Evening star., 1938-04-03
YOUNG GATHERS
FORCESFORBATTLE
Federal Judges Decision
May Hinge on Indenture
by Van SWeringens.
BY the Associated Press.

bS tlle Associated PTeSS.
NEW YORK. April Robert R.
Young. youthful financier fitting at
powerful Wall Street banking inter
ests over the remains of the S2.000,-
100000 Van Sweringen rail empire,
gathered his forces today for a cru
cial battle Monday.
Whether he wins or loses Monday
when Federal Judge Albert c. Coke
is to decide if Guaranty Trust Co.,
third largest bank in the United
States, should be ,enjoined from block
ing Mr.. Young's plans, may depend,
it became evident today. on a curious
indenture devised by the dead hands
Of the Van SWeringen brothers.
Under the terms of this indenture,
today's rise in the market, If it con-
tinues. might float Mr. Young and
his associates free and clear of their
major difficulties
Under the indenture II per cent
of the stock of Chesapeake Corp,
middle Van Sweringen holding COM
pany. is pledged as collateral for three
issues of bonds of Allegheny Corp,
top company in the system. Mr..
Young now exercises indubitable con-
troll of Allegheny Corp, which owns
the Chesapeake stock
However, Guaranty Trust holds the
Chesapeake block of shares as trustee
under an indenture which apparently
gives Guaranty the right to vote the
stock if its appraised value decreased
below $50 per cent of the value of
the bonds.
Claim Stock Advanced.
Mr.. Young's attorneys claim that
at the February quarterly appraisal
the value of the largest of the three
units-8l0,500 shares of Chesapeake
stock-was slightly below the $50 per
cent, but that it rose above that hg-
ure before the end of the period Of
grace March l. Mr.. Young then ap-
piled for proxies to vote the shares,
but was denied.
Prize in the fight is the controlling
stock in the profitable Chesapeake g.
Ohio Railway which Chesapeake Corp.
owns. Both Mr.. Young and his op-
ponent at law. Guaranty Trust Co.,
says they favor dissolution of Chesa-
peake Corp, and distribution of the
C. e. o. stock. only railroad major
stock with increased dividends last
year.
Mr. Young alleged in his complaint,
which brought him a temporary re-
straining order against Guaranty, that
Guaranty Trust, for financial reasons
connected with j. P. Morgan g. Co.,
General Motors Corp. and Morgan
Stanley & Co.. Inc, wished to get
control of the C. & o. management.
Guaranty, denying through its
chairman, w. c. Potter, any improper
motives. acknowledges it wishes to
elect directors who would hold balance
Of power in Chesapeake Corp. 1t
would thus be in position to change
the c. g. o. management.
Decision Due Tomorrow.
Judge Coke is to decide Monday
whether preliminary injunction will
be issued restraining the Guaranty
from voting the Chesapeake stock it
holds as trustee at special stock
holders meeting, called for Monday
by Mr.. Young's opponents, but sched-
uled to be adjourned by mutual con-
sent to April 8. Next regular c. & o.
meeting, at which the management
issue may be fought out, is on April 10.
A summons and complaint against
Guaranty Trust Co. in State Supreme
Court. brought by Fidelity Investment
Association of Wheeling, w. Va,
holder of Allegheny bonds, and which
sets forth substantially the same ale
cations as Mr.. Youngs action, has not
yet been answered by Guaranty.
The Van Sweringen system. brought
into being by two former Cleveland
newsboys, has brought little but head
aches to those who have had a hand
in its control
George A, Ball. Muncie. Ind. fruit