New-York tribune., 1909-12-18
BELT LINE HEARING
ON STATUS OF BONDS.
Counsel Contends 81 200, 900
Issue Vas Cancelled.

States Circuit Court Otto Fl Kahn, as
member of the firm of Kuhn. Loeb & Co.
examined yesterday afternoon in the
hearing on the suit of the Farmers Loan
and Trust Company to foreclose on the
property of the Central Park. North and
East River Railroad Company, commonly
called the Belt Line. on mortgage made
in 1872 to secure the issue of 81. 100000 bonds.
The point made by William n. Dykman,
of counsel for the Central Park company.
is an ingenious one, which. If valid. would
affect other bond issues involved in the or
ganization of the Metropolitan Street Rail
way Company, now in the hands of re-
ceIver.
On June H. 1897, as is known, the Metro
politan Street Railway Company made a
general mortgage to the Guarantee Trust
Company as trustee. and on March Il. 1902
made a refunding mortgage to the Morton
Trust Company as trustee. The lease OF
the Central Park company, which had
come into the hands of the Metropolitan,
was pledged by 1t as part of the security
under these two mortgages.
The refunding mortgage provided for the
acquisition by the Morton Trust Company
as trustee Hereunder, of the 81 10000 bonds
of the Central Park company, which De-
came due In 1902, as well as number OF
other collateral bonds which under the
provision of the refunding mortgage were.
when deposited with the Morton Trust
Company to remain alive as part OF the
security for the refunding bonds Shor'iy
before the maturity OF the CentraI faik
bonds in 1902 the Morton Trust Company
through the issue OF the requisite propoF-
tIon of the refunding bonds, was placed
In funds with which to acquire the CehFaI
Park company bonds. in conformity WIN
the procedure prescribed In the feiuhu-
ing mortgage.
Mr. Dyknan. as counsel for the Cehtrdi
Park company, now holds that the Morton
Trust Company. having bought up the
bonds for the Metropolitan. really can
ceIled them legally, If not actually, on the
theory that a person cannot hold deot
against himself The Farmers Loan anu
Trust Company, however, contehus tiia'
the bonds were simply acquired IN DC
cordance with the terms OF the ledse'
which required the Metropolitan street
railway Company to keep them alive Tor
the protection of the holders or the re-
funding bonds.
In June 1862, Kuhn, Loeb & % Put
chased 81, 600 of the refundlng oohus
60 the METROPOLITAN Street Railway
Conpanv and under the arrangement WIN
that company paid by check more thah
o. ooo Ooo To the Morton Trust Company
II was this money that was used In ae-
,,tr,no tho outstanding bonds of the cen
trail Park company.
Mr. Dykman endeavored to show yester-
dav that the firm OF Kuhn, Loeb & CO. III
buving the bonds was acting as an agent
of the Metropolitan Street Railway Noiii
panv in retiring the Central PARK oohus'
.athsr +hen as a banking house purchasing
bonds as a financial transaction TOT l's
own profit - ,o,,as
The subpoena under which ne was ca'u
reouired Mr Kahn to produce such recofu0
and contracts as related to the purchase
of the 81. 100000 bonds from the Metropoli
ton. He said that he had been unaoie 10
hnd any contract or letters on the suoJee''
s,r,nIv q memorandum showing that the
purchase had been made. II was his recoi-
isct,on Mr.. Kahn said. that the money
for the bonds had been sent TO the Mortoii
Trust Company In the form of check, but
that cbacl. was not in existence as II was
not the custom of the hrm 10 Aeep e"eSN'
going back so far.
.syVbo would have had charge of carry
,r0 ont the contract" asked Mr.. Dykman-
"Iouis A. Heinsheimer." replied Mr..
Kahn,
s.yVould II be possible to have him come
here and testify?" asked Mr. Dykman.
Mr. Kahn replied that he had died some
time ago, and that was one reason why
they were not able to lay their hands on
the contract if such a written agreement
existed. Asked as TO who made contracts
of that character. Mr.. Kahn said that Mr.
Schiff, ST., Mr.. Schiff, jr., or himself did.
"But yo,. did not make this one?" said
Mr.. Dykman.
II really cannCt say
'.Whatn' said Mr.. Dykman. in surprise.
DO you mean to say you would not re-
member such transaction?"
II am not trying to fence with you."
said Mr.. Kahn quickly. Il would gladly
tell YOU IL l could, II would not affect our
interest, So far as 1 can see. But 1t was
seven and a half years ago and 1 cannot
remember
Mr. Kahn said he would make further
search for any records of the transaction.
but he had been told that his testimony
would be sufficient.
Well" said MIR. Dykman. I'VE expected
that your recollection would be more
exact"
Mr. Kahn said he could not remember
whether Kuhn, Loeb & Co. had a loan to
the Metropolitan running at the time but
he would bring such record books as would
show at the next hearing He said he be-
lieved that Mr.. Schin was trustee OF the
Morton Trust Company at the time
The next hearing will be held at IL
o'clock on January at the offices OF Tur-
ner. Rolstan a Horan, where the hearing
yesterday took place. They are counsel for
the Farmers Loan and Trust Company
Mr.. Dykman served notice that on Friday