The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1896-07-17
A RECEIVER ASKED FOR
SMALL STOCKHOLDERS OF THE CIT
IzENs' COMPANY SUE.
Allegations in the Complaint About
yerner-AccountiDg Wanted.


yesterday in the United StatesCircuit Court.
1t is brought in the names of e. Dwight
Church and Nellie Church. of New York.
executors of the late will and testament Of
the late James A. Church. partners doing
business under the firm name of Church *
Co.. and holders Of two hundred shares of
stock The defendants are the Citizens
street-railroad Company. Augustus l. Ma
son, its president; William +. MulholIand,
its secretary and william L. Elder.
member of the board Of directors. Lew
Wallace, jr., Hawkins e Smith. Baker &
Daniels and Frank B. Burke are solicitors
for the plaintiffs.
The complaint sets forth a complete his
tory of the Citizens company from its
origin down TO the present time. dwelling in
detail upon the acquisition of the prop
erty by Messrs. Werner and Mckee and the
alleged watering and manipulation of the
stock by them. 1t is asked that a receiver
be appointed TO take charge of the affairs
of the company and thar all the stock and
bonds not held by innocent persons who
purchased for value be Cancelled.
The capital stock Of the company was.
it is averred, 100000. and there was
clause in the constitution by which this
could be increased TO S3.00O.OO0 This was
at the time of the purchase of the CONTROL
ling interest of the stock by Messrs. Yer
ner and Mckee, at which time the actual
property value of the plant was about
$500, 900.
CONSPIRACY CHARGED.
1t is charged that Messrs. Werner and
Mckee "consDired and confederated to-
gether to acquire the stock and control of
said defendant corporation for the wrong
full and unlawful purpose of creating stock
and bond liabilities to be used for specula-
tive purposes, of selling or otherwise dis
posing of sufficient of the liabilities so
created TO reimburse their own outlay in
the acquisition of such stock and control,
OF selling. repurchasing and dealing in the
remaining liabilities TO make a profit. both
upon ,l the rise and upon the decline thereof
said corporation and using the same both
for the purpose of aiding such speculative
operations and also of making other wrong
ful orontS and gains TO themselves from
contracts to be made by said company for
construction and equipment, and also,
part OF the same wrongful scheme. TO un-
load-that Is TO say, 10 sell at high and I'M
warranted prices = the stock liabilities
aforesaid to investors who might be de-
ceived into purchasing the same"
Ii is further averred that they bought w
all the stock OF the corporation. paying for
1t prices greatly in excess OF its actual
market value At this time there were, in
addition TO the capital stock of 81, 900 900.
bonds to the amount of SllO0.0OO. These
were also acquired by Messrs. Werner and
Mckee, and then, having transferred single
shares of stock to a sufficient number OF
persons TO constitute n board of directors
they caused resolution to be adopted in
creasing the capital stock TO S. 900, or as
II was set out in the resolution. increasing
1t by $500. 600. 1t is alleged that this ac-
ton was taken by the fictitious voting of
nfteen thousand shares of stock. whereas
there were only ten thousand in existence.
1t is also alleged that the increase. if an
increase al all, amounted to $4,000. 000 1t
is claimed that this watered stock was
then thrown upon the market and sold 10
unsuspicious purchasers at a large profit
TO Messrs. Werner and Mckee. and that a
part OF 1t was given as alleged bonuses to
the purchasers OF bonds These bonds
were issued to the amount of 81, 900 600 and
were issued upon a resolution adopted
through the influence of Messrs. Werner
ana Mckee, owners OF the majority of the
stock. for the pretended purpose OF COM
pletfon. equipment and operation of the
lines of railroad and the payment of out
standing Indebtedness. IL is averred that
the investing public was deceived mo nc
cepting them as first-mortgage bonds. when
in fact they Were secured only by third
mortgage, and that some of the first-mort-
gage bonds were exchanged for these
bonds. 1t is claimed that Messrs. Werner
and Mckee should be compelled to account
to the company for all moneys received for
these bonds and that those not issued to
PROFITS OF THE PROMOTERS.
1t is charged that Werner and Mckee
knew that the value of all the property of
the company both tangible and intangible.
was less than the amount of bonds issued
and that the stock now has no real basis
of value, but is valuable only as a specula-
tive investment. That plaintiffs and 276
others now holding stock purchased it from
nj
ing from $40 to $56 per share and that by
the sale of all but 1.2s1 shares Messrs. Yer
ner and Mckee realized a profit of more
than 81. 0.OoO. which. IL is claimed. they
should account for to the company. Ger
tain other sums are also set forth which
ii is claimed Messrs Werner and Mckee
should have turned over to the treasury of
the company They aggregate in excess of
$l01o.OO0 A further charge is made that
the president of the company has refused
to make a statement of the affairs of the
company to the bona -1ide stockholders,
though formal request for such a state
ment had been made.
Charges of incompetency are made
against the defendants in the suit and
MessTs. Werner and Mckee. who dictate
the policy of the company. 1t is charged
that there has been, and is being made
great expenditure of money that is use
less and extravagant. 1t is further said
that Messrs. Werner and Mckee have en-
tered into contracts with Thomas McNally
of Pittsburg. and that they are financially
asked to examine the contracts and TO
place them at the disposal of the plaintiffs
The concluding prayer of the plaintiffs is
as follows: THAT a full discovery be had
OF all and singular the matters and facts
hereinbefore mentioned and to that end that
the said Citizens Street-rairoad Company
and said Augustus L. Mason its president.
and all its other officers and agents who
may have possession thereof, be required
upon such terms and under such condi-
tons as to your honors may seem reason
able and appropriate. to produce for in
spection. copy and extract. all and singular
the books OF account, records of directors
and stockholders meetings, construction
contracts. and other writings and records
relating 10 the matters aforesaid. and in
spection and use had thereof by your ora
tors, their attorneys and agents; and the
other defendants hereto be required 10 sub
nit to such examination TO your honors
may seem reasonable and appropriate
touching such matters.
THAT your ho1Ors take into and under
the possession, jurisdiction and control of
this honorable court. said the Citizens
Street-railroad Company. and all its prop
erty, assets and rights OF all kinds. and If
found or deemed necessary or expedient so
receive. hold. operate and manage The same
under the direction and control of your
honors until the rights and lawfn. powers
OF the holders of the stock of said defend-
ant corporation, as well its original issue
as the increase and further issue herein
before mentioned shall be inquired into
determined and settled by your honors in
such wise that SAID stockholders NAV and
can redress their own INJURIES within said