New-York tribune., 1885-02-23
A RAILWAY LIEN IN DOUBT.
CONFLICT OVER KNOXVILLE AND OHIO.
TAKING TESTIMONY TO FIND THE LEGAL OWNERS
TO $500 900 BONDS.

CONFLICT OVER KNOXVILLE AND OHIO.
TAKING TESTIMONY TO FIND THE LEGAL OWNERS
TO $5OOOOO BONDS.
In the United States Circuit Court for the Eastern
District of Tennessee at Knoxville, there IS pend
ing important suit, to which the Knoxville and
Ohio lRailroad Company, the East Tennessee, V:r-
gna and Georgia Railroad Company, the County
of Knox, In Tennessee and the Central Trust Com
panY and Metropolitan National Bank of this city
are parties The controversy lies really between
the last two parties, and involves over 100000.
The question is whether the bank and persons by it
represented have lien on the Knoxville and Ohio
Railroad superior and prior to the tond blders
represented by the Trust Company.
On January /, 1879, the Knoxville and Ohio
Railroad Company issued 100000 in bonds, mort
gaging the road to secure the amount. The road Is
sixtyive miles long. and runs from Knoxville to
the Kentucky State line, connecting there with
branch of the Louisville and Nashville road. r. 7.
Wilson, of this city. and w. L. Walters, of Balti-
more, were made trustees In the summer of 1881
the Knoxville and Ohio. road sold to the Last
Tennessee, Virginia and Georgia road. The latter
at about the time mortgaged It's entire line to
the Central Trust Company to secure the pur
chasers of S22.OO0O0O of boi.ds. the proceeds of
which used IN completing the Knoxville and
Ohio road and other branches Of the East Tennessee
Virginia and Georgia system. and to take up prior
bonded indebtedness on other finished portions
It:appears that the mortgaged debt of 100000 on
the Knoxville and Ohio road was not paid out of
the proceeds of this 500, 100000 of bonds so III
August, 1881, by an arrangement OF the East Ten
nessee, Virginia and Georgia Company and X. 1.
Wilson & Co.. the latter advanced money to pur
chase the 100000 Knoxville and Ohio bonds and
funded interest bonds to the amount of S35, ,000
hnIJinU tLn,u ~ for the mOu
so advanced
In December, 1881, Messrs. Wilson and Walters,
the trustees executed release Of the mortgage
given by the Knoxville and Ohio company to secure
It's bonds, and the release placed on record in
Tennessee. Subsequently, by procurement of the
East Tennessee, Virginia and Georgia road, Nelson,
Robinson * Co., Of this city, advanced to X. j.
Wilson * Co. the amount of money paid by them
for the bonds, and received the bonds to hold as
security for the advance. Between December,
! 1852, and june 1854 the Metropolitan National
Bank advanced largo suws of money to the East
! Tennessee road, and these Knoxville and Ohio
bonds finally came into the possession of the bank
! az security for it, advance.
! : Tho amount of indebtedness to the bank was
about > 200 900. At that time the East Tennessee
! road IN a great strait for money with which To
meet tie interest on ITS consolidated bonds, due In
june, 1851. 10 enable it to pay this interest 1t
became necessary to extend the banks Loan and by
an agreement between the bank and certain
persons connected with the road. the East Tonnes
I see company issued dehcuturc bonds to the amount
of = 200, ,OOO raining from to ten years. There
. upon the bank and these persons interested
! received these dcbenturc bonds and the bonds of
| the Knoxville and OHIO as security.
Last July judge Baxter, " the United states
Cucuit CoIrt, nj Knoxville decided that the sale of
the knoxville ana ONO road to the Last tennessee.
! Virginia and Georgia was void, for want OF power
IN the former 10 transfer It's property. But he held,
at the same time. that the East tennessee was
entitled to "a lien on the Knoxville and ONO Tor the
ad lnor, made to complete the latter and ioi any
monies Ised 10 take up the rjOo,uoO OF bonds.
| pom this dee sion the Metropolitan Bank and the
persons Interested with Il lnterycned b. petition IN
the knoxville suit 10 set up their right 20 lien on
| the knoxville and ONO road through the bonds
! they had received A. collateral security.
| All the Knoxville and Ohio bonds-Sj35.OOO
Nerc nj some time cancelled under the direction OF
one both of the trustees. but why this was done
| la, not been a-cerraincd But ii appears that TIA.
cancellation elected after the bonds had passed
explanation for -. has ever ibeen gwen by Alessis
| Wilson aud Walters On the petition of tn
| Metropolitan Bank, an order was madc by ~
/ court at Knoxville referring the cause TO >peCia
Master Lewis lillmIn. Jr., OF that city. who ha
been in New York since w eduesdly taking testi
| mOny. The ease II going on al No. 10 BIoIdwll
in ,lie Office OF II. l.. lerrel. who, with William VI
| Baxter represents the bank. Stlluan n JOHN,
represent the trust OmPany. and Leon Jcr0ul lindi
! and j. VI. King of knoxville. the Knoxville and
ohio road and Knox County, whlch-s interested
| as a stOcAhOldrr.
| General Thomas and Calvin :. Brice have been
called ~ wltur,sts. and other prominent railroad
men and capital sts " III bc summoned. The qucs
tlou Is: Nho holds the knoNyll le and Ohio bonds
how did they come by them. .and are they valid
sccurltc, in the hands Ot such prlsons"