The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1897-01-16

ARGUMENT ENDED, BUT DECIS-
ION RESERVED.
A Sensation Produced BY the State
ment of the Southern Fail
ways Scheme.

ways Scheme.
| Wilmington, N. c., Jan. 15.-The hear
ing and arguments in the foreclosure pro
ceedings in the Cape Fear and Yadkin
Valley Railroad case was closed to-day.
The speakers were Charles Steele, of
New York representing the New York
committee Of bondholders. Judge e. J.
d. Gross, OF Baltimore, for the Baltimore
bondholders. III. Il. Turner, of New York,
for the Farmers Loan and Trust Com
pany; Mr.. Williams, OF Richmond, who
| represented some Of the creditors Of the
| North State Improvement Company; III.
| M. Robertson, Cyrus Il. Watson and
| George Rountree, all of North Carolina,
represented the North State Improvement
1 Company, and argued in its defense. The
/ court adjourned finally at 5 O'clock, Judge
| Simontofr intimating that he would rem
| der o decision during the month Of Feb
| ruary. The case is certain to go higher
| court on appeal, no matter what the de-
| cision may be.
| SOUTHERN RAILWAYS SCHEME.
| In its account of the hearing, the VIII
| mington Messenger says:
| Judge IL. J. u. Gross, OF Baltimore,
| counsel for the Baltimore bondholders'
1
| and strong argument lasting O couple
| OF hours. His contention, in brief was
| that the road should not be dismembered
| but in the interest OF all creditors should
be sold as whole. He submitted de-
| cree to the court setting 81 800, 900 as the
| upset price for the road, and apportioning
| the proceeds among the A., b. and c.
| bondholders in accordance with the rela-
| tive earning capacity and value OF the
| respective divisions, as shown by the ex
animation and testimony before Special
| Master Martin. He urged that the whole
road and equipment should be offered to
| the highest bidder at an upset price not
| less than $2.000,00O
| In the course of his argument Judge
| Cross sprung sensation by exposing
| q scheme for the Southern Railway to
| get possession of the road. Mr.. Steele
| objected to Judge Cross use of the mat
| ter concerning the deal, but it came out.
| Judge Gross made the statement that
| Messrs. Low, Baker and Strong, COM
| posing the New York committee. brought
| suit against the Baltimore committee to
| recover 81 a bonds on the ground that
| they had purchased certificates for these
| bonds. The Baltimore committee refused
| to surrender the bonds because the hold
Il 4
| Baltimore plan Of recognizing the
| road as All entire and independent sys-
TEN. The New York committee in the
progress of the case, put upon the stand
| Mr.. Strong, one Of the members Of the
| committee. Mr.. Strong when cross-ex-
| amined by the Baltimore committee,
| stated that it was a fact, that while
he was member Of the New York organ
ization committee, he was a member of
q syndicate who had purchased 100000
| Of the A bonds subsequent to their de-
| post with the Baltimore committee, and
that prior to the meeting OF the bond
holders to pass upon the Baltimore plan
of organization, the New York commit
| tee Messrs. Low, Baker and Strong, had
made q certain contract with the South
ern Railroad Of date December 10, 1895.
This move clearly was to defeat the Bal
| timore plan. The contract made by them
with the Southern Railway provided that
| the New York committee should bid for
| and acquire the foreclosure sale OF Diyis-
| ion A at a sum of at least $1,5OO,OO0
| and would organize new railroad COM
pany which would issue and deliver to the
committee or its nominee S1,500,000 4
| per cent. gold bonds, and stock to such
| an amount as the Southern railway
4
agreed that simultaneously with the
| execution of the mortgage and delivery
| OF the stock it would lease Division A
| for a period OF 100 years and pay, as
rental, interest of 81 100000 per cent.
100 years gold bonds. This agree
ment also contained a provision
| that il the Southern Railway should
| also buy Division b in it would issue
| $3.50, 900 first mortgage 100 years 4 per
| cent gold bonds upon the seventy-fve
| miles of road OF Division B., making an
| issue OF S1,95O,000 of bonds, and in case
| the Southern Railway should become the
| owner or purchase of the eighty-two
miles of the G. Division, it would issue
| $780, Of 100 year per cent gold bonds
! making total Of 81, 350, 900 of first mort
| gage bonds. Mr.. Strong also stated in his
cross examination that there was anoth
err and separate agreement between him
self and Mr.. Baker, and others whose
names he declined TO disclose, by which
| they agreed with the Southern Railway,
| in consideration of compensation therein
| provided for their services, that they
should acquire a considerable amount Of
| the certificates OF bonds deposited with
| the Baltimore committee. Mr.. Strong
also stated on cross examination that the
New York committee had issued circu-
lars offering to buy g. Division bonds at
90 cents on the dollar and also buy G.
bonds at 40 cents on the dollar, and that
while he signed the circular making this
offer to purchase S734,000 of B. bonds
at so cents on the dollar he had done
so without remembering anything about
it, and also with regard to the circular
offering to purchase $4,000 of G. bonds
at DO cents on the dollar, he did not re-
| member about that, but that offer was
| made by himself and the gentlemen CON