Show THE CHARGES MET IsTo Mismanagement in the Salt Lake City Railway Company STRONG ANSWER TO JARVIS ET AL The Necessity for a Bcceivershlp Denied Because the Affairs of the Concern are in Good Sbapo In the case of Samuel M Jarvis and Roland Ro-land R Conklin vs the Salt Lake City Railway Rail-way company et al the defendants will today to-day file the following answer in the Third district court Xow coaie said defendants and for answer to the complaint nerem deny that the board of directors named m said complaint as defendants defend-ants therein have without the consent of the plaintiilb und against tneir objections orptlier TV se construcied or are now operating lines of street railway outside o the corporate limta of aid city of fcalt Lake or the number of miles of Tailvrjy so constructed operated is two and a I quarter mile or auj number of miles or any distance exceeding about threefourths of a mile or that the cost to said railway company in the coustiuciion of Said line or lines of rail a ay outside of tue corporate limits or the city 01 Sat Lae is 535000 or uny cost whatever ox I cecdmg N000 or that at tbo time the said railway 1 rail-way was so constructeiioutside of tne corporate limits or by reason thereof the finances of the company were IX AN EMBARRASSED COXDITIOS as alleged or otherwise l r that there was no business necessity for the construction of the extra mileage of rat way or that the same was constructed throuph territory or at a time when at was well known to the taid board of direc tors and officeis 01 tald company or cue wise that the same would not be profitable in its operat on to the company Or that the operation ot the said extra mileage mile-age of railway necessitated the purchase of equipment or extra motor power or cars or that to operate ttho same requ red an extra force of mo or men and conductors or necessitated necessi-tated the employment of a large or any force of men iu the repair department of said railway company or hcs otherwise largely or at all ex cept in a slight degree increased the daily ex penses of tee said company Or that them the-m ount by which said daily expenses increased l is 1 tgely or at all in excess of the earnings of C those portions of the said railway system or that the operation is at great cr any loss to the bid railway company On the contiary iaid defendants allege that the construction of the said lines of railroad outside of the corporate limits of Salt Lake city was projected ana determined upon prior to the 21st day ol Jlpnl 1691 was for the purpose of connecting the race track situated about one half mile south of the southern boundary line of Salt Lake c ty with the ra Iway system belong ing to the de endant railway company That buch construction was determined upon for the reason that it would operate as an importaru feeder to the said railway system and secure to It a large amount of patronage of persons going to and from the said race track as well as additions ad-ditions to the city rapidly filling with population popula-tion and add greatly to the valueand profit of said system And that thesaid line of railway could be constructed con-structed without expense to the said railway company money necessary for its building construction and equipment havng BEES DO = TED AXD TENDERED to the said company by private indivlduils through whose lands said line of railway was to be extended That at the time the destruction of the said line of road vraa detel m ned upon plaintiff Samuel it Jarvis was a member of the board of directors of the said company and the vicepresident thereof and well knew the purpose and advantage advan-tage which would accrue to the said companv by reason of the construction and operation of said line And the same was determined upon with his full knowledge consent and approval and without any objections on his part whatever what-ever Said defendants allege upon information and belief that the plaintiff Roland K Conklin was also aware of the purpose to construct said line uf railway and consented to and approved the same That the line extending to Fort Douglas which is claused by plaintltls to be outside ot the cor orate limits of the city was determined upoa and the right of way therefor secured during the time that the said Samuel M Jarvis was the vicepresident of the said company and u member of the board of directors thereof and was constructed and put in operation with the lull knowledge and consent of both of said plaintiffs ana without any objections on their part whatever That at the time the said line to the racetrack race-track and its construction was determined upon and at the time of the construction and putting in operation of the line extending to iort Uougla the defendants Francis Armstrong Arm-strong nd Spencer Claw on were not members mem-bers of the board of directors of said company and were n t in any manner connected with its management Said defendants further allege that the plaintiff plain-tiff objected for the first time 10 tile construction construc-tion and operation f the said line of railway at the time of filing their complaint herein and at all times prior thereto both in mectmgb of the board of directors and at meetings meet-ings of stockholders ot said corporation no objection ob-jection was made thereto by either of the said plaintiHs That at tho regular annual meeting of the etockbolders of the said cor oration held at the office of the said corporation on tbo 1st day of April l 9lall the acts of the president and superintendent super-intendent of