Savannah morning news. [volume] (Savannah) 1868-1887, 1886-02-25
FORARECEIYER
THE PORT ROYAL AND AUGUSTA
RAILWAY CASE.

| Suuke ROney-N0 DOet61on Ae
Reached.
About year ago bill In equity was
| filed In the Richmond County superior
Court asking that a receiver be appointed
to take charge OF the affairs OF the Port
Royal and Augusta Railway Company
The matter created quite q stir at the
time in railway circles. The company
filed demurrer to the bill. The case
was postponed from time to time and did
not come up for argument until this week.
1t is now being heard before Judge Roney,
of Augusta, and the hearing will proba-
bly, occupy several days.
The case involves about $3.50, 900 worth
of bonds and the validity of the lease by
the Port Royal railway of the Augusta
and Knoxville Railroad Company.
The bill of complaint sets forth that in
1878 the Port Royal and Augusta Railway
Company executed and delivered to the
Union Trust Company of New York, as
trustee, "a mortgage deed conveying all its
real and personal property. The mort
gage was given to secure the payment Of
the principal and interest Of two series
of bonds, the first known as the Port
Royal and Augusta Railway Company
first mortgage sinking fund bonds,
amounting to $3.50. 900; the second known
as the Port Royal and Augusta
Railway Company general mortgage
bonds, amounting to 1880, 900, and
subject only TO the prior lien of S250,0O0.
Six per cent. interest was to be paid on
these bonds semi-annually out of the net
earnings of the company. The bill next
alleges that despite the terms of the cove
nant the Port Royal and Augusta Rail-
way Company on May /, 1882, execut-
ed third mortgage to William
NJ. Wadley, President OF the Gen.
trail Railroad and Banking Com
pany to secure an issue of bonds amount
ing to $l50,000 bearing per cent. and
having provision that Sc, 1000 per annum
should be paid over to the Central Rail-
road and Banking Company as sinking
fund. This mortgage and the bonds is-
sued under it reo1te the fact that they are
subject and inferior to the liens of the
mortgage made In 1873.
The bill alleges that at time Of making
the mortgage Of 1878 the company was
solvent, and paid interest on the bonds for
two years till July, 1880, when it made de-
fault thereon, and has since failed to pay
the interest. That now, and at the time
of making the last mortgage in 1882, the
company was insolvent. That. notwith-
standing the contract upon the second
mortgage bonds provides that no interest
shall be paid on any Junior lien OF the COM
pany as long as any remain due on the
second series, the company has regularly
paid the interest and the sinking fund on
the bonds under the third mortgage,
amounting annually to $4,000. That
holders of the third and last mortgage
bonds are paid their interest in full, while
owners of the prior lien are paid nothing.
1t is alleged that the bonds aggregating
$4,000 are owned by the Central rail-
road and also a controlling interest in
the Port Royal and Augusta railway, and
the president of the Central Railroad
Company being also president of the
Port Royal Company, and the Gen.
trail Railroad Company being indorser on
the last bonds, has compelled the Port
Royal and Augusta Company to pay the
interest and sinking fund on the last
bonds to the neglect and damage of the
owners of the second mortgage bonds. 1t
is further alleged that the Central Rail-
road Company has a parallel competing
line with that of the Port Royal
and Augusta Railway Company,
with interests directly in conflict
with those OF the latter; that
the interest OF the Central Railroad Com
pany in destroying its rivals is vastly
more than the value of the stocks that
were necessary to be bought to secure the
controlling interest in the road, and the
interest was bought not as an investment
but to prevent it's being successful RI
val and competitor, and also to use the
Port Royal and Augusta Railway Com
pany in securing possession OF other
roads without putting the liability on the
Central.
That in pursuance of this latter policy,
and contrary to the interests Of the Port
Royal Company, the officers OF the Central
railroad diverted and misapplied 500, 900,
or other large sums, in the purchase OF
the controlling interest IN the Augusta
and Knoxville Railroad Company, and
caused a lease to be made OF said last.
named company to the Port Royal and
| Augusta railroad for 80 years.
| 1t is also alleged that the lease is null
! and void, because made in fraud OF the
rights of the bondholders of the Port
Royal road, and for the benefit of the Cen.
trial road and at it's dictation, and the
| lease was not authorized in law or by the
! charter of the Port Royal road, and has
never been ratified by the stock and bond
| holders of the company. That it was
made to secure control OF the Augusts
and Knoxville road, and prevent ito
falling into the hands of a powerful riva
| OF the Central road, and the terms of tine
lease make the Port Royal road, which
derives no benefit whatever from the
lease. solely responsible for the rent
That the road, already insolvent and una
BILE to pay its own debts, is thus made Il
pay the debts Of another company, itsel
| insolvent, and a dividend on the stock
while it can pay nothing on its own.
It is further alleged that the Central
road has compelled the Port Royal anc
Augusta Railway Company to repay anC
refund 10 it large sums Of money inferior
In lien TO the claims OF the holders OF thC
second mortgage bonds; and further
that the controlling interest in thu
Port Royal and Augusta Railway
Company was secured TO lesser
and defeat competition, and u
encourage and promote a monopoly Of th'
business between Augusta and Savannah
and more distant points, and enable the
Central road 10 control the same. Tina
such has been the effect produced, anC
that by discrimination m freights, OF
arbitrary requirements, the freight hal
been diverted from said road and made Il
60 over the Central road, thus enabling Il
TO reap the profits to which the Port R0ya
road was entitled.
That in addition TO assuming the prin.
cipal and interest OF the $3.50, 900 debt un
der the pretended lease, the Port Roya
and Augusta railway is made 10 assume
all other debts and liabilities Of the Au
gusta and Knoxville road, amOnI
which is one OF 100000, TO the Cit
Council OF Augusta for failing 4
build its depot and workshops in Au
gusta according 10 contract, and OF
which suit has been entered. That th,
coutrn1lfng stock I'm the AuCueta am