The weekly tribune and the Cape County herald. (Cape Girardeau, Mo.) 1914-1918, 1915-05-07
Federal Court Agent Says
Promise to Buy $500, 900
Bonds is Binding.
DECISION A VICTORY
FOR HON. LOUIS HOUCK
Railroad is Given Until Week
From Today TO File
Exceptions.

Aii q ICpOI ldllNltu NiONH III Ci-
Louis yesterday by Thomas T. Faun-
tleroy special master of the Frisco,
the road is held to be liable for the
payment Of approximately S1,500,000
of bonds Of the Cape Girardeau and
Northern Railroad, which the Execu-
tive Committee of the Frisco assumed
from Louis Houck more than two
years ago.
The decision Of Special Master
FauntlCroy tarns the road over to the
Frisco, which is now in the hands Of
receivers, but who have made arrange
mcnts for a reorganization involving
the expenditure of more than $780,
100000 to wipe out the debts.
The report yesterday revealed the
fact that the Frisco, under the terms
of the contract which gave it posses
sion of the Cape Girardeau and North
ern, now owes the bond holders more
than 100000 in accrued interest on
the paper.
While The opinion Of Master Faun-
tlcroy is not final, it is believed in St
Louis that the decision will be binding
FaunteIroy gave the attorneys for the
Frisco Railroad until one week from
today to file their exceptions to his
railing. If he should reject the Frisco's
motion for new trial, the masters
report will be sent to Judge Sanford
of the United States Circuit Court for
reaffirmation early next week. St.
Louis lawyers who have studied the
case, believe tho court will uphold the
finding Of Fauntlcroy.
FauntIeroy's report finds against
the Frisco Tor $I,12G,779.58 in favor
of holders Of bonds. Some holders of
the bonds were not parties to the suit.
The Judgment is in favor of the fol-
lowing:
Louis HOuck, Cape Guardian, SIG
614,95; st. Louis Union Trust Co.,
S512,233.33; Mississippi Valley Trust
Co, $3.50, 1886; Farmers and Mer-
chants Bank Of Cape Girardeau, $15,-
SO; jefferson Bank Of S.. Louis, $26,-
45S.33; Lead Belt Bank of Flat River,
$8,466.66; Bank of PerryviIIe, $33,-
86666, and T. J. Moss Tie Co., $2S,-
514.99.
The case grew out of the purchase
by the Frisco of four railroads in
Southeast Missouri, owned or con-
trolled by Louis Houck. These were
the Saline Valley Railroad, the Ches-
ter, Perryvile & Ste. Genevicvc, the
Cape Girardcau & Chester and the
Cape Girardcau g. Thcbes Bridge Ter
minal.
As d result Of negotiations conduct
ed for the Frisco by J. H. Byrd and
for the four roads by Houck, con-
tract with the Frisco was executed, by
which the four roads agreed to trans
fer to new corporation the Cape Cir
ardcau Northern Railway Co, all of
their assets Of every description. This
new corporation was to have an issue
of 1000 shares of stock, all of which
was to go to the Frisco. Houck agreed
to pay the outstanding floating debt
Of the roads, amounting to $4,000.
The Cape Girardeau Northern was
to execute a mortgage to cover all of
the property of the four roads, and
was to issue $2,5O0,O00 of first mort
gage bonds. of these $1,025, 900 were
to go to Houck in payment for the
roads, and S475, 600 were to be sold
by the Cape Girardeau to acquire u
fund to equip and operate the roads.
In consideration of receiving all the
stock of the Cape Girardcau Northern,
the Frisco agreed to guarantee the
payment Of principal and interest on
the bonds. The deal was ratified at
meeting of the Executive Committee
of the Frisco in New York Dec. 10,
1912, which was attended by b. F.
Yoakum, James Campbell, L. V. r.
Thayer AND C. W. Hillard.
No question as to the validity of the
bonds arose until after the Frisco
passed into the hands of receivers
Frisco officials then discovered the
property was not earning the interest
on the bonds, and the receivers dccid-
cd to repudiate the guarantee on the
ground that the stockholders had not
authorized the officials of the Frisco
to make the guarantee.
The holders Of the bonds, through
their attorneys, J. D. and LOomis C.
Johnson, filed intervening petitions in
the Frisco receivership case, and the
decision of the special master upholds
their contention that as innocent pur-
chasers they are entitled to the pay