The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1895-09-28
THEY WANTTO BEINIT
Third Mortgage Bondholders
of \. Z. Petition.
ATTACK ON TRUST COMPANY.
They Ask Recognition I'm the sEis and
say the Trust Company ignored
Them and Helped Itself.

The tl1ird mortgage boudholE@rs of the
Northern Pacific railroad representing
upwards % 81 .6D1 Of third general mort
gage bonds. have petitEoned the United
States court IN this city U Be made par
ties 70 the suit Of the Farmers Loan ana
Trust Company. with Ike force and e.
feet as II made parties 70 the BILL \ Ike
petition was presented 20 Judge Jenkins
court October <, 1884. and the prayer
granted 80 far z 90 permit the petition
crs 10 be made parties defendant FOR the
purpose Of protecting tie interests rep
resented By them respecting any con-
1icts that might arise as 10 the respective
interests in the estate.
The petition which arrived by mail
from New York. is signed by Charles y.
Van Ncsfrand, owner 81 5000 par value
OF the general third mortgage bonds. lie
alleges that the Farmers Loan and Trust
Company. as trustee for the third MORT
gage b0ndholders and for the second
mortgage bondholders. which interests are
fn measure conflicting. upon fling its
bill as trustee OF the second mortgage
should have directed tho atteHtion Of the
court 10 the diversity Of interest. and
have prayed the appointment pro lac vice
of some suitable person not entangied
with other interests 70 represent the third
mortgage b3ndhoiders In the suit vet the
trust company. petitioner says. has Who'll
Is foiied 70 perform that duty. and the
third mortgage pondholders have 10 rep
resentative before the court whose eye Is
single 10 their interests.
Trust Company.s Diverse Duties.
The trust company Is also trustee for
the fourth consolidated mortgage OF the
company. and OF mortgages upon some
seventeen OF the branch roads. The in
fArests Of the third mortgage bondholders
on the one hand and on the other Of the
various cestuis Que trust. whom the trust
company also represents. are stated by
petitioner. 70 be conflicting. and he says
it Is presumptiyely impossible for 1t 10
serve efficiently and faithfully as the
champion of the third mortgage bond
holders In the suit in respect OF such dis
cordant interests. Van Nostrand fears
that unless his prayer is granted the suit
viii be unduly prolonged that admins
tration liens upon the mortgaged property
having priority over the third mortgage
10 an amount in excess OF what would be
beneficial 10 the bondholders win be es-
tablished: that the security OF the mort
gage will be impaired and the third mort
gage bondholdoFs otherwise iTreparably
injured.
Tho Trust Company Inactive.
As q matter of fact, Van Nostrand
Gays. the trust company Is practically
paralyzsd by the difficulties OF its posi-
ton. and instead Of attending actively.
providently and diligently 10 the dis
charge OF the third mortgage trust and
Of the other trusts IL has accepted, IL is
perplexed and inert, seeking mainly TO
protect Itself and shift responsibility. In
this behalf petitioner charges that upon
the first application for receivers certif-
Gates made TO Judge jenkins the trust
company consented 10 the application
with no more than a merely perfunctory
investigation as to the necessity of such
certificates or the amount needed or the
terms on which they should be negotiat-
ed. During the course OF the receiver
chip. he says. tho receivers have been in
the practice Of informing the trust COM
papy OF preferential claims. which they
propose to pay under order OF court. and
without any or at most with merely a
perfunctory Investigation. the trust COM
pany has suffered the receivers 20 make
such payments and so has relieved the
receivers from responsibility.
Got Its Own Claims Preferred.
Van Nos,rand AYERS further that as az
pears by the answer OF the trust company
presented to the Milwaukee court. and by
the statement Of un-edeemcd securities
filed by the receivers October s. 1884,, the
trust company was itself one Of the credi-
tors OF the railroad whose debts were 10
he paid IN FUN for the purpose Of redeem
Ing securities pledged 10 secure the same.
The trust companys claims were three in
number. as follows. one amounting 20
f1y0.0 secured hy $4,000 Northern Pacific
consos. s35.000 Chicago e. Northern Pacific
bonds $4,000 ST. Paul & Northern PACT
nc bonds; another amounting TO S5o0.0oo.
secured by SS5.ooo Chicago & Northern
Pacific bonds. and Si6o0oo ST. Paul &
Northern Pacific stocks. and the third
amounting 70 N0.G00. secured by $4,000 St
Paul q Northern Pacific stock The trust
company. IL Is sad. did not disclose the
fact that u was such creditor or had such
personal interest IN the issu-
Hnce OF receivers certificates. but
the same was kept secret and
concealed from the time that the receivers
alleged application FOR the Issuance ~ GER
tifcates in ls93. until October y 1876 AZ
which time the disclosure was made. not
by the trust company. bat by the rerelv-
ers on tho call or the court during the arrii-
ment on the hearing respecting receivers
certificates. at which time. a. well as A.
rho settlement of the order thereon. che
trust company Was not presen. nor repre-
sented
The petitioner believes that The rcdemp-
ton Of tho So 600 90 the Northern pacia.
consolidated bonds. held by the trust com
rauy was IN 20 respect for the interest Of
the third mortgage bondholders further
that the other securities held by the trust
company, as soon as they were acquired
BY INC railroad company. became subject
q the lien ~ the third mortgage u which
the trust company was trustee. The trust
company, petitioners AYERS Is charge
salo With notice az such lien and
SITS Hen upon the securities as co,Iaterai
~ the debt owed II hy The railroad com
pany was subordinate 10 the lien og sae
third mortgage.
The Trust Company's Omissions.
In the NT2ceeit 0cs resne-tfrr f0e fssti-
enso ~ receivers certificates mo r,e+i-
fia0fr AYERS. enc trust coa7oa0v fti1p,f in
.ts duty % IRE ia.tf mortEaE,, h1ndAal8crs
and it favored the consolidated MORTGAGE
handholders in divers rssna..ts sepea~i-,,-
upon THE face ~ the proceedings a. they
reniasn os record ana particularly In rafs
by cons9ldatiue ana mix * un thc inter
esis OF thc th.r3 mortCags han5h1lfs~
With TIRE interests ~ othrF se~arff, holt
ers, and ny calling attention 80 the rret.
advantage 90 cons, .itafe2 wrrtre-e h,rs-
holders 81 rciecwiUs ccusets o,f-sr.s.,,5s,,.-
as collateral for The floating debts ~ 49,
railorRd company aG3 hc rrg-st~suv r~-,-,,
pointing out mar the redemption ~ .-.--
sells vas of 40 advantage 20 she thf~5
mortgage hondholdcfs further. h>- .sl.r.-
- take tho proper steps ~ have rha r-
ceiscrs pre- ~ statement % trv re.f-.
showing each or tae floating debts ri tea
railroad company AMI rae securities s......
ficallv pledged thereto. whereby g. vv,.s-s
have appeared among other trI-rS M
only thar me trust company VAS H~rrf .
run but that snme OF the debts we-a -.-
mainly by conSols sut others secured tv
50 small A proportion - securities in Wilton
the third HrnrtEsEe honahalters have so,
- s,-~s1A4 AaVsa Nar--, ...--..