The New York herald., 1876-03-22
First Mortgage Bonds of the Mobile
and Ohio Railroad.
A 100000 FORECLOSURE SUIT
Startling Revelations in a Suit Against an
Insurance Company.
THE WITNESS OF THE PERIOD
An Alleged Government Defaulter
in Limbo.

Proceedings OF the utmost importance to holders OF
FIRST mortgage bonds Of the Mobile and Ohio Railroad
Company have just bcen Instituted the courts For
time past there has been pending and undecided
cosure suit instituted by Duncan and Elliott, as
trustees TO foreclose the first mortgage of the CON-
pany amounting TO 50, O00 O00 From tho records of
the co urt filed that suit 1t appears that they claim
default have been made by the company OF payment
of the coupons duo in May and November, 1874, and
that these coupons now valid and outstanding
claims against the property. They also filed petition
for payment of claims OF floating creditors, which
referred In these proceedings 1t made to
appear that the floating debt had been reduced
from moro than $ll0O,Oo0 IN January, 1875 to
$3.50 600 ut the present time and the referee made
report authorizing the payment OF $3.50 900 out Of the
trust estate on the remaining floating debt. The
record also shows that Duncan and Elliott Obtained
issue $500 600 OF receivers certificates TO
ptuto prior lieu the income OF the property, and,
the income prove insufficient the estate ITSELF
% be paramount TO the claim of the holders Of the
lrst mortgage bonds This leave was granted there
,eng oppositonl condition that Duncan and FL
lott hle additional security in 100000, which they
id giving s. l. N. Barlow and w. W. Mcfarland
their bondsmen. Tho report Of the referee has not
yet been confirmed by the Court but is noticed for
hearing the 9th OF April next In opposition to the
foregoing proceedings Mr.. Morris Kechum, the
banker, Of this city, who was originally ap
pointed trustee of the 6000 900 first mortgage, now
steps the solicitation OF the bondholders and
asserts his trustccship seeks to oust Duncan and
Elliott receivers in the first foreclosure suit and
asks for the appointment OF receiver in his suit He
claims that the bondholders satisfied that Duncan
and Elliott give legal title to purchasers of tho
property under decree in their suit even n they
should obtain and that tho rights of bondholdcrs
be legally protected only in suit brought by him.
few days since counsel for Mr. Ketchum made
motion Tor leave INTO court in proceedings TO
remove Duncan and Elliott from thor reccvership
Such leave granted, and in pursuance thereof Mr.
ketchums bill of complaint has now been hled- II
has also been ordered that the motion Tor receiver IN
this suit shall be heard the 9th OF April Below
given the material points IN the complaint OF Mr.
The complaint, after alleging the formal Of in
corporaon the organization Of the company aud the
Issuing OF The rst mortgage bonds proceeds TO state
that arrangements were made Tor loan on such bonds
TO the extent OF $4,000 900 in November 1885,
that TO secure the payment OF those bonds deed OF
trust was executed OF the property OF the company in
which Mr.. Ketchum, John j. Palmer and William X.
Haiiett were made trustees; that after the trustees
appointed had accepted the trust and about
February, 1861, the directors Of the road requested
Mr.. Ketchum 10 execute 10 them deed Of the lands
from the United States part Of the trust,
but rendering him consideration therefor, and TO
allow them TO have full control or the lands,
dled about the 1st of January, 1861, he
requested the directors OF the road to take
the necessary steps 10 appoint their successors
they neglected aud refused do unless he
rendered the rights oil the Dondholders which he on
his part reused that thereafter about the 9th Of
December, 1861 and nearly nine months aiter the
State OF Alabama had adopted an ordinance Of scces
sion from the United States and several months alter
the commencement of armed hostilties between the
so-called Confederate States of which Alabama formed
part, and the United states and long after all inter-
the Confederate States and the State Of Al
ALBANIA had been prohibited by law to citizens OF the
United states and OF the State of New York, where Mr..
Ketchum then resided, and 10 the government OF
which he owed allegiance the directors Of the railroad
company applied toa Court OF Chancery then sitting
In the Confederate States--in the State of
Alabama--for order declaring his
from the trusteeshipi that the grounds on which
such proceeding was had and order made was
that Mr.. Ketchum a citizen Of New York and
alien enemy OF the Confederate states In 1865. the
complaint continues, when the war was at an end Mr..
