New-York tribune., 1891-05-02
SUING THE ATCHISON.
ST. LOUIS AND SAN FRANCISCO STOCK
HOLDERS ACT.
THEY WANT AN INJUNCTION TO PREVENT THE
SANTA FE ROAD FROM CARRYING OUT ITS

THEY WANT AN INJUNCTION TO PREVENT The
SANTA FE ROAD FROM CARRYING OUT ITS
PLANs-HIsToRY OF THE CONTROVERSY.
Stockholders representing about opo-third Of the
first preferred stock Of the St. Louis and san Francisco
Railroad Company yesterday filed In the courts Of 81
Louis an application for injunction 10 restrain inc
Atchson, Topeka and Santa Fe from carrying out us
proposed arrangements with that company. The ap-
pcaton did not ask for the appointment OF receiver
and telegram from Henry Hitchcock the lawyer
representing the first preferred stockholders said that
such request would not be made at the preliminary
hearing The special meeting OF the stockholders
which ws called for May has been postponed
until May 81 and %, 10 allow the claims OF the first
preferred stockholders 70 be passed upon by the court
before the meeting.
In July last the Atchison purchased the preferred
and common stock comprising about fournftps OF the
cnre STOCK OF the St Louis and San Francisco. This
simply change Of ownership in the preferred and
stock. leaving the first preferred exactly
before. A plan has been formulated by the Atchison
people to float mortgage Of S50,o00,000 upon
the ST. Louis and san Francisco property,
covering all pre-existing mortgages, with about
$13. 800, 900 additional. The plan includes reor-
ganization of the road upon per cent basis.
and the holders of about twOthirds of the first pre-
ferred stock approved the arrangement and agreed
to accept the per cent bonds. The remaining first
preferred stockholders however. demanded the pay
stock, whether the road earned It or not The
Atchison maintained that the per cent was payable
only in the money earned, and that the first
preferred stock did not have priority over subsequent
mortgages.
Mr.. Hitchcock came to New-York last week to see
If some arrangement favorable than the one
offered the preferred and common stockholders, could
not be made in behalf OF his clients. lie first asked
for per cent bonds and when this was refused ne
asked for amount OF per cent bonds larger Dy
% per cent than the amount of stock held. Colonel
John j. McCook. the counsel for the Achson road
refused 10 cOuntenance any discrimination between
the different classes OF stockholders, and Mr. Hitch
cock then threatened to bring suit. The action be-
gun Yesterday is the result Of this controversy.
The ST. Louis and san Francisco Railroad Company
was organized in 1876 as to the bankrupt
Atlantic and Pacific Railroad, Missouri Division
The first preferred stock Of the new company repre-
sented the junior securities" Of the old company. and
was in the opinion Of the ncoporators, entitled
to a preference Of some kind Accordingly the fist
preferred stock contained the following clause;
This is first preferred stock, and Is entitled TO divi-
dend up to per cent per annUm derived by the company
from all each current year ire
naming after the payment Of interest all ablltcs IN
preference any dividend upon other class OF stock
by the company, and IS entitled TO snare pro rata
equally with any other class OF stock any excess OF
annual that may be made by the company
any greater than per cent and by resou-
on company priority OF Hen net revenues for
any mortgage bonds that may be Issue"
by company subsequent 10 the or alton OF this stock
Under this clause the first preferred stockholders
received per cent year until 1885, when IL per
cent only was declared earned and paid
The mileage of the st. Louis and san Francisco in
1876 was miles, and had been increased in 1880 TO
1920 miles. For this extension addtiopa bonds had
been issued. Yet the language Of the first preferred
stock give it priority TO all these subsequent
mortgages and to the issne proposed by the Atchson
The laws of Missouri declare that the question of ss
ing preferred stock shall be submitted 10 vote OF the
stockholders, and that the issue shall be made onl"
with the unanimous consent OF the stockholders III
is said that there is record OF such vote on the
issue of the St. Louis and san Francisco first preferred
circular dated July 20, 1875, giving the proposed
plan of reorganization, contained this clause:
new first preferred OF the company, entitled TO
dividend Of per per for each calendar year
from the date reorganization TO be paid from any earn
ings remaining after paying operating expenses improve
ments and interest funded debt shall be created for
saw "a 100000 or shall provide for the ol'
lowing Indebtedness he old bonds previously referred TO-
Nothing in this circular is said in regard TO priority
over subsequent mortgages On these grounds as well
as on the consideration that the ownership OF stock
subservent 10 the material claims of all real creditors
the Atchison bases its position IN the present. con-