New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-02-05
WABASH BONDS
Suit Begun to Procc the Recent
$500, 900, 900 Issue ILLEGAL.

Action was begun late yesterday afternoon in the
United States Circuit Court wherein bondhoIder
OF the Wabash Railroad Company seeks to attack
the recent issue OF 100000 90 per cent gold bonds
and S6500OoO preferred and sl65OOOO common stock
on the ground that the issuance Of such securities
was not only Illegal and in contraventlon OF the
laws Of the states granting the Wabash its
porate existence. but that II also In violation
of the provisions Of the roads bylaws as to
consent OF the holders OF its debentures before an
exchange OF bonds or stocks could be granted.
The issue OF stock complained OF made. It
IS alleged to retire two series OF debentures OF the
Wabash-issucd In 1889 and due In 1939-amounting
TO 100000, because the terms of the bonds pre-
vented the officials OF tho railroad from using the
earnings OF the company for betterments or i'm
provements until after the interest on the bonds
had been paid This II Is said 5y the company.
seriously hindered the Wabash from making such
extensions and improvements were necessary TO
enable it to care for its-Increasng business.
The plaintiff. James POLITE citizen OF New
YORK and bondhoder. seeks 10 have the issue
OF new bonds and preferred and common stock
declared void and illegal. and further asks the
federal courts 10 enjoin the Wabash from paying
either the interest the bonds dividends
upon the stock
The plaintiff further asks that the directors OF
the Wabash be compelled to account To the bond
holders and stockholders Of the road for the
stocks and bonds issued. and. II necessary.
refund any differences in cash. and further. that
the court prevent the holders OF the issue OF
further transfers OF such stock or bonds be
stopped. All OF this is asked because Mr.. PollItz
represents that great and serious injury Will oh
tain to himself and other bondhoIders similarly
situated.
The suit was originally begun in the Supreme
Court of this state. but few minutes before the
closing of the clerks Office yesterday was trans
ferred 10 the federal court. and the complaint,
together with the answer OF two of the defendants
and demurrers of half dozen others. fled Tho
transfer was secured upon the ground OF diversity
OF citizenship. the defendant. the Wabash Railroad
Company, having been incorporated under the laws
Of Ohio, Indiana, Illinois, Michigan and Missouri
The plaintiff represented by Stephen w. Yeaman.
defendant tho Wabash Railroad Com
pany Edward T. Jeffrey. Frederic A Deano r.
T. Welles John T. Otteson. Robert c. Clowry, Rob-
eTt NJ. Galloway, Thomas a Hubbard, George j.
Sl5sun. the Mercantile Trust Company the United
states NIorteare and TryI,t Combany Henry
Evans Henry k. Pomroy, and George W. Cum
ming, the latter three as the committee represent
ing the old b9ndholdeTs the Bowling Green Trust
Forgan, the latter two as the trustees named in
the deed of trust securing the first issue of bonds
Issue was joined by service OF the complaint upon
John T. ottes9n secre5ary OF the wabash Kairoad
plant, long. printed document, begins by stating
road Company under tho laws Of tho states named.
A plan was entered into during the summer of 1906
gage bonds of the Wabash. through the subst
d pr OF and Common P stock sod
meeting Of the stockholders was accordingly
a proxy of the plaintiff who asserts that he is the
owner of 100000 of the old issue of bonds and that
his proxy then and there protested and voted
against the exchange Of securities. The plaintiff
vires'' negotiable and injurious to the plaintiff
Messrs. Evans. Pomroy and Cumming acted the
representatives Of the bOndholderS, IL is said in
the furtherance OF the alleged Illegal scheme of
transfer.
There was filed at the same time an answer of
the Wabash Railroad Company, represented by
Pierce 81 Greer, attorneys, OF No. l20 broadway
The answer says that MessrS. Evans, PomrOy and
Cumming composed committee representing the
stockholders, and Co-operated with the defendant
in effectlng the exchange Of the securities. The
existence of the laws cited I'm the complaint Is adj
mitted, but the defendant denies that the
applicable the defendant or its acts or that II
has violated each any of them.
stituted by the plaintiff to harass the defendant
and to prevent II from carrying out the terms OF
the exchange which, II Is alleged is necessary and
for the best interests Of the stockholders and bond
holders.
The Mercantile Trust Company. represented by
Alexander q Green. Of No. 120 Broadway, filed n
demurrer the bill OF complaint, stating that ii
not Interested in the matter at issue and that
the plaintiff not entitled in law to the
cry demanded 1t also asks the court whether IT
shall be compelled TO make further answer to the
bill and praYS that the complaint be dismissed.
The Bowling Green Trust Company, represented
by Thompson Vanderpoei q Freedman, admits
that the plan of exchange was carried out with
and the Bowling Green Trust Company 1t denies
that the plan illegal detrimental to the best
interests of the stockholders or bOndholders. Sew
eral of the other defendants also filed similar de-
murrers.
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