The morning news. [volume] (Savannah, Ga.) 1887-1900, 1891-08-03

the Failure OF the Road 70 Pay sne In
tnraat On It's Bonds the Lralhla.


the Failure Of the Road to Pay she In
tersst on its 5onds the IroGole.
The applicatiol for a recsiver for the
Alabama Midland railroad announced In
the MoRxISa News day or two ago has
caused something Of a sensation in railroad
circles.
The bill was fled by the Alahama Termt-
/ nal Company in the chanceTy court at
/ Montgomery. Ala, sgairst the Alabama
| Midland railway, the Plant Investment
! Company and the Metropolitan Trust Com
| psny The conUiaiuants alleged that the
/ Plant Investment Company Is operating the
| Midland e5travagantv for the purpose Of
/ not having funds 10 the hands Of the Metro
/ p1iitan Trust Company TO meet iuteres: on
1 the Midlaud's bonds, which the Terminal
( company has guaranteed for four years,
| pledging certain collaterals agreed upon as
security for the payment OF the guaranty,
and with the further object Of making the
road default in interest payment, that it
may be sold under foreclosure, giving the
Plant company the opportunity of buying
1t at q sacrifice. The case will be heard
Aug Is.
The Alabama Midland road covers dis
lance of over 700 miles, embracing two divi-
sions-oDe to Buverne anq the other TO
cambridge, Montgomery being one of the
termini.
The Alabama Terminal and Improvement
Company built the Midland and sold it to
the Plant system over a year ago. or the
former company, j. W. Woolfork of Mont
gomery, is president, Charles Henderson,
first vice president, and J. W Dimmick
second vice president.
Since i completion and transfer to the
| Plant 81 stem the road hes been In constant
| operation.
The Montgomery Advertiser prints the
substance OF the application for a receiver
ship. The bill states that while the road is
! in phenomenally prosperous condition it
| is being operated by alien parties, uon-resi-
| dents OF the state of Alabama, who are i'm
| properly and illegally divertinR the earn
! ings To uses other than those to which they
should be applied. greatly to the injury of
| the stockholders as well as to the bondhold-
| ers.
The parties operating the road, the Plant
Investment Company, a corporation under
| the laws of Connecticut, have, by such d.
version Of the revenues Of the road, allowed
the interest coupons on the bonds of the
road to default; and that the coupons are
! now in default of payment and overdue
and subject to enforcement; that the Ala
bama Terminal and improvement Com
| pany being the guarantor OF the payment
OF the interest coupons up to ard in
Guiding the coupons due 1892, is exposed
to the risk of having to pay the defaulted
coupons unless u court of equity shall inter
vene and direct the application of the net
earnings of said Alabama Midland Railway
Company to the liquidation Of the interest
charges on its funded debt.
The bill further claims that the earnings
of the road from Aug /. 1890, to March 81,
1891, amounted to 1865, 200 Ga, and allowing
"a per cent. Of the gross earnings for the
operating expenses would leave net reve-
nue. arising from the operations for eight
months Of Sll0,460 That the interest
charges on the bonded indebtedness. guar
anteed by the Alabama Terminal and I'm
provement Company, amounted for that
time 30 $4,000, and the bill shows that the
railway company Is capable Of paying, and
Is now earning practically its full interest
charges on the bonds thus guaranteed by
the terminal and improvement company.
The bill alleges that the diversion Of the
net earnings is not only Illegal but frsudu-
lent and that the guarantor company can
only be protected from loss in the payment
of the coupons by the Intervention Of q court
of chancery and the appointment Of q re-
ceiver. whose duty 1t Shall be, under the
direction OF the court, TO apply all net earn
ings to the payment OF the interest coupons
as they mature.
The bill seeks to remove the Plant Invest
ment Company on account Of its alleged
improper use and manifest effort to wreck
and to bring into discredit railroad con-
structed In a thoroughly frst-class man
ner and doing a pbenomenally large
business when it is considered that
the road has been in opera
ton only about one year and that the earn
ings are increasing in rapid and satisfac-
tory manner from month to month. The
bill further alleges that the terminal aud
improvement company has a contract in
writing signed by the president Of the Plant
Investment Company agreeing to pay the
interest coupons as they mature. which has
been violated by the Investment company
and the coupons have been allowed to de-
fault to the injury of the guarantor cou-
pany and to the injury and detrimeut Of
the bondhoiders, stockholders and to the
railway company's property.
A singular feature Of this application is
that 50 far from charging that the Ala
bama Midland Railway company is insol-
vent, it pronounces the company to be in a
singularly prosperous condition, but likely
to be wrecked by the continued default on
its interest bearing securities, unless such
mislnauagement is corrected, as asked for.