New-York tribune., 1907-01-12
O'R0URKE CO.'S REPLY
CHARGE OF BAD FAITH
Prospectus Of Brunszcick Hotel
Called Misleading.

When the case Of the Knickerbocker Trust
Company against the O'Rourke Engineering and
construction Company is called for trial in the
Supreme Court In few days there will be told
publicly for the hrst time the story of the failure
IN erect a proposed S7.O00GO hotel on the site
NJ the old Brunswick Hotel in Fifth avenue.
setween Goth and 9th streets This suit is
brought for alleged failure to take up stock un-
derwritten by the ORourke company. 1t is one
ot several which are pending and of others
which have been settled growing out of the COL
lapse Of an underwriting syndicate that pledged
sl600000 for the purchase of the property
In the amended answer filed by the O'Rourke
company. the defendant in the action at issue
which subscribed to $4,000 worth OF bonds of
the Brunswick Construction Company. which
purchased or contracted to purchase the prop
erty in 1902. 1t is declared that the latter issued
n prospectus in which were set forth certain
statements and representations that were false
and fraudulent. The defendant declares also
that ex-Jucge Henry E. Howland. who was
mentioned in the prospectus as president never
had any connection with the concern but that
matter Of fact Frank King clerk of the
Knickerbocker Trust Company was the prest-
dent
In connection with the Brunswick Construc-
ton Company IT is said there was organized the
Brunswick Hotel Company, of which Gustav
Baumann, OF the Holland House. was the presi-
dent This company also distributed prospec-
tus which told of stock issue of S3,OOOOOO of
an authorized capital amounting to S5,OOOOOO
This company proposed TO make contract with
the Brunswick Construction Company for the
acquisition of the Brunswick Hotel when COM
pleted. free from encumbrances except mort
cages aggregating not more than S75OOOOO 1t
was estimated that the annual earnings would
he MOI rh%n
100000. As to this prospectus the defendant
says:
That the said allegations and representations
with regard to said Brunswick Hotel Company
were calculated to mislead defendant and cause
II TO believe the said hotel company to have
an assured paid up capital of at least 81 10000
and was bona f1de business enterprise pre-
pared TO carry out the construction of said hotel
ana 10 operate the same whereas the alleged
subscriptions TO this capital stock, If any, were
wholly valueless and made by person or per-
sons or no financial resources, and said corpora
tons were never prepared to carry, out the con-
struction of said hotel or the representations
statements and facts contained in said pros
spectuses.
There was. II is maintained an agreement be-
tween the Brunswick Construction Company
and the ORourke Engineering Construction
Company, that the latter. in consideration of
Its subscription to $4,000 in bonds. would get
the contract for the foundation. excavation and
NetiooOAA
fendant alleges that It entered into this con-
tract solely account of representations made
by the Brunswick Construction Company and
the Knickerboc1er Trust Company, which fig
ured the bankers and registers OF stock for
the company. w. B. Randall. treasurer of the
Brunswick Construction Company. was trust
officer Of the Knickerbocker Trust Company.
while Henry B. Cocheu. secretary occupied the
same office TO Charles T. Barney. of the latter
company.
The allegation is made that the Knickerbocker
Trust Company purported to advance to tho
Brunswick Construction Company from time to
time certain sums Of money purporting TO be
on account of the loan provided for in the I'M
derwriting agreement. while the construction
company had no other resources. Besides this
the charge is made that the construction COM
pany, with the knowledge and consent OF the
plaintiff, recklessy and improperly expended
money in a wasteful manner. paying excessive
prices for property acquired. and that In the
three years that the property lay idle and un-
occupied effort made to protect the IN
terests of the underwriters
Along in 1904 the underwriters of the con-
struction company. 1t is said, were surprised to
see mortgage OF $4,000 filed and recorded by
the Brunswick Construction Company to Sam
uel V D. White, employe, it is said of the
Knickerbocker Trust Company. and, IS al
This mortgage was made to appear as a lien
upon the property, it is said. standing in the
name Of the construction company.
Thus II is charged, the alleged claims of the
Knickerbocker Trust Company were attempted
TO be secured ahead OF claims Of the trust COM
pany as trustee of the underwriters It was
then that the latter baked. AS a result OF the
acts Of the Knickerbocker Trust Company and
the Brunswick Construction Company, ii is
charged that the value of the property was
greatly diminished and reduced and the whole
enterprise made a failure. After foreclosure the
property sold to the Brunswick Site Com
pany.
Charles T. Barney. president of the Knicker-
booker Trust Company. said last night that he
knew Of no suits pending in connection with the
Brunswick Construction Company and that
they had all been settled. As for his personal
interest in the enterprise, he said:
Il was only a stockholder like the others in
the Brunswick Construction Company. I had
only a small interest, and / never owned the
brunswick property The supposed facts you
talk about are far from the truth that II Is
not worth while discussing the matter
FIRE SCARES MILLS HOTEL GUESTS.