New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1895-04-04
BONDS HELD TO BE VALID.
AN IMPORTANT DECISION BY JUDGE
JENKINS IN CHICAGO.
THE FARMERS LOAN AND TRUST COMPANY WINS
ITS SUIT OVER NORTHERN PACIFIC
ATTORNEY GENERAL Mo-
LONrY KNOCKED OUT.

BONDS ATTORNEY GENERAL MO
LONEY KNOCKED OUT
Chicago, April 3-Judge jenkins. OF tho United
States Court, to-day decided the case OF the fafh-
ers' Loan and Trust Company Of Ncw-York
against the Chicago and Northern Pacific Railroad
COMPANY in regard to the validity Of the bonds
of the latter company, which Is OF great interest
to Eastern investors The Court held that the prop
ery of the railroad company should be appiled on
the bonds in any event. In 1883 the Chlcaso anu
Northern Pacific Railroad Company made trust
deed to the Farmers Loan and Trust Company
Of \ev.-YOrk to secure the issue of bonds TO the
extent Of 100000. The railroad company then
leased the property to the Wisconsin Central COM
pany, who Immediately afterward leased " 10 the
Northern Pacific Railroad Company FOR nlnety-hlhe
years on default OF payment of the interest the
Farmers Loan and Trust Company began the pres
ent suit in the United States Courts to foreclose the
mortgage The defence set up was that the trust
Company had never qualified TO do business III
Illinois by deposiiing 100000 with the state Auditor
This defence was by the original mortgagcor'
the Chicago and Northern Pacific Railroad Com
panv; by its lessee the Northern Pacific Railroad
Company and by Louis Donnel, a judgment
creditor. The question was argued TWO or three
months ago before the Court by the lawyers from
different parts of the country. SHORTY alter the
arguments Attorney General Moloney OF Illinois
appeared in court with intervening petition lie
also presented elaborate printed brief IN sup
port of his petition. He contended That the mort
gage should he held void and asked the court 10
decree that the trustee could not act In the case
Judge Jenkins decided the case to-day, holding
that the Illinois statute referred to did not Apply
TO foreign corporations simply taking mortgages,
but to those doing active business in THIS state.
Even II the mortgage was imperative, the couit
held as to the provisions about the trustee taxing
possession in the case OF default. the mortgage re-
manned good as security ,,, No.,
The Court also he'd that the Chicago and Nortn-
Pol GOmDaNN having
proceeds of the bonds, was estopped from inaKinb
any such defence as IL did. The Northern Ia.i:c
Company having issued. under ana subject TO the
mo,tsage was in no better position. Again the
Court held that in any event the Court could pro
coed to sell the property and apply the proceeds
on the bonds - -. ,
Judge Jenkins also held that Attorney-Generai
Nolonev's position in law was bad and that the
latter had interest or reason to come INTO court
i'm the matter and attempt to enforce penalties ~
q suit in a Court of Chancery ana against innocent
hode OF bonds. Donnen. although a judgment
creditor vas held TO be in no better position.
The Court then dismissed the intervening pcti-
ton OF the Attorucy-Cicneral for want OF county
and ordered that the railroad companies should
answer, TO the merits Of the bill, by May J.
This decision affects probably more than four,
ffths OF the bonds ISSUED 10y Illinois railroads and
has been watched for with interest by dealers ana
investors in sucn securities.