The sun. [volume] (New York [N.Y.]) 1833-1916, 1893-10-14

The Court Holds that There Was Fraud In
Their Use OF Hooking Valley Honda.

|
The General Term OF the Supreme Court ha
reversed the judgment in favor OF the defend
ants in the suit brought by Cougressma,
James J. Belden against ex-Judge Stevenson
| Burke, Wallace C. Andrews. and others In re-
gard to the consolidated bonds Of the Colum
bus. Hooking Valley and Toledo Railway
Company.
In 1881 ex-Judge Stevenson Burke and o
number OF associates purchased all OF the
stock Of three coal roads in Ohio and consoli.
dated them into the Columbus. Hooking Val.
ley and Toledo Railway Company.
In order to raise the money to pay for this
stock they caused the company to issue eigh:
million dollars Of bonds secured by mortgage
on the consolidated road. Tho mortgage rep-
resented that the bonds and their proceeds
were to be used to double track tho road and
for terminal facilities and in other ways to i'm
prove the security. Instead Of using the bonds
in accordance with the terms Of the mortgage.
Burke and his associates. who were directors
and officers of the consolidated company. took
the bonds to themselves. sold them. and used
the proceeds to pay the debts they had con.
tracted in buying the stock.
Some time afterward they sold the stock. and
the company. under new management
brought suit to recover the value Of the bonds.
Tho company was defeated upon tho ground
that as Burke and his associates owned all the
stock their assent to the transaction estopped
Mr.. Belden. who had purchased $50. 900 Of
the bonds In open market. then brought suit
in behalf OF himself and other bondholders to
ci who Had taken The bonds to m ms ks
good the representations OF the mortgage by
RTod Ss sssa5is hs wS
bonds had been applied 10 improving the
rTko To,rk ~ lno.;ol rnr,, ,S.r,;,,~d A.
suit on the Ground that anisr CO. coe
the first purchasers OF the bonds knew Of and
sHsrefore subseanent parohasers from on them hns
TSe General Term say tina. this is /. start,
$1,000. 90. 900 are invested in such bonds
upon the security Of railroad mortgages. and
The tx Court s' now holds burke and his asso-
pany the full amount Of tho proceeds Of the
SsOoo;ooo OF BONDS which they misappro-
The Courts cay. after resiting the facts:
was wrongful and has resulted in great in
justice to the holders Of the bonds Is apparent
4" Ono OF the means by which i was sought
pearance OF legality and the sem blance OF hon
esty was by the e3chanGe Of l5o99 shares 81
q Equity can and should require Burke and
bis associates 10 turn over the proceeds OF the
may In turn be required to apply them In ac-
cordance with the covenants contained In the
mortgage.
=" There 10 another ground ON which court
OF equity 10 warranted In taking jurisdiction
TO decree an application OF the funds in tho
hands OF Burke aud his associates to the
promised purpose. that is. that tho conduct Of
Burke and his associates was fraudulent 800
dealing. but consistent with tho intention to
deceive. The result Of the transaction was a
was put upon the market bonds bearing its
Of the bona tdes OF the entire transaction.
when. in truth. that was wholly wanting. A
wrong has been done the bona tide bondhold-
ers. fer they have been deprived Of the added
They accordingly hold that Burke and his as
socates are liable both upon the ground OF
:, Judge =, Burkc,s associates were Charles
Hickox. VIM. J. Hitchcock. VIM. ]. MeKinnie OF
ChaunceY II. Andrews Of Youncs.
town. O.. and Wallace c. Andrews OF New
York.
The directors Of the company were the same
men except Wallace T. Andrews with the adj
diton OF NJ. NJ. Greene Of Columbus. John w.
Ellis OF New York. and Charles G. Hickox.