The Daily Ardmoreite. [volume] (Ardmore, Okla.) 1893-current, 1912-04-19
MILLIONS INVOLVED
IN OIL DISPUTE
CENTRAL FUEL OIL COMPANY
WILL BE UNDER MANAGEMENT
OF COURT EMPLOYEES.

cases which affect the properties ana
holdings of the Central Fuel OIL
campany and holding, one way or
the other. makes millions of dollars
difference to the contending parties.
Some time ago the Texas company
filed a suit in the United States dis
trict court asking that the Central
Fuel Oil company be enjoined from
disconnecting their wells from the
/ Texas company's pipe lines, as
threatened, setting up the basis OF
the action contract with the Cen
tral company whereby it agreed to
sell to the Texas company all the oil
produced from its holdings providing
that company would extend its pipe
lines to the fields of the Central COM
pany.
The Texas company asked that its
contract be ordered enforced, which
provided for payment by the Cen
tral company OF $4,000 a month as
part payment toward the pipe line
which had to be laid so as to extend
into the Texas company's field.
Judge Campbell at the final hear
ing of this case refused to enforce
the terms of the contract as written
| He reasoned that when the contract
was entered into there was an un-
| derstanding with the Central com
pany that it would cost the Texas
company $3,O0O,OO0 to lay the pipe
line into the fields. His decision was
reversed, however, by the United
States court of appeals and the cases
were remanded with instructions to
grant the Texas company tempo
rary injunction, which virtually was
holding that the contract should
be enforced.
The Texas company then filed an
application in the United States dis
trict court asking that a receiver be
appointed on the ground that the
properties of the Central company
were not being operated to the best
advantage and that the Central com
pany was not supplying the oil it
should
About the same time the Bankers
Trust company of New York filed a
suit in the United States district
court asking that its mortgage for
$4,000. 900 to secure a bond issue of
the Central company be foreclosed
and the property sold to satisfy the
demands of the bondholders. The Ban
kers Trust company alleged in its
petition that the Central company
had not been providing for the sink
ing fund for the bonds and that GER
tain installments of the interest were
due and unpaid. 1t was asked that
the property be placed in the hands
OF receiver until final disposition
of the case was made. and the pro
perty was sold.
Under both the cases the question
then was naturally raised whether
the lien of the Bankers Trust com
pany of New York. which company
held the mortgage to secure the bond
holders. was the first and prior lien
made by the Central company with
the Texas company had the prior
right.
This is an Important question for
all parties concerned in the case, as
it is virtually conceded and has been
often said by the attorneys repr3sent'
ing the Central Fuel Oh company
that the contract with tn reXas conf
pany is such that if enforced it VII.
bankrupt the company. as it compelS
il to sell oil at much below the mar
ket price and with the $4,000 per
month payment TO the Texas com
pany, it will gradually become insol-
vent
1t is also an important question
(which affects all the bondholderS ald
the Bankers Trust company, which
holds the slO.OOO.OOO mortgage De
cause if the contract is held to be a
prior lien and the Central goes bank
rupt, the bonds and the mortgage vii
not be worth much, whereas if their
mortgage is declared to be aprior liej
then the bonds would be worth pa
at least.
over million dollars worth o.
those bonds are held in the state o
Oklahoma. but the court yesterda,
morning virtually decided the imnor.
ant question in favor of the Teva