The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1904-11-01

| of the court in said cause. marked
exhibit K, which are hereto annexed,
the allegation being that the sale Ger.
tificates were issued illegally. without
notice to creditors and that they are
! invalid and void as a prior lien AGAINST
creditors and bond holders
con their face receivers certificates
are first lien on the property in |iIui-
daton.)
| 1t is also alleged that at the time
of the receivershin order the contrary
was the holder of valuable options iii
| timber lands which had been secured
at low rates ana had greatly en-
HANGED in value: that on the applica-
ton of the receiver. the grounds st3teG
being that it was necessary for the
company to take up these options, the
court on March 3 1908. issued to ed
wards receiver. an order permitting
him to issue certificates f-r $20,OoD.
What of the Options?
After obtaining the $4,000 of GER
tificates that Receiver Edwards in
some way disposed of $4,000 of the
same but that he failed to apply the
certificates for the purpose for which
they were obtained and that compare
lively few if any of the options nave
been taken up, but. instead of e>.er-
cising in the interests of his trust the
power to issue the certificates. he per-
mitted the options to expire. cor
poration in which he is interested ac-
curing many of the more valuablG o.
the same.
Other Receiver Certificates.
That on the 22nd of April. 1908. The
court permitted the issue to the Car }
na-Northern Railroad Company. the
original complainant in the suit, We
ceiver'S certificate for $2,34l.If 1ll
fNrin tn
receivership, the said railroad beng
only a common creditor without altV
prior lien: and that the said Edwards,
being receiver of the railroad as Wen
as the saw mill company, was seek tS
TO prefer the claim out of one trust Tor
the benefit of another trust or Whlch
he was receiver: and that on May -
1903. the receiver was permitted -
issue TO Mayer and Co. certificates IN
the sum of 50 727.46. said Mayer ana
Co being only common creditors u
the company. the purpose pelhS -
give them a reference.
That on the same day authority -
issue certificates for $2,912.2U was OBJ
tanned bv the receiver to pay to various
nersons. common creditors of the ROAD,
iosses which they had sustained p9
,.eason of the delivery by the ROAD 10
the Lumber Company or various pll!s
of goods which had been shipped win
hill of lading attached, and also va
rious certificates aggregating So Z.zO
which went TO parties VINO had uls-
counted scrip paid out by the com
pany for labor.
Dealt in Own Certificates!
All of these certificates, alleges the
complainant, are illegal and Vold az
against the trustee or the bondholu-
ers the same without exception having |
A,1N.,
had no prior lien upon the company !
that they were applied for by Edwards
with full knowledge of the fact, and
that. in dereliction of his duty ana
trust, he by said act induced the court
to issue the certificates for the pur- |
pose of granting preferences 10 the
PARTIES receiving them; and that a1tel
they had been so issued and declared
to be a lien above all other creditors
unon the assets of the defendant cor |
roration, some of them were purchds- |
cd at a discount by the said Edwards.
receiver and his associates, notably |
one T. C. McNealy, who is superln-
tendent of the mill under the recelv- |
ership. and that IN issuing said certln- |
Gates, which they believe to be prior
hen upon the property. Edwards, Nc
Nealy and associates hoped to acquire
the property at great sacrlhce.
Dissection OF FRONT.
After alleging that the receiver is in
competent and negligent in the dis
charge OF his duties the bill alleges
that he organized ut Marietta, near
the company of which he is receiver.
a corporation known as the Builders
Lumber Company which he permitted
10 take up the expiring options or the
southern Saw Mill and Lumber Com
pany Notwithstanding the issue Oh GER
tificateS for the purpose or reducing
said options to possession, ana tnat
a tramway has been built from the
one company to the other Win the
purpose of the selling logs to the lhsol-
vent corporation by the newly formed
company-the receiver beng thus IN
the position of contracting as receiver
tor the purchase of logs from a COM
many of which he is president; ana
That his permitting the Builders Lun-
Ter Company to acquire the lands near
the Southern Saw Mill and Lumber
Company is a part OF Scheme on the
na TT of himself and his Supt. McNealy
to form company to purchase the
property at their own fgure.
After alleging numerous instances of
negligence and improper business re-
iations w til the company of which he
is receiver, the bill alleges that the
receivers statement OF the operation
of the plant showing a profit of 49,
1871 is untrue; that he counts as an
asset repairs and renewals amounting
to s10,918.90 and $12,790, which isI
counted as an asset stated to be prior
accounts payable upon amounts paiC
for timber purchased and unpaid for
and other items, and also states as
bill receivable a receivers certificate
for $4,000, which he appears to have
on hand against receivers certificates
issued and outstanding of Sal .O69.3S
That ueducting the said item of So
|0IS.90 from the assets as it would be
Proper, since it is cost of ma1ufac-
ture, the profits, according to-
his own statement made under
his administration would be only
$5,836S1, if anything. after cutting,
manufacturing and selling fifteen toI
twenty million feet of mber during
years of great prosperity in the lum
Der business.
1t is alleged in the bill that if the
property were put up for sale it would