The evening times., 1898-10-18
RAILROAD deal BLOCKED
Baltimore and Ohio Trustees
Temporarily Restrained.
WALL STREET SURPRISED
Plan of Preferred Stockholders to
Force the Payment of Interest.
Application Filed to Require the
Receiver to Pay Set for Hearing
on October 81.


greatly surprised yesterday to learn that
the reorganization OF the Baltimore and
Ohio Rail Dad had been temporarily
blocked by restraining order granted re-
Gently in Baltimore by Judge Morris, of
the United States district court, sitting
in the United States circuit
According to information that has
reached New York, the trustees of the
consolidated mortgage Of 1887 have been
temporarily denied the privilege OF pro-
ceeding with the foreclosure even in the
States of West Virginia and Ohio. This
was earnestly desired in order that the
reorganization should not be seriously
delayed
The Baltimore papers have apparently
contained nothing about this restraining
order, which was granted to the preferred
stockholders. and the news has curious!y
been kept from getting out of that city.
A representative of one of the banking
firms referring to stay of proceedings
that had been obtained In a Baltimore
court temporarily blocking the reorgani-
zation professed not to have heard about
any such thing, and said the rumor must
be false.
Nevertheless the reorganization COM
mittee was represented at ali of the re-
cent hearings before the United States
courts and was necessarily informed of
what was going on. The ''tie-up" result
ed from an application made by the pre-
ferred stockholders to the court to in
struct the receivers TO pay the interest
on the consolidated mortgage bonds,
which vas due on August l, but which
had not been paid, as had been done dur
ing the previous two years
one of the principal holders of pre-
ferred stock is the State of Maryland. The
purpose of the application to compel The
payment of the defaulted interest was to
block the foreclosure and save the inter
ests OF the shares from being wiped out.
as might happen under the reorganiza-
ton.
This application was made on Septem-
ber II, and two days later-on Monday
the reorganization committee hurried 10
have the trustees bring suit for foreclos-
ure on the consolidated mortgage. on
which the last coupon had been defaulted.
Then the preferred stockholders came
into court again. and Judge Morris grant
ed stay, restraining the trustees of the
mortgage from carrying forward the
foreclosure proceedings until the court
had decided as to whether the interest
should or should not be ordered paid
If the receivers were compelled TO pay
the interest on these bonds there would
be no default and the ground of foreclos-
ure would be removed. If this could be
brought about the preferred stockholders
calculated that the reorganization plan
would have TO be radically changed. in
order the better TO suit the stockholders.
who have not yet unanimously agreed
10 the present plan
The trustees of the main stem mort
gage. which it was proposed to foreclose.
made an application in the interest Of the
reorganization to modify the restraining
order, so as TO allow the foreclosure pro-
ceedings to go on in West Virginia and
| Ohio. but the court, IL is said, refused
to permit this modification. The appli-
cation TO require the receivers to pay the
interest is set for hearing on October 81.
The evidence or testimony of the petit
toners, setting forth their reasons for de-
manding that this interest be paid. will
be taken today in this city. in a down
town lawyers office before a commits
| sioner. The petitioners claim that they
! have a very strong case. and they be-
| lieve that the court viii take their view
| of il. The interest which was payable
on August l. was s2S9, zoo, and it had been
regularly paid ever since the receivership
| until the last named date.
They allege that the company on Au-
| gust l had S2 600, 600 cash in the treasury
| and hence there was no excuse for nom
| payment. They declare that the interest
| on all of the main line mortgages was
earned, and hence there was no ground
! for the foreclosure. If the interest were
| paid the reorganization could not be put
| through without the unanimous consent
| Of -he stockholders. which. OF course.
might he difficult to get II II were oh.
] tanned it would very likely necessitate the
| offering of better terms to the stockhoid-
ers-hence the motive of the State of Ma
| rylamd in trying to block the plans of the
4 committee.
| A representative of the preferred stock
holders openly asserted that the default
on the consolidated mortgage was pur-
| posely made in order to facilitate the re-
| organization by foreclosure.