the said company in respect to the construction and operation of the said lines of railway complained of in said complaint as trl aW fr h b i well as all other of their acts were by tho unanimous unan-imous vote ol the stockholders of the Bald corporation cor-poration duly ratified and confirmed baid defendants further allege that said lines of railway in their operation arc yielding and binco their construction have been yielding large amounts of money to the Bald company Ju excess of all expenditures connected with tho contraction and operation and the Talue of said B stem ot railroad has been permanently increased thereby Said defendants further deny that at the meeting of the stockholders of tho said company com-pany held In Salt Lake city on the 21st day of April 1681 the said plaintms Jarvis and Conk lin were not represented On the contrary defendants de-fendants alleze according to their information and belief that the i Md plaintiffs were repre1 < tsected at Ihe said meeting by one H M Bacon who was then and there duly authorise by the plaintifls 1O ACT FOR THEM and to vote their stock at the said meeting Said defendants further deny that notwithstanding notwith-standing the said records the said defendants defend-ants A W McCune as president K 0 Chambers aa ncepres dent and Walter P Read as superintendent or either them with the sanction or the cooperation co-operation or with full orany knowledge of the wi ongfulness of their acts or otherwise con fitructcd or proceeded to operate or maintain the proposed Hues of railway outside of the said corporate limits of the city of Salt Lake And defendants allege that said lines of railway have been determined upon and constructed tutd were being operated or in process of con structlon at the time the said meeting was held and the said act of construct osr o leration and maintenance was by the unanimous vote of the stockholders at Paid meeting dulY ratified and confirmed and that the acts of the defendants after tnat date were simply for the purpose or carrying out the will of the said corporation as manifested by the unanimous vote of tha stock holders at the said meeting r Sd df Said defendants further deny that well know I ine that If the plaintiffs said request for the adjournment of said mectinc were granted and said meeting adjourned until the time propose i or otherwise that plaintiff would be present or would oppose the extending of the lines of railway of said company or increasing the in debtednes of extending or operating the lines of the company thf said A W McCune Val ter P Read R C Chambers or Spencer Claw son or either of them refused in any way to recognize or pass upon the said request of said plaintiff Said defendants further deny that the persons per-sons alleged in said complaint who had been elect d board of directors and officers of said company did not in any way repres3rt the in terests of the plaintiffs aforesaid On tho con trary said defendants allege that they w reelected re-elected to said offices and since their said elec tion have at a 1 times acted in the interest and fOK THE BENEFIT OF ALL stockholders of the corporation including said plaintiffs And said defendants deny that they or cither of them were cr are pa ties to any conspiracy or plan for tbe conducting of the aff tirs of tho said corporation contrary to its chartered pow era or to the loss wrong or damage to the inter j et of the plaintiffs or either of them or any of the other stockholders of ihe company I Said def ndalts allege that the said S M Jarvis was not elected member of the board of direciors of the s > id comnany or to any other office therein at said stockholders meeting for the reason that during the time prior thereto that tbe said S M Jarvis had I f srd tS Ii been acting as vicepresident and a member of the board of directors of said company ha had I utterly ncg ected to perform the duties thereof or to take any interest In the affairs of the said i corporation and at all times neglected to be present at the meetings of the board of directors I of said company Said defendants further allege that during the time aforesaid when said plaintiffs were so re pr sented in the toard of directors of said company com-pany thty at tarious times sought to enter into con plraCles for the purpose of cheating and de frauding the said corporation by getting possession posses-sion of its bonds and disposing of them at much i less than their market value to themelves in order that they mlctit realize tho difference be I tween the prices at uhich they would take said j 1 bonds and account therefor to the said corpora tion and the prices which they would realize thqrefor upon the market bald defendants further deny that since the time of tho election of the said board of directors and officers that the acts of the said board of direc ors and ofil I cers have been without the knowledge or consent of these plaintiffs or without consuta t 03j with them or anyone represented by them or without said consent of any of them havo been fur the benefit of themielves except in common with al the stocktolders of said I j company or against the interests of said nlain tiffs or eittier of them On the contrary said I plaintiffs hare at all times had opportunities i I for consultation with the board of directors I and have frequently met with them and dls i cus ed the affairs of the said company and at j no time have the plaintiffs been denied the right and opportunity of such consultation Said defendants deny thai ths said A W I McCuno R C Chambers