Evening star. [volume] (Washington, D.C.) 1854-1972, 1893-12-28

Hvered at the mines and to better disguise
the tranaction an agreement was also pro-
vided that the profits made on the coal
should be divided one-half to the coal COM
pany. one-sixth TO the Northern Pacific
company for itself, and the remaining two
stxths to the Northern Pacific company, to
be applied to the purchase of trust cert,h-
Gates at par. 50 that in addition to the
enormous profit made, and which railroad
has never paid expenses of its operation, to
say nothing Of interest on its cost, and in
addition to one-half of its profits arising
out OF the coal contract, the syndicate will
eventually get 100000 from the Northern
Pacific company for the puchase of their
trust certhcates representing the coal mine.
and which cost them not to exceed 500, 600.
The Manitoba Branch.
In respect to the Northern Pacific and
Manitoba railroad. the petition AYERS that
that company was organized by a syndi-
cate composed Of members Of the board Of
directors Of the Northern Pacific Company
which purchased a line of railroad, which
had been partly constructed. running from
winnipeg south to a point Of connection
with the Duluth and Manitoba railroad.
one of the branch lines of the Northern
Pacific Railroad Company, and which syn
1icate then completed the same and added
lot of branches thereto at a cost, includ-
In the original purchase price, Of not ex-
ceeding $1,000 a mile. and that this road
Iney then, as directors OF the Northern
Pacific Railroad Company. caused that
company to buy for bonds at the rate of
$2O.OO mile and thereby realized a profit
TO themselves of upwards OF 5000. coo, and
IN addition the Northern Pacific Railroad
Company assumed the interest on S15O,OOO
OF terminal bonds, secured upon the termi-
nal property of the company at Winnipeg.
and which was at least - per cent In ex-
cess OF the cost or value of that property.
The petition shows that this property has
never paid the mere cost of operation,
and that the interest charges which the
Northern Pacific have had to pay, amount
ing to upward of 100000 year. arising
out OF this transaction had been a dead
loss to it. and the petitioners charge that
the whole scheme of acquiring this line of
railroad was without any business neces-
sity or reason whatever except only that
thereby such members of the board of di-
rectors OF the Northern Pacific Railroad
Company as were interested therein could.
as they. in fact. did. realize an enormous
profit therefrom-"
In addition to the aforementioned branch
lines which were acquired by the issue of
the consolidated mortgage bonds, and which
together about exhausted all of these bonds
which could be issued under the mortgage
for such purpose. the Oakes-Rolston board
of directors of the, Northern Pacific Railroad
Company guaranteed the interest by in
dorsement on the Dor ds, or by lease of
some S3s.0oO.OOO additional bonds of other
railroads as branches of its system, sin no
single instance of which have been. or are.
the earnings of the property nearly equiva-
AchN " Tue LulSrcSl 50
Instances are given in the petition Of
cases where Directors Abbott, Colby and
Hoyt secured and sold to the Northern Pa
cihc. at large prices. properties which were
improbable.
The petition criticises the receivers ap-
pointed at the instigation of the directors
for consenting to the dismemberment Of the
system and its jurisdiction vested in twen-
ty-three different sets of receivers.
Cause for Action.
The petition AYERS that the stockholders.
represented by the board of directors. have
q cause Of action against the late directors
OF. the company. including Cakes and Roll
ston. for the various transactions set forth,
because Of their individual fraud and negli-
gence or mismanagement in the different
Instances cited; and also AYERS that it is
necessary for the new board to have free
access to the books and accounts of the
railroad. which they cannot expect to have
while Mr.. Cakes is one Of the receivers.
and that furthermore. inasmuch as the ac-
tons for restitution must be brought in the
names of the receivers. and it Is not compe-
tent for Cakes. as receiver, to sue himself
as an individual that therefore it Is abso-
lutely necessary that he at least should be
removed and another receiver appointed in
his place.
An order has been issued by Judge Jen-
kins to show cause why the petition should
not be granted.