New-York tribune., 1893-12-29
PRICE THREE CENTS.
ATTACK ON THE RECEIVERS
THE REMOVAL ASKED OF THOSE IN CHARGE
OF THE NORTHERN PACIFIC ROAD.
A SUIT BROUGHT BY THE COMPANY'S ATTORNEY.
IN WHICH CHARGES OF FRAUD ARE RE-
pEATED-ARGUMENT TO BE HEARD.

PEATED-AKGCM MENT 10 BIZ HEAHD.
Milwaukee. Dec. 2s.-A highly sensational turn
was given to the Northern Pacific Railroad re-
ceivership situation to-day when Silas W. Petit
of Philadelphia the general counsel Of the cor.
poration appeared before Judge Jenkins In the
United States Circuit Court for the Eastern
District Of Wisconsin and filed petition for the
removal Of the present receivers-Thomas E.
Oakes. Henry C. Payne and Henry c. Rouse
and for the appointment of other receivers IN
their places Not hint Of this extraordinary
and unprecedented the part OF the
company had been allowed to become public
and the Court was in ignorance of the mo-
ton about to be made when the eminent law
yer from the Quaker City stepped to the bar.
AS soon, however as the nature of the applica-
tion became noised about the building the court
room quickly filed by members Of the bar.
and these in turn were soon reinforced by per-
sons interested in Northern Pacific affairs.
The petition in extent is exceedingly voumi-
nous, covering 200 typewriter pages Of legal
cap. 1t makes sensational charges against Mr..
Oakes, who is eX-president Of the road. and
against Henry Willard and Roosevelt G. Rolston,
president of the Farmers Loan and Trust Com.
pany OF New-York. at the instance OF which
company the bill for a receiver was filed. No
charges are made, however. against Receivers
Payne and Rouse. and their names are included
in the general petition for removal solely De-
they nominated by the men against
whom the proceedings directed, and are con-
sequently assumed to be subject to and working
under the control of that influence.
WHAT Is CHANGED.
The petition says that Thomas F. Cakes was
elected president Of the company in october.
1889 He appointed Roosevelt G. Roston, the
president Of the Farmers Loan and Trust Com.
pany, which is trustee of most Of the main and
branch line mortgages Of the Northern Pacific
Railroad Company. chairman of the finance COM
mittee Of the board.
1t is said by the petition that when the Cakes
Roston board took charge Of the property OF
the company it was in good financial condition
and in high credit: that II had s2,000.00o in cash
in its treasury, and like amount of current
supplies on hand, and that its surplus earnings
for the first half Of the fiscal year commencing
June 1889 amounted to about 81, 900; that in
addition to the division mortgages and the
first. second and third general mortgages
amounting together To about 000Oo), the
company was then also liable as guarantor OF the
bonds of twenty-one branch lines. amounting in
the aggregate to about s26 600 0O0 and that for
the purpose, among other things, of taking up
these main and branch line bonds and of build
ing such other branches as might be neces-
sary for the development of the business of the
company the consolidated mortgage was author
ized by the stockholders TO secure 1850 100000 Of
bonds to pay off all the existing main and branch
line bonds
The petition then alleges that the Cakes
Rolston board increased the interest charges Of
the Northern Pacific Company for branch lines
from $2600O000 TO upward of $4,000 OOO all In one
year and for the acquisition OF properties no one
Of which except a small line costing less than
81 00O0OO ever has paid the cost of operation and
fixed charges, and ,he petition further charges
that in several instances the officers were them
selves interested in selling the properties 10 the
Northern Pacific ComDaoy at an eXOrbitant profit
TO themselves. According to the petition, out OF
the 500 100000 Of bonds that were set aside for
new branch lines there were expended Tor ad-
dtiOnal construction old branch lines s5,Os500O
of consolidated mortgage bonds, none OF which
extensions paid the cost Of operation and hxed
charges: and 32ei0OO OF said bonds We're ex-
pended for the construction and acquisition OF
lines of railroad which do not pay the cost ~
operation. and in most Of which. notably the
United Railroads Of Washington the Rocky Fork
and Cooke City Railroad. and the Northern
Pacific and Manitoba Railroad, some OF the Board
of Directors were personally and directly inter-
ested.
SUBSIDIARY ROADS BOUGHT.
The petition declares that in the construction
Of the United Railroads Of Washington the mem-
bers of the board derived profit of sl,750,o00.
Northern Pacific Railroad Company in the year
ending June 30 1898 sl55.6O2 SO; that the Rocky
Fork and Cooke City Railroad was owned by
syndicate called the Rocky Fork Coal Trust,
Of which Willard was PRESIDENT. and in which
many Of the members OF the Board of Directors
of the Northern Pacific Railroad Company were
participants. who divided among themselves N,-
600 900 Of trust certificates $1,000 900 OF which rep
resented the Rocky Fork Coal Company, when
owned certain coal lands which had cost In
Guiding the expense of opening and developing
ready for mining. about 100000. ana the other
81 600 600 cf trust certificates represented the
ownership of the Rocky Fork and Cooke City
Railway Company. which was organized to build
"A railroad from the main line or the Northern
Pacific at a point near Laurel to the coal mines.
a distance of about forty-fiye and a half miles;
this railroad cost not over 100000 1t Is al
legged that the directors of the Northern Paclnc
Railroad Company caused the Northern Pacinc
To buy from themselves as owners of the Rocky
Fork and Cooke City Railway Company, the said
railroad for the sum of 81. 100000 in consolidated
bonds. and then made a contract between them
selves representing the Northern Pacific Rail-
road Company and themselves as represent
ing the coal company, whereby the ran.
road company agreed TO buy 800 tons OK
coal "A day at 50 80 a delivered at the
mines and that TO better disguise the transac-
ton an agreement also provided that profits
made on the coal should be divided one-half
to the cca company. one-sixth 70 the Northern
Pacific Company for itself. and the remaining
two-sixths 10 the Northern Pacific Company. to
be applied to the purchase or trust certincates
at par.
In respect to the Northern Pacific and Mani
toba Railroad the petition says that that conn
pany was organized by a syndicate composed
of members OF the board OF directors Of the
Northern Pacific Company. which purchased a
line of railroad which had been partly con-
structed: the syndicate then completed the line
and added a lot of branches at a cost including
the original purchase price. of not exceeding
$l2 O0O a mile and that this road they then, as
directors Of the Northern Pacific. caused that
company to buy for bonds at the rate OF $4,000
a mile and thereby realized a profit to them
selves of upward Of 50 100000
In respect To the Seattle, Lake Shore and
Eastern Railroad Company the petition alleges
that the only part Of II which had any prospective
value To the Northern Pacific Railroad Company
could have been duplicated for a little over
81 600 600
In respect to the Chicago and Northern Pacific
Railroad Company, the petition sets out at
length how this road was acquired.