Omaha daily bee., 1903-02-13
UNION PACIFIC. LOSES CASH
Court Decides that 100000 Held by
Boston Trust Company Must
Go to Government.

BOSTON. Mass, Feb 12.-In the United
States circuit court today Judge Colt de-
cided that the entire fund in dispute be-
tween the federal government and the
Emergency Loan Trust company should
10 to the United States. The amount is
5000 900, now in the hands Of the American
Loan 6 Trust company Of Boston.
The decision is believed TO finally settle
the long controversy between the United
States and the Union Pacific railroad, for
which the trust company acted as trustee.
In his decision Judge Colt said:
This bill is brought by the United States
against the Americsa Loan and Trust COM
pany, trustees, and the Union Pacific Rais-
way company to determine the rights of a
trust fund.
on July s, 1885 the Union Pacific. as sue
cessor to the Kansas Pacific Railroad com
pany, executed a trust tndenture to the
there now remains IN the hands of the
trust company $5S9, ,291. with accumulatlons
from December a. 1900. The only claimants
to the fund are the United States and the
Union Pacific Railroad company, and the
only question is whether. under the trust
whole fund, or whether u should be dis
tributed pro rata and without preference
between both claimants.
At the time the indenture was created
there existed certain mortgages and Hens
Railroad company. This included the frst
I
and the consolidated mortgage.
The first mortgage was a prior leh on
/ the railroad extending vest from KANSAS
Z city 5g8 1916 miles. The United states
/ subsidy was a second hen and the con-
| solidated mortgage a third len on u, Ihe
I gage also covered other property belonging
/ to the railroad company.
/ The purpose OF the trust indentures was
/ the creation of sinking FUND for the pro-
/ lection and further security Of these mort
/ cages and lien creditors Of the Kansas
| Pacific Railway company. Inc nrst mort
sage bonds having been paid in tuIl undeI
| foreclosure proceedings the only remalf,lns 9
| benefclaries under the trust being the
! United States and the Union Pacine aii ha,i'
| dated mortgage bonds. -,
! The Union Pacific was under no legaI
| or moral obligation to create this trust
| II was an entirely voluntary act. The
| property conveyed to the trustees under
the indenture was not embraced In any
| The question for our determination is not
| what might have been done, but Wha'
! the donor saw fit to do.
! BY the terms of the article of the in
denture, the fund was created Tor tne
prosecution and further security
| Kansas Pacific Railway company, having
| priority over the subsidy bonds.
Second-For the protection and turthei
security of the United States In respect ol
I the subsidy bonds.
| Third-For the protection and further se
curity of the consolidated mortgage BONDS
1t will be observed that this is the ordei
of the existing liens on the railroad prop
erty Then follows the provision that th'
fund shall be applied TO the payment OF th'
foregoing according to the principle o.
! equity to the end that all the Hen o
mortgage creditors might be credited
thereto in due order. -,
According to the natural reading or tmhl' m
article, IL appears to have been the IN
tention of the donor that the status OF TN
benefciaries in the original security shouiS
be preserved in the distribution OF I'M
further security fund; In other words, tina
this fund should be subject to the SAM
terms and controlled by the same prinei
ples Of equity as were applicable 70 I'M
prior existing security to which 1t wal
supplementary -.
titled as a preferred creditor to this entir
fund, by reason of the manner in whici
/ they are named in the trust indenture AM
by reason of the terms in which IL /
directed the trust fund shall be applied
/. A decree may be prepared directing IN
payment to the United states OF the run
OF $5s9. .2sl and the accumulations thereo
now in the hands of the American Loan
. Trust con pany, trustee, after deductin
therefrom Its proper expenses and dis
| bursements.
in these proceedings are reserved until IN
! settlement of the decree.