New-York tribune., 1910-05-24
CHICAGO RAILWAYS Hit
Active Stock SIumps Following
Receivership.
COULD NOT PAY JUDGMENT
Nor Provide Bond to Procure
Stay of Execution by
an-Appeal.

Chicago. May css-A receivership INTO
which the Chicago Railways Company was
thrown to-day caused its most active stock,
Series participating certificates. TO drop
an extreme Of Q points on the Stock tx
change with only a slight recovery thls
stock participates only after the payment
Of bond interest and dividends on certifi-
cafes of Series !. The earnings OF the COM
pany recently were believed TO indicate an
early dividend on Series ?. Thousands OF
shares were sold when news of the re-
ceivership reached La. Sale Street
The annointment of the receivers, John
NJ Roach. president of the company, and
Henry A Blair. a stockhoIder, was caused
hv the fact that the company had neither
sufficient assets TO pay judgment OF 81
S4s6S4 rendered against il by Judge ban
in the S,Irerior Court of Cook County last
week nor TO provide sufficient bond to pro-
cure a stay of execution by means oil an
appeal
A receiversfrip described mere legal
move for friendly conservation was taken
suddenly and secretly. BY this arrange
,nent it will be possible TO protect the COM
pany while Judge Balls decision is carried
TO the Supreme Court OF Illinois
Tudre Ball held that the Chicago Rail-
ways Company. in taking over the Union
Ye.rlzes. assumed responsibility for the
1,or7ds Of the financially shattered Consoli-
dated Traction Company. The judgment
awarded by Judge Ball, and entered to-day,
vas in favor of litigating bondhoiders OIL
the latter company Should TINS decision
be upheld. it may open the way Tor adol-
7ional judgments of a similar nature aggre-
eating about s5.0e0.0t0.
The city's interest under the reorganlza-
ton ordinance of three years ago, whereby
the municipality receives 30 per cent OF the
net profits of the company, is fully pro-
tected under the receiverslaip. Physical i'm
provements. on which millions have already
been spent will go forward under direction
Of The board of supervising engineers.
Bonds Net Affected.
Il is said that the bonds OF the Chicago
Railways Company are not affected by
either the receivership or the Judgment as
they constitute prior lien on the S5oeoo.ooo
assets of the company
The petition for a receivership was fled
nv Charles P. Cotton. jr, of New York,
representing the Westinghouse Electric and
Manufacturing Company. His bill set up
that the Chicago Railways Company owes
sse O0o to the electric concern, which 1t can
not pay, owing TO the judgment entered
against it. The bill declares that the local
company's assets are at present so en-
numbered by mortgages and trust deeds
that it cannot raise money enough to per-
feet an appeal from Judge Ball.
The proceedings, which took place before
Judge Grosscup, in the United States Cir
cult Court, lasted only a few minutes 80
ouietlv was the momentous task accom-
pIished that Mayor Busse and Corporation
Counsel Brundage, although they entered
J,dee C5rosscup's chambers Immediately
after the appointment of the receivers TO
7lrse that the Consolidated Traction Com
rany do certain street paving. while the
7eceivership attorneys were present, Ieit
the r,lace in ignorance OF the fact that the
North and West Side Chicago traction sys-
tens had entered on another upheaYal.
Mr. Blair IS chairman Of the board of the
Chicago Railways Company and Mr.. Roach
IS its president. That company is the sue
cessor to the Chicago Union Traction Com
1.anv and operated lines. and Owns practi-
cally all of the S15,0O0,Ooo capital stock of
The Chicago Consolidated Traction Com
pany which in April, 1890, entered into IN
agreement with the Chicago Union Trac-
iion Company under which the latter paid
i S45 in Chicago Consolidated bonds, guaran-
teed by the Union Traction Company, and
$50 in cash for each 500 stock Of the
Consolidated company.
Interest on the $4,000 az per cent
bonds OF The Chicago Consolidated Trac-
7ion Company was defaulted on june /
1905 and no interest has been paid since
then. on June "a. 1908, receivers were ap-
pointed. a committee representing the MI
nority holders Of the AZ per cent bonds
some time ago brought suit against the
Chicago Railways Company for the princi-
l,al and interest Of the bonds lodged with
the committee, and last Thursday Judge
Fall. in tho supreme Court in CIicasO
handed doRn a decision holding the CHI
caso Railways Company liable for the
consolidated Traction Company's bonds
WITH accrued interest since June ], 1913
and entering Judgment for the sum oi
Sl3446Ss When the Chicago Railways
Company WAS formed 10 provision WIS
Iaade for caring for the bonds of the Con
! solidated Tracticn Company, which had
been guaranteed by the Chicago Union
Traction Company
Statement of Counsel.
/. {. Krauthof, general counsel Of the
Chicago Railways Company, said yester-
Gay concerning the litigation;
The Chicago Consolidated Traction Com
pany. ar entirely separate corporation, or
i-anlzed 10y the late Mr.. Yerkes, made an
issue of bonds secured by mortgage on
that property which were guaranteed By
The Chicago Union Traction Company Al
though the Consolidated Traction Com
1any or its property was IN nowlSe IN
TolTed in the ordinance TO the Chicago Rail
WAYS Company and constitute no part oi
the property of that company, a Chicago
local court has nevertheless held that the
Chicago Railways Company is responSi blt
Tor these bonds. This holding is contrary
Ia The opinion expressed and conclusions
reached by a large number OF counsel who
have had occasion 10 examine the question
These counsel are stiIi unanimously OF the
ouinion that the action OF the trial cour1
VIII be reversed II VIII necessarily take
some time TO obtain a nnal disposition %
the matter on appeal. Pending this fina
dis,,osirion The property of the company
1UciIl6 he subject 10 the risk OF a receiver
shin in the state court under the contro
al the nlaintiffs IN that case. Such g re
.,ef,ershiD would in the opinion or coun
81 and OF security holders largely inter
.S.ed cause much embarrassment IN th'
r,rnsec1ltion of the rehabilitation and IL
.o,sler construction work of the company
and as well in its operation and IN ITS Tels'
lions 10 and dealings with the city OF Cnl
CaGU.
10 insure q conservation OF the properly
and its administration for the protection % %
the security holders Of the chicago Ran
ayavS Company. the property mas TEN
-lorarily been committed 10 the pnotecdioI
OF the federal court and its receiEers- me
Judgment recovered IN the state court eEei
II enmIly affirmed cannot be enforced Il
The prejudice OF the outstanding bonds %
SC sa-Efsi isfl