Evening star., 1896-10-07
The Southern Railway Company
Brings an Important Action.
VITAL TO THE VALLEY DIVISION
An Endeavor Also Being Made to
Reopen the Canal Case.
SUGGESTIVE STATS TICS

almost $O,COO, which Is DaSed on claim
alleged to be due for one years rent of a |
piece of railroad track between Strasburg |
and Harrisonburg, Va. which belongs to the |
Southern as the successor of the old Vir-
ginia Midland Company and which has
been used a part Of the Valley division |
of the Baltimore and Ohio railroad, under |
a lease from the Midland, for :wenty-sour
years past.
The petition of the Southern Railway
Company is to the effect that it be allowed
to intervene in the case of the Mercantile
Trust and Deposit Company Of Baltimore
against the Baltimore and Ohio Railroad
Company for the purpose of collecting the
rental above referred to. 1t is alleged that
the rental remains unpaid because the re-
ceiverS OF the Baltimore and OhiO claim
that they have no authority to pay bills
which accrued previous to six months be-
fore the road passed into their hands:
while on the other hand the Southern Rail
road Company asserts that the receivers OF
the Baltimore and Ohio have power to
pay such bills as for rental of track. no
matter what may be the custom as to other
matters. 1t is stated that a demand was
made on the receivers on the I'd Of last
March for the sum of $44,625 cue on that
date rental for the six months pre-
vious. The demand was refused, as was
also a similar demand for a like amount
made on September I, when another six
months rent became due
The Importance of the TracknEe.
1t is stated that the attorneys for the
Southern Railway Company are of the
opinion that by the course they have taken
they are certain to secure order of the
court on the receivers for the payment
of the aggregate sum named. The track
concerning which the suit has been brought
is tifty-one miles in length and is vital
part of the Valley division of the Balti-
nd
retain possession of this link 1t Will be
unable to run its trains farther south in
the valley of Virginia than Strasburg.
which is but fifty miles from the Balt-
more and Ohio main line at Harper's Ferry.
and would deprive them of the freight and
passenger traffic which arises along about
100 miles of it's present route through
some of the richest and most prosperous
sections of Virginia
Mr.. Morgnn's Position.
TO some persons the filing of this suit
appears as though Mr.. ]. Pierpont Nor
| gan was entering suit against himself. for
while he controls the Southern Railway
| Company, he Is, as is we'll known, the
| holder of a large amount of the securi-
ties of the Baltimore and Ohio. There are
| others, how ever, who think they see in
this move of the Southern clear mani
| festation of the intention of Mr. Morgan
| to make the Baltimore and Ohio people
come to his terms or to take the conse-
| quences
| Should the Baltimore and Ohio Railroad
| Company be deprived of the privilege OF
| running it's trains over the Southern s
| lines between Strasburg and Harrisonburg
| very large traffic which now goes to Bal
| timore by way of Winchester and Harper
| Ferry would undoubtedly come to Wash
\ ington Another result would probably be
! that after taking possession of their prop
| erty the Southern would put such repairs
| upon the line and add to 1t such equip
4 hri
| standard of excellence that is to he found
| elsewhere throughout its entire system
| The Deficit of the II. and o.
Ordinarily bill of this size would not be
| a serious matter for the Baltimore and
| Ohio to contend with, but with the fact
| staring the receivers in the face, as stated
| by a member of the Baltimore and Ohio
| reorganization committee. that the first
| six months operations under the receiver
| ship shows that the company is earning
| only about two-thirdS Of Its fixed charges,
| and that there is deficit resulting from
| accrued and unpaid car trusts and other
matured obligations, and deficit IN fixed
charges amounting to the very large sum
OF 81, ,36S, ,4Ss.fS. The gross earnings OF the
road. as given out in the official statement
for the last six months of the fiscal year
just ended, states that they were s1O,922.
641.13: miscellaneous income. $500 $50 I6
total income, 81 ~. .331.S 80 The operating
expenses amounted to s., 7O3. 712G4. making
the total net income s2.5SS, 1925. There
| were however, also charges, interest, taxes
rentals, sinking fund, etc, amounting tc
s. 642, 523. 90, and expenses OF construction
| amounting to $S4, ,553.31. Total on these
| accounts. s.. 727 05G9l, leaving the deficit
as stated. of almost 81 100000. 1t must
| also be remembered that the company has
! since June l issued $5,OOOOOO receivers
certificates, and s.. 4Oo,OOO equipment bonds
| bearing q per cent interest, and that these
issues increased the fixed charges. 1t /.
| hny1- hot ho rr,c
| the present six months will be larger. I'm
| til the statement of the expert accountants
| is published, and until it is known exactly
what may be the earning capacity of tn,
property and Its obligations, it is useles:
| to speculate as to what kinds of plans o.
| readjustment and reorganization can b.
accomplished
The Canal Case Promises Trouble.
The B. and o. also has on it's hands seri
GUS trouble with Governor Lowndes o
Maryland, who, as administrator of Lloy'
Lowndes, surviving partner Of L. & r.
Lowndes and others, have petitioned tn
court of appeals of Maryland to consen
to listen to a reargument in the case popu
! larry known as the Canal case, and whicl
! was decided in favor of the Il. and .. b.
/ divided court some months ago. The pc
: titioneIs state that in the year 1868 the
| recovered judgment in the circuit court o
| Allegany county for various amounts ag
| ments, having been revived from time
| time, in accordance with the provisions Q
: | law, are valid and have been liens on tn
| property ever since the judgments wer
| entered, twenty-eight years ago. Afte
reciting the history of the litigation, tn
petition alleges that Mr.. John X. Cove
i | and his co-trustees, for the bondholder!
t | under the act o4 1914, have failed to corr
g ply with Judge Alveys decree at the tim
he placed MIR. Cowen and his associates
charge of the canal property. in not keeI
l. ing office in Hagerstown, where the
l. books and transactions could be inspecte
y by all parties interested, and in not NAL
:. ing reports and showing in detail their r.
= ceipts and disbursements; that said tru!
IS tees are in truth not acting for the benef
II of their bondholderS, but for the benefit
the Baltimore and Ohio Railroad Compan
which has no legal interest in the cana
=, but is seeking to prevent it being used
rival, either waterway or as raj
r. way, and that the money to repair II
~ canal, as was ordered to be done by IL
q court, was furnished by certain stool
3: holders of that railroad company, who Es
ID no legal interest in the canal.
Other Direct Charges.
The petition further charges that IL
high powers of the court of appeals a.
In thus being used by parties who have I