The Birmingham age-herald., 1914-11-11
Roads Receivers Win Part of Plan to Disclaim Liabil-
 ity For Bond Issue
SIMILAR SUITS ARE
 NOT PRECLUDED
Receivers Attorneys Announce Road Is Liable For Bonds But That Of- ficers Exceeded Authority in
 St. L., B. and M. Deal

San Francisco railroad were dismissed in the federal court here today.
 The suit was filed by the roads reoeiv- CTS and it's dismissal was part of their plan to disclaim liability for the Frisco on a s2e.ooo,oo0 bond issue of the New Orleans. Texas and Mexico railroad.
 Loomis Johnson, attorney for the re- ceivers announced that the dismissal of the suit would not preclude the filing of a similar suit, and that such an action might be taken after the liability of the Frisco on the s26Ooo,ooO bond issue had been determined. He said il was felt the receivers could not consistently claim that the road was not liable for the bonds. If they claimed that officers of the road had exceeded their authority in making the purchase of the St Louis. Browns vile and Mexico road. which included a guarantee of the bond issue. If tho bond issue were illegal, there was nothing to restore to the Frisco on the part of the directors.
 Attorneys Statement
 Attorneys for the receivers issued this statement:
 "Inasmuch as the dismissal of this ac- ton will deprive the defendants of the l opportunity to meet the charges of fraud
 made in the petition, we deem 1t but just to them to say that we have made an ex- haustive examination of the matters en- trusted to us.
 We found that in the so-called Browns vile and Iberia deals (for the latter of wh.oh settlement has been made) there was, in our opinion, an excessive exer-
 else of authority by the directors, for the | results of which, in the case of the
 Brownsville, the directors probably could | be held accountable, and that certain of ! them also. might be held acountable for profits made out uf the deal if tho court | should decide that the St. Louis and San i Francisco Railroad company Ia napie at
 all on account of the New Orleans. Texas
 and Mexico division bonds.
 We have failed however. to find, and | judging from the information that we : have, we do not believe that any of the
 directors of the St. Louis and San Fran ! cisco Railroaf company have been guilty i of any actual wiful or intentional fraud
 in the administration of the affairs of
 the company"
 l The proceeding today was before Jacob 1 Trieber of the Little Rock federal dis l trict court. who sat in the court for tho l eastern district of Missouri, in place of | Circuit Judge Sanborn of St. Paul. whc has had charge of the receivership pro
 ceedings from the start, and who in-
 structed the receivers to bring the resti- | tuition suit if they found the evidence jus | tified 1t. Such suit. asking Sl4,OO0.00O was filed January 22, 1914. It was directed against 10 men who were directors of the l Frisco from December l, 1909, to June | ! 1910 During that time the Brownville
 road was purchased. The 10 men were B. r. Yoakum, former president of the l Frisco board of directors; James Camp. 1 bell of St. Louis vice president of the | Frisco and head of the North American company. which instituted the receiver 1 ship proceedings, and seven other former directors of the trisco-W. K. Bixby of l St. Louis, A. S. Grieg of St. Louis. B. L. 1 Winchel of Chicago, F. V. R. Thayer oi
 Boston and c. W. Hlllard and Franl,
 Trumbun and Hans Winterfeldt of New York
 Filed Agreement
 On March 20 1914, the Frisco receivers | filed an agreement made with A. T. Per- Sins syndicate manager of the St. Louis Union Trust company, for cancellation of notes held by Perkins for purchase of the New Iberia Northern and the New Iberia St. Mary and Eastern lines which were
 promoted by syndicates, which Frisco of ficials had been represented The agree ment provided for cancellation of Frisco debts aggregating $i600.000 and for return
 of the New Iberia roads to the syndicat,
 that promoted them
 The St. Louis and San Francisco rail. road was thrown into the hands of re.
 ceivers on May 27 1913. Soon after the 1 United States Senate ordered the inter- state commerce commission to determine l the causes of the receivership. At . hearing In St. Louis last November Fris- l co directors told of the syndcates of which they had been members that had 1 promoted subsidiary lines in Louisiana
 and TeNas and sold them to the Frisco at | q profit. The interstate commerce com | mission reported to the senate last Jan
 uary that the insolvency of the Frisco I was due in part to disproportionate cap
 italization, the acquisition of new lines
 and the financing of the New Orleans.
 Texas and Mexico and other Texas lines.