The New York herald., 1920-12-29
$2,6O0,0OO PAID
NEW HAVEN ROAD
TO END LITIGATION
Restitution Suit Alleged
Mismanagement by For
mer Directorate.
LAWYERS GET THIRD
Attempt to MOnOpOlize New
England Transportation
Caused Suit.
NO BAD FAITH CHARGED
W. Rockefeller, L. G. Ledyard,
C. M. Pratt and Others
Are Assessed.

are ASSeSSeu.
Upon the payment to the New Haven
Railroad Company of $2,500,000, of
which one-third. or $685., 3,333.33. goes to
the lawyers for the stockholders in
whose name the fight was made, the
so-called restitution suit against Will
lam Rockefeller and other former di-
rectors of the road was discontinued
yesterday by order OF Judge Charles
M. Hough of the United States Dis
trict Court.
The suit was set for trial on Jan
uary 81, but within the last week the
disputants reached an agreement of
settlement, which Judge Hough ap-
proved. In this agreement $2,500.000
was set as the sum to be paid TO tho
New Haven, and il was acknowledged
that the directors named as defend
ants did not seek their personal profit
and were not accused of fraud or any
moral wrongdoing. but acted for what
they thought TO be the best interest
Of the railroad.
Restoration Sought.
The object OF the suit. which was
started by minority stockholders in
1916 after both the then directors and
majority stockholders declined to act,
was to compel the controlling directors
Of the New Haven to restore to the
road money which, it was alleged. had
been lost through waste and misman-
agement in the period when the COM
pany was buying up competing rail and
steamship lines and trying to monopo-
lie the transportation Of New England.
The sum sued for was $3.50, 100000
In one of the papers attached to
Judge Hough's memorandum. Richard
V. Lindabury. of counsel for the defend
ant directors, said they would have won
the suit upon trial and added:
Nevertheless the defendants are
weary OF the litigation. and are dis
posed to buy their peace II Il can be
purchased at a reasonable price and
without dishonor."
The defendants upon whom the
81, 10000 is assessed are:
William Rockefeller. Charles VI. Pratt.
Lewis Cass Ledyard.
j. p. Morgan. Herbert i. Sattere
William p. Hamilton and Lewis Cass
Ledyard as executors OF the will of ].
Pierpont Morgan.
Florence a. V. Twombly, as execu-
T.. 4NIE
Twombly.
The plaintiffs six lawyers who will
split the 1893 900 counsel fee, which is
said TO be the largest ever awarded in
a court in this State. are Arthur
Berenson, Lawrence Berenson, Bernard
Berenson. Asa L. French. Francis p.
Garland and Frank VI. Swacker. In his
memorandum Judge Hough said:
Large as the settlement is, L see no
reason why the rule usual In this juris-
diction In respect OF recoveries of sums
largely speculative by counsel operating
on contingent fees should not be ap-
Piled, and award one-third tho
settlement to the plaintiffs counsel"
Judue Hough's Memorandum.
The compromise was ratified In Judge
Hough's chambers. where all the
lawyers met yesterday. AT the end Of
their talk the Judge signed an order
disseminating the suit. accompanied by
this memorandum:
"The compromise OF suits and actions
is generally a private matter between
the parties, and the only reason known
10 me Tor submitting this settlement to
the court IS the unusual fact that II
consists in the payment by one set
OF defendants TO another defendant
rThe railroad company was technically
named as one OF them In the Buitl OF
n large sum OF money in consideration
OF a general release.
Hrhe Individual defendants arc buying
their peace from the plaintiffs by paying
money to the corporate defendant. The
only interest Of the plaintiffs In this SUIT
however, II to get money for the cor
porate defendant and counsel fees and
expenses for their own solicitors.
However, since the appreciation OF the
court has been asked, It is given for the
following reasons:
This bill alleges n conspiracy to cause
the corporate defendant to violate the
Sherman act by doing very expensive
and Improbable thinEs. Ergo, says the
bill. the individual defendants must pay
az damages what the conspiraoy cost the
New York and New Haven Railway. I
have regarded this as an extremely
doubtful cause Of action. difficult TO
prove, and In outcome uncertainty itself
After repeated attacks upon Il. how
ever, tho bill has been retained ESQ far
as am concerned), mainly because un-
derncath the maze OF pleadincs one out
standing fact remains, viz. that the d.
rectors of the railway or a majority OF
them pursued the consistent course OF
acquiring everything that could be called
transportation eystems in
New England. and many that 10 my
mind could . OF be called competing
paying for such acquisitions q great
deal of money or property, con-
stituting an outlay which in tho light
OF subsequent events It would be diff
cult 20 Justify on a business basis. This
has seemed enough to require the trial Of
the suit when and IL pressed.
Now that the plaintiffs have re-
tractae all suggestions Of personal prcfit
hy tho defendants. md retracted also
whatever allegations OF moral wrongdo-
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