New-York tribune., 1895-10-26
BELDEN's SUIT FOR EIGHT MILLIONS.

AN INTERESTING RAILROAD BOND CASE BEFORE
THE COURT OF APPEALS
Albany. Oct. 25-An appeal was argued In the
Court Of Appeals to-day In the suit brought by
James J. Beden OF Syracuse. who owns fifty bonds
OF 5000 each OF the Columbus Hooking Valley and
Toledo Railway Company to compel the defendant.
Stevenson Burke and certain others associated with
him to pay 10000 and interest to the railway
company for the benefit OF the bondholders.
The plaintiff asserted that urder the terms OF the
mortgage securing the bonds IT the duty OF the
officers OF the railroad company. OF whom Burke
was to apply the proceeds Of the bonds amount
Ing to 100000 to doub.e-traokng and equipping
and otherwise improving the road. The bonds were
used to purchase the stock OF a coal company.
owning 10000 OF coal land in Ohio. adjacent
TO the railroad. The nominal value OF the stock
only $4,000. but the profits from the coal
lands have been $4,000 a year. The bonds were
originally sold to Winsow. LanIer G Co., OF New
York. In 1881. The firm knew about the transaction
and approved OF it,
The suit brought in 1890 II tried before
Justice Ingraham in the Supreme Court. in New
York He decided against the plaintiff. Mr.. Belden.
the ground that. the original purchasers OF the
bonds Winslow. Lanier & Co. approved OF the use
made OF the bonds by the railway company. no sub
sequent purchaser could complain. The Plaintiff
appealed to the General Term, where Justice In
grahams decision was reversed. The defendant,
Burke then appealed to the Court OF Appeals from
the decision Of the General Term.
The Central Trust Company, OF NewYork. Is the
trustee OF the mortgages securing the bonds. 1t
refused to bring suit similar to this one at Mr..
Beden's request, being advised by counsel that It
had cause OF action. Consequently. II Is made
party defendant in this suit, which is brought
nominay for the benefit OF all the bondhoders
William b. Hornblower and Judge Stevenson Burke
argued for the appellants They declared. on behaf
of Burke and his associates. that the transactions
complained OF were honest and above-board; that
they operated largely TO the benefit OF the company
and the bOndhOlders, giving them a valuable coal
property, bringing In n sufficient income TO pay the
interest the bonds that Mr.. Belden purchased
the bonds with his eyes open and with full knowl-
edge OF the situation OF the railroad company; that
he in way injured; that his bonds are
worth to-day than when he purchased them;
that interest has been paid punctually: that the
bonds fully secured and that plaintiffs cause OF
action Is not based upon either equity or Justice.
Judge John F. Dillon, Elihu Root and Samuel g.
Clark. who argued for the respondent Mr. Belden,
held that by the construction of the mort
gage. the railway companys right OF dominion over
the bonds and over the proceeds thereof was quail
flied that II bound to use the bonds and
the proceeds in such way as to enhance the value
OF the mortgage security The proceeds OF the bonds
should have been used in improving property already
subject to the mortgage or In acquiring other prop
erty which. by virtue OF after-acqulred covenant,
would become subject 10 the lien Of the mortgage.
The arguments In the case were not finished to-
day, and they Will be continued on Monday.