Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-22
S815,ODO IN NOTES
OUT ON SHOREHAM
Attorney for Rheem Fails to
Bar Statement at Cred
TORS Meeting.

fFrom the $50 Edition Of Yesterdays Starr
Notes aggregating $315 900, obtained
by a released first deed Of trust on the
Shoreham Office Building, are still out
standing, it was brought out at a meet
ing of creditors OF Swartzell, Rhsem 81
Hensey Co. this afternoon.
This information was given by E. Hill
ton Jackson, an attorney representing
some of the note holders. He said his
information was obtained from the
books of the bankrupt firm.
Leon Tobriner. attorney for Edmund
D. Rheem, executive vice president OF
the concern, objected to Jackson's state
ment on the ground it was irregular.
His motion to strike was overruled,
however, by Referee Fred j. Eden.
It was also brought out that a
81 100000 first trust, covering two build
ings of the Westminster Apartment, had
been released. 1t was indicated, how
ever, that relatively smaller number
of these notes are now outstanding.
Admits Equities Traded.
Attorney George E. Sullivan received
an affirmative answer from Rheem when
he asked If a trade in equities had fig
ured in the sale of the Shoreham Build
ing by Swartzell, Rheem &c Hensey Co..
to the Shoreham Investment Corpora
ton. Rheem said his companyS equity
in the Shoreham Building was traded
for that owned by the Shoreham Invest
ment Corporation in the Hurley Wright
Building. 1t was brought out last week
that Secretary of War Patrick J. Hur-
ley is a stakeholder in the Shoreham
Investment Corporation.
DO you recall that Hurley was re-
- ~ n
between 1000, 900 in new trusts on the
Shoreham Building and the original
$2,250,000 first trust?" Sullivan asked.
Rheem replied that Hurley paid $780,
900 in cash. He said this money went
through a title company into a special
account in the Riggs Bank. Swartzell,
Rheem & Hensey Co., he testified,
agreed to relieve Hurley of paying the
other 100000.
Rheem explained this amounted to
paying a discount for closing the deal
at that time. Otherwise, he said, the
sum would have come due two years
later when real estate market conditions
might have been even more prejudicial
TO the interests of the note holders.
Sullivan also brought out that Swart-
Zell, Rheem e. HenSey Co. did not make
a practice of requiring a completion
bond from builders who came to them
for loans. These are cash bonds to be
forfeited If the building is not COM
pleted by the specified time. The
attorney was attempting to show that
the interest of the note holders on the
Shoreham Building might have been
better protected had Rheem brought
about a foreclosure sale at that time,
looking to the builders. Harry Wardman
and Thomas Bones, for any deficiency
that might result.
Holds Outright Sale Wiser.
could you have bought the building
in yourself at a foreclosure sale and
held your father-in-law, Harry Ward
man, and Bones liable for the $l,000,-
900 deficiency" Sullivan demanded.
THAT might have been DONE"
Rheem replied, but we believed it in
the best interest of the note holders to
adhere to the plan we had decided upon
namely, sell the property outright to
a buyer"
Rheem denied he had been motivated
by any undue friendliness for Ward
man. j. Newton Brewer, second vice
president of Swartzell, l1heem & Hen
Sey. was then called 10 the stand.
He testified the failure of the COM
pany was a big surprise" TO him. He
attributed the failure in a general way
to two unsuccessful real estate ven-
lures and to the generally unfavorable
business conditions. He said he knew
little of the detailed affairs Of the COM
pany.
While the Westminster Apartments
reflnancing was under discussion.
Rheem twice refused to say whether
any of the notes covered by the orig
inal first trust were paid out of the
money turned over for that purpose by
the Metropolitan Life Insurance Co,
which made loan aggregating $l,l24,-
900. Counsel advised against the
answer on the ground that 1t might be
discriminating The hearing will re-
sumo at / 80 O'Clock Thursday