New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-03
Hyian Hints City Is After Traction
Lines: Would Protect ITS Investments

III IS under duty to ask the court to
appoint joint receiver. 1t was stated
by Judge Mayer that an application
would he SO made on January Il,
Which IS the return day before Judge
Mayer OF the temporary receivership
nder the dual contracts the gross
receipts are USED, first. for the pay
ment OF operating expenses, mainte-
nance expenses, fixed charges on the
company's investment, preferential
ana then fixed charges on the citv's in
NtstNent, and the commission is given
tic right to check and audit the finan-
Cal accounts OF the companies to
make sure that only proper deductions
are beng made from the gross reve-
nues in order that the city's invest
ment may be protected he two COM
panies III question are using rapid
transit lines upon which the city's eX-
renditure amounts to over $500, 100000
and It IS the protection of this inter
est that causes the commission to make
the Application to the court
Mayors Order Filed
Judge Mayors order, appointing Mr..
Garrison temporary receiver of the
Brooklyn Rapid Transit Company and
it's subsidiary companies-the New
York Municipal Railway Corporation
and the New York Consolidated Rail
road pany-under a bond of $780,
600 was filed yesterday with Alexander
Gllchrist, il, clerk of the Federal Dis
trict Court. The order authorizes Mr..
Garrison 20 take possession of all the
properties and assets and TO continue
the operation of the various systems
Of the defendant railroads. Mr.. Gar
rlson Is further authorized to borrow
money necessary to redeem any and all
securities of the defendants now pledg-
ed. which he deems essential for the
receivership,
The order directs the officers of the
three companies to turn over to him
all papers belonging to the corpora-
ticns and enjoins them from interfer-
ing with the possession or operation
OF the assets.
me rapers in the suit in equity.
which vas brought by the Westing-
fousa Electric and Manufacturing Com
bahV. also were made public yesterday.
PRESIDENT Williams Joined in the prayer
81 the complaint that the property of
,he three corporations be taken over
by the Federal Court to preserve ana
protect it "for the creditors. bondhold-
ers and stockh olders."
Inc clearinghouse claim is for s4s.-
46i 10 for supplies furnished to the
B. R. 7. i''S7' " '''e
Further Charges Made.
After describing the capitalization of
the defendant companies, and asserting
'hao the B. K. T. has agreed to pay the
principal and interest of the Subway
Companys burden, having face valve
Of Sols33 600, the complaint states that
the b. R. I. is the owner Of 63.670
shares Of the stock Of the Nassau Flee
lrlc Railroad Co., $500 shares of the
Coney Island and Gravesend Railway
20, 4,99l shares of the South Brooklyn
hallway Co., 500 shares of the Bridge
operating Co., 1887 shares of The
brooklyn Heights Railroad Co.. and 10
WI shares of the BROOKLYN Queens
county and Suburban Railroad Co.
- II IS further asserted that the B. r.
i. ~ through stock ownership. controls
IN me Coney Island and Brooklyn R. R.
o. the Subway Company, and that it
owns and leases power houses. power
plants and sub-stations in Manhattan
and Brooklyn . . 90 Il
Cost Exceeded Estimate.
When the subway company contract
was entered into between the COMPANY
and the City of New York" the com
PANT says, ut was estimated that tho
amount received by the Subway Com
pany from the sale of it's 100000 900
nrst mortgage bonds would be sufficient
10 enable the Subway Company to com
plete and provide the initial construc-
'ion and equipment called for under
'ne terms Of the contract. but owing to
delays beyond the control of the Sub
way Company and to the great increase
n loD l.
since the execution of the contract. the
cost OF the work has largely exceeded
me estimates, and it is now estimated
,nat further sum of $11 600 900 will
De required Tor the completion of con-
structlon and equipment, that the Snh-
way Company has now expended al the
proceeds derived by it from the sale Of
the hrst mortgage bonds and is now
without funds adequate or sufficient to
enable 1t to complete the programme of
construction and equipment required of
u ny the contract, and also without
1unds Tor the payment Of obligations
and Indebtedness incurred in the course
OF the work and now due or shortly to
become due, the amount of such obliga-
TONS and Indebtedness of the subway
company now due or shortly to become
due being in excess of $4,000, 900"
s4,920.0O0 Indebtedness
he funded Indebtedness of the
b. K. IT, the complaint continues,
amounts to s7O305, and the company
mas also an outstanding floating in
debtedness Of upward of s4.850. 900 for
money borrowed and for materials and
supplles-' 1t also states that default
was made by the B. R. T. in the pay
ment Of the principal of its six-year 5
per cent gold notes due July /, 1918.
and still continues. and that an install
ment of interest amounting to $4,000
40 became due and payable on Janu-
airy /. 1919
The complaint says tire R. R. 7. is
without means TO pay its Indebtedness
and that the default in payment of in
terest viii be continued, and the com
pany will be unable to pay the install
ment due on January l of the subway
company's mortgage bonds, amounting
TO $500, 900
Can Take Over Earnings
Il is further stated that because Of
the default on the part of the Consoli-
dated Company under its guarantee
tins viii Immediately cntitle the
trustee under the mortgage of the sub
way company and under the mortgage