Francis Armstrong W P Head and Spencer Ciawton or either or any of them have conspired togeti er to man I age i the affairs of the said company to the in i jury of the said plaintiffs or either ot them or in i order to build equip or maintain lines of r road outside of the corporate limits of said Salt Lake city or that the said boa d of directors have permitted the liabilities or saia company tb increase as alleged in said complaint to the said amou it of 5310 < J or to any amount On the contrary said defendants allege that since the election of the said board of directors ontbeSlbtday ofApril 1831 l the indebtedness and liaoillties of the said company have been diminished to the amount of 15000 Said defendants deny that in order to raise the money to carry on the extension of said road or to provide for the increase of expense thereof the said board of directors DPUUOWED THE SUl1 OF 100000 or deposited as collateral security for the same 84 Jit OJ of said bonds or that any suca indebtedness indebt-edness matured on the Jth day of August 18J1 or at any other time or that upon maturity thereof said company tas unable to meet the payment thereof or authorized the said directors or officers being unable to raise the money to meet the paj ment thereof with the bank which bad made such loan of 100000 and arranged I with the bald bank that they might havo iluO 000 of the baid = 100000 of bonds released upon the payment of 50000 of the said 4100000 in debtedness Or that thereupon or at all said directors obtained 550000 from another hank maturing January 10 ISA and deposited us collateral forsad sum the saidilOO OOOofbonds leaving cither 300000 thereof or any bonds whatever with the llr t bank for collateral security for tho payment ot i35000 Or that the said indebtedness or any part thereof exists or is now due upon demand Defendants deny tuat said company is notable not-able under its present management or otherwise other-wise to pay baid 50000 maturing January 10 1892 or that the said company is not able to make payment of said 3o000 or that the said 300000 of bonds of this company or anv part thereof are in jeopardy or if placed upon the market to be sold as collateral1 woulu neces sanly or otherwise be sold at a sacrifice or the property of tho company lost to its share holGera On the con rary defendants allege that ionj prior to the election of the present board of directors said railway company for the purpose of equipping and putting in opera tion its electric railway system with the full knowledge conbent and approval of the plain tlflsINCURRED INCURRED A LAHGE INDEBTEDNESS which at the time ot the said election was still outstanding That in order to carrv the said indebtedness at a low rate of Inteiest and to avoid disposing of the bonds of the company at a considerable discount in view of the tlKhtuess of the inonoy market said company iu March 1S91 borrowed of the Park National bank of New York JiOJOO I lor four months at 8 per cent per annum and deposited with said bank SMUOOuu of the bonds of the said compauy reserwng however to said company the rigut at any time to withdraw said bonds or any por tion thereof and sell the same and apply the monies obtained therefor upon payment of said note That in this way 50iuO was paid on said note July 3 1891 Sl73333 August 24 1891 ay50 beptemberSO lb91 and i5JOUO August 30 ISJl leaving a balance of 3490217 On this last date the 8100uOJ note was taken up and a new n cte given the said hank by the said company for the balance due thereon payable on demand at 6 per cent interest per annum That the buiJ last named rote was paid by said company in full on the I9tb day of Novem ber IfcSl t and the bonds held by tae said bank to secure the payment of the same were on said day elcasedto Bald company That the prcs > nt total outstanding Indebtedness Indebted-ness of saia company dbes not exceed I35UO and to Si cure the payment of said indebtedness there ts now outstanding a collateral security therefor SltWWxi of the bonds of said company That the rates or interest paid on said in deb edress by said company are very low considering the usual high rates of interest now exacted on borrowed money in view of the stringency fn tho money market That the said company has been so managed that Us security i rsatl s 1aeann it is in possession of ample funds and assets to meet all its outstanding out-standing obligations as they mature That no part of the property or franchise of the said company is IX lrnu by reason of any part of such indebtedness That under the management of said defend f ants of said company the assets and property have vastly increased in value so that the stock purchased and held by the said plaintiffs could oe now sold and disposed of by them at more than double the am < unt of its original cost to them and all expenses incurred bj them in respect thereto I Defendants further deny that the nartles ral fPiIJlr through whom tho two several loans of 8M000 I each mentioned in sa d complaint were ob nthsCl d t 1 nd Ito I tamed or to whom they arc due are so friendly to tho interests of the defendant director or otherwise that if said bonds wore offered at 1 forced dale as collateral their purchase and foreclosure of the same or the re orgamzat on of the said company under such forecloseure would be so c inducted or ihnt it is the men ton of the said directors or any of thm that it j shall be so conducted as to secure to them or any of them the whole of the property of the said company or in any manner ignoring tue interests of