Evening star., 1938-03-30
BANK RESTRAINED
IN c. & 0. FIGHT
Court Bars Guaranty Trust
Temporarily From Voting
on Rail Control,
By the Associated Press.

~ the Associated Press.
NEW YORK, March 30.-Guaranty
Trust Co., third largest bank in the
United States, today was restrained
BY Federal court injunction from ex-
ercising stock voting rights which
would give it virtual control of the
vast Van Sweringen rail empire.
The temporary injunction, return
able Friday, was issued by Federal
District Judge Albert Coke on al
legation Of Robert r. Young, Al
year-old Texas and Cleveland finan-
cier, that his control of the Van
Sweringen roads was menaced by a
combination of Morgan banking inter-
ests and prominent General Motors
officials.
Mr.. Young, who last year with
comparatively small cash outlay, got
control of rail properties once rated
at $4,000, 100000, filed an equity petit
ton in which he charged that Guar
anty Trust Co., improperly and for
reasons connected with its financial
relationship to General Motors, j. P.
&sAoA 6oAi " w., dil0 Ol1lClO, was pldlle
ming to get control of the manage
ment of the Chesapeake & Ohio Rail-
way.
Holds 1,27s,o0o Shares.
Guaranty Trust Co., as trustee,
holds l,278,000 shares (about II per
cent? of Chesapeake Corp, middle
Van Sweringen holding company. Mr..
Young asked the Federal Court in ef-
feet to enjoin Guaranty from voting
that stock contrary to Mr.. Young's
wishes at special meeting April
and to issue an order directing Guar
anty to give Mr.. Young proxies for
that stock.
Mr.. Young in his petition named
for the first time those he considered
his opponents in desperate strug-
gle. which first came to light fort
night ago, to control the Van Swerin-
gen roads and especially the 9,287-
mile Chesapeake & Ohio Railway,
only line in the country that increased
its dividend during the depression.
Mr.. Young in the petition identified
his opponents as:
Donaldson Brown, financial vice
president of General Motors Corp.
John Thomas Smith, general coun-
sci and vice president of General Mo-
tors.
Frank F. Kobe, New York financier,
until recently an associate Of Mr..
Young.
Charles L. Bradley, president and
director of Chesapeake Corp.
John P Murphy, secretary and di-
rector of Chesapeake.
Declares Change Sought.
The petition alleges in substance
that Mr.. Young was informed that
Guaranty intends to exercise its Ches-
apeake Corp. voting power to change
the management of the Chesapeake g.
Ohio Railway. 1t recites that Guar
anty's failure to follow the wishes
Of Mr.. Brown and Mr.. Smith may
prompt said Mr.. Brown and Mr. Smith
to cause to be lessened the preferen-
tial treatment of long standing given
to the defendant Guaranty Trust)
and to j. P. Morgan &, Co., by the
General Motors Corp, with respect
to the distribution of its huge deposit
Of cash balances"
The petition continues: -
Defendants (Guaranty's) course
Of action threatened as aforesaid is
also motivated by its improper desire
and intent to bring about such
changes in the present directorate and
management of the Chesapeake &
Ohio Railway as will assure to Nor
gan, Stanley g. Co., Inc, an invest
ment banking corporation, the benefit
Of underwriting such securities as the
Chesapeake g. Ohio may have
occasion to issue and to assure
the continuance of emoluments
which said j. P. Morgan g. Co. has
enjoyed ."
Morgan, Stanley g. Co., Inc, was
formed IN 1885 to take over the in
vestment banking business of j. P.
Morgan g. Co. Some Of its officials
were previously identified with Guar
antv