Fort Worth weekly gazette. [volume] (Fort Worth, Tex.) 1882-1891, 1889-09-12
ATTY GEN. HOGG.
He Institutes Two Suits Involving
Twenty Million Dollars.
The State Interyenes 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 a
Bogus Indebtedness.
Special to the Gazette.

! 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 a 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 ZOO 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 d
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
sociates 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
state. The object of Attorney-General
HOgg in having that Indebtedness cam
celled is to afford the road OPP
portunity to reduce its freight rates
to the lowest mnilEum and tc prevent
stock jObbing; in other words, to squeeze
the water out of the stock of the inter-
national and Great q orthern and reduce
its indebtedness, thereby lighteAaag the
burden on the people Of the state, out of
whose pockets comes the money to pay
the interest on watered stock. Besides
the SI4 200, 900 directly involved in
suits there are about ten millions of
stock of the road tied up by injunction
in the district court of Travis county.
Attorney-General Hogg's latest move
ment creates a sensation here at the
Capitol
Following is the first section of At
orneY-General Hogg's new suit in the
matter of the international and Great
Northern,
/. That the state of Texas, by special
laws, on the 9TH day of August A. D.
1870, and the 10th Gay of March, A. D.
1875, granted to the International and
Great Northern railroad company, de-
PENDANT herein, charter to construct,
equip, own and operate all railways de-
scribed in the petition of the plaintiff,
except the one from Overton 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
granted, 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 safe 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-
struction, maintenance, equipment and |
operation of the particular railroad it |
self.
That neither the defendant railway |
company nor the plaintiffs, individ- |
uallY 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 secure the same on the railways de- |
scribed in the petition except for that |
which was necessary for constructing, |
improving or operating the |
SO mortgaged.