The San Francisco call., 1910-07-29
SALEOF OCEAN
Shore LIKELY
TOBE DELAYED
Date for Railroad Auction Will
Probably Be Fixed in
November
Court Expected to Make Special
Provision for Preferred
Claims

The sale OF the Ocean Shore railway,
set originally for September l. will he
postponed in all probability until the
early part Of November. The terms of
The transaction at that time. it is an
ticipated. viii require that a certain
sum be set aside from which the pre-
ferred claims may be paid. A hearing
was held yesterday morning before
Judge Van Fleet I'm the United States
circuit court to determine approx
rnately the amount Of such claims. The
case was not fully presented and viii
he resumed on August Is. w w. Kauf-
man. attorney for the receiver, est
mates that the legal preferred claims
viii not exceed $3.50. 200. Claims for
preference. however. may aggregate. as
high as 100000
The receiver. Frederick Stratton, had
~ previously filed a petition for the sale
:of the road. urging that the disposal
he made subject to the payment in
cash Of d sufficient amount to meet the
obligations to preferred creditors. The
Mercantile trust company, the trustee,
answered the petition yesterday
-. through its attorney. ". 7. Brobeck. It
- requested that il be left free TO pro-
coed with the sale under the terms of
The deed of trust
. MANY ATTORNEYS APPEAR
The various issues involving the
iroad brought a remarkable assortment
" OF attorneys into court. Gavin McNab
interviewed on behalf Of c. c. Moore
bonds
L. J. AIcCutchen for creditors; Sid
nev Ehrman for the Union trust COM
many. and Charles A Cray for ]. Dow
nev Harvey and j. = Folger. Claim.
ants were represented by Sidney Van
V+.rI1. Rsrclss Henley. J. Howard
smith. Seth Mann and Judge Sullivan.
W T. Rrobeck appeared for The Mer-
camille trust company and ". W kauf-
man for Receiver Stratton. The nu-
merical strength of counsel inspired
Judge Van Fleet to address them as
'the bar
While Judge Fleet rendered no judg
rncut. he thus expressed the purposes
Of the hearing:
we arc endeavorinE 10 approximate
tho amount of the preferred claims so
that the purchaser of the road will be
informed Of the amount, provision for
which will be made i'm the order of
sale The hearing is simply TO enable
the court TO fix gross sum 10 be set
aside from which the claims. eventu-
ally to be paid. should be paid
This statement was made from the
bench 70 prevent the introduction of
extra neous matter The estimate OF
the amount of preferred claims viii
I'm no way establish their legality. 1t
viii remain for the claimants To go be-
fore the master in chancery and deter
mine their right Of priority
PETITION REVIEWED
Attorney Kaufman, acting for the
p receiver, opened the proceedings by
reviewing his petition, stating that the
road was being run at = loss and advo-
eating its sale with the conditions here
tOfore mentioned. BrObeck then made
, answer for the Mercantile trust COM
pany. asking TO be allowed to proceed
with the sale.
AIcNab on behalf of G c. Moore
objected that the proceedings requested
by the receiver would complicate mat
ters and necessitate d cash bid, thus
depriving the bond holders of the right
to buy in the property. Judge Van
Fleet replied that 10 such action was
contemplated.
Attorney J. Howard Smith, on behalf
- Of certain creditors, suggested that the
unpaid capital stock could be called
D in and the stock holders assessed.
1t seems to be in controversy" said
Judge Van Fleet, whether anything
is due on the capital stock, as much of
il seems TO have been issued on prop
erty and not in coin. without saying
ii as final, I am exceedingly skeptical
as 10 the power Of the court under the
circumstances to order an assessment
on the capital stock. I have little
doubt that the court COULD direct the
receiver to call in the unpaid capital"
COURTS RIGHT DISPUTED
The receiver takes the position" re-
piled Attorney kaufman, that the
court can not order an assessment:
that il can call in the unpaid subscrip-
tions, but only such unpaid subscrip-
tions as the directors themselves would
have Ule power 10 call in
J. w. Crosby. auditor of the Ocean
Shore. was placed on the stand and
questioned al length to determine the
nature Of the various claims He was
without his books and little satisfac-
tory progress could be made. 1t devel-
oped. however. that the company had
raised money just before the receiver
ship by contract with J. A Folger by
which he had accepted bonds at some
thing over SO cents on the dollar. Fol-
ger had advanced SAC, 600 and received
in return $4,000 in bonds
=, An effort was made TO determine into
Z -ksshat various divisions of the enter
prise the $4,000 raised by bond sales
within the six months previous to the
receivership had gone. A further ex-
animation Of the accounts will be nee
essary to determine this point.
A controversy is expected when il
comes to determining just what claims
are preferred. Brobeck gave it as his
opinion that the preferred claims were
limited to those based upon operating
maintenance and possibly rental
charges incurred within six months OF
the receivership-