Daily globe., 1879-06-17
FARLEY'S RIVAL,
Another Man wan.s a slice OF q Railroad

FARLEY'S RIVAL.
Another Man Wants q Slice of a Railroad,
and he Don't Get It Very Bad.
An adverse decision was rendered by judy q
simons yesterday, to the application Of a.
Sablgaard, who sought to be admitted as a
party to the foreclosure of the $3,000,000
mortgage against the First Division of the
st. Paul & Pacific Railroad company. The
action is the direct outgrowth of an e1tensive
railroad suit brought by Edmund Rice,
Horace Thompson, John S. Kennedy, trus- /
tees, against the First Division of the st. |
Paul Pacific Railroad company and others. |
In this case H. Sahlgaard, claiming to be |
the owner of $4,000 bonds secured by the
mortgage by which this suit is brought to |
foreclose, made application to be admitted
as party to the record in the action, in order
that he might oppose the confrmations of
the sale and move for modification of the
decree.
The ground of the application was, that
the sale was for an inadequate price, and
was Improperly conducted, and that the
trustees should have purchased the property
for the benefit of all the bondholders-
He further charged in his petition that
Messrs. Stephen, Smith, Kittson and Hill,
with one John s. Barnes, had formed a
syndicate and bought majority of
the bonds of this and other
issues of the company, and had also bought
stock of the company, and obtained contro
of the management, and of the defense of
the foreclosure suit, and that the decree in
the case had been prepared under their direc-
tion, and to their benefit, to the prejudice of
the petitioner.
All these statements of the petition were
denied by the trustees, except that they ad-
mitted that Smith, Stephen, Kittson and
Hill, but not Barnes, had bought a majority
of the bonds and stock. The trustees also
insisted that the property sold, in their
judgment, for all it was worth. Judge
Simons decides that the petitioner was
not entitled as matter of right, and
that his application ought not to be granted.
Every allegation of the petitioner, tending
in the least degree to show collusion, breach
of trust, or neglect of duty on the part OF
trustees is explicitly denied by all of them.
That purchase of a majority of the bonds
and capital stock of the railroad company
by the parties above named, was not only a
perfectly legitimate transaction, but it was
matter over which the trustees had no con-
troll, and the same is true with regard to the
organization of the purchasers as a corpora
tion under the law of the State.
AS to the complaint of the petitioner, that
the trustees did not buy any mortgaged
property at the foreclosure sale. for the ben
eft of the bondholders, the court held that
they had right to do this, and that it was
their duty to SO do, if, in their
mt ha int cfc Of fhn
holders would be promoted thereby
but they declare in substance, that such is
not their judgment.
As to the complaint that the property
covered by the mortgage, and which was
sold, was worth enough to pay the entire
mortgage debt, principal and interest, and
all prior incumbrances, the trustees say
that in their opinion and according to thei,
best judgment, information and belief, the
property sold for fair value, the most thai
could be obtained for it, and the court holds
that this affirmant is supported by facts
stated in the answer of the trustees relative
to the value of the property.
1t was urged upon the argument that tht
lands should have been sold in parcels anl
not in body; as to which the court says
So far as am aware, the course pursued il
this case, in that respect, is the same usual,
pursued in the foreclosure of railroat
mortgages, and there is nothing to shov
that the interests of the bondholders coul,
be promoted by sale made in any differen
manner.
In this matter the plaintiffs have acted il
the discharge of duties imposed upon then
as trustees. It was competent and prope
for them to foreclose the mortgage in ques
tion, without making the petitioner or an
other bondholder party to the proceeding
for that purpose.
Such is the rule of law. But to grant tn
application of the petitioner, upon the cas-
made by him, would, in effect, establish
contrary rule, for it would not be d1fficu
for any dissatisfied bondholder in any cas-
to present reasons for making him a part
to the action, at least as strong as those pre-
sented BY the petitioner in this case.