Evening journal., 1909-07-28
EQUITY SUIT
AGAINST TROLLEY
Bond Holding Company Seeks
TO FOrestaII EarIe'S Plan
of Reorganization

The American Railways Company
yesterday filed an equity suit in Com
mon Pleas Court No. against the
Interstate Railways Company, the
United Power and Transportation
Company and the Real Estate Trust
Company. The purpose OF tho suit "a
TO forestall the plan advocated by
George II. Earle, Jr., for the reorgan-
ization plans by which the interest on
the Interstate As and the money bor-
rowed is guaranteed by the United
Power and transportation Company
for fivo years.
Decd TO secure Bondr
The bill sets forth that on Decem-
Der p, 1902, the Interstate Company
executed a deed OF trust to the Real
Estate Trust TO secure an issue "
bonds designated as tho Interstate
Railways collateral trust gold bonds
not TO exceed Si0.7S1. $50. and under Il
pledged i4s,6SS shares OF the capital
stock OF the United Power and Trans
portation Company. OF the issue OF
Interstate bonds authorized Si0,776,O00
are now outstanding.
The plaintiff the bill explains. is the
owner OF sl,000.000 Of these bonds
The bill recites that the Unltcd
Power Company agreed that II would
cause 20 be issued evidences Of indoht-
edness for all debts due II from under
lying companies and deposit the same
with the Real Estate Trust Company
and that It would not increase the is
sue OF It's capital stock beyond the
shares then outstanding.
The Interstate Company agreed 20
- -.
company and 20 all companies OF
which the latter was the holder OF AZ
least a majority OF the shares 20 such
an extent as should be necessary to
insure sufficient and proper better
ment.
The American Railways Company
then alleges that the Power Company
had no power or authority In law 10
become surety for the payment of
money loaned TO another corporation.
Another Squsbble.
The complicated state OF affairs
created among Interstate Railways IN
terests was increased by the Issuance
/ of a circular by four members Of the
Committee on Reorganization, elected
by the bondholders. This circular was
In reply 10 that prepared by Edward
h. Smith and Company. last week, and
touches chiefly upon the propriety ol
exacting charge from bondholders foI
services. IL viii be recalled that IN,
f. b. Smith circular pointed out thai
bonds would be released on the pay
ment Of s67. 1866. Tho reply sent Gu
in reply 10 the r. B. Smith and Com
pany's attitude was signed by JohI
c. Bell. r. w. Robelng. William II
McTvain and Holstein Deiiaven.
The latter took the stand that ow
ing 20 the fact that the plan outline'
was not accepted. there should be nj
charge for services.
The circular recites az length wha
the proposed plan sought 10 accomplish
I and then added;
"A plan which thus proposed.
place Of YOUR bonds, the substltutio
d OF another issue OF bonds. 20 the lie
s of which you would be postponed
j. and the issuance instead 70 you OF pr,
a ferred stock scaled down is per cen
n or % per cent from the face valu
= Of your bonds: and which conteir
plated the further enormous dilutio
OF the value OF such preferred stoc
by tho issuance Of additional preferre
stock 10 the amount OF 81. .350.00O (whic
additional preferred stock the syndl
cate proposed Offering on the marke
at 20 or 75; and which further involve
the likely acquisition OF control of IN
new company by the syndicate
through the Ss,150.OO0 additional com
mon stoclS-did not and could not an
E peal to the undersigned members O
! the committee. To us II seemed
= good plan for the bankers and thei
syndicate. but not for you"