The New York herald., 1921-08-30
new PETITION ASKS
RECEIVER FOR |. R. 7.
AND CHARGES FRAUD
Continental Securities Co..
in Filing Second Writ for
Receivership, Assails
Roads Officials.
WOULD END IL LEASES
Fictitious Assets Listed, BO-
muses. Given to Officers
and Unearned Dividends
Disbursed, Is Alleged.
TRANSIT BOARD NEUTRAL
City Co-Defendant and Cor
poration Counsel O'Brien
Studies Situation-Hylan
Sees Higher Fare Move.
TRANSIT BOARD NEUTRAL

While transit securities tumbled
yesterday in the stock market as re-
suit of the petition for a receiver for
the Interboro Rapid Transit Company
filed last Saturday by the American
Brake Shoe and Foundry Company q
second petition was filed in the United
States District Court asking for a re-
ceivcr.
In addition TO general allegations of
the Interboro's inability to meet its
obligations the second petition accused
the traction company OF many irregu-
larities, including the charging of ap-
proXimately SIS, 900 OF payments of
interest and sinking fund chatges
against construction account instead
OF income, thus creating fictitious as
sets, and paying bonuses TO directors
and officials, some Of whom already
were receiving salaries for their ser
vices.
The petition also Is the first court
action having for one OF its specific
objects the abrogation OF the INTERIOR
ough's lease OF the elevated lines. the
burdensome rental and other fixed
charges of which, 1t has been conceded
generally. constitute the main obstacle
that prevents the subway lines from
supporting themselves and making
money. The petition asked that the
court direct receiver to abrogate that
lease contrast, which the petitioner
blamed arsc.y for the InterSoroush' :
present financial difficulties.
City Is a Codcfenslant.
Yesterdays suit was filed by the Con-
tinental Securities Company of Jersey
City. and the following are named as
codefendants with the marlborough :
The Manhattan Hallway Company,
whose elevated lines are under lease 10
the Interborough the city OF New York,
which has financed and owns the sub
ways the Guaranty Trust Company, a.
trustee, and the Bankers Trust Company,
as trustee.
The Continental company and its
president. Clarence IL. Vcnner, VINO
signed yesterdays petition. have re-
ceived a 81 cat deal OF publicity in the
last decade because or the frequency
with which they have begun court ac-
tions against corporations in whose
intN NSte Inc
Interborough before has been under the
legal fire OF the venner concern. as
has the New York Central and other
large corporations. The applca tion OF
the Continental In the present litigation
recited that the complainant owns $50
shares OF Interborough capital stock OF
500 par value per share, $4,000 (par
value) worth OF first and refundng
mortgage per cent. bonds. and S25. 900
(par value) worth OF I per cent colat-
erai notes.
vealed in the petition, followed q demand
1t made last Thursday upon the Inter-
borough that ii concede bankruptcy and
ask voluntarily for n receiver, upon a
threat that, unless the Interborough
agreed by yesterday to pursue that
course, the Continental would file suit.
The suit was begun despit. the promise
of the Interborough to submit the de-
mand to Its directors at the regular
meeting scheduled for to-day. In ex-
PLANTATION. the Continental said that
further demand upon the Intcrborough
directors would be virtually to ask the
directors to order n suit against them
selves, since. the Continental charged,
they are responsible for the irregulari T.
ties OF which the Continental COM
planned.
Forewarned ny Continental.
The revelation that the Tnterborougf
thus had notice OF the intention of tho
Continental to file suit served TO revive
speculation regarding whether the In
terborough was taken altogether by
surprise when the American Brake Shoe
and Foundry Company beat the Conti-
mental to court with a petition las.
Saturday.
None OF the interests named as de-
PENDANTS by the Continental would COM
n~nt yesterday on the matter.
Neither would banking interests con
nected with the Interborough company
say anything concerning either yester-
days or Saturdays petition. At the
offices OF J. p. Morgan g. Co. II was
said that the responses to the com
panys request to noteholders to permit
the extension OF tho z per cent. notes
At rate or per cent, by approval of
which extension the Transit Commits
sion hoped. as did the Interborough. 20
avoid n receivership, were coming In
satisfactorily.
NO hsures were obtainabie from the
Morgan house regarding the number OF
those responses, but In other quarters II
was said that n 90 per cent. OF The
notcholdors would consent TO the exte,,
sion II was not considered likely thar
the remaining 10 per cent would be
able to obstruct the extension plan.
7. y. Morgan q Co. have issued receipts
for notes which already have been de-
posted and those receipts were admitted
yesterday 70 trading in the curb mar
kct
Tho reeeivership news was demoraI-
izing to traction securities on tho Stock
Hxchauge ard In the curb market The
heaviest loser o.; tSc RruUp was Man.
haSaJi Elevated guaranteed stock.
r-hieh opened m : a points NJ 10 and
cssrnp.ly destined another 4. points