Ketchum received the first inmatlon that these pro-
seedlings had beon instituted against him. and that
order had been made therein ousting him rs trustee
purport.ng TO do the 7th OF April, 1864 These
proceedings he charges 10 have been null and void,
and that the Court without jurisdiction TO deprive
him OF title TO the trust property the grounds for such
proceedings being his 10y atty the lawful authority
and government OF the territory whore the Court
sitting. on about the ls OF April, 1879 William b.
Duncan and Andrew Y. Elliott, OF the late hrm Of Dun
can, sherman Co. beng then directors OF the road.
and william b. Duncan, its President, the latter
obtained from Charles Welsh who had been named
trustee under the pretended decree OF the
Alabama Court form OF resignation and soon there
after Mr.. Duncan procured Welsh TO withdraw such
resignation and It was never accepted; that notwith-
standing said resignation had no validity, Mr. Duncan
procured II to be exhibited to q. H. Young and A.
Jackson who had also been named trustees under the
Invalid Decree with a request that they would hkcwse
thereafter and the pretcnce to Young
and jackson that Walsh had resigned whereby their
designations mad been procured, Mr. Duncan procured
Walsh 10 act as trustee and TO appoint him and his
partner Elliott trustees, notwithstanding Duncan was
president OF the road large stockholdcr thereof and
represented floating claims OF Alexander
Duncan. his father, or other parties. which claims
direct hostility to the rights OF the first
mortgage bondholdcrs. All these proceedings Mr..
Kechum has ignored, and claims that he has
always acted and OF right stiIl remains,
OF the property OF the company 10 pay
OF ITS hrst mortgage bonds with interest, and
such has acted n concert with que trust orhe
protection of the rights Of the bondhoders. He further
Al egcs that while he has never abandoned his trust
the directors have unlawully and persstenty endeav
Ored abandon the trusteeship Tor the purpose of
carrying fraudulent aud improper designs upon the
trust property; thar alter William b. Duncan and An
drew r. Elliott had intrudcd themselves INTO the trus-
leesbip under co.or OF the void and fraudulent pro-
.cedngs rcclted and had filed bill oi complaint
in court and had been appointed receivers OF the
road though representing the fraudulent claims Of
Alexander Duncan and others, he tketchuml deemed
N prudept and advisable to await the expiration tho
three months limitation provided Tor in the mort
gage, and from that tmc he has been diigcnt
In nrcnarnp for proceedings Tor the protection OF the
property bondholders and the execution OF the
trusts devolved upon him; that the company has failed
pay the interest which fell due on ITS rst mortgage
bonds the LIST May, 1875, which interest amounts
TO x3sS 600; that the holders OF such bonds too
numerous be parties to this proceeding, but he
has been requested by a number OF them owning
bonds 10 large aggregate amount institute these
proceedings upon default being made IN the payment OF
lhe interest; that the company Is largely indebted
otherwso than as already stated to large number Of
persons and Is greatly embarrassed IN us business auu
Affairs, and Is, in inc1 utterly insoVent ana uhhpe 70
pay debts and It's engagements; that as he Is
informed and verify believes, notwithstanding the pay
mont OF the coupons OF the hrst mortgage
bonds which fell due on the LIST Of November,
1874 and the LIST Of May 1874 aud the LIST OF November
1S'5 In the ordinary and accustomed manner IN which
said coupons had been heretofore paiu II Is claimed
by the directors OF the company that on the lst OF
January, ls75 there remained outstanding coupons
matured and unpaid TO the OF S7d3 4l5 81; that
Tuch coupons, so claimed by the directors TO be out
s.andine are the same which were presented oy the
holders thereof 10 the Mobile and Ohio Railroad Com
pany and by Il received and paid and presumably can
coied; that said coupons not cancelled, as OF
right they should have been. but were by the then
president OF the company and by William Il. Duncan
aud the directors thereof delivered Alexander Dun
can the father OF SAID William d. Duncan and other
persons pre- ended security CLAIMS OF said
Alexander Duncan and others upon the Mobile aud