New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1894-11-01

u.DGE LACoMBE GIVES AN IMPORTANT
DECISION
FIRST MORTGAGE COUPONS AND THE FUNDED
COTTON BONDS MIST nE PAID BEFORE
THE SECOND CONSOLIDATED BONDS
COME 1N-LARGE INTERESTS

INVOLVED.
Iudge Iacome. in the United States Circuit Court
Yesterday handed down a decision I'D no matter 81
Inc n,vm,rt by me receivers Of he New YORK. Lake
Erie and Western Railroad Company of interest on
large amour, Of oonds the coupons on which have
no, been paid The suit is that o. TrcnDr Luther
Park against the New York Lake Eric ana Western
Railroad Company and the Farmers Loan and Trust
Coupan- rs moI;eagoe. IN trust Of various mort
cages Under this suit the Farmers Loan ana Trust
Company petitions in behalf OF many bon ih'f''ia
that the court should require the receivers 10 pay
i,,ere., on the new second consolidated bonds ~
octoher L. 1873 amounting to $3G.N1,fo Instead ~
on s22 81 O0l in bonds inferior in point ~ tim" or
~ lion 70 the former bonds Another and similar pc
tition was made by holders OF S21"0"D OF tn gee
ond consolidated mortgage bonds
Since 1873 the coupons OF the new second consoi-
dated bonds have not been paid, as there
has not been income sufficient to pay the interest
Proceedings 10 foreciose have not been installed
because the NOR gage provides for foreclosure only
in the event Of default on each Of SIX successive
coupons Five sets Of bonds. agsresaing $--'S''''
are held by the receivers. ana il Is II" interest on
these bonds that the petitioners alleged the re-
ceivers were about to pay to the exclusion Of the
second consolidated and the new second consoii-
dated bonds Of an earlier issue.
First to be taken up by Judge Lacombe Tor CON
sideration were the consolidated trust bonds OF No
vember l. 1882, for $3.3ii,CO) November and May
coupons unpaid Inc par Ndiu' u 9'' No ~" "'''''
pledced for payment in this STATE Is 100000, and
the actual value is not within three times the
amount Of the collateral trust bonds
The outstanding pledged stocks and bonds are
having interest annually on the foregoing in excess
OF the amount due on the trust bonds by over
5000 Moreover. the control OF coal lands and
other property of the Erie road is secured to bond
holders by these bones
If uDon default of payment OF interest on these
bonds the trustees should declare me whoir pIl'-
cipal due. Judge Lacombe says ana sell The pledged
securities in open market to the highest bidder.
values would b" unwarrantably impaired. The
receivers he says. should not take such risk
due the coupons TO secure the pledged STOCKS
and bonds
er ,rsi Inori@oge bonds Il NrayIst 1890 on The
Chicago and Erie Railroad fsr $i2 yD1Gh This road
is controlled by the Erie road ana Is not operated
at profit Ii would be most lmprovidoni and
repreheusiblc the Court decaros for the receivers
10 allow the bonds TO be forscoscd. The coupons
should be paid for May.
AS TO the November coupons 10 decision was
made and it would bc premature to make an order
OF reference to "A master.
The same decision mad" as TO So0o,"D first
mortgage New DIRK. Lake Erie and Western Rail
road bonds. series Of May H. 1852. coupons Of No
vember and May being unpai..
Judge I.acoInbe left out Of consideration pay
ment Of interest due on siJrs 40 income bonds OF
the road as no interest had been earned
Last. he passed upon the payment Of one years
interest due funded coupons Of 1854 and 1855
amounting to {4.03l.c0 Upon the winding up OF
the affairs of the defendant railroad. he says.
any subsequent instalmen; OF interest the
principal OF The second consolidated bonds The
defendant therefore, represented by these coupons
point Of lien 10 that represented by subsequent
coupons of the second consolidated bonds. There
Is why the receivers should be in
structed not TO pay them If there should be net
q sufficient.