New-York tribune., 1910-01-25
CITY RAILW AY SUES
ASKS FOR S9,797, 200.
Metropolitan Securities Com
pany Charged sc1th Fraud.

William w. Ladd, as receiver of the
New York City Railway Company, began
his fight, through Joseph Fl. Choate.
Matthew c. Fleming and Theodore w.
Morris, his counsel before Judge Raw
in the United States Circuit Court YES
terday to recover from the Metropoli-
tan Securities Company and various of
its directors the sum of s., ,797, POO which
he alleges was transferred from the treas
ury of his company to that of the securi-
ties company without any consideration in
return.
Among the directors of the Metropolitan
Securities Company who are co-defendants
are Thomas f. Ryan, Mortimer l.. Schir,
Peter A. B. Widener, John D. Crimmins.
E. j. Berwnd. Paul D. Cravath. Herbert
II. Vreeland, Thomas Dolan and others.
sEx-Judge Alton B. Parker Mr.. Cravath
Francis Lynde Stetson and Richard Reid
Rogers represented them and the company
Mr.. Morris opened for Mr. Ladd. He gave
an outline of the conditions which preceded
the organization of the securities company
and said that most of the co-defendants
were directors in the railway and the Sc
curities company, and in that capacity is
sued debenture notes of the former to the
latter at 20. and within a short time had
the railway company redeem them at par,
causing the loss for which suit was brought
He said that it was known at the time the
transaction was made that the railway
company was facing a deficit of 100000
The payment for the redemption" Mr.
Morris said, was not only made out Of the
capital stock of the company, but was also
made at a time when it was the duty of
the directors to preserve the assets for the
benefit of the creditors. No sooner was this
hnu
tiously TO withdraw the assets of the COM
pany SO that the New York City Railway
Company was eventually deprived of all it's
assets. and the receiver got only an empty
she'll. with nothing to meet the obligations
of the company
Mr.. Norris said that the action Of the
directors seemed incredible unless there
We're purpose to place the assets of the
railway company beyond the reach of the
creditors. He said he believed that he had
shown fraud and conspiracy, and if the
case were one between individuals there
would be no question of a decision in favor
OF Mr.. Ladd
Mr.. Rogers, who especially represented
the securities company, said that all of the
stockholders of the company which was
practically the only creditor of the railway
company. ratified the transaction to which
Mr.. Morris objected. He said that when
the railway company had the money with
which to redeem the debentures at par II
had legal right to do so.
1t was not milking process, Mr.. Rogers
declared vehemently. The New York CITY
Railway Company was the only asset prac-
lcally of the securities company, which it
was pledged to support, and there was no
reason why it should wish to destroy its
principal asset. Not one of the directors,
he said, profited one cent by the transaction
either as a stockholder or as an individual.
Mr. Stetson, who spoke for all the direc-
tors excepting Mr.. Widener, reviewed the
financial steps taken to save the Metropoli-
tan Street Railway Company, including the
reorganization of the New York City Rail
way Company, the Metropolitan Securities
Company and the Metropolitan Securities
Syndicate. He said that whatever liability
might lie against the securities company,
there was none against the directors.
Judge Parker will continue the argument
this morning for the defence and Mr..
Choate will close for the plaintiff