Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-13
Holder of 1925 Paper Wants
SWartzeIPS and Rheem'S
Order Vacated.
SAYS RELEASE WAS
IMPROPERLY MADE
Early Mortgage Debts Past Due,
but Financiers Held They
Were Paid, He Says.

Charging that a first mortgage for
$1,200,000 on the Carlton Hotel had
been improperly released by Edmund
D. Rheem and Luther A. Swartzell,
officers of the bankrupt firm of Swart-
zell, Rheem g. Hensey, one of the note
holders today asked the District Su-
preme Court to appoint receiver to
take over the property and conduct
the business.
The court is also asked to vacate
the release executed by Swartzell and
Rheem and recorded on october 3,
1928.
The petitioner, George NJ Hamilton
of Pittsburgh, Pa, charges through At
torney Joseph A. Rafferty, that the
release was improperly executed and
recorded and that the group of bankers
involved in the financing were ION
notice" that the instrument did not
recite the truth in the statement that
the indebtedness had been fully paid
The court is asked to re-establish
the original deed of trust.
Notes Due Not Released"
Hamilton says he owns five notes
totaling $4,000 of the issue of notes
under the original deed of trust, record
ed March 80, 1925, and which was at
tempted to be released" October 3, 1928
The notes have matured, he says, and
no interest has been paid since Sep
TENDER, 1890.
Named as defendants are the Ward
nan Real Estate Properties, Inc.
Swartzell & Rheem, trustees; the Gen.
trail Hanover Bank g. Trust Co., and
A1k - ekaa
under an authorized bond issue OF
SIG, 5000 placed on number OF
properties recently, including the Carl
ton Hotel.
Hamilton SAYS the conduct of the
bankers financing the large bond issue
and their agents constituted mail
fides," and II the money to pay the
81, 100000 first mortgage then on the
property was provided by them they
were bound to see to its proper appli-
cation and failure to do so was meg
ligence of such a character as to neg
alive any right they might otherwise be
entitled by law to enjoy under the deco
Of trust securing their bond issue, which
now appears as first lien on the prop
erty."
Protective Body Formed.
Formation of the first Protective
Bondholders' Committee following the
ccllapSe of Swartzell, Rheem & HenSey
was announced today.
This committee was formed for the
benefit of the mortgage note holders on
an unfinished apartment in the 14OO
block of N street, built by Frank Tom
linson and financed through Swartzell
Rheem g. Hensey.
In a suit recently fled by TomlinSor
against the noteholderS it was alleged
that, although mortgage notes totaline
5000, 900 were sold, the builder has re-
ceived less than 100000 from the mort
gage concern.
neys representing the noteholders, with
Paul E. Lesh as chairman.
Petition Rules Postponed.
Referee in Bankruptcy Fred j. Eden
yesterday arranged with United States
Marshal E. c. Snyder for a room in the
District Supreme Court house, to be
itors of the bankrupt mortgage con-
Germ. A date for this meeting has not
been set.
Justice Jesse C. Adkins yesterday
continued until March all rules pend
ing on petitions of noteholders and
others for the return of securities found
among the papers of the bankrupt cor
porat1on.
Attorney Michael M Doyle, represent
ing the receivers, answered questions
yesterday at the hearing, which was at
tended by about go lawyers. Some
sought to have the receivers permit ex-
animation of the records, but Attorney
Doyle insisted that to do this would re-
tard the work of the receivers and
would interfere with the presentation
to the court by February IS of report
of the assets and liabilities of the bank
rupt. He offered to aid as far as pos
sible in giving information to lawyers
who would write to the receivers, but
would have to insist that the receivers
make all examinations.