The Bennington evening banner. (Bennington, Vt.) 19??-1961, 1913-03-20
CLAIM RUTLAND
STOCK WORTH
ONLY $40
Former President Clement Be-
fore Board of Appeals
DIVIDENDS HAVE BEEN Small
Price Of 1906 Paid by New Haven In
terests Not Fair Basis of
Valuation.

Montpelier, March 19.-The apprais
al of the Rutland railroad property
took up the entire day before the
board of appeals, the principle wit
ness being Perciyal w. Clement OF
Rutland, former president of the road
who gave important testimony as to
the value of the stock and bonds OF
the road which, in effect reduced the
valuation $1,50O,O00, as made by the
former state tax commissioner, j. Il.
Cushman. Mr.. Clements valuation
was based on what he considered TO
he a fair market value of the road
securities. He was recalled at the
afternoon session to explain the divi-
sion of rates between the Rutland ana
the New York Central road, whlch
subject Attorneys +. w. Lawrence OF
Rutland and j. G. Sargent OF Ludlow
counsel for the Rutland road, ala not
believe the state would go into. MT
Clement was called for this purpose
as he was the only available witness.
At the close of the hearing the road
asked for a continuance in order 10
get other witnesses here. The state
objected on the ground that the board
of appeals could not keep all cases
separate and ought not to be handl-
capped by continuances. The board
will announce its decision in the morn
ing The hearing brought out no
startling features, and leaving out the
matter of division of rates the rail-
road appeared TO make out good
case.
Mr.. Clement stated his connection
with the Rutland railroad since 1888,
first as vice.president and then as
president until 1902, when he sold
the control of the property; and as
director and one of the principle min
ority stockholders since the purchase
of the control by the New York Gen.
trail
Mr.. Clement gave his figures of the
values of the different outstanding Sc
curities of the company which State
Treasurer Deavitt has used as a basis
of his valuation in his appeal from
the appraisal of Former Tax Commits
sioner ]. E. Cushman.
The principle item of difference
was the valuation of the $685., 500
par value, of Rutland preferred stock
which Mr.. Deavitt had valued at 1O5,
urging in justification that this was
the price agreed upon in the proposed
sale of the control from the New
York Central to the New Haven;
though the fact appeared that the
stock has been offered for sale for
some time past in the Boston market
at As, with no bids.
The railroad company's attorneys
showed that only IL per cent of divi-
dends had been paid on this stock in
the past 10 years.
Mr.. Clement valued the stock at not
over $40 a share. He thought that
the price which the New Haven was
willing to pay for the control of a
competing line in their fight against
the Grand Trunk could not be called
the fair market value" He also con
sidered the control of the road worth
more to the New Haven than TO any
other interest because of the situa-
ton of its property and the increased
business it could give to the Rutland.
Mr.. Clement objected to the basis
of valuation, proposed by State Treas
urer Deavitt, as being unfair as COM
pared with the assessment of other
property in the state for the purpose
of taxation, in that il practically I'M |
dertakes to value the railroad proper |
ty on a per cent income basis. He |
gave as an illustration that while this |
an appraisal of $4,000 |
for every $500 of net earnings, no one |
would consider for a moment the as
sessment of a house at $4,000 which |
only paid $500 year rent.
In the cross examination by Attor-
ney Z. A. Cook for the state II was
attempted to show that i'm the opera
ton of the Rutland road. under New
York Central control, il was not Civ
en- its fair proportion of through
freight divisions. Attorney Cook re-
ferred to testimony in the suit Of I'm
termeyer and others against the New
York Central.
Mr.. Clement said that the treat |
ment of the Rutland by the New York /
Central had always been eminently |
fair; and that most OF the divisions /
now in use we're the divisions estab-
lished under his own administration
of the road back to 1896.
Mr.. Clement was followed by Hen
~ G. Smith, former vice-president OF
the Rutland company and now 1ocat-
ed in New York city. Mr. Smith plac
ed the present value Of the Rutland
preferred stock at about $40 a share.
Referring to the price OF los in the
trade between the New York Central |
and the New Haven. Mr.. Smith said |
that he did not think this figure |
should be taken as a measure Of the |
market value for the reason that il /
was a price fixed in a swap" Of Rut-
land preferred for the stock Of the /
Naur Xn~E Ontario .-H To-far- pail