Los Angeles herald., 1910-05-24
JUDGMENT FORCES
CHICAGO RAILWAYS
To RECEIvERSHIP
Stock of Big Corporation Drops
When a Decision Exposes
Weak Assets
is UNABLE TO PAY $1,344,684
Company May Be Liable for Five
Millions More if Iudne's
Findings Stand
[Associated Press1

~ HICAGO, May 23.-The receivership
into which the Chicago Railways
~ company was thrown today sent
it's most active stock, series 2 partici-
pating certificates, off an extreme nine
points in the local exchange with only
a slight recovery. This stock partici-
pates only after the payment of bond
interest and dividends on certificates
of series one, but the earnings of the
company recently were believed to in
dicate an early dividend on series two.
Thousands of shares were unloaded
when news of the receivership became
known in La Sale street.
The appointment of the receivers,
John M. Roach, president of the COM
pany, and Henry A. Blair, heavy
stockholder, was precipitated by the
fact that the company had neither suf-
ficient assets to pay a judgment Of
s1,344,6S4 rendered against it by Judge
Ball in the superior court last week,
nor to provide sufficient bond to Sc
cure a stay of execution by means of
an appeal
There was only one way out-a re-
ceivership-and this action, described
as a mere legal move for friendly con-
servation," was taken suddenly and Sc
cretly.
By this arrangement it will be pos
sible to protect the company while
Judge Balls decision is carried to the
state supreme court.
Judge Ball held that the Chicago
Railways company, in taking over the
old Union Traction company, promoted
by the late Charles T. Yerkes, assumed
responsibility for the bonds of the
financially shattered Consolidated
Traction company.
The judgment awarded by Judge Ball
and entered today was in favor of the
litigating bondholders of the latter
company.
EFFECTS OF RECEIVERSHIP
Should this decision be upheld it
opens the way for additional judgments
of similar nature aggregating about
S., 900, ,000 Other effects of the receiver
ship may be summarized:
First-The citys interest under the
reorganization ordinance of three years
ago, whereby the municipality received
fifty-five per cent of the net profits
of the company, is fully protected
Second-The physical improvements,
TO which millions already have been
devoted, will go forward under the d1-
rection of the board of supervising en-
gineerS.
rd-Consolidation of the proper
ties of the Chicago Railways company
and of the Consolidated Traction com
pany, providing Judge Ball is sus-
tanned by the upper court.
1t is said the bonds of the Chicago
Railways company are not affected
either by the receivership or the judg-
ment, as they constitute a prior lien
on the $5O,OOO,OOO assets of company.
The friendly offices of the Westing-
house Electric and Manufacturing
company were called upon to secure
the receivership. The petition was
filed by Charles P. Cotton. jr., of New
York. representing the Westinghouse
company. His bill set up that the local
company owes a bill of $4,000 to the
electric concern which it cannot pay
because of the judgment secured
against it.
The bill declares that the local COM
pany's assets are at present SO en-
numbered by mortgages and trust deeds
that it cannot raise money enough to
perfect an appeal FROM Judge Balls
decision.
The proceedings. which took place
before Judge Peter S. Grosscup In the
United States circuit court, lasted but
a few minutes.