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Legal Battle Over the Sale of Michigan Bell


Property Will Probably Be Tied Up Several Years - Ann Arbor People Are Interested

A number of people in Ann Arbor are very much interested in the legal battle that will be waged over the recent sale of the Michigan Bell Telephone Co., under a foreclosure of the mortgage. The preliminary skirmish began last Thursday when Judge Swan of the U. S. district court granted a stay of proceedings until Monday of this week in acting on the protests of the minority stockholders against the confirmation of the sale and asking that the Old Colony Trust Co., Michigan Telephone Co. and N. W. Harris be ordered to show cause why the sale should not be set aside.

The hearing did not come up yesterday, on account of the death of Judge Swan's brother, but was adjourned to Wednesday. It is not probable that the matter will be decided then.

The three petitions contain too many allegations of fraud, which will have to be substantiated by testimony. A time will be set by the court for the hearing and the introduction of evidence, and whichever way it is decided, the question will undoubtedly be appealed to the United States court of appeals, tying the litigation up for a year at least, and meanwhile continuing the management in the hands of the Union Trust Co. This is precisely what the petitioners wish, for they all make the claim in their protests that the revenues are enough at present for all expenses, interest on the bonds, etc., and that the receipts of the company are increasing every day.

One of the first things the receiver did was to cut down salaries, and in many cases employees, especially at the Boston end, were unceremoniously dropped. Secretary Hance stated this morning that every man on the pay roll is now earning his money. It is said the saving is about $60,000 a year.

Secretary Hance justifies the $100,000 expended on improvements on the ground that they were absolutely necessary to maintain the plant in first class condition. The plant at Ann Arbor, Jackson and Battle Creek have been entirely remodeled, but the work was started or contemplated before the Union Trust Co. took charge.

The Ann Arbor people interested in the matter were originally stockholders in the State Telephone Co., which was to be a rival of the Bell Co., when the latter bought of the State Co., the stockholders were given one share of Bell Co. stock for two in the State Co. There was about $100,000 worth of State Co. stock held in the city being divided up among nearly three hundred persons. Many of these had enough experience with telephone stock and when the Bell stock went up to 87 they sold out realizing a fair amount for their investment. A goodly number, however, held on to their holdings and there is no $40,000 or more held here. Most of the stockholders here have joined in the movement to have the sale set aside and they are watching with interest the outcome of the legal battle.