Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-13
WARDMAN FINANCE
CORPORAT|ONP PUT
IN RECE|VERSH|P
Alexandra Judge Grants Mi
nority Stockholders
Petition.
FARLEY ON SELECTION
TO BE HELD TOMORROW
Mismanagement, Fraud and Col
fusion Were Among Charges
Contained in Suit.

receiver for the Wardman MORT
gage dE Discount Corporation, a yir.
ginia company, was granted by Judge
William P. Woolls of the Corporation
Court at Alexandra, Va. this morning
on the basis Of the suit filed last Octo-
Der on behalf of minority stockholders
Of the corporation.
The decision, which was handed down
orally and only in the presence of at
torneys for both sides, was merely to
the effect that sufficient evidence had
been introduced to warrant the appoint
ment OF receiver for the corporation.
Acknowledgement. fraud and collision
were among the charges contained in
the suit brought against the corporation
and Harry Wardman. Thomas p. Bones
and James D. Hobbs by Attorneys H. F.
Kennedy and Harry A. L. Barker on
behalf Of Robert B. Smythe, Theodore
S. Grape and Charles D. Davis, minority
stockholders.
Appraisals Were Criticized.
Granting of the receiver is taken as
further evidence of the collapse OF the
elaborate financial structure set up in
IgZS to take over the operation Of 10
Wardman-built properties in washing
ton. which followed the authorization
Oh a $l6,0OO,o00 bond issue, of which
Sl1,OOO,0O0 were sold, on which the
owning corporations were not able To
meet the interest payments due March /
sharp criticisms of alleged inflated
appraiSals of some Of the 10 properties
IN connection with the excessive" bond
issue were made recently before the
Blaine subcommittee of the Senate
investigating real estate conditions here
The stock of the owning corporations
is controlled by the Hotels MANAGEMENT
& Securities Corporation. This COM
pany is said to control the stock of the
Wardn1an Realty g. Construction Co,
wnich, IN turn, controls the Wardman
Real Estate Properties, Inc.
Farley on, Receiver Tomorrow.
No receiver was named, but Attorney
Gardner L. Boothe, statutory agent for
the corporation at Alexandria, Is 10
confer with plaintiff attorneys tonaor..s
row at noon in an effort to agree on 4
receiver. In the event that they are
unable to reach a decision, receiver
VIII be named by the court.
Attorney Kennedy announced follow
ing the decision that he planned TO 70
into Equity Court here at once and seek
the appointment of a receiver to take
charge Of any possible assets in Wash
ington.
The receiver to be named at Alex
andr1a will take charge Of any assets
Of the corporation in Virginia, the only
visible assets being $500 shares OF
Wardman Realty & Construction
Company non-voting preferred stock.
stockholders. however, contend that
they have claim against the property
OF the old Wardman Corporation, which
includes the Wardman Park Hotel and
other properties in Washington, on
which the Mortgage & Discount Cor
poration originally held liens, pricr to
the action Of the board of directors in
substituting the present stock at the
time OF the refinancing in 1928.
Held Liens on Hotel.
The Wardman Mortgage and Discount
Coronation, which was formed in 1924,
was organized for the purpose of a
finance company, and originally held
liens on the Wardman Park Hotel. 1t
was the contention of the plaintiffs that
the Wardman interests, exercising the
22,9e1 shares Of common stock issued to
them without cost, used this vote in
having action of the board of directors
IN exchanging the liens for stock of the
realty and construction company so that
the latter company might meet $500,000
interest payments due. On this trans
action is based the contention of at
torneys for the plaintiffs that the stock
holders of the discount corporation have
prior claim against the Wardman Park
Hotel
During the trial the books Of the
Wardman companies were subpoenaed
and brought into court and a certified
public accountant employed by the
plaintiffs sought to show from these
books that stock had been irregularly
issued and transferred
Dividend payments were also sub
jected to attack by plaintiff attorneys
who sought to show that dividends had
been paid some stockholders and not
to others, that they had been paid when
funds in the treasury were not sufi-
Gent to meet them, and that funds had
been obtained from Harry wardman
and from the Annapolis Hotel at vari-
Gus times to be applied to the payment
OF dividends
Case Opened in November.
The case, which opened in the Alex
andria Corporation Court in early No
yember, consumed about II days in
hearing, and was not closed until Janu.
airy z. at which time Judge Woolls an
nounced he would reserve decision. Re-
Continued on Page 2, Column So