The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-03-21
Screen Line" System Debt
$71,600,OO0 as Shown
in Petition.
FOLLOWS B. r. r. ACTION
Procedure Is Started Over
$4,000 Claim of Brake
Company.
NO MORTGAGE INTEREST
Special Franchise Tax for
1900 Unpaid-City Seeks
Coreceivership.
NO MORTGAGE INTEREST

- ubSe JULIUS NJ. MdyeT OF tne FED
sral District Court yesterday ap-
pointed Job E. Hedges temporary re-
ceiver Of the New York Railways Com
pany, which operates the so-called
green" car lines and which owns or
controls the franchises of a score or
New York city.
Thus the two principal surface car
systems Of New York city are in re-
ceivers' hands. The B. r. T. led the
way December 81, 1918.
The order to show cause why the re-
ceivership should not be made perma-
nent is returnable at 4 o'clock p. NJ.
March 81 in Room 235 OF the Federal
Building. Mr.. Hedges accepted the ap-
pointment under a bond of 100000
and Immediately after the signing OF
the order went to the offices of the
Broadway and took possession. The
order furthermore authorizes the re-
ceiver to borrow such money as in his
Judgment appears needful to meet cur
rent requirements and operating ex-
penses.
Company Debt Barred.
The action was brought by the
American Brake Shoe and Foundry
Company, a Delaware corporation. on
an equity claim OF $3S, ,s06.26. The pc
tition alleges a floating Indebtedness Of
900 on the part Of the defendant
and alleges mortgage Indebtedness OF
approximately s700oeooo, the interest
upon which, the petition states, the de-
tendant company is unable TO meet.
Tho petition OF the plaintiff is attested
by William G.. Pcarce. president Of the
American Brake Shoe and Foundry
Company, and George NJ. Judd. counsel.
The petition asking for the receiver
ship was brought by counsel TO Judge
Mayors chambers at 80 o'clock yes
terday afternoon after a series of con-
ferences between officials OF the Inter
borough Rapid Transit Company and
the New York Railways Company and
representatives of the conpany's credi-
tors and the stock and bond holders that
had extended over couple OF days
The action followed a sensational falling
of OF Interborough- Metropolitan "a per
cent. bonds in the market yesterday.
Rumors that a receivership would be
asked for spread through the financial
district shortly after noon, but could
not be confirmed until the petition was
actually hled.
No Opposition to Action.
Ia tb. oopference that followed the
formal action in the Judges chambers
the stockholders we're represented by
Paul d. Cravath, the per cent bond
holders by Joseph p. Cotton, Jr. and
the s per cent bondholders by Charles
p. Rowland. No opposition to the re-
csivership was suggested and the formal
proceedings occupied only a few min
utes The selection of Mr.. Hedges as
receiver Is regarded as a personal choice
by Judge Mayer, as the two men were
classmates and have been friends for
many years.
No secret has been made OF the fact
that a receivership has been imninent
for many months The New York Rail-
ways Company. through Theodore p.
Shonts, has repeatedly warned the pub
lie that the only alternative to such an
eventualty for the surface, elevated
and subway lines lay in the granting OF
the right to charge an increased fare
officials OF the company pleaded fire.
auently before the Public Service Com
mission and the Board of Estimate for
financial relief, but the extent OF the
company's Indebtedness was never actu-
ally known by the general public.
Among these items of indebtedness al
legged by the plaintiff in the petition and
not denied in the reply nled on behalf OF
The New York Railways Company Is an
item OF approximately 100000 repre-
senting outstanding unpaid special fran
chise taxes for the year 1900. which con-
stitute a lien upon the special franchises
that threatened to compel the city off,
cials to seize and sell the lines.
Unable to Pay Interest.
The petition sets forth that for tho
fiscal year ending June 80, 1918, tht
income from all sources fell more thar
sibo,OoO short OF the amount required
to pay the Interest on the first real es
tate and refunding mortgage bonds, and
furthermore that for tho six month;
ending December 81. 1918, the income
was sT3s,IS7 OF the amount required fol
such purposes, while the corporate deflci
reached $2.125.03s, with all special ant
reserve funds exhausted. The petition
further sets forth that while since en-
tering into possession OF the properties
the defendant company has spent up
ward of $4,000. 900 In improvements anc
additions, which enhanced the value q
the lines. the defendant nevertheless II
several instances substituted electricit,
as a motive power in some of its line
without establishing power houses o.
other Independent sources for the sup
ply of motive power. leaving certain
lines Of the system dependent upoT
others In the system for their power.
The financial situation OF the de
fandant ls the more acute, the petition
says, by reason of the situation will
respect 10 public service corporation