The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1899-07-04
THE MONON LITIGATION
LOUISVILLE BANK ASKS FOR RE-
CEIvER FOR THE ROAD.
Charges Of Manipulation and Misrep-
resentatfon tn the Fed
eraI Court.

the Kentucky National Bank of Louisville
In which a receiver is asked and a decree
that the judgment and order OF sale FORM
erly rendered Is erroneous. The defendants
In this suit are the Louisville. New Albany
& Chicago Railway Company, the Farmers
Loan and Trust Company and John III.
Barker, trustee, the Central Trust Com
pany Of New York and John III. Stotsen-
berg, Of Indiana, trustee. the Central Trust
Company of New York and James Murdoch,
Of Indiana, trustee, John T. Mills. jr., and
Frederick p. Olcott, of New Jersey, Henry
w. Poor and Henry c. Rouse, of New
York, and the Chicago, indianapolis &
Louisville Railway Company. The plaintiff
owns thirteen bonds OF the Beattyville Com
pany which were part of those issued to the
Central Trust Company July 1, 1882 and
which are guaranteed by the Louisville,
New Albany & Chicago Company.
The complaint says that on April Q, 1870,
the L., N. A. & c. Company filed bill In
the United States Court in Kentucky, and
on Jan. q, 1899. a supplemental bill was
filed In which 1t asked that this guarantee
be held to be illegal. The Circuit Court
so ordered and the United States Circuit
Court of Appeals OF the Sixth district re-
versed this ruling and the Supreme Court
OF the United States agreed with the Court
Of Appeals. The ruling which the Supreme
Court affirmed was that the plaintiff is
bona fide holder of eight bonds The other
five bonds were purchased from w. w.
Jenkins, who bought them in good faith.
and therefore the plaintiff is creditor in the
sum of $4,000. The complaint then states
that on Aug. "A. 1896. John T. Mills. jr.. took
a judgment against the road, and on his
application the court appointed w. II. Nc
Doel as receiver for the property. Mills
claimed to be creditor in the sum of 1884,
11.35. but, the petition charges, he was
secured creditor and held at the time securi-
ties of greater value than his claim. He
has since been paid in full. the complaint
says, and IL further charges that these pro-
ceedings were solicited and procured by the
railroad company or its board of directors,
including Samuel b. Thomas, who was
president, and w. III. McDoel, who was vice
president, for the purpose of hindering and
delaying payment of the unsecured credit
ors. and 1t was not brought in good faith.
On Nov. II, 1886, the Farmers Loan and
Trust Company filed a petition to foreclose
a mortgage for $10.000,00O. and on the same
day a petition was also filed by the Central
Trust Company to foreclose its mortgage.
The cases were consolidated and the de-
cree was entered on Jan. e, 1897. which, the
complaint states, was before there was any
right to have it done and without bringing
in the unsecured creditors In explanation
of this claim the complaint states that the
agreement and one of the conditions of the
mortgage was that in case of the default of
interest proceedings were not TO be inSti-
tuted until six months after the date OF
such default of interest The complaint
charges that these proceedings were insti-
tuted within five months of the date Of de-
fault Of interest and therefore should be set
aside.
THE CONSOLIDATION ILLEGAL.
The complaint then takes up the consolida-
ton of the Louisville, New Albany & Chi
cago and the Chicago G. Indianapolis Air
line companies. 1t says they attempted
to consolidate on July II, 1881, but the latter
road was organized under the laws OF Illi-
nois and under those laws, it was forbidden
them to consolidate. The claim is made
that the pretended consolidation is null and
void. Stock OF the consolidated roads was
issued and this Is claimed to be void. On
JAM !. 1885, a mortgage was placed on the
the Farmers Loan ard Trust Company. and
this Is claimed TO be void. Subsequent mort
cages were given to the Central Trust Com
pany and one to the Farmers company for
So 600 600 and it is claimed these constitute
no lien. The plaintiffs claim that the prem
Uses In Illinois cannot be covered by these
prohi kasr consolidation, and that such
premises should be held to be general as
sets for the benefit Of the general creditors.
Prior to the fling OF mortgages. the COM
plant recites, plan of reorganization was
agreed upon and a committee consisting OF
Olcott. Poor and Rouse was appointed to
buy in the road and to issue new securities
secured creditors. but which would not pro-
vide any way for the payment OF the un-
secured creditors In this action, the com,
and concealed the fact that he was not a
general creditor but was really secured
creditor, and he pretended to represent the
general creditors OF the company
THE INCREASE IN EARNINGS.
The total amount of interest past due on
the mortgages foreclosed is said to have
been only S232 477.12, and the complaint says
the net earnings. under proper management
and in reasonable time, would have paid it.
The bill charges that John T. Mills. jr., did
not represent the true facts TO the court, but
that he assisted in procuring "a sale which
was not necessary. The statement of earn
ings from 1892 to 1896, as included in the bill,
is as follows:
For 1892 gross earnings, S,112,107.7 net
earnings $s97. 159 40; fixed charges 1881, PAS
surplus. SIS, 91461.
For $685. gross earnings, s.. 400 SIS. 80; net
earnings. S,135. 022 80: fixed charges, 1884,
s4o55: surplus. $1S0,1S2 80.
For 1894, gross earnings, 50, 19o, So. as; net
earnings. i,07, 271.7s: fixed charges, $see.
2Ss As: surplus. 77,9s5.33-
For 1926, gross earnings, $3.145.614.61: net
earnings, H074, 80: fixed charges, 81 004,
$500 surplus. se9.H7.66.
For 1896. gross earnings. s., 362. 72-5s; net
earnings. 81. 1S2, Is: fixed charges $,019,-;
4s6.6S. surplus, Sl62, S794S
The figures are taken the complaint states,
from statement made by the committee
on reorganization before the foreclosure
proceedings were taken, and had the court
known of this statement and the earnings
no sale would have been necessary. The
plaintiff then charges that Mills and the
officers did not tell the court of the state
ment. and that they did not apply the net
earnings OF the road TO the payment of inter-
est but that. without any objection from
them, they allowed an order to be made by
the court on Nov. "a 1896 authorizing Nc
Doel. sss receiver. to borrow 100000 to be APP
piled to bridges and general repairs. the d.
rect charge Is made that the earnings were
allowed to be diverted to bring about the
foreclosure proceedings The plairtiff then
says that on Jan. %. 1897. ii filed an inter
vening petition in the foreclosure case. and
was admitted on its own behalf. The Louis.
willie Trust Company also filed petition and
claimed collusion in the foreclosure proceed
ings but the lower court held against its
admission. holding that was subsequently
reversed by the United States Supreme
Court The petition asks that the former
decree may be held TO be erroneous and &c
have failed because OF the failure OF those
interested to make full disclosures and be-
cause OF the agreement between the bond
holders and stockholders to destroy the in.
terests of the unsecured creditors. IL fGrthel
asks for an accounting OF the earnings OF
he d.. H. 90