New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1890-12-03
COURT OF APPEALS.
IMPORTANT POINT N RAILROAD LAW SET.
TIED
DECISION AGAINST THE FITCHBURG ROADS AT
TEMPT TO REPLACE SEVEN PER CENT BONDS
WlTn FOuE Pr ~ DEBENTrREs.

TEMPT TO REPLACE SEVEN PER CENT BONDS
WITH -FOUR PER CENT DEBENTUREs.
The Court Of Appeals at Albany yesterday handed
down decision in the Of Maria T. Polhemus
against the Fitchburg Railroad Company. This
decision establishes an important precedent in this
state In effect it win prevent the scaling down Of
interest on railroad bonds, aud will compel consolidated
railroad companies to accept obligations previously
entered into by the individual companies that enter
into the consolidation.
The history Of the case. which has now been
definitely settled. an Interesting one. In 1874 the
TOY ard Boston Railroad issued first mortgage bonds
for tl,10,0OO. bclIng seven per cent Interest and
maturing in hity years. \, the road wa, perfectly
solvent, the bonds eagerly sought by Investors.
In l99G tlc Troy and Boston road was bought up
by the ficlburg Railroad for Si50OO00 one Of the
>tpulatons in the transfer. however. that the
seven per cent bonds should be called in. ana that
dcbcnture bonds. bearing four per cent interest and
maturing in twenty years should be issued in
their stead. About twothiid> ~ the mort
gage bonds were held by stockholders. who con
scented To the arrangement. the benefit accrnc t.
their stOcl by the change would De- far greater than
their To-, ~ the lower rate % Interest. other bond
holders, however, VIZ rou,ly objected to the plan of
exchanging lfty per cent boris for tUenty-ycar
/ per cent dcbcnturc bonds, Among these were Ncr
myc d Co. and other banker, of thi, city They
formed themselves INTO an assoc dll u Tor tF pulpOr
OF mutual protcctlon putting the In the hands Of
Ma,tcn & Nichols. lawyers. OF 80. I4G Broadway.
The the bond, Represented by the association
wa, over S1OOoO0
The coasoLdatcd road wa known n the Ftchburs
Rair nd C,m!any Finding the holders of the mortgage
bond, II the Troy ana Boston Road. unwilling to ac-
code to the term, OF the transfer G.. W Tlllngha-t
and j. r. Gdlc the trustee, Of the mortgage. took -tcp,
| to -cc1irc foreclosure. This done to force the
bondho!dcI- t. surrender th"ii ,oc'ritc-. The app
cation Va, opposed hy Na-ten d Sicho~ and carried
by them TO o." General Icim where decision wa,
given granting a stay u proceedings, with prVvi,O
chat the prosecution 4 III" action be- pcrpctunly ,aycd
II tr dcf'udait- would IiN tine full amount of all
On" L0ud- occurred hy the Wut--c 81 ludinF principal
| and interest 70, date Il payment 81 per cent The
ci-r Va, carried e. a.. Court ~ Appeals, Nn.o tho
ord n o the General FERN Wa- affirmed n APRIL !a-t.
This decision urlut that o." at"Wp ot nh" lchhurI
Railroad e. replace tLc : I~r cent d"bcntun- could
/ act succeed.
IN the meantime tine intr,,f on the ~ rtgagc bonds
had been i'm default since january !, l--i. ,lut ~
recover thr r,-t 20 pr cent wa. begun 30 --7.
t" bond held hy Nt,ia I. P"h"nu- being elected =,
4. tr-t case. \ decision in favor Of IA" boz dh"drF'
W- given u tho lower courts. aud the ct-" va- idh u
ly 'c RAILROAD 90 thc Court II Appeals. Wh'rr That
dr.-tD. was sustained yesterday. J. b. thought ulat
mauy similar suit, VIII now b" Instituted against thc
Iit,lDurr ludl.