The Portland daily press., 1894-07-24
OTTAWA HOTEL COMPANY.
Francis Cushing Files a Bill in
Equity.
He Complains that He Has Been Defraud-
ed by.Directors-And Yet He Was One
of Them-What the Treasurer Saws.

Quite surprise was created Yesterday
by the fact that Mr.. Francis Cushing. in
the Supreme court, through his LAWYERS,
Godfrey Morse, Hill Hodges, Boston, and
Charles H. Bartlett, Bangor, filed bill in
equity against the Cushing's Island Hotel
and Transportation Company.
The writ alleges that the complainant holds
ITO shares of the respondent CORPORATION.
the whole amount of capital stock being
SIS, 900 divided into 750 shares of the par
value of 500 each. and that he has paid to
the said corporation ST., 900 for the said
stock. January IA, 1883, the stockholders
voted to issue it's bonds to the amount of
So, 900, secured by mortgage on its property
Subsequently, prior to February 10, 1888. a
bid of John ". Burrowes of Portland. for
the completion of the hotel then to be
erected by the respondent corporation on
Cushng's Island, believed to be for the sum
of S31, 500 was accepted, provided Burrowes
would take his pay in bonds and stock at
par. Burrowes was to complete the car
penter work on the hotel for $65, GOD to be
paid in bonds and stock, $4,000 in bonds
and $4,000 in stock. but upon an express
secret and fraudulent understanding and
agreement between Burfowes and Frank A.
Pitcher, the president of the corporation,
and he directors or one or more of them,
that Burrowes should receive cash in
amounts secretly agreed upon for said stock
and bonds at a valuation less than part.
This secret understanding was not known
to the complainant until the spring of 1884,
Subsequently the remainder of the bonds,
to the amount of $4,000 with other bonds to
the amount of $4,000, out of those issued to
Burrowes, and also the remainder of the
stock. $50 shares with 150 other shares out of
the stock agreed to be delivered to Bur
rowes, were delivered to the Casco National
bank as collateral security for money adj
vanced. The stock so-delivered was treated
by the Casco bank as fully paid up stock.
Burrowes proceeded with the work and
from time to time stock was issued to him
and bonds were handed to him; stimuli
taneously he issued an assignment of them
and they remained in the hands of the
treasurer of the corporation and one or more
of the directors and Burrowes received an
order for money upon one E. Greedy Spring,
which ordersswere duly honored and paid by
said Spring out of funds supplied by, or on
the credits of one or more of the directors,
each of whom was chargeable with notice
that such bonds and stock were not fully
paid or regularly issued. These persons at
once became the holders of said bonds and
stock. as should appear by the books now in
the possession of David W. Snow The only
sums paid for such bonds fand 3 stock as
the work done by Burrowes. in all between
S23, 900 and S24, 900 and work done by other
persons on similar secret understanding and
certain sums advanced by the holders of the
bonds and stock for running expenses of the
hotel. 1t is believed that the total of such
payments is $4,000. Subsequently the COR
poration borrowed $4,000 upon its notes en-
dorsed by several of its stockholders. The
whereabouts of this note is unknown,
though it has long since been paid. The
complainant has paid his share, but has
never been reimbursed. The persons into
whose hands said stock came voted upon it
as if it had been sfully paid and thereby
were able to control the affairs of the corpo-
ration.
The complainant insists that the issue of
stocks and bonds to Burrowes was in sub
stance and legal effect, an issue of stock
and handing over of bonds by the directors,
Stephen R. Small, Dennis W Clark. George
H. Knight and Frank A. Pitcher, to them
selves and others collusively acting with
them, at less than nar value, without full
payment in cash. and suohE,issue of stock
and bonds was gross fraud upon the corpo-
ration and upon. every holder of fully paid
stock.
Prior. to foreclosure proceedings the COM
plainant frequently protested against the
conduct of the directors and urged that all
unsold stock be assessed.
subsequently by reason of the wrongful
acts of said directors the cash in the
possession of the corporation became ex-
hausted and it's credit impaired. The
directors holding such bonds were enabled
to cause the mortgage to be foreclosed and
all the property covered by the mortgage
was sold. The said foreclosure and sale was
unnecessary and fraud upon the COM
plainant.
Such mortgage was not foreclosed by any
of the methods provided by the statutes of
the state, and but for such fraudulent issue
of stock and bonds there would have been
ample assets.
The corporation is indebted to the Port
land Kerosene Oil company and others, and
the officers of the corporation have failed
to take such steps as would supply money
for the payment of this indebtedness.
The complaint prays the court to appoint
receiver of the books, !, accounts and
property with power to set aside the said
mortgage sale by the trustees of the bonds
aforesaid.
The case will come MP for a hearing in
September.
representative for the PRESS called on
Mr.. S. Il. Small, one of the directors, last
evening to see if he had anything to say in
reference to the matter. Mr.. Small had
nothing to say for publication He was!quite
astonished to find that Mr.. Cushing had
taken the steps he had but stated that he
was quite certain that proper answer would
eImade to his allegations by the company
when the case came up for trial
Mr.. Cooling ofsthe Ottawa Hotel and
TRANSFORMATION asg..st eompany,s said that he
hadnU to say on SubJec5 at
present. Mr.. Gushing, he said, was an i'm
practicable man in his views. He gave the
land on which the hotel was erected in ex-
change for stock just as Burrowes was paid,
and others who did work on the building.
After he had been made a director he
wanted things done his way, and President
Pitcher didn't see things as Mr.. Cushing
did There was nothing of fraudulent, or
underhand motive,@ done by the directors as
would appear if the case came to trial..
IL