The daily Argus. (Rock Island, Ill.) 1873-1877, 1876-04-24
From the chicago Inter Ocean, 22d.
A NEW CLOUD ON THE PROS
pEcTS OF THE ROCKFORD,
ROCK ISLAND AND ST.
LOUIS RAILROAD.
BEEN MANAGING THE IN
TERESTS OF THE
BoNDHoLpERs.
A First Mortgage Bondholder Files q
Supplemental Bill Charging
Fraud and Asking for a
Receiver.

In the United States circuit court yester-
day Miss Jessica NJ. Hooper, Of New
York, first mortgage bondholder of the
Rockford Rock Island and st. Louis
railroad company, filed her bill of COM
plant by way of supplement to the
litigation which has been pending 10 this
court during the past two years, and I'm.
der which the road was sold by Henry W.
Bishop, master in chancery, in August last
to Heyman Osterberg, who took possess
ION OF the road in November thereafter.
The bill alleges that the railroad CON-
pany issued its two series Of bonds in 1869,
the first series, numbered from to 5000,
for $1,000 each. being secured on the
northern end Of the road by a trust deed
to the Union Trust company Of New
York. The second SERIES numbered from
5,O0l to 1900, secured in like manner
upon the entire road, subject to said prior
lien OF the first series, the total amount Of
bonds being $9,000,000; that the bonds
were sold and scattered, large majority
being held in Germany.
The bill alleges that prior to 1878 the
road became embarrassed and failed to
pay its interest on the bonds, and that
certain persons in Frankfort organized
themselves into a committee with the
holders That Osterberg was one of the
committee, but was not the owner of any
of the bonds, and the members of the
committee were not owners, nor to any
considerable extent interested in the
bonds. That in 1874 the committee,
having meantime induced considerable
number of bondholders to deposit their
bonds with the committee, taking in each
case power of attorney giving the COM
mittee authority to take such steps in
relation thereto as they might deem best,
resolved that it was advisable to f)reclose
the mortgage, and appointed said Oster-
berg delegate of the committee to procure
a foreclosure. That he came to this
country and filed bill to foreclose; that
during the foreclosure proceedings this
court decreed that the first series of
bonds were entitled to preference oyer
the second series, to be first paid out of
the proceeds of the sale of the road.
amounting to 81 per cent of the total
proceeds.
The bill further alleges that the decree
of foreclosure was entered. and the road
ordered to be sold at public auction by the
master and that at the sale on the 10th
day Of August, 1875, it was bid off by and
in the name of Heyman Osterberg for the
sum of 3 $4,000 that at the sale Oster-
berg publicly announced that he bid the
property of for the committee of the Ger
man bondholders. That the purchase was
in fact made by Os,erberg for the holders
of bonds who had united together under
the direction of Osterberg and the com
mittee, including the com plainant, and not
for himself or the committee; and that
Osterberg wrongfully made the purchase
in his own name without disclosing upoI
the records of the court the fact that he
purchased for the bondholders, and that il
fact
osTERBERG HAS NO RIGHT OR TITLE
to the property, except as a Representative,
OF complainant aud the other holders o
the bonds who had com bined together al
aforesaid That upon such purchas,
Osterberg deposited $4,000 and after
ward from time to time he paid over t
the master,in money, bonds, etc, sufficien
to make out the whole amount credltet
upon his bid s 900, lj5. and that recentl
he paid over the remainder VI his bid {
wit, the sum Of S22O,S44
The bill alleges that no deed for tn
property has yet been issued or made, no
has the sale teen finally confirmed. Tha
in the powers Of attorney aforesaid tn
committee w;s authorized to take sucl
action as might be necessary to bring abou
as satisfactory result as possible for tn
bondholders, appoint confidential agent
and substitutes, revoke the appointment
OF trustees and cause others to be appoint
ed, make compromises, receive payments
appoint banking houses, etc. that the ex
penses were to be borne pro rata, and tina
the bonds should stand az security to tn
4. Ill =. A
OF the power of attorney is attached Il
the bill. That during the time Of the fore
closure proceedings, and before the sale
Osterberg and the committee advertised
in Germany and in this country for othe
holders Of bonds to deposit their bond
with the committee, offering that the
should stand on the same footing witt
other holders of bonds then Represented
by said committee, and that considers bl
numbers of other bonds were deposited, S
that finally about $4,5O0,000 were de
posted, and among them the complainant
deposited nine of the bonds Of the frs
series, to be paid or used toward the pur
chase OF the road, complainant executing
like power OF attorney, as above mentioned
and Osterberg then agreeing with com
plainant that the bonds so entrusted I
him should entitle her to an equal proper
zion of interest with other holders of lik
bonds in the property of the road in cas-
he should become the purchaser thereof
The bill alleges that at the time sh
deposited her bonds with Osterberg b
concealed from her the fact that the cour
had already decided that she was entitle
to q preference in payment out OF the pro
ceeds OF the sale OF the road, amounting t
about thirty seven per cent thereof, an
that she was wholly ignorant Of the sam
until recently, and not until after she ha
paid over to Osterberg an assessment o
20 per cent, upon the par value of he
bonds as next herein stated, That 500
after the purchase Of the road by Oster
berg he represented to complainant that i
order to pay for the property and to max
certain repairs, it would be necessary 70
the bond holders TO pay in to him 20 pc
cent, IN gold Of the par valued OF thei
bonds, and in that way to raise the sum 0
Sl,OOO.O00, and that if she would pay in {
him said 20 per cent, she would b
entitled to and should receive for sue
advance first lien ON the road. to be re
paid in gold in ten years, with interest at
per cent, and should receive therefor pey
bonds, and that any deficit arising out O
the failure of any Of the bondhoIders L
pay their 20 per cent, would be raised b.
the committee or by the other bondholder
at the expense of the delinquents. Tha
upon these assurances she did pay TO hin
SAID 70 per cent, amounting to 81, 500 il
gold, TO make up her portion of said 81,