The morning times., 1896-12-19
L-ROAD SCANDAL BREWING.
Sensational suit Filed by Man.
haitian RondhOIder.

albany, n Y. Dec lS.-A sensational
case was begun before the attorney Y general
OF the State of New York today.
Mortimer Hendricks OF New York city,
a bondholder OF the Manhattan Railway
Company, which owns and operates the
Elevated Railway system OF New York
city, made application 10 Attorney General
Hancock asking him TO begin an action
against the directors OF the Manhattan
company for judgment Compelling them 10
pay back Ia the railroad company the
amount OF money paid to the stockholders
in dividends in excess OF surplus profits,
and removing the directors from office
and restraining them ana their successors
in office from declaring and paying divi-
dendS i'll excess OF the profits OF the cor
pordtlon.
Mr.. Hendricks was directed to serve
notice OF his application upon the directors
OF the company and hearing was set
before the attorn ey general for next
Wednesday.
MI Hendricks asserts that during the
year ending June 80, 1895, the company
paid 81 500 600 dividends, which was
S27T SOL in excess of their surplus profits,
and that during the year ending Tune ~,
S96, the company paid the same amount
of dividends. which was S6Sl ,SO2 in ex-
cess of the surplus profits of the company.
He says that since June 30, 1896, the di-
rectors declared quarterly dividend
amounting To $3.50 900, although the net
income was only 81 $4,000.
He claims that the earnings OF the cor
poration have not been sufficient during
| the last two years TO pay the expenses of
operating the road. its fixed charges anu
| the dividends on the stock by about ST.
02O 900, and he charges the fact to be
| that the excess ofGividends over the profits
have not been paid out of the surplus
| I'M pr hV
poration, and that thus debt was created
| 10 pay excess dividends amounting to over
ST. 900 900.
The directors who Mr.. Hendricks desires
| the court 10 remove from the office are
! George Gould, Edwin Gould, Howard Gould,
Russell Sage, Thomas t Eckert, Samuel
| Sloan, Robert NJ. Galloway, Donald Mackay,
Joseph Eastman, "A. L. Hopkins, G p.
| Morosni, Warren b. Smith, and John j
| Terry.
Tie officers Of the company are: Presi-
| dent, George J. Gould, secretary and
| treasurer, ID. W. McWil liams, and the
! general manager, W. j Franzioli.
| In his petition To the attorney general Mr.
| Hendricks declares that he is the owner
| of bonds of the Manhattan Railway Com
| pany of a face value of 81 ,OOu, and
| charges that the directors OF said cor
| poration have paid out of the funds of
| said corporation and transferred TO Others
| large sums OF money nia"luilS anu III
| violation OF their duties; that said directors
| have abused their trust and have been
| guilty OF misconduct in office, and have
| ahenated property belonging to the said
| corporation contrary to provision OF
law and are about to ALLEVIATE still more
| property belonging to said corporation
| contrary to a provision of law
Mr. Hendricks quotes from the c0mpany's
| annual reports to the State railroad COM
| nissioners TO suhstantiate his charges. He
says that the statement in the official re-
| ports that the dividends were paid from
surplus profits Is false, and that there are
no surplus profits. He says:
~ our petitioner further states that
the surplus profits reported June 80, 1895,
as aforesaid, were $5,345, ,245.59, and on
June 80, 1896, 81, ,663, ,342.74; that if the
expense OF obtaining the title to said road,
other than tue cost OF tangible property,
was deducted from said item OF asset the
so-caled surplus would entirely disap-
pear, and that il the actual value Of said
road and its equipment was employed
rather than its cost, the capital of said COM
pany, in your petitioners belief, would be
impaired. "