The Press., 1903-12-17

Suit was instituted at New York last week by Gardner Hall, Jr., of South Wilmington, in the circuit court of the United States, against the North American Trust company for the recovery of $225, 900 subscribed and paid by him as a member of the un- derwriting syndicate of the White Mountain Paper company. The White Mountain Paper company, which never went into active operation, is now in the hands of receiver, and reor- sanization committee is trying to put it on its feet. Mir. Hall in his com plaint says thst about June. 1901, the North American Trust company, with one Charles F. Locke, became pro- moters of the White Mountain Paper company, organized to buy up 400, GOO acres of timber land in New Hamp- shire and Maine, containing about 5000, 900 cords of spruce, poplar and other woods, suited to the manufacture of papers and to other commercial uses, for which purpose pulp mills were to be erected. These properties were owned by George B. James of Boston. In the promotion of this con- cern, according to the complaint, the trust company was to advance the money to enable Locke to induce in vestors to buy bonds and stocks The company was organized under the laws of New Jersey with capital of $l5, 900, 900, B, 900, GOO preferred and $lO, GOO, 900 common. An issue of $10, GOO, GOO bonds was authorized, secured by a first lien. The plaintiff alleges that he agreed to an underwriting plan that the agreement should become binding when $5, 900, GOO was subscribed for by parties satisfactory to the trust company. He was to take $25O, 900 par of the bonds, paying $225, 900 for them, getting them at 90 with a bonus of preferred stock. Four calls were to be made for the money, the first one of D per cent. when the 8, 900, 900 had been subscribed. On March II, MT. Hall says, he got letter from Oak leigh Thorn, president of the North American Trust company, stating that subscriptions in excess of the So, GOO, 900 had been secured and that the first payment was due on March 21, 1902. MT. Hall says he paid $62, 800 and sub- sequently the other payments were made. MT. Hall says he believes that the statement that the underwriting had been made was not true, "but that large amounts of said so-called underwriting and subscription of five millions were made by persons of no financial standing and against whom the agreement of subscription could not be enforced at law, and that the defendant in some instances knew that such subscribers were insolvent and financially irresponsible, and in other instances could have ascertained this fact by exercising diligence and making investigation, and that the character of said so-called under writing subscription so pretended to have been secured by said defendants. was not of such a nature as to justify the defendant in declaring the same operative or in making said call. In all, he says, he paid $225, 900 for $25O. 900 par value of bonds and 625 shares of preferred stock, due him as a bonus. He believes that had the defendant complied with the terms of the underwriting agreement this stock and bonds would have been worth $225, 900, but, are as matter of fact, he believes, of no substantial value now.