The Washington herald., 1921-05-14
PROTECTIVE BODY
OF D. And R G. co.
AIR GRIEVANCES
Directorate Charged With
Deliberate Default of
Interest Payment.
BRING TRUST SUIT
$3S, 900, 900 Judgment Recov.
cry on Alleged Invalid
Breach Charged.

The protective committee of
stockholders of the Denver and Rio
Grande Railroad Company. through
their counsel. Arthur N. wickwire.
Of New York, have addressed an
open letter to Hon Albert B. Cum
minis, chairman Of the Interstate
Commerce Committee investigating
the railroads. in which they bring
to his attention certain episodes In
the history of this railroad company
which disclose. they claim, enor-
nous wrongs committed by the d.
rectorate and certain railroad mag
mates and nnanciers cooperating
with them Following are excerpts
from the committees charges:
Unfair Tactics Charged.
This committee speaks on behalf
OF over 5000 victimized stockhold-
ers of the Denver and Rio Grande
Company. They are prepared to lay
before your committee evidence
showing that the directors and their
associates deliberately caused a de-
fault to be made in the payment In
the interest on the first mortgage
of the Western Pacific Railroad "a
subsidiary of the Denver and Rio
Grande) and caused the mortgage
to be wrongfully foreclosed. thereby
wipinE out the second mortgage for
S25,000,000 held by the Denver and
Rio Grande and over s3o.oo0.000 of
promissory notes held by IL. This
was accomplished through the de-
vice of interlocking directors. Not
satisfied with this. they caused suit
to be brought by the Equitable
Trust Company. pf New York. as
trustee for the Western Pacific in
terests. against the Denver and Rio
Grande to recover damages for
breach of an alleged agreement.
which was. in fact wholly invalid
and unenforceable and from which
the Denver and Rio Grande never
derived a dollar Of benefit; and they
recovered Judgment thereon for
S3s,0eo.00o. This mastery stroke of
high finance Immediately permitted
the tail to wag the dog: for the
Denver and Rio Grande. instead of
being creditor in the sum of s55,-
100000, became a debtor In the sum
of s3S.ooO.o 600.
Dkseeferate- RespensibIe.
This alleged agreement was
foisted upon the Denver and Rio
Grsnde by means of an interlocking
directorate and II was one Of the
most amazing and unconscionable
agreements known in the annals of
railroading. A similar contract in
the case of the Wabash Pittsburgh
Terminal and the Wheeling and
Lake Erie constituting a part Of
the same rans-continentaI scheme)
had been adjudged inequItable Snd
utterly invalid and unenforceAble
three years previously by Judge
Day in the United States Distric,
Court of Ohio cell Fed. 5I5)-but
this defense was never set up or
litigated in the case of the Denver
and Rio Grande-for some occult
reason
Having secured this Judgment
for 33S. .000. 900. the Western Pacific
interests proceeded, by execution,
to strip the Denver & Rio Grande
of nearly all its free assets, includ-
ing $1,000 900 IL Liberty bonds, all
its interest in the Utah Fuel Com
pany "a coal property of great value
which for many years has paid
a dividend OF at least 100000 into
the Denver & Rio Grande treasury.
besides some millions of dollars on
deposit in the banks. Then they
proceeded. by a collusive proceed
ing, to throw the Denver & Rio
Grande into the hands of a vice
president of the Western Pacific. as
receiver: and on November 20, 1920,
the entire railroad and equipment
and all the remaining property and
the free assets excepting claims
against the United States govern
ment growing out of Federal con-
trol) were sold at judicial sale to the
western Pacific interests at the up
set price of s5.0o0.000 This price
Is utterly inadequate. as the past
and present earnings of the road and
all of the financial statements show
that there is an equity of about
100000 in the property above the
bonded Indebtedness.
The committee has caused a bill
IN equity to be filed in the u. 8
District Court of Colorado on behalf
of the stockholders seeking to enjoin
further proceedings under said
Judgment for $4,000. 900; to set aside
said judicial sale and to secure the
restitution Of all the property seized
~ the Western Pacific interests to
the Denver & Rio Grande. The COM
mittee Is also contemplating SUITS
against the directors to recover
damages for their colossal breach
OF trust.
The protective committee is pre-
pared TO lay before you at as early
a date as Is convenient to you. ali
the evidence and data in its possess
sion: and viii furnish you with the
names OF witnesses who should be
suhpoenaed in order that all facts
ana circumstances germane TO your
investieation may be brought into
the light"