Los Angeles herald., 1892-01-31


Good Business.
The Cable railway litigation it appears
has taken new phase, which is likely
TO end in the first mortgage bondholders,
who are mostly San Francisco people,
bringing foreclosure suit and selling
the road. This action will result in
s'letting out" the Chicago second mort
gage bondholders and the holders OF
current open accounts against the COM
pany, and thus wiping out all indebted
mess and enabling the first bondholders
to buy in the property and put it in
good condition.
The case now under consideration is
one brought to determine the question
of whether Receiver Crank shall be
forced to pay the Bank of California
81, 900 for money advanced to the Los
Angeles Gable Railway company as dis
tinguished from the Pacific Railway
company.
The facts of the case were dug out of
the brief submitted some time ago by
Holdridge 0. Collins, the local counsel
for the bank, which most admirably
states very complicated matter. This
statement reads as follows:
September 10, 1887, the Los Angeles
Gable Railway company executed to
trustees first mortgage on all its rail-
ways, etc., to secure the payment OF 1900
bonds of $1,000 each, payable in thirty
years, with interest at 6 per cent per
annum, payable quarterly. Coupons
were attached to these bonds for the
interest, payable to bearer on the 18th
day of September, December, March and
June in each of these years, and were
numbered in series. Eight hundred and
thirty-six honda were issued and are
outstanding.
Series No. IL of the coupons were pay
able and became due September Is, 1890.
At that time the Pacific Railway COM
pany came into the possession of and
claimed to be the owner of all the prop
exty mortgaged-of all the property OF
said Los Angeles Gable Railway COM
pAny, and of course subject to said
mortgage.
On September Is, 1890, the Pacific
Railway company, although under no
obligation to pay said coupons and un-
der no liability on or for said bonds, by
it's vice president addressed the following
letter to the Bank of California, to-wit:
''SAN Francisco, Sept. 10, 1890.
@sBnnk of California, San Francisco:
''GENTLEMEN: Will you kindly pro-
tect the coupons falling due today of the
bonds of the Los Angeles Cable Railway
company, and hold them uncanceled,
and we will take them up on our return
to Los Angeles, and oblige,
"Yours truly, j. F. CRANK, V. P.'
The coupons referred to in this letter
were said series No. IL and payable on
September 15, 1890.
AT this time the Bank OF California
owned and held 140 of said bonds and
the coupons thereto attached including
series No. IL, payable September Is,
1890.
Six hundred and forty-one coupons
were owned and held by other bond
holders of GAL bonds.
The Bank of California between Sep
tember Is, 1890, and October 80, $780,
from time to time as the 641 coupons of
said GAL bonds were presented, paid to
the holders thereof the full face value of
said coupons in money and said holders
tranHrerred said coupons to the Bank of
California and the bank took them ''un-
cancelled" and has ever since held them
suncancelled."
Afterwards, in the early part of 1891,
the receiver in this action was appointed
by this court.
The bank claims that it advanced said
money for and on behalf of said Pacific
Railway company and received said
ga coupons of the Los Angeles Cable
Railway company, which the Pacific
Railway company was under no obliga-
So 49, 80 e.. l.
pf the money so advanced.
The court will bear in mind that these
coupons were not the obligations of
the Pacific Railway company, but of the
Los Angeles Gable Railway company,
and the only reason why the
Pacific Railway company could be
interested In the coupons was to protect
its property acquired from the Los An
geles Cable Railway company, subject
to said mortgage.
Yesterday Attorney Bicknell for Re-
ceiver Crank filed the following answer
to the suit, which shows the line that
Mr. Crank intends to follow in order to
rescue the road from the slough of debt
1T is now in, and which, though il will
cause the loss of lot of money to the
holders of the second mortgage bonds
And Of unsecured accounts, will clear a
very VaiuAple property from what would
otherwise be interminable litigation, and
enable it to be properly operated. The
answer reads as follows:
Edward Russell, plaintiff, VS.. Pacific
Railway company, Los Angeles Cable
Railway company ct al, defendants.
do not deem it necessary to stop to
discuss the law of the case as presented
by the petitioner in its behalf, as l see
no wav to avoid a foreclosure of the
deed Of trust given to secure the pay
znent of the bonds and coupons held by
the petitioner at any time after the 10Th
of March next.
The facts in relation to the business
Df the receiver are as follows:
/. The receiver has cash on hand, at
this date, $22, ,512.79.
2. Proceedings have been commenced
by the city of Los Angeles for the grad
ing and paving Of Pearl street and
EiRueroa street from Sixth to Washing