New-York tribune., 1903-06-16
NJ. S. R. LEASE SUIT BEGINS
L4U CLERKS DIRECTORS.
Court Questions ability Of Securities
Conn pany to Pay DiUidend.

The suit of minority stockholders OF the Metro
politan Street Railway Company to upset the lease
of the property and assets of that corporation 10
the Interurban Street Railway Company came up
in the Supreme Court yesterday. when Justice
Scott began the hearing of the action brought oy
Isdore Wormser, jr.. against the MetropohtaH "io
Interurban companies to enJoin them from cdli se
out the lease to have it declared unlaWIul anu
to compel the return of the property ana assets
delivered to the Interurban company 10 the 'ae'i'
politan Street Railway Company
Ex-Justice Charles L. Brown, with W. D. 1uth-
rie of Guthrie Cravath & Henderson ana Ed"alu
Lauterbach. of Hoadly. Lauterbach & Johhsoh'
appeared for the defendants, and Albert L. Shch-
ney of Stckney, Spencer & Ordway. ana Aioei-
SON. Pendleton & Anderson, for the piainti1
The answer of the Metropolitan Street Railway
Company says that the plaintiff suoscrloeu "
shares of stock of the Metropolitan SecuIlte9
Company under the privilege offered to the STOCK
holders, and receiving and retaining '"e SIC
thereby ratified and approved the lease anu -
estopped from contesting its validity. Inc iH
ban answer sets up the same facts
Mr. Wormser. information ana pehel ailese'
that certain persons Of whom are directors
of the NretronoIitan Street Railway Company. COM
bining with other persons, whose names ne ooe'
not know have designed and entered ii'o
scheme for the purpose of divertng poI'loii u
the earnings Of the Metropolitan Street Railway
C,o-onanv from its stockholders, and OF appiylhe
IN. earnings so diverted their own beneht ana
advantage. ..o
Henry Robinson, the general attorney OF the
Metropolitan Street Railway Company since 1870
tba fret witness said that he had held two shares
r &c stock continuously Mr.. Warren had toid
him there was to be some new plan 10 raise cai'.
for additional improvements, and ne presulheo
man was settled by the executive committee Mr.
Elkins Mr. Widener, Mr.. Dolan and Mr. Nreelahu
Mr. Robinson said about 100000 shares OF STOCK
were voted by the stockholders in favor OF ratiIy
ing the lease the Interurban leaving only l"pet
cent against and that notice OF the terms oi 'e
lease had been sent to all the stockholders
Mr. Brown raised question as to whether MI
Wornser was the bona fide owner of the 1000 shares
of stock on which he sued Mr.. Wormser tesuhed
that 1l5 shares of stock were in his name and go
in the name of his firm. He personally subscribed
the stock he held, and the 1lo shares STOOD IN
his name. Later he took the certificates to court
Orrin Root, jr, general manager of the Metro
poIitan system and director. holding lo0 shareS
said he was satisfied before he voted for the ex-
ecution of the lease that it for the best in
terest of the company and that the men behind
the Interurban scheme were fully responsive
These were Kuhn Loeb & Co. Mr.. Baldwin MI
Schiff Mr.. Haven and others whose names escaped
him
There were many considerations" Mr.. Root
said such as the unfavorable decision of the
Franchise Tax law, the possible effect of the con-
struction of the rapid transit subway upon the
earnings of the company the increased cost OF the
materials of construction, which all factors
that might to affect the earnings of the road
adversely, and the very strongest consideration was
the fact that the Metropolitan company in order
to insure ability properly conduct it's busl-
ness and the completion of the elevated
and subway work, should secure sufficient funds to
construct miles of tracks: should also have
some means to fund the floating debt, then over
s1 900 O0O so as enable the company TO keep it's
floating debt from becoming operating charge
and prevent the continuance of the per cent divf-
dend. which must have been the case If stocks or
bonds had been issued without guarantee on the
financial conditions of the company, when the mat
ter was taken up
After recess a statement of the earnings and
operating expenses of Metropolitan system for
the wear 1902 submitted and Mr.. Root said that
after the payment of the Z per cent dividend in
December 1902 there a deficit of s216.220 which
was made up by the lessee, the Interurban COM
pany.
Now. Mr.. Root said Justice Scott, taking the
witness in hand. Let understand this. The
Metropolitan Railroad had not been able to pay
Z per cent dividend; the Metropolitan Securities
Company took nothing but the securities and prop
erty the Metropolitan system had, and guaranteed
7 per cent. How did they purpose to do it? The
company also to advance s23.CpO000?"
I'VE believed the personnel behind the securities
company guaranteed that the per cent would be
paid: that the money needed for the development
of the Metropolitan system would be raised with
out cost to the stockholders of the Metropolitan
road
still don't see" Justice Scott said. 'how the
securities company could pay the dividend if the
railroad company could not.
The securities company would benefit eventually
and get its money back but it would take time.
The Interurban company owned ffty-nine miles of
franchises which had to be developed"