New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1894-05-13
A BIG RAILWAY SUIT.
ACTION BEGUN TO RECOVER 100000.
THE DEFENDANTS ARE THE MANHATTAN TRUST
COMPANY AND AMOS T. FRENcH-rHEY SAY
THE QUESTIONS HAVE ALREADY BEEN

THE QUESTIONS HAVE ALREADY BEEN
DECIDED IN THEIR FAVOR.
A suit was begun yesterday in the United States
Circuit Court In which Gordon r. Badgers ana
Charles Bruen OF Sioux City. Iowa, are the plain
tiffs against the Manhattan Trust Company OF this
CITY, and Amos T. French. individually. and as the
executor OF his fathers estate. to recover over
100000 OF securities, which, It Is alleged, were
fraudulently hypothecated by the defendants Dom
aid Mclean Edward r. Gedney and George X
Blanchard are also concerned with the defendants
IN the suit The action, with its accompanying
charges of fraud arises out OF project formed
and partly executed by the defendants. TO puiid
and equip a line of railway from Covington, Neo.'
to Sioux City, and Salt Lake City. Utah. distance
of $50 miles to be known the Pacific Short Line.
Francis o. French now dead; his son. Amos G.
French Donald Mclean, f. r. Gedney and George
r. Blanchard were the organizers Of the scheme
and formed what Is known the Wyoming I'M
provement Company to carry out the Undertaking.
The company was incorporated with capltai Oh
100000 Capitalists were invited TO suDscrioe 1or
stock for building the first section OF the road from
Covtngton TO O'Nellls, distance Of 100 miles II
was said that the rest Of the road would be built
and equipped by a syndicate Of capitalists Inc
line was to form part OF the system Of the Nebraska
Railway, the Wyoming and Eastern Railway ana
the Salt Lake Valley and Eastern Railway Inc
plaintiffs among some nifty subscripers lot
the complaint that s7647O7 s. contributed for
this purpose The Manhattan Trust Company, OF
this city, became financial agent for the new COM
pany and the stock issued was Immediately de-
livered to the Trust Company.
IN ORDER TO GET LOANS
The complaint alleges that the Wyoming I'M
provement Company controlled by FRANCIS "
French VINO elected trustees and directors to carry
out his wishes. In 1890. 1t is alleged all the ooAds
Issued or to be issued to the Improvement COM
pany by the Nebraska and Western Railway were
with the connivance of French, hypothecatsd with
the Manhattan Trust Company. to secure loan 70
the Improvement Company Of $50o0CQ. Subsequent
~ all the stock of the railway company, ana al
the bonds issued by It, well as all the stock OF
the new company. were hypothecated win inc
Trust Company to an additional loan OF
100000
The plaintiffs and others who subscribed TO the
construction fund to the extent OF $4,000 were
entitled 10 receive trust certificates for stock ana
subscription receipts for bonds and were entlteu
to stock OF the Improvement Company and hrst
mortgage bonds of the Nebraska and Western
Railway Company.
Certificates OF the par value OF $4,000 were duly
made and delivered. 1t Is alleged that when the
plaintiffs subscribed it understood between
them and the Manhattan Trust Company mat the
bonds of the Nebraska and Western Railway Com
panv ps well as the stock OF the improvement
livrTy tg them In the face OF this understanding
IL is charged that the Manhattan Trust Company,
i'm wilful disregard the covenant, WfohSlHliy
and fraulently.' at the instance OF the trustees,
caused the hypothecated bonds and stock 10 De
made and accepted. -, .
The bonds 80 hypothetical We're secured py a
mortgage made by the Nebraska and western Rai,-
way Company upon the hrst section .. w ooai,
All Of these bonds alleged TO have been trauduehty
hypothecated by the Manhattan Trust company
were sold 10 other persons in 1890. This iact II Is
said was frauduently concealed by the trust coin-
pany at the instance OF the Trenches. ana WIS
not discovered until long afterward. .
The cost Of building the first section OF the r0au,
~ - alleged aid not exceed $1,000 mile. Beiore
49,. bonds we're made there had been subscribed
500 OO0 OF which 1913 Occ paid UP.