
stock OF 100000 unpaid interest due on the bonds Of the
Boston, Hartford and Egle Railroad Company guaraE-
teed by the Erie. Mr.. AngePs he papers demonstrate
that these items which the English accountants could
not determine, only excess of the slC0O0Oo
surplus earnings winch they ascertained, but that
these items least 81 than the amount
they had ascertaned the surplus earnngs aud that
thus the invesg gation and conclusions of Mr. Dunan
were justified uy the results of the investigation by the
Ell gllsh accountants
William c. Barrett and John L. HILL counsel for Mr.
Angel, presented 10 Judge WestbroOk, sitting In
Supreme Court Chambers yesterday, motion papers
covering the points narrated. Upon reading the
papers Judge WestbroOb signed order requiring the
Company to show cause why receiver should not be
appointed take aud hold the certificates of the 5000
shares of BuIlo. NewYork, and Erie Railroad stock
referred to in Mr. Angells complaint and in like man
ner to take and hold all the bonds issued under
ceved By the mortgage made by the Erie Railway Com
pany The following is the full text of the ORDER
SUPREME COURT, COUNTY OF NEw-YoRK.-John C.
Angel agt the Ere Railway Company, Peter H. Watson
samuel H. NJ Barl0W, samuel D. BaDc0rk, Herman r.
BaltZer. George Ii. Brown, William Butler Duncan,
Giles W. Hotchkis', William T. Hart John Taylor John:
ston, Henry l.. Lansing, Edwin d. Morgan. Cortland
Parker, Homer Ramsdell, Lucius Robinson. and Fred
sufficient cause therefor exists now, on motion OF Bar
rett, Redheld HUI, plaintiffs attorneys 1t is ordered
that upon the coiaInt and answer IN thus cause the
affidavit oi the plaintiff, the copy aihdayt or 3 H.
Dunan, the copy Of the lease from the Buffalo, New.
York and Erie Railroad Company to the Erie Railway
Company dated February 1868 the copy Of the mort
gage from said Buffalo, New-Y0rk and Erie Railway
Company 10 Hunter ana the defendant Duncan,
dated MAY /, 1874, the copy Of the mortgage from
Erie Railway Company 10 the Farmers Loan and Trust
Company dated Feb t. 1874 and the several schedules
annexed 10 said adayls marked respectively A, and
G. being extracts from the affidavit OF said Watson and
report OF the accountants referred to the plain
tfs affidavit all Of which papers annexed together
and herewith served, the defendants and OF
them show cause at special term or this Court TO be
he'd at the Courthouse in the city of NewYOrk the
second day OF December 1874 at II o'clock,
soon thereafter counsel can be heard first, why re-
eever should not be appointed to take ana hold
ncaes OF the 5000 shares OF The Buffalo, ~ y and Erie
Railroad Company referred to in tho complaint and
said aiidavits and to manage and control the same
under the order OF this Court TO take receive and
like hold all the bonds land coupons thereto be-
Iop supd mudpr nv tha