The New York herald., 1922-05-30
READINGPREFERRED
STOCKHOLDERS WIN
They Will Share in Coal
Common Distribution,
Says Supreme Court.
TAFT GIVES DECISION
Plan of Dissolution Fixed
by Lower Court Held
Inadequate.
ONE RULING AFFECTS s. P.
Control of Central Pacific Is
Dissolved by Justice
Days Decree.
ONE RULING AFFECTS S. P.

WASHINGTON, May 20 (Assoclated
Press) Two decisions affecting great
railroad properties were handed down
to-day by the United States Supreme
Court. In one it was decreed that
preferred stockholders of tie Reading
company will participate with the
common stockholders in the distribu-
tion of certain assets of the Philadel-
phia and Reading Coal and Iron Com
pany.
A modification of the dissolution de-
cree in the Reading case was ordered
to more effectively divorce the Reading
Company and the Reading Coal ana
Iron Company.
Pointing out that the difficulty in the
separation of the interests of the Read
ing Company and the Reading Coal and
Iron Company lies in the lien OF the
general mortgage which covers muqh OF
the property of the former and all the
stock and property of the latter. and
is not redeemable until 1897. the court.
in an opinion by Chief Justice Taft,
directed that ''the District Court should,
after hearing of all interested parties,
determine the respective values of the
properties of the merged Reading Com
pany and the coal company which are
subject to lien of the general mort
gage"
Then -he decree should direct, the
court continued. that the liability of
each of the bonds and the pledge under
the mortgage shall be modified as be-
tween the mortgagee and the mort
gagors so that the liability of the Read
ing Company on the bonds outstanding
and the lien of the mortgage upon tha.
company's property to secure them
shall be reduced to an amount proper
tionate to the ratio of the value OF It's
pledged property to the value of all the
property pledged. including that of the
coal company"
Allowed to Amend Plans.
The District Court is permitted to de-
termine what IL any, inquiry 10 the
security a modification OF the terms OF
the debts and mortgage may be caused
and to compensate for ii by such pay
nent to the bondholders by either or
both companies as may seem equitable
and convenient.
The changes involved in these sug-
gestions may interfere with, or make In
applicable the provisions of the present
plan looking to a proper working capital
for the Reading company, the supreme
Court declared. Authority, therefore,
was given to the District Court to amend
the plan in any way which seems wise
10 leave the Reading company properly
financed to meet its obligations to the
public.
Chief Justice Taft said it did not seem
necessary to change the general form of
that feature of the dissolution plan by
which through the distribution of certif-
icates of interest to the stockholders
of the Reading company in the stock
of the new coal company the stock re-
lation. of the Reading company and the
present coal company are to be ended,
though the powers of the District Court
are by specific provision now to be linn
tied in that regard.
The decree in the Reading case was
entered by the United States District
Court at Philadelphia after the SUI
preme Court had held the combination
between the Reading (or holding) COM
pany. the Philadelphia and Reading
Railway, the Philadelphia and Reading
Coal and Iron Company. the Central
Railroad Company of New Jersey and
the Lehlgh and Wilkes-Barre Coal Com
pany to be unlawful.
Dissolution of ownership and control
of the Central Pacific Railway by the
Southern Pacific Company was ordered
by the court in an opinion delivered by
Justice Day.
The decision in the case. which was
the last Of the railroad merger suits to
be before the court. held the two lines
were competitive. Justices McReynolds
and Brandeis. because OF their official
connections prior 10 going upon the
bench. did not participate. Justice Nc
kenna delivered short dissent.
The court directed that decree be
entered severing the control by the
Southern Pacific of the Central Pacific
by stock ownership or by lease, but in
accomplishing that end, so far as COM
patible, said the mortgage lien OF the
Union Trust Company OK New York
should be protected