The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1896-08-19
ABOUT R. R.
RECEIVERS.
President MOOrefield Storey of
the National Bar
Association, In His Address Is
Very Severe
AGAINSTTHE METHODS
By Which Receivers Are Now
Appointed
By the Courts In Railroad Re-
ceiverships.

Saratoga, N. Y, Aug. 19.-There was
a large attendance in the convention
hall at the opening of the nineteenth
annual meeting of the American Bar
association today. When Lord Russell
Sir Francis Lockwood, and MOntagu
CrackenthOrpe together with their
ladies entered the hall, they were
greeted with hearty applause. Judge
George S. Bachelor escorted them to
seats at the front and near the plat
form The president of the association
MoOref1eld Story, conducted Lord Rus
sell, Sir Francis Lockwood and Mon
tagu CrackenthOrpe to seats the
platform. Among others honored with
seats on the platform were J. Randolph
Tucker, Edward J. Phelps, William AL
len Butler, Henry Hitchcock, Austin G.
Fox, Chas. Clahin Allen, Francis RawIe,
and James G. Carter
President Storey called the associa-
ton to order and delivered his ad-
dress.
The address of the president was up
on the most noteworthy changes in
statute law on points of general inter
est made IN the several states by con-
gress during the preceding year. as re
Quired by the constitution.
The most important and longest part
of the address was devoted to railway
reorganization; it is based upon a, stat
ute of Kentucky, which for the first
time attempts to deal with this sub
ject and which the address considers as
ableS the courts to protect the interests
of investors by making every reorgani-
zation of a railway the subject of ju-
d1c1al investigation and securing for
every interest a hearing, The address
points out that the great railway sys-
TENS of this country have been built up
and equipped with borrowed capital
Many of the securities represent in
vestmentS of more than their face val
ue. Capital stock has been frequently
| issued without payment; often as a
90 wit q In la5c
way, the money of creditors has been
| invested and the control of the proper
| ty retained by the debtor-the railway
| company.
The failure of a railway company
| finds the managers united and fully
! prepared for the emergency which they
| inevitably have fOreseen, while it finds
| the creditors scattered, ignorant, and
| frightened and entirely unready to act.
| What has happened in practice? we
| have seen the managers, while stoutly
| denying up to the last moment that any
| such step was contemplated or that the
| property was in any way embarrassed,
| secretly prepare a bill in equity and
| without notice to any one interested,
| file it in a court of the United States,
| asking for the appointment of receiv-
| ers.
AS a matter of fact, in every case,
| the proceedings have been colIusive.
| The managers of the insolvent COM
! pany have controlled both sides of the
| litigation. The selection of receivers is
| great many persons. There should be
| no undue haste in the choice of such
! ofdcers.A restraining order will hold
| everything until after notice and hear
| ing, leaving the property meanwhile to
| be managed by its officers as before
| Every bankrupt or insolvent law that
| we have ever known, has left the choice
| of assignees to the creditors and no
| reason exists for not applying this rule
| to railway receiverships.
| The former officers are interested in
XXy01 1oh hay
| have brought together, they hold lu-
| crative positions which they do not
! wish to lose, they are deeply interested
| parties. Such men of all others should
| be disqualified to hold the scales be-
| tween conflicting interests, nor is there
| any practical reason for their selection.
! The receiver can employ them, as the
! corporation employed them, and thus
get the benefit of their skill and exder-
| ience. Yet with scarcely an exception,
| whenever a great railway has passed
into the control of the court the credi-
tors have first learned the fact through
the newspapers.
After a long and expensive contest
the self-constituted reorganization COM
mittee appears and bOndhOlders are Of
fered their choice between a contest
conducted at great disadvantage and
expense and the acceptance of such
terms as may be offered. While in
theory they need not accept, in fact
| they do not dare to refuse. The ex-
penSe of the reorganization has been
in many cases enormous and in fixing
it there is no one to audit the accounts,
no one to represent the creditors, who
| suffer while their trustees profit.
| Proceedings like this are a very evil
example. Many a man sees the saw
| ings of a lifetime swept away by the
mismanagement of a corporation and
sees the managers continue in charge
in spite of all opposition that creditors
can make. To the reckless use of pow
| er by the managers of great corpora
tions and by those who profit in thei1
| downfall, we must attribute much OF
| the discomfort the hatred of capital and
capitalists, of corporations and thei1
officers, which underlies the movement
/ which now eXciteS our alarm.
1t is to the courts that we must look
for protection. Their authority rests
peculiarly on the respect of the people
for their absolute impartiality and ir
the long run they cannot preserve thai
respect unless they observe the wei
settled rules of judicial procedure anC
unless they respect and enforce every
legal claim.
} After President Storey had conclud
, ed his address the executive cOmmitte'
reported the nomination for member
? ship, and IS new members were elect
: ed. The aggregate membership of tn
association is 1,342. The treasurer's re
port showed a balance of 81 133. .5S.
general council was elected, one from
each state. The member of the council
/ from Kansas is ]. D. AIilliken-
2 Evangelist J. A L. Romig will begin
a series of meetings at the Third Chris
| tan church tonight