New-York tribune., 1903-08-18
TO SUE RECEIVER SMITH.
STATUS OF BONDS. ISSUE.
Neu- York Security and Trust Co.
Gets Permission.

The New York Security and Trust Company re-
ceived leave yesterday from Judge Kirkpatrick, OF
the United States District Court at Newark, to be-
gin suit against ex-senator James Smith, jr, re-
cever for the United States Shipbuilding Company.
to ascertain the status of the S0.000GO0 of second
mortgage bonds issued by the company William
D. Guthrie. counsel for the security company.
made the application, and counsel for Receiver
Smith did not oppose 1t strenuously
Mr. Guthrie first asked that foreclosure proceed
ings be allowed but Judge Kirkpatrick said ii was
/ not desirable that independent suits against
the receiver should be pending at the same time,
the suit of the Mercantile Trust Company of New
York trustee for the first mortgage, having been
begun. The court said, however. that holders OF
second mortgage bonds should be allowed to as
certain the value OF the respective bond issues of
the insolvent corporation. and modified order
finally granted by the court.
1T is evident that If foreclosure proceedings
under the second mortgage were authorized" SAID
Judge Kirkpatrick. mo would buy the prop
erty without first asce-taning just what the value
OF the assets would be after the sale under the
first mortgage OF SIG 000,O0) hs | taken place.
Mr. Guthrie said his clients had absolutely
interest in the issues in the first mortgage fore
closure suit They wanted to determine the title
and value of the various bond issues. He said the
mortgages given under different conditions
and the issue in each different. and therefore,
he could not see how the suits could be combined
Yet his clients contemplated intervening in the
first mortgage suit.
decree under the second mortgage until the first
mortgage sale had been made and he was in
formed as to the possible value of the companys
assets. or until all difficulties under the first mort
gage had been settled
The S10.0O0O0O of second mortgage bonds were
issued to Charles NJ Schwab in payment for the
Bethlehem Steel Works. and the mortgage given
as security covers all the property OF the ship
building company in the States where the sub
sidiary plants OF the corporation are situated In
he
Company to the court 1t is averred that August
/. 1893. interest payments overdue $4,000
of the bonds. The first mortgage was given by the
Mercantile Trust Company. of this city. trustee
for hondholders representing $l60o0,00 of bonds,
and this mortgage also covers all the plants Of the
United States Shipbuilding Company.
Receiver Smith told Mayor p. II. Ryan and
Alderman Edward Nugent, who represented
special committee of the Common Council of
Elizabeth, that he would do everything he can to
reopen the Crescent Shipyards Elizabethport
He said that negotiations pending which, if
successful. might enable him to order the resump-
tion Of work at the Crescent shipyards next week.
William Nelson Cromwell, of counsel for the re-
organization committee of the United States Ship
building Company, said yesterday afternoon
1t is the intention of the reorganization committee
the Shipbulding properties The FIRST and Second
mortgage bondhoiders acting together in the
matter.
Receiver Smith may come in and contest the suit
which we have brought, but we have doubt
10 the outcome The mortgages will be foreclosed,
the reorganization committee will buy in the prop
critics at the foreclosure sale. and then the com
commttees plan Mr. sehWab is not trying M to s set
the Bethlehem Steel Company away from the
United States Shipbuilding Company. He is acting
with us in this matter, and Will continue act
with in carrying out the plan. II is the nten-
tion of the committee weld all properties
gether into compact concern-one compact com
pany. The Bethlehem steel plant will be part OF IL.
All the bondholders. minority and dissenting
holders wei the others. will get a share. OF
course, under this action.
Mr. Cromwell made this statement after n meet
ing OF the reorganization committee yesterday af-
ternoon. held after the receipt OF the news that
Judge kirkpatrick, OF the United States District
Court. in Newark. had given permission TO the
New-York Security and Trust Company TO begin
an action against Receiver Smith. The Mercantile
Trust Company permitted some time ago 10
bring suit 10 fOreclose the first mortgage.