New-York tribune., 1907-11-10
MORTGAGEE SUES MS. R.
FORECLOSURE SUIT FILED
Morton Trust Company Bases 1ctiOn
on Default in Third AUenue Rent.

Further complications entered into the Metro
politan Street Railway Company's entangle-
ments yesterday when the Morton Trust Com
Joary as trustee began suit in the United States
Circuit Court TO foreclose mortgages held by 1t
on the property Of the railway. BY order OF
Judge Lacombe, Adrian H. Joline and Douglas
Robinson, receivers for the company. were made
parties 10 this foreclosure suit.
This action is based on the failure of the
railway company TO pay the Third Avenue
guaranteed rental which fell due October IS. In
its petition the Morton Trust Company sets
forth that this failure to pay the guaranteed
rental broke the lease, and so a default in
the terms OF the mortgage. To protect the hold
ers of the bonds and TO prevent the separa-
ton Of the system into its component parts the
trust company brings this foreclosure action. It
asks also that injunction be granted against
the street railway company restraining it and
its agents and all other persons from interfering
with, transferring selling or disposing Of or en-
cumbering any. property under its control.
On March 81, 1902. the Metropolitan executed
a mortgage to the Morton Trust Company to
secure an issue of per cent bonds not to ex-
ceed S6J, 100000 ar any one time. In this mort
gage the railroad company transferred to the
trust company all the surface railroads and
property held by It, including all roads operated
by It as lessee. These roads were described
specifically in the mortgage, and included the
Third Avenue system. Thereupon the Metro
politan began the sale of its bonds, S16G04 COO
Of which now are outstanding, according to the
trust company's petition. and which constitute
a lien on the property of the Metropolitan
OF this sum, the petition says, S4,9S3,O00
bonds were deposited with the Morton Trust
Company TO secure outstanding bonds issued by
seven Of the subsidiary companies Of the Metro
politan and two mortgages Of the Metropolitan
itself. The general mortgage also includes
stock pledged and deposited with the Guar
antee Trust Company. under mortgage of the
Metropolitan Street Railway Company dated
February !, 1897, to secure collateral general
mortgage trust bonds bearing per cent as fol-
lows: 1900 shares of Broadway & Seventh
Avenue Railway Company 1000 shares Of the
Forty-second Street & Grand Street Ferry Com
pany, 5000 shares Of the Central Park North
& East River Railway Company and $500
shares Of the Thirty-fourth Street Crosstown
Railway Company.
The mortgage was precise and specific in pro-
.viding, the petition says. that the rnortgagor
should pay any sums Of money due under any
lease mortgaged. One OF the leases covered by
the mortgage was the lease of the Third Ave
nue. Railroad Company to the Metropolitan. Of
April 19. 1900. guaranteeing the payment on
which the receivers Of the Metropolitan system
deliberately defaulted. Because Of this default,
the petition declares the trustee Of the mortgage
the Morton Trust Company. has been urged by
many bondholders TO institute foreclosure pro-
ceedings.
Then the petition continues that at present
the property is IN the hands of receivers, ap-
pointed ct the suit of the Pennsylvania Steel
Company and the Degnon Contracting Com
pany. Against these receivers the Morton Trust
the income and profits from the mortgaged
property be applied to the payment OF interest
and rentals under the leases, as provided in the
mortgage. The petitioner prays that the re-
ceivers be made parties TO the proposed fore
closure action.