The weekly tribune and the Cape County herald. (Cape Girardeau, Mo.) 1914-1918, 1915-10-29
Action Will Force Frisco to
Take Road Over and
End Receivership
SALE TO BE OFFERED
THROUGH NEWSPAPERS
Court DEGREES InsuresBond.Hold
ers of Realizing Face Value
on $1,5O0,OOO Debt.


thern Railroad will be sold at public
auction at the end of 80 days.
The sale which is brought on by
bond holders of the road, it is believed,
will force the Frisco to take over the
properties and at the same time take
it out of receivership. This move, it is
forecasted, also will pave the way for
the release of the Frisco system from
bankruptcy.
Judge Ranney's order filed yester-
day, was a supplemental decree to the
one he filed Nov. %, 1914, when he or
dered the road sold. 1t was aimed to
take care of block of bonds that were
not encOmpassed by the first order.
When the supplemental order had
been filed, it was announced that adj
vertisements of the roads sale at auc-
ton will be inserted in newspapers at
once and the line will be knocked down
under the auctioneer's hammer at the
Courthouse steps in the Cape.
When the original order of sale was
made by the Court, the document did
not make provision to have a block of
$4,000 worth of gold bonds held by
the ST. Louis Union Trust Company
as trustee, covered by the proceeds Of
the sale.
In the original order it was provided
that the properties were to be sold to
satisfy claims represented by bonds
aggregating $1,500,000.
A part of the road, the section be-
tween Pennington and Saline juno
ton, is subject to mortgage or deed
of trust executed by the Saline Valley
Railroad Company on Sept. 20, 1905,
to secure a debt of 100000 which is
represented by first mortgage bonds
of the Saline Valley Railroad Company
bearing interest at per cent and TO
mature Jan. l, 1886.
A block of those bonds whose face
value is $4,000 are outstanding and
unpaid, and now are in the hands of
the St. Louis Union Trust Company.
The decree makes it plain that the
mortgage on that section of the road,
to the extent of $4,000 now outstand-
ing, constitutes a. lien upon the rail
road, paramount to the lien of the
mortgage already tied up in the for
mer decree.
When the road is sold, the Court or
ders that the $4,000 worth of bonds
be satisfied under the mortgage.
The $4,000 worth of bonds which
were covered by the supplemental
court order compose the last block of
bonds against the railroad to be placed
road.
1t was when control of that paper
was gained, that the trustee in charge
of the bonds was willing to go ahead
with the sale.
Attorney John d. johnson of St.
Louis came down to the Cape yester-
day afternoon accompanied by Attor-
ney Charles P. Hope to have the order
entered.
Johnson represented the St. Louis |
Union Trust Company, and Hope the
railroad.
When the bonds, which are secured |
by the mortgages on the road first |
were issued, the bond holders obtained |
a contract with the Frisco Railroad,
binding the Frisco to guarantee the
bonds on the C. G.. & n.
A total of about 81 100000 worth of
bonds were issued against the road, all
Of which the Frisro contracted to
guarantee. The Frisco, about three
years ago, went into the hands of re-
ceiver, and at that time the receivers
attempted to have Judge Sanborn of
the Federal Court in charge of the
Frisco receivership, declare that the
with the c. G. & n. bond
holders was not binding upon the rail-
road.
The vast majority Of the bonds are
owned by Louis Houck who took them
n payment for the construction work
he performed upon the road.
Many of the bonds were purchased
by scores of business men in Southeast
Missouri and financial interests in st.
louis.
When the attempt was made by the
frisco receivers to abrogate the guar
lntee contract with reference to the
ponds, Houck championed the cause of
he bond holders and fought the case
'ut in the Federal Court. /;
A few weeks ago, Judge Sanborn {
landed down an opinion in which he {
leld that the contract the Frisco made, /