New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1904-01-09
SCHWAB STILL HAS BONDS
HIS COUPONS NOT C1SHED.
Nezo ShipbuiIding Hearing in Fore
closure Suit Starts.


pected to be a rival to that which has been
going on FOR many weeks before Examiner
Oliphant in this city. was begun yesterday be
fore John a. Shields, standing examiner in
The Criminal Branch OF the United States Circuit
Court in the Postofice Building. The hearing
before Mr.. Oliphant IS in tie suit brought by
minority bondkolGers for permanent receiver
Of the United States ShipDuilding Company. The
hearing before Mr.. Shields IS in the suit brought
by the New-York Security and Trust Company
and Charles n. Schwab against the shipbuild-
ing company and James Smith, jr., the tenn
porary receiver. 20 foreclose the 100000
mortgage on the Bethlehem Steel Companys
plant. which IS held by the trust company as
security for the S100000O0 second mortgage
bonds Of the siipbuilding company which went
10 Mr.. Schwab in company with many millions
OF shipbuilding stock in payment FOR the Beth
lehem shares which Mr.. Schwab transferred TO
the shipbuilding company.
The two hearings serve to show how compli-
Gated the shipbuilsing litigation has become. In
the first Samuel Unternyer represents the mi
nority bondholders. while W. D. Guthrie is coun-
sel for the shipbuilding company and Mr..
Scawab. In the second, w. NJ Cutcheou is
counsel for the New York Security and Trust
Company. while Mr.. Guthrie's firm represents Mr..
echwab and Mr.. Untermyer's firm represents the
shipouilding company and Mr.. Smith MI
Cutcheon and Louis Marshall, Mr. Untermyer's
law partner. examined the witnesses at the hear
ing yesterday
Mr. cutcheOn first introduced testimony as to
the signing Of the mortgage papers on August
II by Lewis Nixon president Of the ship
building company and by officers OF the trust
company L. Carroll Root third vice-president
or the trust company, identified the mortgage
papers and said the company had received with
them 100000 certificates of stock of the Beth
lehen Steel Company and 100000 in bonds
OF the shipbuilding company. The bonds were
delivered TO Mr.. Schwab. but the certificates
alsve remained in the custody of the trust COM
pany. The bonds were delivered on August %,
Iso2. TO Oliver Wren. Mr.. Schwab's secretary.
Q-You are familiar with Mr. Wren's signature7
al an he signed the receipts.
Lewis Nixon vice-presideTt Of the T75tteS Sfa+og
S sdsg COMPANY. and Frederick X Seward,
the delivery OF the bonds to Nm schwab? A
Q-Did you receive money from any one 10 pay
we interest on the bonds? A.-Frorn the United
sIa1 F, SAPouIidag Company check for $4,000
Ya And II your ;, eomPs "a paid out this money?
1893 on the issue Of 100000 OF bonds
Q-And you received a request for foreclosure
3-who signed it? &C; n sshwab 1t through
Tor $1,000 and a. Mcneil, for $4,000 INC
ODD you subsequently TO the request cause TO
cbe prepared and served on the United States Ship
building Company and James Smith. jr, its
iet aid H0'e OF foreclosure Of the mortgage A
Q-As a result suits were begun in this State.
They were.
Q.-And your company was not furnished with
scented for payment.
SAYS SCHwAB CAUSED DEFAULT
Mr. Marshall objected to the witness answer
ing this question. saying that Charles NJ
Schwab had wilfuy and wrongfully prevented
rba Sbi ri1u ing and he eba1o
Steel Company, which he controlled, from fur
nishing the funds TO pay coupons. and therefore
the plaintiffs could not take advantage Of this
act.
How many Bethlehem shares in the name OF
the New-York Security and Trust Company are
now in your vaults?' asked Mr.. Marshall on
cross-examination, and Mr.. Root said there were
2999G3 shares.
o.-And who holds the other shares"' Alive
shares each are held by l. NJ Mclvain Archibald
Johnston Lewis = NiTon joseph sep I p sf3 a Adoph
oi4oW diS you set the money the payment
OF ne PeoTFary o31IoiT r,n f2 the Reba Ia
Steel Company and Endorsed by the United States
Shipbuilding Company.
Henry F. Wilson. jr.. clerk of the trust
pany. testified that he examined the 10000 bonds
on August u. 1902. and saw that they all were
certified correctly.
GLOW many bonds did you examine when you
last saw them? A--Twenty-seven hundred in all
Monday and Tuesday a week
Some OF them at the Standard Trust Com
pany. and the others at safe deposit vault on
o.-Whose box was it at the safe deposit vault?
o.-Who opened the box for you? A-olver
Wren.
THE SHIPBUILDING SEAL
While the lawyers were examining the metal
seal Of the shipbuding company. an impress
OF which was introduced as evidence Mr.. Shields
asked: What have you there, Marshall-a gun?"
It's more dangerous than gun" replied Mr..
Marshall IT'S the seal of the United States
Shipbuilding Company
81 don't think it's dangerous now" remarked
Mr.. Cutcheon, because il has been fired and ex-
ploded."
William D. Eaton, an attorney in the Office
OF Guthrie. Cravath & Henderson, testified to
presenting August l, 1903, az the offices of
the United States Shipbuilding Company, and
TO the representative OF Mr.. Smith, 1898 coupons
OF the mortgage and collateral bonds OF the COM
pany for payment The demand was made to
Mr.. Degnan at No. 43 Cedar-st. but the wit
mess said there was no money forthcoming AZ
terward Mr.. Eaton took the coupons 10 Mr..
Root at the Office OF the New-York Security and
Trust Company. where payment on them was
also refused because there were no funds TO meet
the payment
,Q-Where did you get the coupons? A.-From
Q.-Mho IS he2 Al never saw him before that
cay: MT Ward told me that he had cut the cou-
,a 9mUnder whose direction cid you present the
Q.-Who olc he represent? Al do not know
Andrew o'Rourlke. stenographer in the law
ONCE said that he accompanied Mr. Eaton, and
hon