Evening star., 1938-04-01
SECOND SUIT FILED
AGAINST BIG BANK
Guaranty Trust Charged
With Disregard of Duty
in Rail Case.
By the Associated Press.


NEW YORK, April 1.-The fight
for control Of the profitable remain,
Of the $4,000 100000 Van sweringer
rail empire has resulted in the filing
of a second legal action against Guar
anty Trust Co., third largest bank in
the United States.
Fidelity Investment Association, a
Wheeling (W. Va) banking corpora
ton. through counsel, John Warren
Giles, filed suit yesterday in State
Supreme Court charging against the
Guaranty wrongful. reckless and ma
grant disregard of its fiduciary obliga-
tions.
Fidelity. owners of 1926 900 of bonds
OF Allegheny Corp, top Van Swerin-
gen holding company, asks removal of
Guaranty as trustee for the bonds, ap-
pointment Of receiver to hold the
bonds and collateral, an accounting
and return of any profits which might
have been made but for the banks
misconduct and fault"
Restraining Order Secured.
Wednesday Robert r. Young, youth
full Cleveland flnancier who last spring
with comparatively small cash outlay
gained control OF Allegheny. obtained
in United States District Court here
restraining order against Guaranty
Trust, charging the bank with viola
ton Of trusteeship for reasons con-
nected with its financial relations with
J. P. Morgan Co., General Motors Corp.
and others.
This order, returnable today. pro-
hibits Guaranty from voting 1878 900
shares Of stock in Chesapeake Corp,
middle Van Sweringen holding COM
pany, which the bank as trustee holds
as collateral for the Allegheny bonds.
Mr.. Young, in supporting affidavit,
alleged that Guaranty. for improper
reasons. intended to vote the Chesa-
peake stock held as collateral at a
special Chesapeake Corp. stockhold-
ers' meeting Monday, for the purpose
Of getting control of the management
OF the profitable Chesapeake IL Ohio
Railway.
He charged that emoluments re-
ceived by ]. P. Morgan, and Morgan,
Stanley & Co. (which was formed in
1885 to take over the Morgan invest
ment banking business and has Off
GERS formerly associated with Guar
anty), and repository advantages
from General Motors were involved in
Guaranty's actions.
Named IS Opposing Him.
He named Morgan partners, includ-
ing two Guaranty directors, General
Motors officials and others as oppos-
ing him.
The Fidelity action yesterday asks
appointment of new trustee and an
order to compel Guaranty to turn
over all money, stock. bonds and other
property which it holds under the
Allegheny indenture
The action asks that Guaranty be
directed to pay any sum found due
and that such judgment be a lien upon
all properties of the bank.
Guaranty Trust is alleged in the
action to be taking unwarranted ano
wrongful advantage Of its position as
holder of record of 1850 shares ol
Chesapeake Corp. in order to vote the
stock for substantial changes in the
dictatorship and management of the
Chesapeake & Ohio Railway "withou,
regard to the effect they will have or
the future earnings of the c. g. o
and the value of its stock"
Such action, it is charged, woulc
impair the value of the stock of Chesa
peake Corp. which the Guaranty
holds as trustee for Allegheny Corp
and for holders of Allegheny Corp
bonds, secured under three indentures
The details alleged are substantially
the same as those in Mr.. Young's
Action