New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-11-17
SUES FOR S1,1OO,0OO
Receiver for CrosstoWn Line
Says Bonds Were MisappIied.
FRANCHISE, ONLY ASSET
Ryan, Vreeland and Other Met.
Directors Defendants-John
keenan, Got 100000.

some further instances OF intricate rail-
road high finance were revealed I'm suit
| filed by Joseph 3. Mayer. receiver of the
| Twenty eighth and Twenty-ninth Streets
Crosstown Railroad Company. against
Thomas Fortune Ryan, II. II. Vrceland.
Almeric III. Paget. Peter A. 3. Widener
and other defendants. who we're the d.
rectors Of the Metropolitan Traction Com
pany at the time OF its dissolution. to COM
pei them to account for $1,000 worth
OF bonds issued for the crosstown company.
The proceeds, the receiver said, were not
applied TO the benefit OF the crosstown
/ company. which was the purpose of the
issue
When Mr.. Mayer took charge Of the
railroad property there was nothing left
but the franchise There was not piece
81 rolling stock, he said. According TO Mr..
Mayer. 100000 worth of the bonds. on
whose issue he seeks light, were placed
on the market and sold. realizing more
than 100000 to the Metropolitan interests.
John Keenan, received 100000 worth OF
the bonds, because. as the resolution said,
he has heretofore and at sundry times
rendered service 10 the Metropolitan Street
Railway Company, in and about various
| negotiations"
The defendants. who also include Thomas
Dolan and r. Somers Hays. and John G.
johnson, George W. Elkins and Sidney F.
Tyler, as executors OF the will of william
L. EllSins. remain as trustees of the Met
ropolitan Traction Company for purposes
of litigation.
The complaint OF Mr.. Mayer set forth
that in 1896. the Twenty-eighth and Twenty
ninth Streets Company was capitalized for
$4,000. and had outstanding an issue OF
bonds amounting to 10000. This issue
was in the process OF foreclosure. there
| being due for principal and interest Sl4.5
| The Metropolitan Traction Company.
| through one Of its agents. made an agree
ment with Edward Lauterbach, represent
ing practically all of the stockholders and
bondholders OF the old road, TO buy the
stocks and bonds in part for cash the rest
with part OF the s1.50o,O0o bond issue to
be made by new company, which bonds
were to be secured by the Metropolitan
Street Railway Company.
Mr.. Lauterbach foreclosed the mortgage
under this agreement under which the
Metropolitan company was TO pay $4,000
in cash and $4,000 in the new bonds.
| Mayer said that in order TO justify the
| issue OF the stock and bonds Of the new
company, Trusow filed what was called
reorganization certificate. in which he
said ne and other persons had become
associated TO form company to operate
the Twenty-eighth and TNenty-ninth
Streets Company
II was said also that the company would
~ colt eI m
the Metropolitan Traction Company dis
solved and its assets were distributed
among the stockholders.
Mayer, on becoming receiver. had his at
torneys investigate the affairs OF the COM
pany. They Informed him that upon the
filing OF the reorganization certificate the
old company passed by operation of Jaw to
the new company, and that after the filing
OF the certificate Truslow had nothing to
sell to the new company.
The attorneys also reported that that
bond issue of s1,500,0Oo would only be jusu-
fed by SO much of the Metropolitan resolu-
ton as rected that the money was neces-
sary TO equip and operate the crosstown
railway. None of this money was paid or
expended for that purpose, Mayer said, and
when the reorganization certificate was
filed there was already contract in exist
ence with the Metropolitan Street Railway
Company turning over to II the property Of
the little company i'm consideration OF its
guarantee OF the bonds.
The directors OF the Metropolitan Trac-
ton Company agreed TO pay Truslow 5000
| in cash for the railroad, $4,000 Of the
81 800 900 of capital stock TO be issued and
also s1,5oo.Ooo of bonds to be issued. Bonds
to that amount were issued to TruslOw.
who turned more than $4,000 worth over TO
Lauterbach. representing the stockholders
of the old company, the Sl,loo.Oo going TO
the Metropolitan interests, which put $780,
OOO Of them on the market and gave John
keenan, $4,000.
Mr. Ryan and Mr.. Widener said in their
answers that the bondholders had no cause
for complaint as matter of law They said
that when the bonds were issued everybody
concerned was satisfied. subsequent pur-
chasers Of the bonds have nothing to COM
plain Of. and the receiver had no right TO
interfere.
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