New-York tribune., 1910-09-21
SUES WABASH DIRECTORS
Exchange of Stock with Termi-
nal Company Attacked.
ST0CKHOLDER TAKES STEP
Seeks to Recover $50, 900, 600
George j. Gould Named as
One of Defendants.

The exchange by the directors Of the
Wabash Railroad Company of s1e.OOo.oo0
Of the conpany's common stock for an
equal amount of the capital stock of the
wabesh-Pittsburg Terminal Railway Com
pany, now in the hands of a receiver, is
attacked in a stockholders suit which has
been brought in the Supreme Court by
James PoHitz. who holds 100000 worth of
the Wabash stock He names as defend
ants George j. Could. Edwin Gould. Gen
eraI Thomas H. Hubbard and other di-
rectors of the Wabash. and alleges that
they acted in violation of the laws Of FIVE
states, in one of which. Michigan. he de-
clares. they have made themselves amen
able to the penal code. which fixes pun
ishment OF ten years imprisonment for
their alleged offence.
PoIlitz, who is an importer at No. Al
Warren street, says that the defendants
were responsible for the increase Of the
Wabash common from S2s, $4,000 10 Ss000,-
0O0 and then used s1O,OO0.0OO Of the stock
to obtain possession Of the practically
valueless Pittsburg company. He adds
that in doing so they hoped to get S10o00,-
without consideration. In this, Pollitz
alleges, the defendants violated the
laws of Illinois. Indiana, Michigan. Ohio
and Missouri. TO which the company is
subject, and he seeks 70 recover for the
stockholders the s10.006.O00 which he alleges
was wrongfully taken from the company.
PolIitz relates that the increase of the
Wabash stock was made on March %, 1904,
a tvr-N as ha a GF-P g.
burg Terminal Railway Company was or
ganized as a consolidation OF existing rail-
roads. He says that at that time the
defendants dominated the Wabash board,
and that with Joseph Ramsay, then presi-
dent; Russell Sage. James Hazen Hyde
and others, they conceived the plan where
by the exchange Of stock took place. He
says that the defendants. while acting as
directors of the Wabash, acquired for
themselves a large part of Wabash stock
without the company or the stockholders
receiving any valid consideration for II.
Pollitz also demands an accounting from
the Wabash directors of their action.
Pollitz says that he wrote TO z. A De-
lano. president OF the Wabash. setting
forth his complaint and asking that pro-
ceedings be instituted in behalf of the
acted upon.
General Hubbard has fled his answer 70
the action, and among other things he
says that PoiIitz. who acquired his stock
in 1906, did not acquire it in good faith.
but for the purpose Of annoying the de-
PENDANTS so that they would buy his hold
ings at a higher price than the market
quotation General Hubbard. denying the
allegations Of the plaintiff, says that in
1903 the Pittsburg- Carnegie & Western,
through consolidation with the Cross
Creek Railway. in West Virginia. and the
Pit+sburg, Toledo & Western. was united
with the Wabash -Pittsburg Terminal Rail-
way Company, and that the Wabash stock
holders gave the defendants authority 10
make certain trackage and traffic agree
ments with the Wheeling & Lake Erie
and PittsbUrg and others to acquire a
road from Jewett. Ohio. TO Pittsburg, with
a terminal in Pittsburg.
The close traffic alliance. says General
Hubbard, makes them practically a single
system. Subsequently there was a modi-
1cation Of the agreement which provided
that the Wabash and the Wheeling & Lake
Erie, if it became necessary to meet the
interest on the Ptttsburg company's bonds.
should pay up TO % per cent Of the gross
earnings of either road on traffic delivered
to the Pittsburg company from points east
Of Chicago and St Louis. General Hub
bard says that the directors believed that
the arrangement would be to the advan-
tage of the Wabash
The defendant in his answer says that
the directors Of the wabash decided not
only TO buy the entire capital stock of the
Pittsburg company with Wabash stock
but bought $6.5Q000O of the Pfttsburg
bonds for s6,00O.0OO cash These acts, he
SAYS. were confirmed by the stockholders
Justice Blur yesterday allowed 2 mo-
ton of the plaintiff for twenty days time
in which to answer or demur TO the an
swer of General Hubbard