Fort Worth daily gazette. (Fort Worth, Tex.) 1882-1891, 1889-09-06
ATTY GEN. HOGG.
He Institutes Two Suits Involving
Twenty Million Dollars.
The State Intervenes to Defeat the Fore
closure of Mortgages on the Inter-
national and Great Northern.
How the Laws of Texas We're Violated by the
Watering of Stock, Creating
Bogus Indebtedness
Special to the Gazette.


AUSTIN, TEX, Sept. 5.-Attorney-
General Hogg has just instituted two i'm
portant suits in the district court of Ty-
Ter involving about twenty million dol
lars. Following is brief statement of
the case:
Suit was instituted by J. S. Kennedy
and associates of New York against the
International and Great Northern rail-
way of this State in the district court of
Tyler to foreclose mortgage
and collect 81 900 900 of bonds
issued by that company: The
Union Trust company, of New York,
brought suit against the International
and Great Northern at Tyler, to fore
close mortgage and collect 81 900 200
of second mortgage bonds against
the same company. The state now,
through Attorney General HOgg, inter
venes to defeat the foreclosure of the
mortgages by Kennedy and his associates,
and also by the Union trust company of
New York, on the ground that the bonds
are fictitious, and were issued without
any authority of law. The pO-
sition of the state is that
Kennedy and associates bought out the
International and Great Northern at
Federal court sale in 1879 at Austin for
less than three million dollars and thus
all the indebtedness of that road was ex-
tinguished Since Kennedy and his as
socates bought it they have increased
its Indebtedness in stocks and bonds to
over twenty-five million dollars, which
was not, as held by Attorney General
Hogg, authorized by the laws of this
Sstate. The object of AttOrneY-G
5zogg in having that indebtedness can
celled is to afford the road OPP
portUpity TO reduce its freight rates
to the lowest minimum and to prevent
stock jObbing: in other words, to squeeze
the water out of the stock of the Inter
national and Great Northern and reduce
its indebtedness, thereby tightening the
burden OH the people of the state, out of
whose pockets comes the money to pay
the interest on watered stock. Besides
the Sl4 900 GOO directly involved in
suits there are about ten millions of
stock of the road tied up bv injunction
in the district court of Travis county.
attorney General Hogg' latest move
s4nent creates a sensation here at the
Capitol.
torney-GeneTaI HOgg's new suit in the
matter of the international and Great
Northern:
l. That the state of Texas, by special
laws, on the 9Th day of August, A. D.
1870, and the 10th day of March A. D.
1875, granted to the international and
Great Northern railroad company, de-
PENDANT herein, a charter to construct,
equip, own and operate all railways de-
scribed in the petition of the plaintiff,
except the one from OyeTtOn to Hen
dersOn and the one from Round Rock
to Georgetown.
That the terms, conditions and con-
sideratiOns upon which said char
ter, and amendment thereto were
}tssFanted as well as the obligations i'm
posed on said company thereby, are
fully set forth in said special acts, which
are referred to as part of this answer,
and viii be used on trial of the case.
That by said charter and the general
laws of this state in force when it was
granted, and ever since said time, the
International and Great Northern rail-
road company and other railroad COM
panies, persons, firms and associations of
persons within the state were and have
ever been denied the right to
mortgage its railway property or to in
any way incumber it by any kind of in
debtedness except for money, labor or
property actually received and applied
to the purposes for which said corpora
ton was organized, to wit, the con-
strnefion, maintenance, equipment and
segsefation of the particular railroad it
self.
That neither the defendant railway
company nor the plaintiffs, individ-
uaIly or collectively as citizens or in
any corporate capacity ever had the
right to borrow sums of money and issue
bonds therefor or to give any kind of lien
to secures 4tfle same on the railways de-
sar5bed in the petition except for that
which was necessary for constructing,
completing, improving or operating the
railways so mortgaged.