Evening star., 1938-10-12
RAILROAD TRUST
PETITION OPPOSED
Traction Firms Contend
Limitations Statute Bars
BondhoIders' Plea.

Declaring that the plalntluS nave
been asleep on their rights for years
the Washington Railway g. Electric
Co. and the Capital Transit Co. asked
District Court yesterday to dismiss the
bill to establish a constructive trust
filed recently by some bondholders o.
the old Anacostia g. Potomac River
Railroad.
Through their attorneys, Bowen &
Kelly, the companies told the court
that the alleged causes of action are
barred by the statute of limitations.
The defendants also advised the
court that 80 days notice in writing
Is required to the trustees, but that
no default in payment of principal OF
interest on the bonds or otherwise has
occurred.
The defunct railroad was taken over
by the local operating companies. Dis
trict Court was told that the defend
ants deny that the property of the
Anacostia G. Potomac River Railroad
Co. was "fraudulently" conveyed te
the Washington Railway g. Electric
Co., as alleged.
Plaintiffs in this case are David
Fisher, 1929 Columbia road NV;
Emma c. Dwight, 723 Fifteenth street
NV; John Dallett, Leon County
Fla and Louella ellison, Toledo Ohio
They sought to force the defendants
to acknowledge liability on the bonds.
Holders Are Advised.
Holders in Washington of Anacostis
& Potomac River r. R. per cent first
mortgage bonds, due l949, today were
advised in letter from the Baltimore
National Bank, trustee under tn.
mortgage, that in their opinion the
Washington Railway g. Electric Co
and the Capital Transit Co. are liable
for the payment of these bonds
The latter adds that proper lega
steps are to be taken in the courts OF
Washington to establish such liability
There are more than 100000 OF
these bonds outstanding and they are
very widely held by Washington
banks and local investors. One suit
involving the status of the bonds i.
already pending in the courts,
The letter from the Baltimore
National Bank says:
This bank is substituted trustee
under the deed of trust securing the
described bonds of the Ana
costa and Potomac River Railroad Co
In 1912 the Anacostia and Potomac
River Railroad Co. conveyed its prop
erty to washington Railway and Elec-
trio Co., pursuant to an act of Con-
gress of 1900, and in 1888 the Capital
Transit Co. was formed and took over
the various formerly independent rail-
way lines that operated in Washington
Interest has been paid promptly
but Capital Transit Co. and Washing.
ton Railway and Electric Co. deny tna'
they are responsible for the payment
of either the principal or the interes,
on these bonds.
Bondholders' Action.
"You may have learned that severa
individual bondholders recently
brought suit against Washington Rail.
way and Electric Co. and Capita
Transit Co., asking, in general, tina
the conveyances of 1912 be decreed tt
be invalid and for other relief. Thu
trustee was also joined in this sui
because of its position as trustee.
Even before the filing of this suit
however, your trustee, through it
counsel had been investigating tn
facts surrounding the various consoli
dations of the Washington railWa,
system in order to determine whether
the two companies had made them.
selves responsible for this bond issue
in spite of their denial of any liability
for the same. But it has taken youl
trustee and its counsel many month!
to make the investigation and, in thu
meantime, it has seemed inadvisablt
TO make any announcement until 6
definite conclusion had been reached
Your trustee is now in a position Il
state that the facts which have come
to It's attention strongly tend to show
that the Washington Railway and Elec'
trio Co. and the Capital Transit Co
are both responsible for the paymento
principal and interest or. these bonds
"Your trustee, therefore, kelie"e'
that it should bring proper proceeding!
on behalf of all bondholders in th'
courts of Washington, D. c., to estab
lish this liability, which, if fnall,
established, would have material eff
feet on the value OF these bonds.
Organizing Committee.
Your trustee has considered The
advisability of requesting the bond
holders to organize a committee fol
the protection of their interests, but
after consultation with few Of thu
largest bondholders, has come to thu
conclusion that such protective com
mittee would entail unnecessary exY
pense and that the trustee by itsel
has sufficient power under the deec
of trust to take and pursue any actor
which may be proper and advisabl.
under the circumstances On thu
other hand, your trustee invites an,
bondholders who may desire informa
ton from time to time to consult with
1t at its head office, Baltimore ane
Light streets, Baltimore, Md
In conclusion. it should be stated
that representatives of Johns Hopkin.
University, Baltimore; Safe Deposit
and Trust Co., as trustees, Baltimore
Mercantile Trust Co., as trustees, Bal.
timore; Maryland Trust Company, a.
trustees, Baltimore; Citizens Saving.
Bank, Baltimore. and American Sc.
curity and Trust Co., Washington, D
c., as well as other holders, have beer
consulted and have Informally ap.
proved the action which the trustee
proposes to take against the Washing.
ton Railway and Electric Co. and tht
Capital Transit Co.; further, that ne
hondholder will be requested to ad.
vance any funds for prosecution of the
contemplated action.
BALTIMORE NATIONAL BANK,
by J. HAMBLETON OBER,
Vice President
Holders of City e. Suburban IS, due
i948, received similar letter from thu
Baltimore bank, expressing identically
tha