The sun. [volume] (New York [N.Y.]) 1833-1916, 1876-08-08
AN UNFOUNDED LAW SUIT.
poy TTLDEN's CONCLUsIVE REILLY
TO A WEsTERN COMPINf.

rois Railroad COMPANY Lih-
n,Iity Of Millions Of Dollars, Building up
bankrupt Concern, and Now the Thanks.
The answer OF the defendants in the suit
,r.u,uted by the st. Louis, Alton, and Terro
g,uts Railroad Company against Samuel J. Til
aso. Charles Butler, Russell Sage, andtl,ob bert
e,y.rd. vas fled yesterday afternoon In the
rTst. once OF the United States Circuit Court,
m bnscity, by Judge Sinnot, Gov. Tilden's Law
prtner, and the solicitor for the defendants.
The suit was brought on account OF the issue Of
rertain stock by the defendants and the execu-
hon Of deeds Of trust to secure certain bonds.
while the railroad, which Is now the
property OF the plaintiff, was in their
hands, having been bought by them under
. decree Of foreclosure and sale, and by
virtue OF an arrangement between them
and the bondholders, by which the latter hoped
TO save Themselves from the heavy losses In
which the insolvency OF the railroad threatened
W involve them. The plaintiff corporation seeks
y this action to hold the defendants liable as
kustees and agents for itself, and alleging that
he issue Of stock by them was unauthorized.
md that It was made in violation OF their trust
and for their personal gain, demands an ac-
counting from them and other suitable relief
The answer that Is now filed forms, with the
exhibits attached thereto, printed volume Of
lei pages. ills sworn to separately by each OF
the defendants, and II presents state OF facts
that rcfute In the most conclusive manner every
material allegation of the complaint, and that
show not only that the defendants committed
no breach Of trust, exercised no illegal power,
end did no unauthorized oct whatever for their
own pecunisry benefit, out that they stepped
into the breach at a time when the Terre Hauto,
Alton and St. Louis Railroad Company was at
the brink OF ruin, and every person that had
.tWk
serious loss, even the nrst mortgage bond
holders having no prospect OF realizing
moro than one-third Of the value Of their
bonds, and all other creditors, including the
second mortgage boDdholders, seemed certain
TO be cut Qn entirely and assuming personal
liability OF several hundred thousand dollars,
bought In the railroad and all its property In
their swn names, but by virtue OF an agreement
with the bondholders, under which IL
hoped that with a reorganization of the rail-
road. the issuing OF new bonds In place OF the
old ones, the resumption OF the payment OF In
terest. aud wiser management Of the railroad
and Its business, the frst mortgage bondholders
would realize the fun value OF their bonds, and
something would remain for the second mort
gage bondholders.
were realized to large extent, and that this
consummation was achieved by the skill, ardu-
pus laoors, and unselnsh devotion o. the de-
fendants. The Issue OF stock OF which the
plaintiff complains Is shown to have been
tireIy lawful and authorized. and the issue of
bonds and the execution Of deeds Of trust to
secure them to have been made by virtue OF the
previous agreement OF the defendants with the
bondbolde and to have been only discharge
pf their bounden duty. II is shown that when
the defendants subsequently conveyed the title
to the railroad which they had acquired 10 their
OWN right at the foreclosure and sale to the
plaintiff. the conveyance distinctly recitod
The issue of stock OF which complaint Is made,
and that the plaintiff made no objection then
10 said issue Of stock. and raised no objection
thereto for thirteen years thereafter, during the
among the fies Of the piaintif. and ali ihe facts
were within Its knowledge, and we're set forth
sislm VEN sSss n ts sas sSs Tsersaas
tees for, 1t, and wore liable Svn Is sucn en-
the contrary, that the defendants assumed q
personal stability OF hundreds OF thousands OF
dollars when they bought the old insoNeht
railroad and clearly bought 1t In their own own
right, and not as trustees Tor snyoSay. me. aney
mept with Them, and that pledge they fulfilled.
To the plaintiff, or to the stockholders OF the
old concern, or TO It's general creotoIs' they
deny that they assumed any liability or ooisa-
Those creditors were not entitled to claim
fendsnts bought tue old railroad was next TO
nothing IL comma anded not more than Two per
seisbe even at that figure. The claims Of tho
general creditors were worthless Inc STOCK
Holders would not have expended dollar 10
prevent the foreclosure OF the nrst mortgage,
which would have cut them OF entirely. They
had no rights that were worth preserving, aud
could not, and were not disposed TO resist any
arrangement which the bondholdefs desired TO
enter into. No agreement was maue w win M ,uvsn ,a
by the defendants, ana no oohkatiou VI bu'-
teeship assumed toward them.
