New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-07-01

legations is being pressed, and that the company
cannot expect to receive from any of the ship
ing interest and sinking fund charges; that, In
order to successfully continue the business of
the shpyards, substantial new cash working
capital is imperatively necessary. He also
states that efforts have been made to establish
a fixed borrowing credit for the company, but
that this has been prevented by the large
bonded Indebtedness of the company and that
the company is unable to use its credit to make
cash disbursements.
WHAT WOULD FOLLOW.
1t would follow from this that the defendant
company. being without funds with which to
pay its maturing obligations now presently due
and unable to raise money upon its credit TO
make said cash disbursement, and il being i'm
possible for any one of the shipbuding plants
TO contribute any money toward the payment
of any of these charges, default must be made
thereon.
BY the bill of complaint the defendant was
called upon TO answer the charges in relation
TO insolvency which were therein set forth, said
answer to be without oath. this being expressly
waived. Such an answer has been filed, though
not necessary at this time, and it is now before
the court.
It contains no statement of assets and la
bties of the defendant company. neither does
IL deny except in most general way, the speci-
fc charges contained in the bill in regard to the
amounts which coming due within a few
days and the inability Of the company to meet
them.
Ine aIlQ2NltS annexed 10 ana InduS pdAl VI
the answer show that these denials are evasve
and if taken literally they would have ten
dency TO mislead the court. AS for instance:
Mr. Gary admits the truth of the statement at
tTibuted TO him in the compliments bill thar
the bills payable of the shipbuilding company
maturing between now and August next, in
dependent of maturing accounts current, are
S410021 IL but says that this liability arises
from an Endorsement Of the notes of the con-
stituent company, and that all of the maturing
and pressing accounts referred to in the bill ana
mentioned in his statement therein referred 10
are obligations incurred by the constituent com
panies and are not accounts chargeaole 10 the
United States Shipbuilding Company, nor that =
IS liable for them, and adds that there are no
notes bills payable outstanding of any KIND
against the United States Shipbuildlng Com
pany.
vice president and general manager of the Bath
Iron Works. Limited, that, in order to carry on
the ordinary business of that company, which is
of the constituent companies OF the United
States Shipbuilding Company, they have been
obliged to borrow money from local banks upon
their promssory notes bearing the Endorsement
OF the United States Shipbuilding Company. So,
too, Macy Smith Chace, the vice-president
of the Crescent Shipbuilding Company, OF Eliza
beth, in his affidavit says: THE Crescent Snip
building Company has been able TO finance It's
business with assistance from time to time
from the United States Shipbuiding Company
by the lending of its credit through Endorsement
OF the company's notes.
It also appears TIT the defendant company
is the owner of practically all of the capital
stock of the subsidiary companies, and that 1t
is the actual owner of the plants where the
the organization of the subsidiary companies
is maintained merely for the purpose OF re
tanning contracts which have been AWARDED 70
them and which are not transierrlpIe; ina
the properties where the business is conducted,
owned by the defendant company, are leased
TO the subsidiary companies upon leases WHICH
are terminabe upon five days notlce .
Under these circumstances the liability of the
defendant company for the debts or the SUD
sidiarv companies and the notes upon which
they are Endorsed is not a secondary one ana
does not arise from any other fact than that in
x1,a r4in Of
panies acted the agents OF the de1ehdant
company in the procurement OF money. II IS
not sufficient that the defendant answer the
charges and allegations Of the bill literally; IL
must traverse the substance of each charge spe-
ciically and not by vague and general denial;
and when ii has in its possession the means Oh
obtaining a particular knowledge of the matter
specifically charged in the bill. 1t snoulo glE =;
the court the benefit of its information. II 1t
fails TO do So it may be fairly presumed that a
truthful statement would be prejudicial TO IT'S
interests. Weighed in this scale the Inaterla4
and controlling facts which are fully and clearly
averred in the BILL and not properly denied III
the answer, must be taken as confessed
DOING NOTHING TO RELIEVE COMPANY
am of the opinion, therefore, that the de
fendant company is undouptedIi,y l1soio eIr,'
What the directors doing to reneNe the coH-
pany from its embarrassment? So far as ap-
pears from the papers before us. nothing
II would appear that the directors of the COM
pany have abdicated their powers and that the
company is drifting along without any guld-
ance Not only are the directors not striving to
relieve the company from its embarrassments.
but they are advising the stockholders to sub
nit TO ruinous eXtortion TO procure present
funds and threatening foreclosure to those bond
holders who refuse 10 relinquish the security or
their mortgage
COMMENT OF Mr.. SHELDON.
George r. Sheldon chairman of the reorgan-
tzation committee OF the United States Ship
building Company, said yesterday when word
was brought to him OF the decision of Judge
Kirkpatrick to appoint receiver:
81 don't see how the appointment of a receiver
will interfere with our going ahead with our
plan of reorganization" The statement Of Mr..
Sheldon is taken to mean that the reorganza-
ton committee will work in harmony with the
receiver.
Samuel Untermyer OF counsel for the security
holders who had applied for the appointment of
a receiver, said last night:
Il do not believe that it will be possible for us
to agree upon man. The bondholders will now
be invited to join together in effort to rescue
their property from Mr.. Schwab's attempt at
condscatioTl. We believe that the receiver will
he able as a result of the examination OF the
books by impartial accountants, TO prove that
the shipbudng company has earned more than
enough TO pay interest these bonds and that
there is being withheld from it by the Beth
lehem Steel Company accrued profit which. If
rroperly applied would satisfy all pressing OBJ
legations These moneys. moreover, have been
withheld in the attempt to precipitate fore
closure.
I'VE believe that. with the cooperation of the
bondholders foreclosure can be averted and
their securities restored to substantial values
The bondhoIders have been misled as to the
comparative values of the shipbuilding bonds
and MI Schwabs steel securities One has