The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1896-01-04
Judge Seawell Decides That the
Railroads Bonds Are
Legal.
FORECLOSURE OF THE DEBTS
The San Mateo Electric Road Must
Be Sold to Pay All
Expenses.

Judge Seawell yesterday decided the suit
brought by the bondholders OF the San
francisco and San Mateo Railroad against
that corporation, and added another chap
ter to the dismal tale of retribution that is
falling upon all things once tainted with
Buckleyism.
BY this decision the eight miles of
doube-track electric road, running from
Market and Steuart streets out among the
San Mateo hills, has passed from the
Joosts forever.
The San Francisco and San Mateo Rail-
road Company was formed with the Joosts
and board of directors, and then the S. S..
(San Francisco and San Mateo) Construc-
ton Company was organized for the pur-
pose of doing the work. Like the Pacific
Improvement concern of the Central Pa
chic Railroad, it was closely connected
with its parent railroad company, and the
two labored in perfect harmony. By the
contract terms the directors OF the railroad
company were to deliver to themselves as
directors of the construction company,
bonds in fractional parts proportional to
the work completed.
But the San Francisco and San Mateo
Railroad Company, collectively and indi-
vldually, have begun to feel the pinch of
poverty. The Joosts were in deep water
and the others some distance from the
shore. The s. s. Construction Com
pany was stringiug along the rails
and wires, sub-contracts were let on ''long
time" and the work was being rushed
through in a careless manner.
Then the railroad directors delivered to
the construction directors bonds from time
to time, which were sold and the proceeds
used to pay the hard-presslng bills. These
II n lNl,x@
and the price of supplies from the Risdon
1orn Works nor other claims yet standing
against the San Francisco and San Mateo
twin companies. In course of time the
81, 100000 had been spread along the eight
miles of badly built road, between Steuart
street and the hills south of the City.
When the importuning creditors could
no longer keep cooling their heels in the
anteroom bold stroke was resolved upon.
The directors of the San Francisco and
San Mateo Railroad Company met and re-
solved that the bonds had been prema-
tureIy issued and, consequently, their dis
posal by the S. S. Construction Company
as pledges was illegal. They had been de-
livered from one board of directors to the
other in advance of agreed time and they
were not security.
The 81 100, 600 worth of creditors quickly
did something and the California TILE In
surance and Trust Company, as their trus-
tee, began suit for foreclosure in default of
payment of interest, and Judge Seaweil
yesterday sustained the validity OF the
bonds. He decided in effect that the S. S.
Construction Company was the accredited
agent OF the San Francisco and San Mateo
Railroad Company and the acts of the
former were directed by the latter, and
consequently legal.
The court also ordered that AS soon as a
final decree should be signed the railroad
should be sold and the proceeds applied
to defray the cost of the suit; to pay the
expenses of the receiver, Sanford Bennett
to liquidate the preferred claims against
the road and the payment of the bonds.
Receiver Bennett is to file his account in
two weeks, when the decree shall be made.
Judge Seawel decided further that the
claim of the Risdon Iron Works for S11 600
was to be regarded as preferred claim.
with those of the laborers, as it was a bill
for supplies used in the construction of the
road.
The laborers largely owe it to Labor
Commissioner Fitzgerald, who caused
their different claims, amounting to from
$50 TO $500, to be recognized among those
classed as preferred.
sit is we'll known that the proceeds of a
sale of the road Will be only small frac-
ton of the Indebtedness" said an attor-
ney interested in the case, land it is prob
able that the principal bondholders will
form syndicate ana operate the line till
all claims are paid. The road needs ex-
tensive repairs and some of the poor work
to be done over; bat it is a paying con-
Germ and only requires the right kind OF
management.
The railroad company will appeal the
case to the Supreme Court.