El Paso herald. (El Paso, Tex.) 1901-1931, 1910-09-05
Passed to Catch the Interna-
tional & Great Northern,
But Will Affect All Rail
road Securities.

Austin, Texas, Sept. 5.-The bill that
legalizes unsecured claims on railroads
when in receivership hands, passed by
the legislature with the necessary two
thirds majority to put 1t into effect i'm
nediately upon the governors sigma
ture has caused q sensation No meas
ure considered at this special session Of
the legislature aroused more interest
among the railroads and outside in
vestors in these properties than the one
In question
While the bill was aimed specifically
at the International & Great Northern
which has about 10000 of unsecured
claims exclusive OF about $4,000, 600
loaned it by the Goulds, outstanding
against 1t, its provisions are Of general
application 1t is not improbable that
other Texas railroads viii have to un-
dergo the process of reorganization in
order to conform to the stock and bond
law when their present outstanding
excessive bond issues mature, in which
event they may have TO follow the re-
ownership course and find themselves in.
the same predicament that the Interna-
tional & Great Northern is now in
volved
At any rate, the bill was vigorously
opposed by the general attorneys Of all
the principal railroads Of the state. The
assertion was freely made by the op-
ponents of the measure that its enact
ment into law would put a stop to rail-
road construction in Texas and would
be serious blow to other investments
in this state.
There was a general feeling on the
part of members Of the legislature
and others that the international &
Great Northern should be made to pay
its unsecured debts. A large part of
the S1,500,e0o outstanding against it
jury cases. considerable amount or
other damage claims and labor &C
counts is embraced in the total.
Origin of the Measure.
This piece of legislation had it's orr
gin over differences that arose some
time ago between the state railroad
commission and the International &
Great Northern as to a revaluation of
the property of the latter as a basis
for a new bond issue under the propos-
ed reorganization. The issue which the
road proposed to order to cover its in
debzedness was about S13, 900, 600 in ex-
cess Of the valuation placed upon the
property by the railroad commission
The road claims that unless the COM
mission grants it. the necessary author
ity to issue bonds to cover its indebted
ness, it is unable TO meet It's unsecured
claims. The commission, on the other
hand, takes the position that its valua-
ton of the roads property is just and
equitable.
1t is considered doubtful that this diff
ference as to the proper valuation Of
the property, Tor bonding purposes that
existed between the railroad and the
commission would have caused legisla-
ton on the subject had not certain dam
age suit lawyers over the state pur-
chased big amounts Of the outstanding
unsecured claims against the road, and,
seeing little prospect of these debts be-
ing paid, led in an agitation for the en-
Rctment Of law legalizing such claims.
Text of the Measure.
The text Of the measure passed by the
legislature is as follows:
I'm case Of the sale of the property
and franchises of a railroad company,
whether by virtue OF an execution order
Of sale, deed Of trust, or any other pow
er or by a receiver acting under judg-
ments, heretofore or to be hereafter
rendered by any court of competent
jurisdiction, the purchaser or purchas-
ers at such sale, and associates, if any,
shall acquire full title to such property
and franchises with full power to main |
tain and operate the railroad and other |
property incident to it under the re-
strictions imposed by law; provided, |
however, that said purchaser or pur- |
chasers- and associates, If any, shall not |
be deemed and taken to be the owners !
OF the charter of the railroad company |
and corporators under the same, nor |
vested with the powers, rights, privile- |
ges and benefits Of such charter owner I
ship as II they were the original 4
corporators of said company, unless /
the purchaser or purchasers, and asso-
ciates, If any, shall agree to take and /
hold said property and franchises /
charged with. and subject to the pay
ment of, all subsisting liabilities and !
claims for death and for personal in /
Jury sustained in the operation of the