The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-12-14
An Interesting Legal Fight.

The Merchants National Bank of Balti-
more has begun suit in the United States
Court at Toledo against the Ann Arbor Rail-
road and Wellington r. Burt. The bank
alleges that while Burt was receiver of the
road, through fraud and gross deceit, he
received an order of foreclosure and sale of
the road and formed a syndicate to buy in
the property, valued at $10,0O0,00O, for two
million. The petition AYERS that, while ie-
ceiver Burt formed a syndicate to buy
bonds and then sold them at an advance.
1t charges that the purchasers of the road
at once bonded it for 81, 10000, and issued
100000 common and preferred stock, and
asks the court TO vacate the order of fore
closure and sale. The Baltimore bank is a
creditor of the road.
The petition takes up the matter of the
foreclosure showing that in 1895 the Craig
shipbuiIding Company applied for a receiver
and that Wellington r. Burt was appointed.
The road, according to the plaintiff, was in
good condition, and that Burt in an inter-
view with the prospective buyers of the road
and those who held stocks and bonds of the
company, and some of whom afterwards
formed a syndicate and purchased the road,
while he was yet receiver, represented that
the road was in very bad condition, saying
10 them that they had no road at all; all
they had was a couple of streaks or rust
running across Michigan, and a part of that
was under water; that he would not put his
money in it, for 1t was not worth cent"
The petition states that Burt recently in
spected the road and knew its condition, ana
distance from Toledo took his word for it,
and believed his statements to be true. 1t
sale of the road. and his representations
to the stockholders, and also that he pur-
chased in his own name large block or
90 ft1sa 0V1Nr
agreement with syndicate to purchase the
road of which he was receiver, depressed
the market value of the property in order
that he and his associates might purchase
at the lowest possible figure; that some Of
the bonds purchased while he was acting as
receiver We're sold at an advance, and that
he fraudulently retained the profits for
which he should have accounted in his re-
port as trustee of the property. The bank
alleges that the property at the time or
the sale was worth fully $l0,0OO,OO0, but the
syndicate selected one r. G. Martin TO Duy
It, and 1t was sold at $2,623 900, the sale
being confirmed by the court on July 8, 1893,
after which Martin conveyed the prop
erty to the present company. ana
stock and bonds issued by the said COM
pany was distributed to Burt and his assoc
ciates in proportion to their respective IN
terests in the purchase; that If Burt had
honestly and conscientiously exerted himselt
he would have realized fully ten millions
for the stockholders in the sale. To prove
this the petition shows that Immediately
after the sale the company issued bonds on
the road to the amount of S7,00o,OO0, which
were secured by a mortgage and issued COM
mon and preferred stock to the amount or
$4,000. and that Burt himself became a
large holder of the stock, and is now d.
rector and president of the road Also, that
the amount for which the road was sold was
absorbed by the preferred claims in decree
against the road, and the general creditors
and stockholders got nothing on account
of the amount due them. Burt is also
charged in the petition with buying valuable
property while acting as receiver and re-
selling it and retaining the prohts which
should have gone TO the company.