New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1904-01-17
DEMANDS HIS BONDS BACK
{. III. CAV1N4UGH MAY SUE.
Schzrab's Laacyer Says He Is Out
side Courts Jurisdiction.

ford N Y had formally demanded the return
OF the shipbuildlng securities purchased and
owned by hiln-ffty bonds. two hundred shares
OF preferred stock and FIVE hundred shares OF
common stocl-which he had deposited with the
Sheldon syndicate. II is understood that If the
demand is refused he viii begin legal proceed
ings 10 recover the securities.
John W. Young also has taken the aggressive
having some time ago II now develops, served
formal note on the Sheldon syndicate, claim
ing virtually all the shipbuilding stock held by
the syndicate. and asserting that no reorganiza-
ton plan can be lawfully carried through which
does not acknowledge and safeguard his rights
and the rights OF all persons holding interim
certificates which they have received from him.
Asked regarding a rumor that the shiphuild-
ing proceedings begun before Judge kirkpatrick
in Newark last week would not be continued TO-
morrow. the date set by the Judge one OF the
attorneys for the bondholders' protective COM
nlittee said yesterday afternoon that the report
was without foundation.
Briefs IN reference TO three applications IN the
United States District Court at Newark in the
United States Shipbuilding suit have been FLED
with Judge kirkpatrick. The court Will decide
two applications AT Trenton tomorrow Inc
points involved whether the company SHAH
be allowed to amend its answer in the Conkiin
suit for receiver by confessing insolvency, this
AOiltneiOn pelllS CdiCuldlSu u AtiAC'S S-@~@
NJ. schwsb from further questioning before the
examiner: whether Charles NJ. Schwab shall be
made party defendant TO the Conklin petition,
and whether the Conklin suit shall be CONSOLE
dated with the other suits now pending namely,
those of the Mercantile Trust Company OF New
York. TO foreclose the mortgage of Slo'ooo.oeo
securing the bond issue, and the New-York Sc
curity and Trust Company. for the foreclosure
Of a SloO0o0oO mortgage. known as the Beth
lehem mortgage TO secure bond issue of the
same amount.
The complainants' brief filed by Samuel I'm
terrnyer and Henry wollman charges that the
interests behind the shipbuilding company are
working hamper Receiver James Smith, Jr-.
in the performance of his duties, and that in
some of the subsidiary companies there are men
who are drawing salaries at the expense of the
company's estate, and who administering
property in which they have no right for their
own private advantage The brief OF W. d.
Guthrie Charles C. Deming and Robert H. Nc
Carter, counsel for the company. alleges that
the only reason why the compliments coun-
sci should insist on continuing the hearing be-
fore the examiner, that insolvency has been
admitted. is that they desire to continue to fish
for facts Tor some Interior purpose. The COM
plainants' brief in general terms criticises the
{}strategy OF Mr.. Schwab's counsel in the pending
ants quite content TO take the risk. and
perhaps, since he has further examined the
question, his solicitude for the welfare and sue
cess Of the complainants is touching and has
brought about such a change of heart on his
part, that We may next expect confession of
the other charges OF the complaint and possibly
sn the end just plan OF reorganization. Mean
time the agreement made in open court should
be performed" the brief goes on to say.
II does not follow that there should be
decree issued in the Conklin suit at this time
and the only effect OF the confession is to with
draw that issue from the case. The duty Of
formulating decree rests with the complain
ants. and IL is for them, subject to the d.
rection OF the court, to propose its form and
determine when il shall be entered.
A number Of cases cited to show that
the joinder Of Mr.. Schwab as party defendant
would not Gust the from the courts juris-
diction. The brief argues against the conten-
ton that insolvency was the only issue before
the court. Mr.. Schwah," it says. lis properly
Joined, on the ground that so far as concerns
his ownership Of the bonds secured by the mort
gage TO the New-York Security and Trust Com
pany, and also the Bethlehem shares on which
he has a mortgage. il relates TO real and per
sonal property within the jurisdiction of the
court The relief prayed against him will be the
cancellation Of his bonds, the removal of the
mortgage and the enforcement Of the receivers
Hen on the Bethlehem stock" In regard to stop
ping the proceedings before the examiner, the
brief says
This should be allowed only on condition that
the parties now before this court cease defying
the orders of the court"
II is further held that after the question of In
soiVency is determined there still remains the
question Of fraud which the bulk of the testi-
fnony was being directed, and also the validity
rights and priority Of the various liens and
claims that are attacked in the suit, in the trial
or which the court has the right to bring in
other parties from time time by intervening
petitions, ancillary bills and other process
The brief charges that the order of the court
has been persistently eYaded: but the receiver
has been and is to-day excluded from the pos
session of important parts of the shipbuilding
company's property through the opposition of
parties IN control. las a result of such tactics
says the brief. some OF the shipyards are now
IN control OF vendors, of whom are
charged with having perpetrated upon the COM
pany the gross frauds that generally
conceded TO have been committed. They are
without restraint or control Of any responsible
authority, and az result absorbing the
estate in payment Of exorbitant salaries 10
barrass the receiver in the performance of his
duty, in the hope Of discrediting his admin
Of duty in exposing frauds charged TO have been
perpetrated-"
The brief of the defendants holds that If the
motion 10 file q supplemental answer should be
granted II would result in the immediate entry
of final decree appointing a permanent re-
ceiver. which would put end TO the testi-
rnony in the suit. because II would necessarily
grant all the rel-t framed in the bill. IL the
application should be denied and the testimony
before the examiner be continued. then it should
at once be determined whether or not Mr.
Schwab. who is charged with fraud, is a neces-
gary and indispensable party defendant to such
issue, and should be should not be made
9 party defendant says the brief The brief
argues that the charges Of fraud and misman-
sgement merely tend TO prove the ultimate
statement made by counsel in court that Mr.
echwao would appear 10 challenge the jurisdic-