The Birmingham age-herald., 1921-02-07
Daily Financial Gossip
By HOLLAND

New York, February 6-(Special)-A former governor of New York has been asked to accept the chairmanship of protective committee of stockholders which will seek by legal means to pre- vent the sale of the Denver and RIO Grande railroad for S5,000,000 to another railroad corporation. This protective committee intends to act in cooperation with another protective committee which it is understood was organized in the far west.
 It is tvident that the stockholders of the Denver and Rio Grande railroad, at least those who are members of these protective committees, purpose resisting to the utmost the sale of their railroad property. This purpose undoubtedly in- yoived additional litigation to that which has already been begun. The United States district court at a recent sit ting in St. Louis heard motion which was offered by attorneys for the stock holders protective committee in which protest was made against the contirma- tion of the sale of the Denver and Rio Grande. This motion was supported by affidavits in which it was stated that se- curities which arS first-class and valued at nearly $9,00000 were transftrred to the purchasers of the Denver and Rio. .Grande in addition to the real property of the railroad company The protective com mittee attorney, J. F. Webster, believes that he can prove fraud in this sale. He furthermore states that the phys ical property of the Denver and Rio Grande is valued at s225 000,000 If the sale be confirmed by the courts the loss to the stockholders, if it is proved by evidence would be at least $S0.Oo0. coo.
 SENSATIONAL LAW SUIT
 It is the understanding here that in addition to the litigation which is all fy, tl,n pt~ Oltp strong that individual suits will be brought against the railroad directors who perfected for a comparative small sum this sale of the Denver and Rio Grande. Contemplated action of this kind is undoubtedly due to the example set by the suits which were brought by stockholders of the New Haven Rail- road company against individual direc- tors These suits were recently compro- missed by the payment in the aggregate of coo which was made by the d- rectors who were sued. The cause of complaint in the cases of the New Haven and of the Denver and Rio Grande is not the same. but it is alleged that the prin- ciple invo T, namely the responsibility and trusteeship which is upon directors, must be fully and honorably maintained.
 If these protesting proceedings which have been instituted by the protective committee of the Denver and Rio Grand Railroad company are passed to Juug- nlent in the courts, in all probability some very sensational testimony will be of fered. The proceedings will be numbered among the celebrated cases in which heretofore various railroad companies and some of their officers and directors have been involved.
 The action of the United States courts at St Louis in entertaining the motion to which the defendants are given 90 days to answer against the confirmation of the sale of the Denver and Rio Grande is' in line with the modern tendency. of the courts. which is to give perfect protection to stockholders.
 This tendency was recently illustrated in this city A corporation met with re- rious disaster. Suits were brought against the directors, and especially against one director who is man Of financial prominence. It was proved upon trial that although he was a director he at no time attended the meetings of the