New-York tribune., 1906-12-12
SUES TRACTION TRUST.
WANTS MERGER BROKEN.
Action Begun in L. S. Circuit Court
Against Belmont Ryan Interests.

A suit Of similar nature TO the Northern Sc
curities merger action begun yesterday III
the United States Circuit Court by D. w Bur-
rows. of Chicago. to have declared Illegal the
formation of the Metropolitan Securities Com
pany. into which merged the BelmOnt-Ryan
traction interests in this city.
The defendants are the marlborough Metro
politan Company. the Interborough Rapid Tran
sit Company, the Metropolitan Street Railway
Company. the Metropolitan Securities Company,
the Manhattan Railway Company. the New York
City Railway Company. Thomas F. Ryan, Au-
gust Belmont, Cornelius Vanderbilt Edward J.
Berwind, John D. Crimmins Andrew Freedman,
Thomas 2. Fowler Gardiner NJ. Lane, F. :.
Cannon. r. w Meade. Orin Root jr., Edward
W. Sayre. H H. Vreeland and Charles f. War
/ In his bin of complaint Mr.. Burrows. who Is
represented by Coudert Brothers as counsel al
leSes that the merger of the traction interests
| is tantamount to a conspiracy in restraint OF
trade. and a holder Of 1.400 shares of stock in
| the Metropolitan Securities Company he asks
that the combination he dissolved. The plaintiff
asks, also. that the old stockholders have re-
stored to them their stock. which he alleges the
defendants have taken under their ownership.
The complaint in the action. which is a lengthy
document alleging the illegality and impropriety
of the Ryan Belmont combination. describes the
formation of the different corporations that fig
J:re in the action. The Interborough Rapid
Transit Company was formed I'm 1902, it is
stated. with capital stock of s25,000000. s13-
500 900 of which was used to acquire possession
of the stock Of the Rapid Transit Subway Con-
struction Company The latter stock was subse-
quently increased to s25.OOO.000 to equip the
subway. In 1903 the latter corporation leased the
Manhattan L. a competitor. it is charged. for
9s9 years The Metropolitan surface roads were
leased in 1902 to the Interurban Street Railway
Company known the New York City
Street Railway Company.
According 10 Mr.. BurroVs's complaint. Thomas
F. Ryan and his associates owned and controlled
the Metropolitan. while August Belmont exer-
cised a similar control over the Interborough
Rapid Transit Company. The charge is then made
that the two men conspired unlawfully 10 deprive
| the public Of its right 10 have competitive roads
and entered into illegal combination 70 effect
consolidation Of the Metropolitan Street Rail
way. the Metropolitan Securities Company and
the Interborough Rapid Transit Company.
In pursuance of this scheme. II is charged. the
Interborough- Metropolitan Company lad its
birth in January last, with common stock of
500 900 O00 preferred issue Of s55 600 900. and
with s7o,0o0,O00 in Az per cent gold bonds The
complainant says that a committee consisting
Of Belmont Walter G. Oakman Ryan, Wander
bilt and Peter A b Widener invited the holders
Of the stock of the three corporations, the
borough Rapid TransitCompany. the Metropoli-
tan Street Railway Company and the Metropoh
| tan Securities Company to exchange their hold
ings for stock I'm the new corporation. For each
share Of the Interborough company. 5000 in the
gold bonds and s99 in common stock of the In
terborough- metropolitan Company vas to be
given ii was stated For each share Of the Met
ropolitan Securities Company 800 in preferred
stock and s9e of common stock would be paid,
and for each share OF the Metropolitan Street
Railway Company common stock amounting TO
s9350 would be exchanged.
Under this plan the complainant claims that
337 .O22 shares of the Interborough secured,
ont of a total of 35OO0O shares. or sc per cent;
422S46 shares of Metropolitan Street Railway,
out Of ? total issue of $4,000 We're exchanged,
or 81 per cent. and 2S9,171 shares of the Metro
pOIitan Securities Company. out OF 800. 00O were
secured or 90 per cent AS q result OF this
QUESTION. it is alleged. the Interborough- Metro
poIitan Company unlawfulIy obtained possession
of the control OF the three corporations. and that
the stockholders of those corporations lost their
Individual rights the stock exchanged having
been deposited with voting trust which gave
the directors Of the company control. and
that the shareholders of the recently formed cor
poration had no rights further than 70 draw
| such dividends as the marlborough Metropolitan
! Company cared to give them.
Emphasis is laid on the charge that the new
| company was formed under the business cor
| poration laws and not under the railway laws
! Of the State OF New York, therefore not being
! amenabIe 10 the restrictions and obligations
! imposed by the railway laws
Mr.. Burrows makes the charge that the new
! company was not organized In good faith TO
purchase the stocks of the three companies but
! for the unlawful purpose of putting the control
! in one corporation and that the shares issued
in pa--rnent for the stock in reality nothing
! hut beneficial certificates designating the hold
| ers TO participate in the alleged unlawful pool
! or combinations profits.
The further charge is made that August Bel
! mont e. Co obtained ,.IOOOG0 of the new COM
panys stock upon the payment of $2.JOOOOO in
cash and the further consideration that the
! latter company would bear all the expenses OF
! the formati IN of the Interborough Metropolitan
! Company
As a result of the alleged conspiracy Mr.. Bur
! rows states that the marketable value of his
14OO shares Of Metropolitan Securities Company
| has been destroyed. In addition he complains
/ that by the action Of the defendants he has been
/ deprived of his riShtful share of the Metropoli-
tan SecUrite- Company.
Prior to the corporations formation he
declares the Metropolitan Securities Company
was listed on the New York Stock Exchange
/ and had a ready sale, but that now the Inter
/ borough Metropolitan Company has been listed
! 10 the exclusion Of the other company. leaving
the stockholder no alternative I'm dsposing of
| his holdings except TO exchange them for such
stock of the holding company the latter
might care to give him.
! Resides violation Of the stock corporation
laws of New York State. which prevent a do
mestic corporation from combining for the crea-