New-York tribune., 1918-01-05
Priority Denied
In Big Judgment
Against D. & r. G.,
Government Control Saves
Railroad From Insolvency,
Says Counsel

Judgment for a sum in excess of
Grande Railroad in favor Of the Equ
table Trust Company, as trustee for
the bondholders Of the Western Pa
ciiic Railway, was affirmed yesterday
Appeals, in u decision written by Judge
Hough. The court ordered that the
case he remandcd, with directions to
the District Court to transfer it to tho
law side Of the court, and as so trans
fcrrcd, that the Judgment entered
June Ia last be affirmed, without costs
Injunctions Ordered Vacated
The decision further ordered that
the several injunctions issued in the
course of the litigation be vacated and
set aside
The decree appealed from, as grant
ed by Judge Learned Hand, contained
mandatory portion reading as fol-
lows:
"Ordercd adjudged and decreed that
the complainant, the Equitable Trust
Company of New York, as trustee, re-
cover from the defendant, the Denver
e. Rio Grande Railroad Company, the
sum Of $38,270,343.17, with interest
thereon at the rate Of 6 per cent per
annum from the date of this decree;
that the defendant, its officers and
agents, pay said sum to the complain
ant, and that the complainant have
execution thereof pursuant to the
rules and practice Of this court"
The appeal from the decision Of the
lower court vas taken by the Equitable
Trust Company to establish the prior
ity of its claim against the Denver e.
Rio Grsnde
Not Entitled to Priority
Judge Hough, whose opinion was
concurred il by Judges Rogers and
Mayer, said in concluding his decision:
"Thc plaintiff has a money iudment
for breach of contract and that is all
1t is entitled to no further or greater
priority than any other owner of a
judgment on contract Of the date Of
the so-called decree This fact may
become important if it be true. as
alleged in plaintiffs pleadings, that the
liability asserted against the defend
ant and now established by the iudg-
ment Of the courts Of this circuit. is
so great as to render the new Denver
and Rio Grande Company utterly in
solvent.
apparently such asserted. if not
hopedfor insolvency-hoped for in the
sense Of attempting to establish the
liability-was one Of the reasons for
plaintiffs attempt to draw a bill in
equity, that attempt has failed, and the
failure must be definitely marked"
May Secure Accounting
Following a meeting of the Denver &
Rio Grande directors yesterday after
noon, it was stated that the Circuit
Courts decision would undoubtedly
have precipitated receivcrship had
not the railroads been taken over by
the government. Under the President g
proclamation attachments may not be
levied subsequent to the time when the
carriers passed to the control of the
government.
Alvin w. Krech, president of the
Equitable Trust Company, which, as
trustee Of the Western Pacific bonds
began the litigation in The lower court
| to protect the interests Of Western Pa
cihc bondholders, said last night that
the assumption Of control Of the
railroads by the government would not
in his opinion, prevent his bank, acting
as trustee, from securing an account.
I ing of the Denver company's books.
After the Circuit Courts decision
was made public in the financial dis.
trict Denver e. Rio Grande issues be
came notably weak, while other rail
road stocks were strong. The pre-
ferred fell 41a points to S12 and the
common stool. pa points to 81. Tho
company's bonds, including the consoli
dated as and the improvement 5s, de-
clincd from to 2 points.