said plaintiffs Defendants deny that 5000 of the alleged indebtedness in-debtedness of said company being other than the iSoOOO mentioned in the complaint and evidenced evi-denced by the note of its officers draws interest inter-est at the rate of VI per cent p r annum or any interest exceeding u per cent per annum or that said rate of i teiest is unusual or exorbitant exor-bitant or unreason ible or tends to diminish the security or as ets of said company or that such is a ruinous rate of interest or is promised prom-ised to be paid or is incurred because of the ruinous or any ad policy of the said board of directors inaugurated or carried on bv them for the purpose set forth in said comp aint or for any oth r purpose Or that the said company has within a few days or at any time incurred an obligation to t1e extent of I OW or to any extent t < meet which obligation there are no funds m the hands of the said comp my for Its payment Defendants further den i that there is or ever was any plan or purpose of any description on the part of said board of directors or any of them to WRECK TH E SAID RAILWAY SYSTEM or otherwise injure the same or ruin the plaintiffs plain-tiffs of all or any of their rights therein or that said entire railway sstem or any part thereof has been grossly or at all mismanaged by said defendants Said defendants further deny that under the circumstances alleged in tie complaint or otherwise or at all the said directors have continuously persistently or otherwise refused re-fused or failed to ndopt improved methods in their operation of said railway system or that they had maintained said system with but one I single electric curcuit or as a result thereof a break in a line carrying a current at any point would cause the shutting down of the entire system or the sloDpage of pvery car On the contrary defendants allege that they have adopted and put in operation in their 1j Stem S-tem of railway all practical and valuable imp im-p ovements as fast as they have been discovered dis-covered and their utility and value made manifest mani-fest That heir said system of railway is nnd I has been for n 1 consUerable lime past divided i into several different circuits so that tho breaking I break-ing or the interruption of the current at one part of said system does not interfere with tho movement of the cars in other parts thereof Defendants further deny that they have been making contentions as alleged m said complaint or expending largo sums of money thereon or that for long time or for any time past from twelve 1 to fifteen or any number of motor cars havo 1 been In the streets every day or any day I I or i are not run over the pit iu the car house or g ro i g no fno repair i shop for the purpose of making an examination ex-amination as alleged ir otherwise or that after standing IN THE STREETS ALT NIGHT or otherwise without proper care the said cars j are run out upon the lines the following day without any examination or withoat being be-ing cleaned or repaired or are not taken over the pit until a breaking down occurs Or that a small portion of the money expended upon the extensions mentioned men-tioned in said complaint would build an ad I di ional carhouse for the shelter of all of the companys rolling stock Or that such care wou d materially or at all decrease the logs by breakage or otherwise to said company or tend to a proper or economical administration of its I business Defendants allege that since their election as members of the board of directors of said company I com-pany they have diligently taken care of all of the property and cars of said company and caused the said system or railroad to be operated oper-ated to thn greatest public advantage and with a due regard to economy and the interests of the stockuolders of said company Defendants fuither allege that prior to the election of the present board of directors when I said ri M Jarvis was a director and vcopresl j dent of said company by the reason of the I facts that the said Jarvis wholly neglected to attend meetings of the said board of directo s i of the said comoanv or pay any attention to the I management of its bust ness and the necessary absence from Salt Lake city on private busl i ness of other members of the board of directors direc-tors it was often impossible to obtain a mooting moot-ing of the board ia order tJ transact necessar business pertaining to the affairs of the 1I11l1 I company and that by raason of such neglect on the part of the plaintiffs in the manaxemcn of the said company its affairs suffered through J inattention That since the election of the i present board of direc ors all difficulties aris ing FIIOII SUCH FORMER XEGLECT have been remedied and ihe system of railway ot said company has been put in firstdas worning conoiuon Defendants further deny that because of the attention which has been iven to tile > tot t-ot said extensions with motives alleged or othoiwise the proper attention has not boon i I given to the use of the companys property or I Its care or preservatIOn or for the most profitable profit-able operation of the road or tiut the coiapa ly owns several open cars as alii god and the said I open cars have to the loss of tho company been permitted to remain idle in the burn or elsewhere or that it would require but n few hours of labor to change he trucks or motors from the closed cars to tho open cars or In this way to improve the condit on of the rolling stock for the summer or lor any time or greatly or at all to increase the attractiveness of the