The weekly tribune and the Cape County herald. (Cape Girardeau, Mo.) 1914-1918, 1916-08-31
COURT is ASKED TO
TELL FRISCO TOPAY
Cape Girardeauan Will be Given
Stock in New Company
For Amount.
SUIT is THREE YEARS OLD
Company Attempted to Escape
Contract 1t Made Before
Going in Bankruptcy.

Louis Houck yesterday was allowed
S1,37 1886 on claim against the
Frisco on account of his bonds Of the
Cape Girardeau & Northern Railroad,
in a report which Thomas T. Fauntle-
roy, master of chancery in the Frisco
receivership, submitted to the U. S.
Circuit Court in St. Louis.
This action in the Federal Court is
heralded by Major Giboney Houck and
his father as a complete victory in
their train of litigation which traces
itself virtually through the entire his
tory of the Frisco and c. G.. & N. re-
ownership.
The report of Fauntieroy will be-
come Judgment in the court or the
order of Judge Sanboln, who is in
charge of the affairs Of the Frisco re-
Ownership, probably today before the
motion to approve the sale of the road
is taken up.
1t will be necessary then for the
Frisco to pay the judgment in order
to maintain their organization scheme,
and that will probably mean that the
Frisco will actively take over the C.
G. & n. properties.
Mr.. Houck was joined in MS litiga-
ton against the Frisco by the ST.
Louis Union Trust Company of ST..
Louis, which also he'd some of the
railroad bonds, but the large majority
of the paper was owned by Mr. Houcl;.
The bonds were given to Mr.. HoucIz
several years age in part payment for
what were known as the Houck lines,
four small railroads, which were or
gained by a subsidiary company of
the Frisco into the Cape Girardeau G.
Northern. BY the terms of the con-
tract made for that deal. the Frisco
Railroad stood back of the bonds. They
amounted to S1,500,O00 and By reason
of the fact that the Frisco guranatecd
the payment Of the interest ard pria-
cipal on the bonds thcy found q mar
ket.
Many of them were sold on the mar
ket and the funds used in financing i'm
provements on the c. G. & N.
In 1913, however, when the Frisco
went into receivership, the receivers Of
the road refused TO recognize the val
idity of the purchase of the c. G. & N.
or Houck lines, claiming that the
stockholders did not approve the deal.
This announcement also Withdrew
the Frisco's guarantee of the bonds
and their value on the market disap-
peared. The action also forced the C..
G. & n. into receivership.
NJ. Houck and the st. Louis Union
Trust Company, holding large ma
Jority of the bonds, filed a suit in the
Federal Court, seeking to try out the
validity of the sale of the c. G. & n.
to the Frisco, and thus restore the
value of the bonds.
The trial of the case was referred
by Federal Judge Sanborn to Mr..
Fauntleroy as special master. At the
close Of the trial, FauntIeroy, almost a
year ago, submitted report to Judge
Sanborn in which he asserted the val
idity of the sale of the C. G. & n. and
declared that the Frisco would have
to stand good for the bonds which Mr..
Houck and all other bondholders pos
5essed.
Judge SaEboTn made that order in
the court last November, but follow
ng that step, it became necessary for
The court to determine how much the
Frisco would have to pay on the bonds
Judge Sanborn decided that in order
o maintain the Frisco's contract as
yuarantor, it would be necessary for
hat road to pay damages amounting
o the difference between the par value
If the bonds and the market value i'm !
after the Frisco went into !
eceivership.
In order to establish this amount it |
vas necessary to take up the question
f what was the market value of the
onds Immediately after the Frisco
allure in separate trial and the case
7as again referred to Mr.. Fauntleroy.
n his former report, Mr.. Fauntleroy
recommended that the Frisco be order
d to pay the full amount to the bond
olders.
Testimony in the second case to fix
on the bond deal was con-