St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1893-09-14
SUED FOR MILLIONS.
Fraud Charged Against VIII
lard, Cakes and Others
BY BIG NJ p STOCKHOLDERS.
Crooked Transfers Of Railroad
Stock and Bonds.
THE CHICAGO STATION DEAL.
Agreements and Leases Pro.
cured in a False Manner.
THE CHICAGO STATION DEAL.
RETURN OF PROPERTY ASKED.

New YoBK. Sept. 15.-John Swope,
of Pennsylvania. one of the stockhold-
ers of the Northern Pacific Railroad
company. on behalf of himself and other
| stockholders, has begun an action in
the supreme court, through his counsel,
against Henry Willard, Charles l.. Col
by. Colgate HOyt, Edwin ii. Abbott, of
the Northern Pacific railroad; Thomas
| +. Oakes, Henry c. Rouse and Henry G. +
| Payne, its receivers, and the Chicago 81
| Northern Pacific Railroad company, to
| compel the individual defendants to
make restitution of millions of dollars
| winch the Northern Pacific and the
Northern Pacific company has been de- ;
| prlVed OF by means of fraud. Swope
brings the action because of the
| refusal on the part of the receivers of /
the Northern Pacific company or its |
directors to act IN the matter. The |
| complaint alleges that Col by, Hoyt and
! Abbott were the three trustees of the
| Wisconsin Central company, who owned
| majority of the stock of the Wisconsin
Central company. They still control
and manage the affairs of both COM
panies. Willard, Colby, Hoyt and Alb
bott. in September. 1889. owned the
| land at Harrison street and Fifth ave-
nue., Chicago, the title to which was in
the name of John p. Neal. who held it in
TRUST FOR THEM.
Upon this property was then being
| constructed the Grand Central station.
1t was subject to purchase money
mortgage of S650,00 The total cost of
the building was to be S750.O0O. At that
time s350,O0O had not been paid.
Willard. Colby, Hoyt and Abbott
owned the capital stock of and con-
trolled the Chicago u Great Western
Railway company, the Bridgeport 81
South Chicago Railroad company. and
| the Chicago, Harlem u Batavia Rail-
road company, which operated lines
| OF railway within the limits of the
| city of Chicago. The capital stock
of the three railroads had no market
value, and they had bonded indebted I
ness in excess of their cost. The value
| OF the land mentioned and railroad
| properties is said 10 have been $S,00O,-
| 600 in March, 1890. These four men at
the time were also directors of the
Northern Pacific company, and Willard
was the chairman of the board. Abbott I
was president of the Wisconsin Central
company. Swope charges that they in
September, 1889, conspired to defraud
| the Northern Pacific company by SELL!
| ing to il through themselves as the
| directors all the Chicago property and
| the land for a price in excess of its
value, so that they could make an
EXORBITANT PROFIT
| to themselves personally in fraud of the
Northern Pacific company. By their
scheme they received about 800, 600. !
1t is alleged that they agreed to form a |
corporation TO which they should con-
vey all of the Chicago properties, which
they should mortgage for a large sum,
and then to have the corporation lease
the properties to the Wisconsin Central
company for large rental, which
should be then leased to the Northern
Pacific company, the latter to assume
all obligations of the former and Willard
and his associates 10 receive large sums
i'll bonds and stock of the companies.
As part of the scheme. it is alleged,
Abbott retired from his position
as director of the Northern Pa
cific company, and after it had
been conSummated he was again elected
a member of the board. This
was done for the purpose of Disgusting
the conspiracy, It is charged. The
Chicago Il Northern Pacific Railroad
company was organized by Willard,
Colby, Hoyt and Abbott on Nov. 23, 1889,
with capital stock OF 1899, 900, secured
by the mortgage on the property of the
e.
provided that s., ,049, ,000 of bonds to be
secured by the mortgage should be re-
served to retire the mortgage debts
when they should accrue. 1t is alleged
that SO, $4,000 of bonds were delivered
to Willard, Colby, Hoyt and Abbott in
payment for the different properties
mentioned, and the share of the capital
stock in the three railroads in Chicago
was assigned to the Farmers Loan and
Trust company as trustee.
Willard and his associates then made
to themselves, as owners and in control
of the Wisconsin Central company, a
lease for ninety-nine years Of all the
property of the Chicago & Northern
Pacific company, subject to the lien of
the S30.000,000 mortgage, and the lien
OL Llo purcIldSe monty mortgage 1Oc
S650,0 600 70 the bonds of S399,OOO and
other outstanding mortgages, the con-
sideration being that the Wisconsin
Central company should keep the road
IN repair and to pay s35O.0O0 per year;
also to pay the interest on the mort
cages and to pay for the expense of
maintaining the Chicago & Northern
Pacific. a sum not to exceed S25,O 900 per
year. Following this the Wisconsin
company was leased to the Northern
Pacific company on mortgage in 1890
for ninety-nine years, subject to the
mortgages mentioned, with the pro-
vision that all the covenants of the
Wisconsin Central company should be
carried out.
Willard was then chairman of the
Northern Pacific company, and two of
his associates were directors. With
this it is alleged that 299,900 shares of
the capital stock of the Chicago &5
Northern Pacific company were trans
ferred to Willard, Colby and Thomas T.
Oakes Oh trust, and as bonus 94.425
shares of the same capital stock of the
value of 50. 425, 900, so that in addition to
profit of $40, $50, 600 already realized by
them in bonds of the company, theY