The Jersey City news., 1902-01-13
ELECTRIC R. R. TROUBLES
Receiver Asked for the At
lantic Coast Company by
Holders Of Mortgages.

An application was made before Vice
Chancellor P.tney this morning for the
appointment of a receiver for the At,ans e
Coast Electric Company, a corporation
connecting the summer resorts OF flea-
sure Bay, Long Branch, Elberon, Deal,
Allenhurst, Lock Arbour, Asbury Park,
Ocean Grove, Bradley Beach, Neptune
City, Avon-by-th and Belmar. The
application is brought by holders of first
and second mortgage bonds. who declare
that their interest has not been paid.
The road was Incorporated in 1895 with
a capital of 100000, and executed a
mortgage to the Knickerbocker Trust CO.,
to secure 600 bonds of 81 900 each. max ng
bonded Indebtedness of 100000 in 1885.
OF these 500 bonds. are outstanding at a
rate of S per cent. interest due on May
and November each year
In the next year 1896 the company
executed another mortgage known as a
general mortgage, TO the Guaranty Trust
Company, subject to the lien of the
Knickerbocker Company to secure $500
bonds of $1,000 each. The interest for
these being in default the holders Of the
first bonds appointed a comm ttee con-
e,sting of Clement B. Newhold, Robert w.
Leslie and Francis r. Welsh to represent
them and the holders of the second bonds
appointed George W. Norris, Freeland G.
Hobson and Henry w. Tracy similar
committee, and these are the complain
ants in the bill for a receiver.
Counselor Albert c. Wall. of the firm of
vredenburgh, Wall and Van Winkle rep
resented the complainants and Mr.. r. v.
Lindabury the defendants
Mr.. Wall said. in stating the facts Of
the petition that $4,000 of interest due on
November / last was unpaid. He said the
annual charges were as follows
Rentals, leases, taxes, interest. ETC.,
s1S282O; net earnings, $l16,917; leaving a
deficit of $65 s03. There was also interest
due on the following sums:-Daniel
O'Day. $15, 600; H. H. Rogers, s1T5eoo, and
G. B. NJ Harvey, $4,000. There was an
attempt. continued Mr. Wall, on the part
of the stockholders to reorganize the com
pany and endeavor to make the bondhold-
ers accept security at a lesser value, Mis-
management on the part of the officers
of the road was another cause for re-
ceivership in this that the company had
paid about s5S,000 for the construction OF a
new power plant out of the proceeds OF
last summers business and other adj
yances and the result was the company
was without funds to pay its interest and
taxes. Summing up the committee of
bondholders declare that the interests of
the bondhelders are now in jeopardy by
reason of rnismanagement.
Mr.. Lindabury, in opposing the applica-
tion, said that there was no proof Of mis-
-l1f flaf
company couldn't get plenty of money
to run its affairs and there wasn't the
slightest proof of the eompany's insel-
yency-
In reply to this Mr.. Wall said that the
statement on the bill clearly sowed that
a receiver was necessary TO exhaust the
receipts of the company for its bondhold-
ers. In support of this he read a letter
from President Benjamin of the road urg-
ing immediate change in the committees
affairs and a plan to meet the company 5
debts at once or else legal action would
be imminent.
what benefit will a receiver be?' asked
the Vice Chancellor.
Mr. Wall read affidavits of members of
the committee of bondholders and insist
ed that the receiver wouldn't disintegrate
the road.
you must show that the directors are
making an improper use of their posi-
ton If they are doing just as wen as a
receiver and are not advancing their in
terests over other then cui bono? Show
me where they have misbehaved them
selves.
Mr.. Wall insisted that the stockholders
themselves, to use a slang phrase. said it
was up to the bondholders to do some-
thing. But counsel asked the Court for
leave to amend his bill and set out more
specifically the reasons why receiver
should be appointed.
TT may be that this road is overbonded
and overcapitalized, observed the Vice
Chancellor. SThat is the way big for
tunes are made now. They overbond and
vercapitalize and thus induce people to
put their money in it. I will give you
leave to amend and you must show what
these men have done in the way of mis-
management. Draw your order. The or
der of restraint is dissolved 1 don't
know what it is. Laug4ater.)
The case was adjourned to February 8
for hearing.
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