lines of the road or increase the travel or tho receipts Defendants further deny that becaus of tho matters set forth in said complaint which hme engrossed the attention of the said directors or otherwise or in furtherance of thilr sad or any plan to doprec ate the creditor assets ot said company they or the said officers of said company or uny of them have falleJ to prop erly care for or utilize the electnc currents created by the power station for tho load or that the said oDicos are pla ning to build further fur-ther power stations for the road with purpose alleged or thai more electricity Is ow generated gener-ated than is needed to run tao entire system or that by the method by which the said system is now operated the two engines In the power house of the said company or all of the dynamos dyna-mos are running continuously so that u break In cither engine or either of tno dynamos at any time would CAUSE A SmjTTNG DOWN of the entire system and a stopping of all the cars u on all the lines of the system until repairs be made Or that In a portion ot bald road proper attention has not boon given to the scheduling of the time of paid cars so that as operated cars folio IT closely upon each other or then at long intervals other cars will follow or making tbo expense ot tho operat on or that ot the maintenance of a largo number of cars while the utility of the system Is only thnt of a portion of the nuuibcr of cars actually run Or that the number of men employed as motormen or con ductors is much larger than is necessary to carry the number of passengers that iiro carried by them or to operate the liDOS successfully Or that the number of men working in the repair re-pair shops is unusual or larger than tho num ber employed in the shops of other electric roads Or that by reason thereof or at all the Expenses of the road are increased an un i usual or unreasonable amount Defendants further dony according their information and belief that durlnc the year 1891 there has been any increase in the expense in proportion to the earnings as compared to the year iS90 or that the facts appear as alleged In the books of said company On the contrary defendants alle eon information und belief that the monthly net eaiiungs uf the road duiing the Hra seven mOl ths of the jear 18J1 has been 6559 or an a grojate of 15OI558 while the net earnings per month for ibCO were only S5n33 bo that tho earnings under the present mn asement of the road h we increased over ox peiises at the rate of more than 1500 per month I Defendants further deny thai the total earnings earn-ings during IsUl 1 are as allege In sa d con paint but on the contrary defendants allege that THE TOTAL EARXIXGS for the first seven months of 1801 weroJloT fl ia 65 Said defendants further dony that the members of the board ot dtr ctors upon the request of the plaintiffs or otherwise have roused to meet to taku all necessary or prop r steps or action for the protection of tho property of the company or in the interest of Its stockholders or the better management of its affairs For further defense and by way of counterclaim counter-claim defendants allege that prior to the commencement com-mencement of this act on said plaintiffs appeared ap-peared before the board of directors ot said company and demanded that the bonds of the baid company be dibtributed among Us stock hoi jcrs in proportion to the amount of atock held by each ana tnreatened that unless defendants de-fendants other than the company would sell their stock l to plaintiffs u on terms prop sed by t fsl l fs g i plaintiffs they would endeavor to make rouble for the said company and the members of tho aid bjard of directors llrat to have EO disposed dis-posed of said bonds to said stockholders would have bee 1 to leave the company without the necessary and available means of meeting its obligations to its creditors and the necessary proper expenses connected with toe proper iiiaintenance of its sytcm of railway iu such manner as to conform with the requirements of its charter and franch es and to do those things according to it duty to subserve the puolic convent nee and would have been In effect a fraud upon the creditors of said company I com-pany and upon ttie public Tbut for these I reasons the said board of directors refused to take the action as requetea by said plaintiffs Thereupoa said plaintiffs with the nope and f r the purpose of coercing th said boardof directors into taking this unlawful and improper im-proper action had their complaint prepared and published IX THE SALT LAKE DAILY TRIBUNE several days in advance of filing It with the clerk of this court intending thereby to injure and impair the T credit f of the said company depreciate the value of the stock of the said dofendauts and render it impossible for sail difeaiait to meet the obligation of said company to Its creditors or compelling them to egotiate Icaus at hi her rates of inteicst and at greater expense to the company than would otherwise to the case That the said action s comm ntel by the plamtifls and the publication of said complaint and faho scandalous and malicious charges in the public newspapers in advance of filing the compla in coin t was done maliciously mali-ciously and with the intention and purpose aforesaid afore-said That by reason of such fa ss scandalous and malicious publication on iho part of said plaintiffs and the prosecution of this said action defendant corporation has sustain d damage and injury to its credit In the sum of 50000 RAWMXS OKIICHLOW Attorneys for Defendants |