The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1874-08-17
SALT LAKE.
SUIT FOR SEVEN MILLION DoLIARs.

OSAAAAAA@s
SANFRAU, August l5.-On the 7th inst.
Michael Reese sued the California Pacific
Railroad Company, Milton 8. Latham
and others to recover seven million dol
lars, on account ot alleged fraudulent
transactions. To-day Latham filed sepa.
rate answers. He declares that until
within two days Of the institution Of the
suit Reese had never been owner or holder
ot any stock in tho California Pacific
Company, and has been induced to lend
bis name to the Central Pacific Railroad
Company in bringing the action; that the
real parties arc the Central Pacific; that
the action Ia prosecuted entirely BY them;
that all the allegations OF fraud made by
Reese against defendant are UNANIMOUSLY
false; that he was never interested with
Raelasen, Ryder and others in building
the roads Of the California Pacific Com.
paDy, never had any shares Of stock ex.
cept lew issued in 1870 in order to
enable him 10 become director in the
Company while the California Pacific ex.
tension was constructingl Raelafen and
Ryder applied TO the London San Fran.
cisco bank for loan to 1t, and Latham
assisted them to obtain 1t elsewhere, for
which service he received 29 bonds Of the
company, realizing theretrom $4,000,
which is all the interest he ever had in
either company. That in January, 1870,
defendant became q member Of the board
OF directors oil the California Pacific r,
Il. Co.; that at this time said company
was indebted TO the bank Of which deien.
| HQnf 10 Inlo Ii
the agent of representative holders Of
large amount Of capital stock Of said
corporations, owned by various persons
residing in the Eastern States and in
Europe; that for the sole purpose Of pro-
tecung their interests and without
the slightest interest Of his own
as director, indirect or direct.
shortly thereafter an application was
made BY the contractors for the construc.
tlon and equipment Of the California
Pacific Railroad Extension Company Tor
release from the obligations OF their
contract. This application was based on
their Gofer to, surrender certain notes OF
the California Pacific Railroad Company
which had been deposited In Escrow, in
the bank OF which this defendant was in
charge, for safe keeping, and this de-
iendant having sscertained the utter in.
ability OF the contractors 10 complete the
Railroad Of the California Pacific Hail,
road Extension Company, and acting with
his co.directors, voted for the release OF
said contractors from their contract, upon
the condition Of the surrender and cancel.
laton Of said notes. That In March 1871,
the Company issued bonds TO the amount
Of 800 pounds sterling, known since as
the income bonds, aud which were trans
mitted 10 London and taken In good part
by the owners and holders Of the Capital
stock Of the Company. The proceeds
amounted to 1,853,2s4, all Of which was
accounted for 10. the. Company.
BE gives an account OF the purchase Of
tho California Steam Navigation Com.
pany, North Pacific Railroad and San
Francisco and Humbold Bay Company.
The Central Pacific Directors became the
directors oi the purchased companies, and
this was before the bonds were issued,
and 1t was understood on their issuance
that all the companies should be consoli-
dated. Stanford d Co. were determined
TO own and control tho California Pacific
Road, though aware of its Indebtedness Of
IS 49l, 600. They promised Latham tha,
II he would visit New York and obtain
the consent Of the stockholders whom be
represented, and personally assume ell
the obligations over the same named, they
would, on his return from New York, give
him their note for $250000 He went "a
New York and procured the consent OIL
the stockholders TO the terms OF the pro-
posed sale, and also the consent Of those
IN Europe. On his return the Caliiornia
Company issued bonds Of $1,000, 900, o.
cured by a mortgage on the property
which bonds were TO be guaranteed by
: the Central Pacific Company, After the
issuance Of the bonds the directors re-
signed, and STANFORD Huntington, Hop
kins and others were elected directors IN
their stead and It's capital stock delivered
to Stanford and his associates. he sayI
that with the exception oi note TO hin
Of Staniord's for $3.50 900 he never paid 9
D dollar for the 70 .l0l shAreS obtained BY
3 them. Stanford s. Co. have refused, hI
7 says, to pay the interest on the bonds o.
t the California Pacific road, and havt
2 caused the company to confess judgmen
tor $l,S9i000 on It's pronissory note ON
day old in favor OF j. B. Hggin, Of thi
D city, through whom they are trying &
I obtain q perfect title to the California Pa
Q Icitc Railroad. Ia round numbers III
total obligations Of sthe Vallejo systen
Q may be put down at $4,000, 900, and i
: has been suggested that the best thing 10
. bOndholders VIM be TO toreclose and iak