The New York herald., 1922-04-01
ELEVATED RENTAL
DEFAULTED L.R 7;
RECEIVERSHIP seen
Directors Formally Decide
Not to Pay ST, ,O50,O0O
Quarterly Rate.
STATEMENT BY HEDLEY
Progress in New Interest
Plan Reported in, Face Of
Grave Situation.
LINES OWE NINE MILLIONS
Court Action Probable Soon to
Untangle Situation From
Alright Con tract.
LINES OWE NINE MILLIONS


board OF directors of the Interborough
Rapid Transit Company yesterday af-
ternoon, that corporation formally de-
faulted in the payment of $1.050, 900
quarterly dividend rental due the Man
haitian Railway Company under the
terms of its lease to the marlborough.
The sum named fell due on De-
cember 81 last, as it was the rental for
the final quarter of the year 1921.
Under the terms OF the lease. however,
q payment must be ninety days in
arrears before foreclosure proceedings
could be begun by the Manhattan look
ing to the return Of the elevated rail-
road properties to their bondholders
for independent operation.
Although the Interborough directors
yesterday voted liquidation OF 1891 .16o
of its debtor account w:th the Man
haitian, an account now aggregating
close to s6,0o0.000, including tax ar
rears. their default upon the per
cent. rental charge left the INTERIOR
ough at the close of the business day
open to foreclosure proceedings that
may be begun by any Of the more than
1000 individual stockholders OF the
Manhattan Railway.
Default Not surprise.
The 1nterborouerl's derault cannot be
said TO BIO surprise. Td5 New YORK;
HERALD several weeks ago made the
authoritative statement thar the inter-
borough was through paying Z per
cent interest rental on the Manhattan's
999 year lease and would default on
the April / payment.
1t was pointed out that the elevated
lines had been operating at a deficit /;
that they we're draining the Golfers OF
the Interborough OF about ST.o0o.00
annually and that the Interborough
management had determined TO free
itself OF the cuSs bcrsome milistone, even
at possible cost OF a receivership.
At the close of the special meeting
Of the Interborough board Frank He'd
ley, president OF the company. issued
this statement:
THE interborourh Rapid Transit
Company board, at its special meeting
this afternoon. authorized the officers
OF The company to pay the semi-annual
interest. amounting to SS13,660. due April
/. 1892, on the first mortgage per
cene. bonds OF the Manhattan Railway
Company az part OF the rental, and
s17.5U senli-annuai cash rental (due
under the lease to defray the Manhat-
tan's administrative Office cxpenses).
Action upon the per cent. dividend
rental, amounting to s1.050,oo0 for the
quarter. due April I. 1922, was deferred
by the board tor further consideration.
THE officers or the company reported
progress and were authorized to con-
tinue negotiations with tho representa-
tives Of the Manhattan Railway Com
rany looking toward readjustment Of
the rental provisions OF the lease"
Won't Add to Statement.
Mr.. Hedley and James l.. Quaclsen-
bush. general counsel to the Inter-
typed statement.
officials, counsel and committeeman
representing the Manhattans horn of
the dilemma we're little more COM
municative. One said:
II have little doubt we could get to-
gether on q reasonable rental figure II
II were possible 70 get the Manhattan
STOCKHOLDERS together.
But that is impossible This lease
was drawn In the interest OF he Man
haitian Railway BY an astute lawyer
the late Julien r. Davies. lie mode II
alright and copper riveted. 1t II. in
effect contract with every individual
stockhoider on the Manhattan's books.
No board cf directcrs. no protective
stockholders committee has one atom
Of right to nullify an individual stock
fxat ~
dividend without his consent"
with yesterdays default the Inter-
borough on its stock dividend rental ac-
count with the Manhattan row Is in
arrears actually for six months pay
ments IN the sum OF s2,l00.0o0. which Is
Z per cent. annually upon the $4,000. 900
stock capitalization. One-half OF the
g.. 10000 having fallen due ninety days
ago. Is now default which renders the
Interborough liable to action in fore
closure. The other si,05o.0C0 though
technically due yesterday in payment
for the first quarter OF 1922, win not be-
come n similarly actlonable default un-
til Juno 30 next.
BtlIs Owed by Interborough.
In addition. the Intorborough yester-
Gay owed the Manhattan some g. 10000
consisting Of bond interest and arrears
Of taxes. for payment OF which the
Interborough il responsible 70 the city.
The Tnterboroush's total obligations
due to-day aggregate about 100000. to
meet which the company has about
A00oo0o Despite tho default tho opin-
ion was held in some quarters that Mr..
Quackenbush's activities recently with
members OF the banking house Of j. +.
Morgan & Co. suggested the possibility
Of a new banking loan OF $1,000, 900.
should the Manhattan elevated lines
be returned TO their bondholders for in
dependent MANAGEMENT. while the third
trackage improvements and the several