Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-05
BORROWER CLAIMS
S119,688 AS UNPAID
BYBANKRUPT FIRM
Frank TomIinson, Builder,
Sues SwartzeII, Rheem, Hen
Sey and Buyers of Notes.
$70,311 OF 100000
PAID, REST SAID DUE
Action Would Compel Company and
200 Mortgages to Pay Bal
ance, Damages.

Alleging that Swartzell, Rheem g.
Hensey, bankrupt mortgage house,
acted as the agent of its investors,
Frank Tomlinson, local builder, today
dled suit in District Supreme Court to
compel holders of notes on an apart
ment project to pay him the balance Of
a loan which remained unpaid when
the mortgage house went into bank
Tuptcy.
The suit names as defendants Julius
!. Peyser and Henry P. Blair. receivers
for the mortgage house, and more than
200 holders of promissory notes Sc
cured by first mortgage on an apart
ment house under construction in the
1400 block of N street.
The action is unusual in that it en-
beavers to make Swartzell, Rheem &
Hensey agent of the noteholders In
stead of the builder
The petitioner, through ATTORNEY Ed
mund D. Campbell, of the firm of
Douglas, Obear g. Douglas, tells the
court he approached officials of the
mortgage concern on October 20, 1880,
to secure loan of 5000, 900 to finance
the apartment project. This loan was
to be secured by deed Of trust on the
property.
$7O,311 Advanced.
Tomlinson says he was advanced
$40, Bill "a of the principal amount and
that he then gave the mortgage house
his promisSory notes in the aggregate
sum Of 100000 He asserts a deed of
trust to secure the notes was executed
and delivered to defendants Luther A.
Swartzell and Edmund D. Rheem, as
trustees.
Thereafter, it is alleged, the mort
gage house, acting as agent Of the pur-
chasers, sold to them 1853 of the mort
gage notes. According to the petition,
there remained unpaid a balance on
the loan of S1l9, 6S8.06 when Swartzell,
Rheem & Hensey was adjudged bank
rupt on January 26 last
The court is asked to appoint a re-
ceiver for the apartment property, and
to grant the receiver the following
powers:
/. To demand and receive from the
noteholders, pro rata with their respec-
tive holdings, the unpaid balance of the
loan. The plaintiff tenders himself
ready to complete construction of the
building with this money and to ad-
vance any necessary additional sums.
Asks Damages in Delay.
2. In event any or all of the note
holders refuse to pay, to issue and nego-
tiate receivers certificates for such
certificates would be a prior lein on
the property.
8. To hold any balance remaining
In their hands subject to further order
Of the court.
1t is also asked that the noteholders
be restrained and enjoined from dis
posing OF or selling the notes pending
dnal determination of the action. The
plaintiff also asks for a money decree
AGAINST the for Hoo,
ages he may sustain In consequence of
delay on their part in advancing the
unpaid balance.
The court is asked to compel the re-
ceivers for Swartzell. Rheem g. Hensey
to cancel and deliver to the plaintiff two
notes which were undelivered by the
mortgage house and are now in the
hands of the receivers.
The plaintiff believes his petition
states, that it IS imperative for the
protection Of his interests, and the in
terestS of the defendant receivers and
noteholders that construction work on
the building be resumed and completed
as speedily as possible in order that the
property may be made productive Of
rental income and to prevent impair
ment Of its value as security for the
deed Of trust"
Book Check Continues,
While the civil actions following the
Arms bankruptcy became further COM
plicated. the Department of Justice and
the United States attorneys Office were
continuing their investigation Of the
company's affairs today.
The Government accountants, Charles
7. Malone and z. j. Armbruster, were
still examining the books in the Office
of the company at 727 Fifteenth street.
Their findings will determine whether
any further criminal action will be
taken.
Nugent Dodds, Assistant Attorney
General, and Neil BurkinShaw, assistant
United States attorney, with Agents
Louis Loebl and Aaron w. jacobson,
were tied up in other matters today.
1t was learned from the receivers that
the schedule Of the firms liabilities and
assets is nearly completed. When this
schedule is filed, it is expected that a
trustee to take over the assets and pay
the liabilities will be appointed