The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-12-22

CrOss-COmplaint to Set Aside the
Eastern Mortgages.


CrOss-COmplaint to Set Aside the
Eastern Mortgages.
Attorneys Gates & Hume, representing
second-mortgage creditors, have filed
cross-complaint in the Krag-Reynolds liti-
cation in Room 8. Superior Court The
cross-complainants are the Southern Cali
fornia Packing Company Of San Diego;
the Portland Packing Company. Of Port
land, Ore; Moore & Brady of Baltimore;
the Hudnut Company, of Terre Haute: the
Illinois Packing Company OF Hoopeston,
ILL.,, and Morse Brothers. These firms have
merchandise claims against the insolvent
krag-Reynolds Company aggregating about
$1,000. The defendants named in the cross
complaint are the Krag- Reynolds Company,
Lafayette Perkins and John L. Sheldon,
trustees; John Reagan, assignee; the West
ern National Bank, of New York; National
Bank of the Republic, of New York; Chemi-
cal National Bank, of New York; National
Banking Association, of New York; Central
National Bank, of New York; Chemung
Canal Bank, of Elmira, N. Y; Bank of
America; of New York; Importers and
Traders National Bank, of New York, and
Arbuckle Brothers.
The purpose of the cross bill is to deter
mine the liability of the Krag- Reynolds
Company in the matter of the New York
bank Indebtedness, which includes the claim
Indebtedness is $4,000. On Dec q, 1897, the
krag-Reynolds Company executed two
mnortgages to secure their, creditors. The
New York banks and Arbuckle Brothers,
who, II is claimed hold the notes of the
Krag-Reynolds Company for $4,000, We're
made preferred creditors under the second
mortgage. The claimants named in the cross
bill were also place in the second mortgage,
but by the terms of the instrument they
could not recover until the preferred credi-
tors We're paid Gates & Hume, in behalf of
their clients, are now asking that the notes
held by the New York banks and Arbuckle
Brothers be declared null and void as
against the other creditors, and that the
$4,000 named in the mortgage be declared
no part of the indebtedness of the Krag-
Reynolds Company. The attorneys claim
they will show that the loan Of $150,OO0 ne
gotiated by Charles M. Reynolds, president
cured for his own personal benefit and that
the Krag-Reynolds Company received no
part OF the money The attorneys say,
M: Reynolds kept his own private account
with the New York banks that w. A.
krag, vice president and general manager
secretary, knew nothing about this New
York indebtedness until they were called on
to execute the mortgage. 1t is also asserted
by the attorneys that the directors of the
company never authorized Mr.. Reynolds 10
borrow this money and that the transaction
was without the knowledge of the direc-
if it is shown that Charles M. Reynolds pro-
cured this money on his own responsibility
and for his benefit. the indebtedness cannot
be charged to the Krag-Reynolds Company.
Notwithstanding it was borrowed In the
name of the company. The cross bill asks
that an investigation be made of these
transactions and that all books, papers,
checks or drafts in the hands of the RECEIVE
er be brought into court for this purpose.
1t is shown that should the cross bill be
successful in court in setting aside this New
York Indebtedness, it will inure to the bene-
nit of all the real creditors, and it is asked
that they be required to assist in paying
the attorneys fees and expenses of the
action Gates & Hume say they are hopeful
of a favorable decision in the matter The
attorneys are of opinion that should the
cross bill be sustained and the court should
set aside the mortgages as prayed in the
suit brought some time ago by Assignee
Reagan, there will be a distribution of at
least s. per cent among the creditors. The
Krag- Reynolds litigation has been set down
for trial on JAN 20. Charles NJ Reynolds
the president of the company, is yet absent
from the city, and is said to be in Cali
fornia