Telegram-herald., 1891-01-18
CONVERSE CINCHED
A SUIT 20 Compel Him 70 Divide
ths 6wag
MADE IN THE IEWAYco FAILURE


nsssrs. Csnsssek aAA sweet Dsisg As-
sieas 70 Esessss shs Aseass - Their
Unpaia elatns Axsisss she His
Mas sfAetsrias Company.
Another chapter in the history OF
the NewAyGo Manufacturing Company
was commenced yesterday BY the fling
Of IN amended declaration In On action
on the case instituted BY Charles c.
Comstock VI. James w. Converse and
David ID. Irwin, through Msssrs.
Eggleston and Mcbride, attorneys
She action is brought TO compel Con-
verse to disgofge the amount OF Mr..
Comstock's claim, sggregating 81, 900,
aud is contslnporancous with . credi-
tors bill flied by Martin l.. Sweet
against the same parties.
The case 10 one involving litigation
extending over q considerable period
and embraces the early invest
ments and enterprises made and
instituted by David +. Clay At
Newaygo. II appears that Clay was q
shrewd operator in lands and lumber,
and by dint of great activity and IN
dustry built up an extensive business,
and acquired possession of valuable
tracts OF timber. The business was one
OF great magnitude, and required the
use OF large capital. By reason OF
their association III the construction OF
II -.
Clay anu Converse became close business
friends. Whenever Clay needed funds
Converse was ready aud did advance
the required amounts. Poor manage
ment followed. the company's credit
was impaired, and il soon fell to pieces,
leaving in the wreck vast unsecured
Indebtedness. The affairs OF the bank
rupted company passed into the
hands of David d. Irwin, receiver.
Upon showing made Of It's resources
and possessions, the latter consisting
largely OF standing timber, the court
directed the receiver to proceed and
operate the mills for the benefit of the
creditors. As soon as this order was
entered, Mr.. Converse, who had ad-
vanced large SUMS to Clay, for which
he had mortgage security, began to
foreclose one of them. In the United
States Court, the amount being some
$25, 900. The receiver was ordered to
pay and satisfy this mortgage out of
the funds IN his hands for that
purpose, as the mortgage covered
the water power and other valu-
| able privileges. 1t is alleged that Mr..
Converse visited the receiver and pre-
vailed upon nim to use the funds 80 set
apart to repair the dam and rebuild the
| dry-klln. He also discovered the value
| OF the pine timber and succeeded IN
| inducing the receiver to allow this to
remain, and in Its place buy SIC, 900
| worth OF logs, which were rotten ana
nearly worthless, So that in working
them up into lumber he increased the
debts rather than diminished them.
Then decree ordering the sale of sli
the property and assets was entered.
Before this took place, 1t is alleged that
Mr.. Converse entered into an agree
ment TO buy up at twenty-five cents on
| the dollar, which he did do, divers
claims for the benefit of the company
and thereby reduced It's gross liabilities.
| Some of the creditors united in an
| appeal from the decree, but ii is
claimed that Mr.. Converse got in his
| fine Italian hand and secured with
drawal of the appeal. Shortly before
the sale took place well qualified Judges
appraised the property, fixing its value
at over S4l2 200. Other peculiar trans
actions occurred before the sale, all
tending to the manifest advantage OF
Mr.. Converse, but which were too ex-
tensive in detail Tor recaptuiation here.
| The day of sale arrived, and with it q
number of prospective purchasers. The
auctioneer began the sale, but when the
timber was offered, the most valuable
part OF the assets. question vas raised
as 10 the title. The sale was suspended
and an investigation disclosed that the
| title was III a third party.
| Nobody was wiling to buy under
the circumstances. 1t is alleged that
the property, IN consideration of loan,
| was decided to the grantee appearing on
the records; that afterwards, upon pay
;nent of the loan, the deed was made
over TO Clay, who had refrained from
recording IL, and that at the time OF
sale the deeds were N possession OF
| Converse. The other bidders thus
| frightened off, Converse bought the
property, worth S4i2,0o0. for about
$4,000. Before any OF the claim:
against the property could be satisfied
the receivers fees and expenses were
allowed. When these were paid. TO.
gether with the claims secured by in.
cumbrance or otherwise, chiefly held
| by Converse, there was nothing left for
the unsecured creditors. Many and
volumiuous allegations are se'
| forth in the amended declaratior
particularly specifying the illegal and
| wrongful acts of both Converse and the
receiver. 1t is because of the alleged
| collusion between these two and the
consequent disallowance of the claim
vf Mr.. Constock that the acton il
brought. In the case of Mr.. Sweet q
demurrer was filed TO the creditors bill
which Judge Grove overruled. In The
Comstock case demurrer was filed
and Judge Grove, in sustaining It. held
| that the declaration must show a sun
sufficient TO meet the $4,000 of thu
secured creditors and q asurplus adequate
to pay the claim of Comstock. The
/ amended declaration complies witt