New-York tribune., 1898-01-12
RAILROAD INTERESTS.
BONDHOLDERS WANT TO INTERVENE
PETITION IN A SUIT BROUGHT BY J. p. MORGAN

RONDHOLDERS WANT TO lNTERN ENE'
prrrrIoN IN A SUIT BROUGHT BY J. P MORGAN
q 70 AGAINST UNION PACIFIC RECEIVERS.
1udee f. Henry Iacombe, OF the United states
Circuit Court listened for more than three houfs
Yesterday afternoon to arguments on pet'uon oS
holders OF certain bonds guaranteed by the union
Pacific Railroad Company for permission TO inter
yene in suit brought by j. +. Morgan q Co III
that court against the Union Pacific Road and It's
rooeivers 10 secure the sale OF securities or the
road ~ the par value OF 81 10000 and the esti-
mated market value OF about SlbUoVV. Ihls sae
was TO be held to-day. but In the course OF the
hearing it developed that It had been postponed
until January g.
Roger Foster and ex-Judge George H. feaman
onreared for the petitioners and Victor Morawetz
ana Francis Iynde Stetson for j. p. Morgan Co..
the trustees Frederic r. Coudert and L. Enery
Ande-son two OF the Union Pacific receivers. were
also present.
Mr. Foster who made the principal argument FOR
the petitioners declared in opening that practically
ALI the unsecured creditors OF the road were ex-
cluded from the benefits Of the reorganization. and
cited several cases especially that Of the railroad
company against Howard Ia case In the Ohlted
States Supreme CourD, In which 1t was he'u 'Hal
II the stockholders Of a railroad got anything on
reorganization they must hold It in trust for the
unsecured creditors. The holders of the collateral
trust notes ne on. were to receive. beside the
fuu amoun. of their respective holdings, bonus
Of Is per cert in preferred stock OF the new corpora
.lon There was due on the collateral trust notes
the sum OF $31s300); and Mr. Foster read list OF
securities held by the Union Pacific asserting that
they could be sold for FAR more than the amount
due s3lSSOoo There could be no doubt he contin-
uei that trustee should protect the interests OF
mortgagors as We'll as of mortgages
Under the first collate trust agreement, exc
cuted in 1891" continued Mr.. Foster. "Drexel. Nor
gan & Co made trustees for US; and what
we object 20 is that after obgating themselves
10 us to sell for the highest possible price they
should now try to buy FOR the lowest possible
price" He objected strenuously to the authority
given the trustees both to conduct the sale and 10
bid al It. Again, IN violation OF the usual custom
at auction sales he said, the trustees had not d.
v!Ged the securities into small lots. thus allowing
small Investors opportunity to bid. and giving
themselves an alleged unfair advantage. II the de-
cree were not altered, the rights OF unsecured
creditors wouIa pe G1t on VINE tne soocnnoIurS @
creditors. would be amply protected.
Then there was read ii statement signed by the
receivers In which they said that for the last
three or four weeks they had been negotiating for
secuTe handsome surplus. which should be de-
voted TO the benefit o. the unsecured creditors
further instruction from the Court. and said that
the value Of most OF the securities was much less
than was generally supposed.
Victor Morawetz. who appeared in opposition TO
the petition for Intervention, suggested that if
any Intervention were allowed It might be made
in the foreclosure suit. He read long affidavit
ly Charles II. Coster. Of j. u. Morgan & Co. in
tIe course Of which the statement was made that
the Reorganization Committee had voted to adjourn
the sale until January 2.
T. Ellery Anderson then made statement. CIV
Ing IN deta. the value Of the several classes OF
securities held and telling how the collateral trust
note Indebtedness had been decreased. and again
saying that the receivers were entirely neutral
IN this proceeding
Mr. Norlwetz resumlng his argument denied
that under the creditors agreement OF 1881 preXei.
Norgan AZ co. made the sole trustees the fact
hing that n trust deed had been made TO COM
mittee composed OF J. Perpont Morgan. John a.
Stewart and other hnancicrs. He went on to OK
main the oteholders agreement. saying that at the
lime Il was made the outstanding notes amounted
to more than Ss00O,O0c. and described the offer
made the notcholders by tho Reorganization Com
n,ittee whereby the notehoders would receive
II ner cent in preferred stock as consideration for
possible delay of five years In getting their
mopey in reply TO Mr. Fosters objection to j.
p Morgan & Go. conducting the sale, Mr Morawetz
sa,d that his clients perfectly willing TO have
The sale conducted by the special master alone
Mr. stetson said that II the Morgan irm had not
'sr,ed 70 act as trustees. but had themselves
lon, the whole sum involved. there would nave
heen no criticism Of their course; and they might
have done that. - A., ,o.. A,.
Iudre Iacombe will hand down on Moiday his
decIsion on the motion for intervention