The Washington times., 1901-09-06
CITY And SUBURBAN SUED
Sensational Charges Against the
Management by Stockholders.
Petition for n Receiver and for Sale
of the Linc-Wnshington Traction
Interests Openly Accused of At
tempting to wreck the Property.


of the Line-WnshingtonT Traction
Interests Openly Accused of At
tempting TO Wreck the Property
The City and Suburban Railway. one OF
the constituent concerns of the Washing
ton Traction and Electric Company, was
yesterday made defendant in a suit in
equity filed in the Supreme Court of the
District which will probably result in
bringing the financial affairs Of the syn
dicate railways to a climax much sooner
than has been expected. Three of the
largest minority stockholders of the City
and Suburban Company. Charles L. VIII
liams, Stephen Gatti. and John +. Shea,
ask that a receiver be appointed for the
railway and that its affairs be wound up
and the railway sold. They charge that
the company has been grossly misman-
aged and alleSe that an effort has been
made by the Washington Traction and
Electric Company officers to wreck the
property financially. They so into a de-
tailed story of the alleged mismanage-
meIit, pointing out numerous ways In
which they assert that large amounts of
business have been diverted from the City
and Suburban to other concerns con-
trolled by the parent company. with the
and preventing it from meeting its obli-
cations. The petitioners further assert
that it is the intention of the controlling
company to defraud the minority stock
holders out of their interest in the prop
erty and TO gain entire ownership for
themselves.
This action on the part of the minority
stockholders OF the company is under
stood to have been in contemplation for
some months, in fact, since the failure
of the Washington Traction and Electric
Company to pay the interest on its bonded
Indebtedness in June last The filing of
the bill was hastened however.-it is stat
cd by the numerous suits Instituted last
week against the City and Suburban by
other concerns controlled by the parent
company. as fully described in The Times.
These suits were for the payment of de-
maEd notes representing sums borrowed
by the City and Suburban from the other
companies. Their object, it is asserted,
is to force the company into bankruptcy,
in the interest OF the syndicate manage
Tllent. The present suit has the same
ostensible object, but with the difference
that the petitioners in equity wish the
receiver appointed in their interest and
not for the benefit of the Washington
Traction company.
Yesterdays bill recites that John r.
Shea is the holder OF ics shares of the
stock of the City and Suburban; that
Gatu holds 355 shares, and that
Charles p. Williams owns 10 shares.
The Washington Traction Company, it is
said, owns 3o.56s shares out of a total of
5000 shares. Mr.. Shea is the largest
minority stockholder of the company and
the other two compIainants are among
the largest. There are somewhat less
than 5000 shares of the stock held by the
minority interest, of which nearly or
quite half are held in this city and the
remainder largely in Baltimore.
Inc Dill is accompa MED by copy of
tht last annual statement of the COM
paly. and the statement is cited as show
1h2 that during the year 1900 its earnings
Were not nearly sufficient to cover -ex-
penses. Its total receipts Were S235. .92s.2S
and its total disbursements including in
terest on its bonded indebtedness Of
81, 750.00o and the cost of maintenance and
repairs. amounted to si3S. .f97. 20
The bin then recites that This condi-
tion of insolency on the part of said com
pany and its inability to pay operating
expenses is due to the gross mismanage-
ment of said company by its board of
directors, and by reason of the relations
which il bears to the other street rail-
ways in the city OF Washington, District
of Columbia"
The most important part of the bill
if the recital of the alleged methods of
the Washington Traction Company in
defrauding the City and Suburban. After |
stating that the syndicate company owns
q large majority of the stock of the
and Anacostia railways, as
wei as the City and Suburban. and that
these companies have preserved |
their separate existence they are in fact
and governed By the same Of
fcers. the bin proceeds:
By reason of the ownership by said !
nm ri,
paDy of majority Of the stock in the |
defendant corporation. and by reason of /
its ownership of majority of the stock I
In the other two railroad companies a bovc
named the said Washington Traction and /
Electric Company, acting through the /
board of directors Of the defendant com
pany. has permitted the cars of the Me-
tropolftan Railroad Company and OF the
Anacostia and Potomac River Railroad
Company to run over the tracks of the
defendant company and to divert from
IF passengers which it would otherwise
larry. and a large amount of business
which IL wosild otherwise receive. and the
board OF directors of said defendant COM
pany has permitted the cars of the said |
lther railroad companies to use the tracks 1
Df the defendant company for an made
luate rental and has otherwise operated |
and managed the defendant road, not IN |
th.. interests of it's stockholders, but in |
the interest Of the other companies
named.
alGlllOn thereto the DodTO OF dl-
rectors of the defendant company and the
said defendant company itself have estab-
lished o system of free transfers with the
other two corporations above named, and |
with the Columbia Railroad Company, by |
" hich the defendant company is compelled |
to carry large number of passengers
receiving any compensation |
therefor and your complainants charge
that ii Is the intention of the board of
directors OF the said defendant company,
and the persons in control of its affairs.
to wreck the property Of the said defend
ant company and to destroy the value of
the stock Of the minority stockholders,
your complainants.
Later in tho bill. after describing The
law suits fled by the Washington Trs.c-
ton interests last week, above referred |
to. the complaint continues: Your com
piainants further aver that if the affairs |
Of the company were properly and 1udic- |
ieusly managed and If the road of said
company were considered in the interests
of its own stockholders, ii would be able, |
after the payment of all operating eN-
pcnses and the cost of maintenance and |
repair to earn sum of money more thdn |
sufficient TO pay the interest on its bond |
I'd debt and in that manner render all |
he stock Of some value but your com
claimants aver that if the defendant com
Dany and its board of directors and the |
said Washington Traction and Electric |
Company, which has entire charge and
ma IA t;errent OF it's affairs. are permitted
10 operate said road In the manner In |
which IL Is now being operated. and II
hey are permitted TO carry through the
,ollusiye suits above referred to, the
Of the complainants and the
stock which they own and for which they
paid many thousands of dollars. will be
utterly destroyed and the cornplainants
viii suffer irrcpara bic injury"
The bill states further that a petition
signed by large number OF the minority
stockholders Of the City and Suburban
=. q . |