The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1876-08-08
IMPORTANT RAILROAD war.
The st. Louis, Alton and Tcrre Haute
Railroad Company's Suit.
GOVERNOR TILDEN'S ANSWER.
An Inside History Of Railroad Speculations
and Combinations.

OF tho ST Louis, Alton and Terro Haute Railroad
Company, plaintiffs against Charles Butler Samuel J.
Tildcn, Russell Sage aud Robert Bayard. defendants
The points and OF the defendants
put ill., In which they set forth collectively THAT the
two agreements between the ST. LOUIS, Alton and
Tcrre Haute Railroad Company and the Bellevilie and
Illno,stown Railroad Company. OF which was
signed by certain OF the first mortgage bondholders
and the other OF which signed by certain OF the
second mortgage bondholders, were notof tho same
tenor effect but essentially distinct ana differ
ent in their objects and provisions that the principal
object OF the agreement OF the first mortgage bond
holders create OF such first mort
gage bondhoders able to induce the bidding upon
and purchase OF tue road by parties who should
agree beforehand protect tho interests OF such first
mortgage bondholders the the road should be
sold either under foreclosure Of the first mortgage, or
under any Jocrecs which should discharge and OK.
tngush the lien OF tho said first mortgage that .
SINGLE bondholder, or few bondholders, owning Q
small part of the bonds outstanding would, except for
GONE such agreement DO exposed TO the necessity al
tho sale OF either buying tho whole road and paying In
cash all tho purchase money except the small par
thereof which might be awarded to them OF
their bonds tho distribution OF the proceeds OF the
SALE or the other hand OF allowing the road be
sold to purchaser and conenting themselves
with the share Of the proceeds Of sale
10 winch their DOndS would DO entucd on
the distribution; that tho first mortgage
bonds discredted that THOR market valuo fell
TO about orty-lvc tho dollar the principal
although they boro twenty-one per cent or moro OF
overdue interest and small quantities only saa-
Bile such rate which made the aggregate value
OF these securities somewhat less than $500 0O0the
sum for which the road bid of at the saleandy yet
1t believed by the holders that II the payment Of
interest should be resumed new bonds substituted
under ownership, the marketable value OF those
securities would or might DO enhanced nearly three
fold, which expectations of the holders In fact
realized, inasmuch as the new bonds IN which the
crued interest OF the old bonds funded, with the
principal thereof, became and have renamed worth psI
more. -
And these defendants further answering say that the
said purchasing committee OF the first mortgage bond
holders only made settlements with tho parties to
the two several agreements Of the first and second
mortgage bondhoIders, and with every such person,
but exercised their discretion in spirit Gully Of
equity but of liberal relief; in favor every other
creditor who applied them, and in favor every
stakeholder who applied to them; that they made
Elements and allotments III two three thousand
cases, many of thcm anomalous and capable OF being
disposed Of only by tho exercise OF summary judg-
mont that although tho tmc limited for tho FIRST and
second mortgage bondhoder to become parties the
agreement aud for all other creditors holders
to avail themselves OF tho discretionary recognition
contemplated thereby, expired within sixty days after
the LIST day OF May, IN the year 1861, the said pur
chasing committee continued to this Limitation
whenever occasion during many years thereafter
ana never enforced II against any person.
MR. TiLDENs ANSWER. 4
And the said defendant Samuel j.. Tilden further
answering, for himself that during all the period
since july 1862 well before that time and unttI
time in June, 1873 the said TiIdcn acted, ths u
instance and request of the said purchasing committed
as their counsel In divers Important matters and tha
IL no IN no enli ou
SUCH whatever; that during all tho eleven years
tween said dates the said rIlden ut the instance
request OF the complainant well 1t the instanc
Of said committee, was accustomed TO rendor PROBES
siona services as counsel for the complainant, whic
IN frequent and almost constant need OF probes
siona advice and other professional servlces that
have neimes boon abori0us. protructed
difficult requiring special ana peculiar skill and ab
ties, and were OF great acknowledged usefulness
and value To the complainant, among the truits
complainant pay interest on its mortgage bond
and avert fresh bankruptcy; that Tor non I
of these services has the said Tildcn receive
any compensation from tho complainant, who
from organization in June, 1862, has pal
him no compensation Tor any professional services nN
has he received any compensation therefor from IT,
said purchasing committee. And these defendants fu
Their considering, say touching aud concerning the all
cations the said bill contained respecting the cor
pensation OF members OF the committee purchxsttS
tho railroads aforesaid and vcsting thcn in y new CO
porzlon that time Of the creation Of SAID cor
nittee, and long prior thereto, was believed
hrst and second mortgage bondholders signing I
the agreements herein before mentioned that tho
" he imposed upon the said committee OF ulu
difficulty, responsibility and labor, requiring great
dusiry, Devotion anu skill Tor its adequate accomplish
meDt, but that the actual work, responsibility aud
bor OF the said committee greatly exceeded such exp
tation; that the task has embraced tho obtaning p
session OF the railroad protecting Its incomes and
cnucs and admin iscriDg IT'S business, the continuing
the plan for the creation OF ownership Of
railroads aforesaid the peaceful reconciliation OF RI
and opposing interests the preparation OF great M
beers OF legal and other documents, the furnfshing
necessary legal COUNSEL and advice TO protect the
una interests o the new ownership, the forma ton
corporation and putting "a condition
prosecute with vgor and success the business
which II was organized, the supplying Of tho neco
ties OF the road 10y loans VI money and otherwise u
the new company was IN "A condition tn sustain It's
the examination OF some thousa uds Of cases in VIII
claims against the nsolvent corporation sou.
recognition and tho prosecution and defence OF div
Lticatons; that these Iabors began at a period II
before the committee actually constituted,
have bot as yet wholly ceased, inasmuch tho
committee has never refused 10 rco6gnize any CID
made by any creditor or stakeholder OF the lnsoiv.
corporation on the ground Of any neglect on
presentation thereof, but has uniformly,
these defendants believe tho first and sec
mortgage bondholders wished TO exhibit tow
such creditors and stockholders. recognized cv
clam found by them alter examination TO be
torious when presented by any such creditors
hoiaers. notwithstanding any deluy in the prese
tions; and these defendants, further answering, a
touching Their settlements and aotmcnts OF bonds
stocks to t.ird parties and the account asked 10
and by the bill OF compliant herein, in respect IL
aud every vi these transactions, and detail OF
act and thing concerning them, that tho said tran
tions, two or three thousand IN number, most Of w.
were done com lctcd fourteen years ago: that
and every OF these transactions was at the time Il
OIL duly closed aud proper acquittances executed b
persons having any interest IN tho samc, aud Apr
Aid ratified by each and every boudhoider who stos
the relation OF principal 10 the said purchasing
mittce; thai the sad purchasing committee wout
have undertaken complex and difficult "A busln
Their rights and obligations respect to such prof
had not ben carefully defined, qualified and lmits
a written agreement, or " they mad been exposct
review on all these transactions, under any prefer
each one OF tbc thousands OF partics other tha
principals whose interests might DO supposed
affected 10y what was done by them, or review
person corporation claninx TO represent suc
ties And touching well these DISPOSE
also the disposal OF such ASSET
ight remain after these dispositions
made, these defendants deny That the
purchasing agents OF the bondholdcrs were or
any manner liable TO review by The complainant