The answer makes evident that any compeh-
Baiion the defendants may have ootaineu oi
profits they may have realized were no adequate
remuneration for the large LIABILITY assumed oy
them aud the arduous labor ana compre ehsnsiss
ABILITY required from them and that IN the
msnapement " the railroad and In carrying out
the agreements Into which they entered the
honUrsbly. and WITH rare hberallty. -
The following Is a condensed summary Oh TIE
facts set forth In the answer;
ugy rST Inc to i Of 9Grs w Terre Hsue Shs hteS
Riirgsd Cumpani And ina ialloyAle an. .iinolstowI
by nfst and sseSnd IN Ttsages these
b is6 we're con.ohaAea unds! the name o. The TER,
LEM 4 he mortSgss ues as rasa 5sals aomSsnY 5
o,ent, b@ctine greatly embarrassed financially rnt
is,Heu new bonos secured by third ana fourth mort
flul in the payment u TIE interest upon all it
bouds. and m the PAYMENT OF debts % every KIND
ana lna became enIre insolyent. 1t tailed TO psl
iis wuihineH ami empojees, nd tne business % H.
i, is nl-lness y.eiqed ueI income whste'er, sn
inrr, prosytct oi relieving ls cohait9l eheep
Yicn uq have ereis " Oe abls si'inee in! ~. 9
tu.s, s isS.5 At tnst time ae hrs
,se oona' ad ea To- % Psr 81 cen: hs In nnne,p vii
the accutnul .tous VI interest added. 49,, T., ,,. =.
T ss.oau oneaps di @ mount u their prhc an
&c umuaied eret. Ihe sock could not pc ,old 10
T. , Ire eT ausStties anti The The N masei q ~ i6e bono
had all the stock wss not more this i w i,
net mortgage bonds alone Under cir umstance
tfe company surrendered It's property IN D~trnOe
1893. to Azlrah c. flaHg ana john Nnkinhon, t.A Hu
tttr named ia ire second NOR cages and upefSe
by them me capActy of trustees and receivers un
tile sale OF property under foreclosure. AT TIA
1u cturc Of the nrst mortgage OondhOlfers man
tested a disposition 10 tOreclo their len, whic
would hive cut On tntirey al other claims, includln
tne second mortgage tOnd. and al the STOCK anu uns'
cured dcDts, . .,. -.
general creditors tne stO ShO defs eyer, ha
puicent faith Ia the value OF the property to contr
ute any money toward buylng the property ia und'
euch foreclosure, or 10 resist the proceeding AN
nrolonged ne 20 iatiOn agreement was Effected b
Tween Some OF tue d st nd oine Of the second NOR
Vance a large amount OF money TO aid the three pres
INC neccssties OF the road, and the former, IN 81
t1iaration OF tnat advance, As wen ~ OF ON
rircun.i ances agreed 10 = plan DV Whlch Tue sal
die entire DrOpery should be en- ct'd 10 per Ons "
vgu assume the absolute title Of the tsne anu Nou
second mort place OF th'lr oo Dohls u, " on
occurred upon the perry under thS no. V"hel
Al the alne lme thls plan bhoulu eIloi AZ W. \, y
ture of recOgnitlOn wholly dlscreuoLA1, o ny Ihu
eats Of creditors nid sOCkh ldeIs, when, Ou. LOT ~
Tecognltlon would become wholly exinct All OF !
ntnt and for the unit u all he bohds not ,hus .
reseuted tae persons VINO were 70 Decone tno % ~ ~
owners Of the rOal were necessarily iorcou ~ ASsu
EersOhal liability. - -,
Tnese persou. Who we're style the purchasing Agei
OF the TOau, distinctly required unaer the AK
ties AMI nOt gents, ana the bOnchO det aenl nc
only that they subject thente Yea to thr oDnxatoh
furnishing new tOnlA Ia eAclAuge Tor TIC ou One',
diKAtion whatever Wa imp d IN tAe puTCAAs
!. ia favor OF the stOcAhOldtTa or Ot tn credt
sHeh. ont 10 the second mo- tsasr Dol dholders,