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Ulster & Delaware
Railroad |
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A BANKRUPT RAILROAD CONDITION OF THE NEW YORK, KINGSTON, AND SYRACUSE LINE. FAILURE OF THE LITCHFIELDS TO MEET THEIR ENGAGEMENTS - REPORTED LIABILITIES, $1,500,000. New York Times |
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The condition of the New York, Kingston, and Syracuse Railroad, now in the hands of a Receiver, is attracting some attention in connection with bankruptcy proceedings which have been instituted against the estate o the late Elisha C. Litchfield and his brother, Mr. E.B. Litchfield, who had control of the road for eighteen months up to September last. The Litchfields, who are well known in this city, went to Kingston about a year and a half ago to take charge of the road, having entered into certain arrangements with Greene & Co., the late contractors, to complete the line. The bankruptcy of the Litchfields and the inability of the road to meet its engagements, have naturally created a good deal of excitement in and about Kingston, and charges are made against the former, which, if true, would no redound to their credit. It is alleged that they worked the line for their own benefit, and contracted debts which they have left unpaid. These allegations are, however, entirely denied by the surviving membrs of the firm, who claim that the debts now existing were nearly all old debts which they assumed when they made the agreement with Greene & Co. To understand the condition of the affairs thoroughly, a short resume of the history of the road and the causes which led to its present insolvent condition is necessary. Mr. Thomas Cornell of Rondout, had been President of the road from 1865 to 1870, during which time thirty miles of the line were completed, upon which was paid $1,109,768, with liabilities against the company for iron, &c., of $291,039.66, besides a large amount due for right of way. Of the amount due for iron &c., $212,513 was made payable in gold, then at a premium of thirteen per cent. The total cost of the road up to that period was $1,631,410 or $58,000 per mile. In September, 1870 Mr. Cornell was removed from the office of President and at this time the cash in the treasury was represented at $183,665.46, but this amount, it is claimed, was only represented by the check of S.D. Coykendall, the son-in-law of the late President, and against which $51,975 was allowed him by the Treasurer on vouchers for commissions upon loan bonds previously sold by him. Among the subscribtions for stock in the Rondout & Oswego Railroad the towns along the line subscribed $1,195,000 to the stock of the company, in payment of which they issued their bonds and the company took the bonds and issued stock for the same. These bonds were sold by Mr. Cornell to Mr. Coykendall, it is claimed, without any security further than his own check. It is asserted that Mr. Coykendall still owes on part of these bonds $155,560 for which a suit is pending. Under the direction of the board elected in September, 1870, the work of construction was continued, and up to the Spring of 1872 there had been about fifty-eight miles of rails laid, but much of it was not ballasted. GREENE'S CONTRACT About that time a contract was made with J.A. Greene & Co. to complete the road to Oneonta, a distance from Rondout of 100 miles. Greene & Co., it is alleged, also agreed to pay the debts of the railroad company, slated not to be over $700,000, the latter agreeing to deliver first mortgage bonds of the Rondout and Oswego Company and a certain amount of the railroad stock. Soon after Messr. Greene & Co. proposed Elisha Litchfield (since deceased) to become their surety under the contract, and Mr. Litchfield agreed to do so, under the impression that the entire liabilities did not exceed $700,000 and that they (Greene & Co.) could deliver $1,500 first mortgage bonds. Mr. Litchfield (deceased) and Mr. E.B. Litchfield, under this contract, made large advances and and incurred liabilities, but upon examination they found, it is claimed, the liabilities of the railroad company to be $1,200,000, instead of $700,000. Having thus committed themselves they found they could not withdraw without great loss, and they accordingly decided to continue work to Earlville, to connect with a road then being built and since completed between Earlville and Syracuse. The name of the company was then altered to that of the New York, Kingston, and Syracuse Company. Mr. Cornell made a loan to the company of $63,000 upon $90,000 of Rondout and Oswego bonds, for which he now has a suit against the company. The new road executed a mortgage to the Farmers' Loan and Trust Company for $4,000,000 a sum sufficent to provide for the $2,000,000 previously issued by the Rondout and Oswego Company, and to comply with the contract to complete the line to Earlville. Of the Rondout and Oswego bonds about $500,000 had been sold and the balance pledged for loans. The company then placed upon the market $3,500,000 of new bonds for sale, intending to retire and cancel $1,500,000 of Rondout and Oswego bonds, and leaving $500,000 in the hands of the Trustee to provide for those sold, thus leaving the New York, Kingston, and Syracuse bonds the principal bonds upon the road. The sale was negotiated in London by Messrs. Dean, McGinnis, & Co. in March last but when the bonds were taken to England a fiancial panic was prevailing in Vienna, which prevented the sale of the bonds. Mr. John McGinnis subsequently made a sale, or at least agreed to make one and the contract was to have been signed when a cable dispatch was received in London announcing the failure of important banking houses in New York. This put a stop to the sale of the bonds and the railroad company found it necessary to suspend the payment and Messrs. Litchfield were obliged to do likewise. Mr. E.B. Litchfield claimed that they have built seventeen miles of road and put it in good condition from Rondout to the village of Stamford, about seventy-five miles. PRESENT CONDITIOIN OF THE ROAD The road is doing, it is claimed, a good local traffic, but not sufficent to provide for the interest upon the bonds. If it can be completed to Earlville, thus forming a line through to Syracuse, it is considered that it would pay a good dividend. A contractor had offered to complete the line to Oneonta provided the coupons upon all bonds can be funded for eighteen months, and that of the $4,000,000 issued by the company $3,000,000 can be used upon the line from Rondout to Oneonta, 100 miles. This offer is to be laid before the stockholders, in order to prevent, if possible, a foreclosure of the mortgage by the Trustee. |
