New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-08-02
THE COURTS.
MR.. HERRTNG's SUIT AGAINST THE ERIE.
TIE DEMURRER TO THE COMPLAINT sUsTAINED-A
DECISION ny JrsTTCr VAN WORST.


DECISION BY JUSTICE VAN WORST
In the Supreme Court, Special Term, Judge
Van Worst yesterday handed down decision sustaining
the demurrer to the complaint in the case Of william
Herring against the New-York Lake Erie and Western
Railroad Company and others. As presented to the
Court the case involved the validity, 10 extent, OF
the judicial determination three years ago under which
the property and franchises OF the Erie Railway Company
were sold the Organizers Of the present NewYork Lake
Erie and Western Railroad Company, and the old com
pany dissolved uuder a suit OF the Atorney-General
in the name Of tho people OF the State. Tho
question before Judge Van Worst on demurrer to
the complaint, which argued about month ago by
W. W. mcfarland and ex-Judge George F. ComstocE for
the demurrer, and ex-senator Roscoe Conkng for the
paintif
In 1874 the Atlantic and Great Western Railroad Com
pany issued what were called Western Extension bonds
These bonds to bear per cent interest. PAYABLE
semiannually and to mature on February l, 1901
On each bond a written guarantee by the Erie Rail-
way Company. More than a million dollars worth OF
Thorn sold in England, whore the payment OF the
principal and interest was secured by the nled9ing
OF like amount Of the stock Of he Cleveland Columbus
Cincinnati and indianapolis Railroad Company the divi
dends from which were 10 be applied toward the paw
ment of the interest the bonds In the dividends
shoud suffice this Davmant and the Atlantic and
Great Western Company should not provide for the de-
cency then the Erie to furnish the required finds
the furtheranoe Of it's guarantee. default occurred
in November. 1875.
The plaintiff william Herring IA owner Of thirvsx OF
the guaranteed for $500 each which he bought in
ENGLAND. when he began this action the Atlantic and
Great Western Railroad Comnanv waS1nsolvent and s
propertv and franchises had been sold under Judgment
Of foreclosure Erie had been dissolved
tho ground Of insolvency Bnt before me ind 'ment
peniencv Of the action the property and
Of the Erie Company had alsO been sold under fore
closure in on action beeun nv the Farners Loan and
Trust Company. mortoagee. The purchasers were T. d.
MORGAN. l. Lowher Welsh and Daniel A. Wells, as trus-
tees for the present organization.
in his complaint. M. Herring claimed that at
d6 ction ,mf Sv tbc III" Farmers Loan and rrnst COM
nanv tho Eric Comppnv owned bonds.
stock and other assets ~ the value Of several millions Of
dolllrs, which are not included among the propertv
covered nv the mortgages yet they were sod urdor the
foreclosure 70 the prelude" of the unsecured credOrs
The psiniR meinalncd that thiE pr pery constituted
trust fund 70 be apred n the interest on the Atan
antcr; and that Ind uent foreclosure the
and al The PROCEEDINGS in that suit and tho poonlo's
NJ the property not included in the MORTGAGE. were
fraudulent and void and the court had Jurisdiction
sti.utcd no bar aglirst the nlaniiR and
other creditors similarly situated preventing them
,,, ho conniain, asked omono other things that III
tho orders might he set nj 'hFt the sole
property covered nv the Ortgo &c he declared
tns action. md RECOVER oft re Amounted and thot
the proceeds be distributed amono fhn 'an' and cred
ors situated Ike him "a y extcnt ~ the interest due
Judge Van Worst hold that Herring simnlv
creditor whose claims had been dot rn ri
the Judgment NJ court, and whose rem dies ~
law were Wholly uncv h9uetcd Creditors AT LARGE. bow
ever are favored IN equity. and encorr0red
I'm attempts to reach property OF their Web ors
and subject It 10 their domands until
they have exhausted all tho'r legal remedies
In answer the objection urecd ~ the plain TN that
adu1icaiOn I'm the ueopes acton void because the
receiver had taken nc stems REQUIRED OF him nv
the statutes and that udcIa indurv had been made
i'm eli her Of the suits to ascertain what portion Of the
Erie Railroad Companys propertv was covered bv the
mortgage ana hence The rights % the general creditors
Of the Erie Ia been dsregarde1 and sacrificed Judge
Van Vorsf held that examination Of the complaint
disclses that the question as g. what pronery OF the
Erie road mbraccd the terms Of the mortgage
was neither overlooked nor disregarded
Ia the foreclosure suit ire st,sn,
tiOn Cont directly called
TO this subject and he ssy Of inquiry and &C
counting with respect Ia il, and he reviews AT some
length all the proceedings in that bearing on this
point So IN the peoples proceedings were had
which brought in the Ncw-IOrk Lake Erie an "eser
Railroad Company defendant, ana the referees re-
port that the receiver this action ii not any time
acquire hold dispose Of any property OF any End not
subject the len OF the mortgage OF the
said defendant the Farmers LUah and Trust Comp my
confirmed Commenting on these facts he Court
says ,.
IL seems quite that by these judgments
the subject when presented ia TINS aclOn mas
been fully dgdicated AMI as these things al appear by
the plaintiffs complaint. they lead to the concuslOn
wch irresistible that cause OF action 10 disclosed
by the plaintiffs pleading"
The Judge also he'd that receiver Mr. Jewctt IL en-
all the NJ the Erie Railroad Company not
legally disposed action proceeding necessary
their recovery be maintained by him or AT the
instance creditors should the Court order III MS
name. The complaint does not ate facts sufficient c
constitute of action, and for that there
be jud sment for the defendant on the demurrer