New-York tribune., 1910-05-25
Accountant Tells of Third Ave-
nue. Bond Issue.
DISTRIBUTION OF PROCEEDS
Marvyn Scudder's Testimony
Before P. S. Commission
Causes Legal Tiff.

Despite the repeated protests of Willlam
D. Guthrie, counsel for the Third ave-
nue. bondholders' reorganization coInihiI'ee'
Marvyn Scudder, expert accountant tes'i-
fed yesterday at the hearing oeIore tiio
Public Service Commission on the dlstripu-
ton of the proceeds of the sSi'9oo'Voo 'i
4 per cent consolidated bonds issued IN
June 1900, by the Third Avenue Raliroad
Comnany at the time of the lease to the
Metropolitan.
Oliver c. Semple, counsel TO the commls-
sion, said the bondholders' committee IN
cluded this amount in the cost OF reproouc-
ing the road as it was claimed that the
proceeds were spent in requirements, better
ments and improvements. The testimony
of Mr. Scudder tells different tale. MI
Guthrie said the employment of Mr. Scud-
der was waste of public money, oppression
OF the petitioners and food for scandal.
OF the bond issue, sS5,O00,O0O was un-
derwritten by Kuhn, Loeb & Co. at 9S n.
Of the proceeds s23, 3,169,397 was paid out
directly by the Morton Trust Company,
trustee under the mortgage, while a balance
of s11,424.070. including interest, was
placed to the credit of the Metropolitan
Street Railway Company, lessor OF the
Third Avenue. for construction account OIL
the Third Avenue system.
The lease provided that no sum should
be paid out until the Metropolitan by ITS
president or vice-president. under its cor
porate SEAL had certified that the amount
had been duly expended for the purposes set
forth in the lease. No trace OF such cerun-
cation was found. according to Mr.. Scud-
der for the payment of S1S,265,575, made
up of the proceeds of the bonds above re-
of %ta ~ ind or nj
OF the s23,169,397 paid out by the Nor
ton Trust Company, s15,S54,914 was used
to meet notes and other bills payable for
securities purchased and interest. Among
the amounts SO paid were s4,S0S.554 for
some 1e, 900 shares of Union Railroad stock.
bought at 22727 in March, 1898, when the
stock was selling in the open market ,it
from 100 to 210; s2,557,4Oo for 11,2S7
shares of Dry Dock, bought at 200 in Sep
tember 1897 when the stock selling
at from $50 to 10. In addition, s5,903, ,66S
went for notes and miscellaneous items, for
which no details are given; $4,000 to
operating cash. and s333,126 largely for
legal and underwriting charges for which
no vouchers are given except the indorsed
checks.
Are not indorsed checks good vouchers?'
asked Mr. Guthrie.
"They may be so considered" replied the
witness.
The Metropolitan, from the amount set
at its disposal paid to the Union Railway
s4692.75O in large blocks. ostensibly for
operating expenses. The Metropolitan Rail-
road got S1,423.93S, and the Dry Dock S42.-
4S1, but no vouchers appear. Some por-
tions of these amounts were returned later.
For supplies, materials and services ST.
140 437 was paid out, and in this were
included advances Hoadley, Jauterbach &
Johnson, the lawyers, got for services TO
February /. 1900. 100000, while for ser
vices in connection with the lease and the
forming of the KuhnlLoeb underwriting
syndicate they drew S1S5,0O0.
Mr.. Guthrie would not admit the COM
potency of Mr.. Scudder even after he had
testified that he served as accountant to
Governor Hughes in the insurance investi-
cation and in various other public proceed
ings. He also ran foul of Commissioner
Maltbie by stating his view that the COM
missioner knew more about the Scudder
statement than counsel for the petitioners.
you assume that I have seen the state
n1ent BEFORE, said Mr.. Maltbie. II have
not. That assumption is like many others
you have made here, unfounded in fact
The hearing will continue Today.