The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-09-25
KEOKUK WAR WITH
ROCK ISLAND AGAIN
Opposition to Receivers Plan
to Cancel Lease Of Iowa
Railroad.
FEAR OF HEAVY LOSSES

The minority stockholders OF the
Keokuk and Dcs Moines Railway Com
pany, which is controlled by the Chicago,
Rock Island and Pacific Railway Com
pany, have begun a fight against the
application OF Judge Jacob NJ. Dickinson
and Henry L. Nudge. receivers OF the
Rock Island, for permission from the
Federal Courts to and discon-
tinue the lease under which the keokuk
and Des Noines is operated 10y the Rock
Island.
Herbert II. Clark of the stock ex.
change firm OF Henry I. clark 4 co.
announced yesterday that he had been
requested by several large stockholders
OF the company to manage, through
counsel, the opposition to the receivers
petition. and has sent out circulars ask
ing other minority stockholders TO Join
him In the fight.
The keokuk and Des Moines is
operated by the Chicago. Rock Island
and Pacific under "A lease dated May II.
1873. which fixes the annual rental at a
sum equal to c5 per cent. OF the gross
earnings and guarantees a minimum
rental OF sl37.50O, which IS the amount
of tho interest charges on the under
lying ; per cent first mortgage bonds "
the keokuk. The interest. but not the
principal, is guaranteed tv the Rock
Island. 1t is this lease which the re-
cieivers propose To- have the court cancel.
Under the terms Of the lease the Rock
Island Is obliged to maintain the equip
meut of The keokuk and to furnish at
its own cost such additional equipment
as may he necessary for the proper de
velopment OF the road. II Is charged
that the Rock Island has dcfaultcd his
obligation and that at this time the
keokuk has no equipment whatever ~
its own.
Mr.. clark, in the circular he has sent
10 stockholders OF the Keokuk. SAYS that
II the court should decide 20 discontinue
the lease dividends would hc impossible
and a foreclosure OF the underlying
mortgage would almost inevitably follow
because the property cannot he operated
uutil il is financially ana physically re-
h~abilitated. such rehabilitation cannot
be accomplished before the maturity "
the next interest coupon or before the
period Of grace fixed under tho terms o.
the mortgage. with foreclosure, Mr.
Clark says. the stoyk Of the company
would he absolutely vIlucless.
He therefor" urges Immediate action
on the part Of the stockholders 20 oppose
the remuneration Of the lease and 10 in
sist. in case the court should grant the
release. upon equitable terms" including
the furnishing by The receivers " sufii-
cient equipment and the return to the
treasury OF the stock which the Rock
Island acquired nnlcr the lease. This
consists OF 2O.j90 shares and consists ~
a majority 81 the company's stock. This
stock was taken by the Rock Island at
81 a share for the preferred and 80 cents
a share FOR the common II was cN-
pla med thai the keokuk road wa> willing
to let the stock go al such a low figure
owing to the agreements Il obtained IN
the lease.
Mr.. clark asks the stockholders who
I join him in the fight to aSrec To- bear
an assessment at the rate Of u Of /
per cent. OF their respective holdings
for the preferred and "a OF ! per cent.
for the common to establish a fund To
defray expenses of lighting the pro-
posal 10 cancel the lease.
In June. 1914, q SUIT WAS instituted
hy preferred stockhuld.rs Of the ktuNH~
AMONG them hc.IS MIR. clark. gains
the Rock Island To cumpc, that COM
pany To account t. the Keokuk for
rentals under the lease and 10 force
the company 20 pay damages for losses
by the keokuk through waste ana mis-
management The sum me- toned IN
this suit was about $4,000
Il is pointed out hy the Clark inter-
ests that IL l.. Nudge. one Of the r"-
ceivers ~ the Rock Island, Is IN a pecu-
liar position in that he is also president
~ the Kepkuk as We'll as ~ the Rock
Island. ~ receiver We is trying Z"
have the Rock Islands lease of Tn,
Keokuk vacated. while the Clark inter
csts aliege that as president or Inc
Keokuk he should be lighting an pro-
posal to cancel the lease,