Nyack, and are operated by the Erie Company under a contract with the Northern Railroad Company of New Jersey, executed December 31, 1868, a copy of which is transmitted with the testimony and proofs, and is referred to in the Appendix under No. 31 of Exhibit H, and No. 34 of Exhibit L.

The capital stock and bonds of the Nyack and Northern Railroad Company were acquired by the Erie Company by recovering the same from Gould, being a part of what is known as the "Restitution Fund."

At the time of the appointment of the Receiver these bonds were pledged by the Erie Company as collateral for its indebtedness to S. L. M. Barlow, and were redeemed by the Receiver.

5. Capital stock of the Montclair and Greenwood Lake Railroad Company.

Prior to 1874 the Montclair Railway Company had been organized as a corporation of the State of New Jersey, to build a railway from the Erie tunnel to Montclair.

The Erie Railway Company had purchased $1,000 of the mortgage bonds of the company, and had the same at the time of the execution of said mortgage, and at the time of the appointment of said Receiver.

Afterwards the said Montclair Railway Company was reorganized, and became the Montclair and Greenwood Lake Railroad Company, and the Receiver exchanged these bonds for $100,000 of the capital stock of the last named company.

6. Capital stock and bonds of the National Stock-Yard Company.

The Erie Company acquired $232,200 of the stock, and $655,000 of the bouds of said company, prior to March 15, 1874. The Receiver acquired $549,500 of its stock, and $10,000 of its bonds. The estimated value of all these bonds is $332,500. No estimated value is given in regard to said stock.

This company was organized as a corporation of New Jersey prior to 1872, for the purpose of receiving from and delivering to the Erie Company at Oak Cliffs, New Jersey, on the line of the Erie Railway, cattle and other stock. The par value of all its stock issued at the time of its incorporation in 1869, was $1,000,000. Its property consists of real estate, cattle-yards and buildings in New Jersey, near the Hudson River, and upon property formerly known as the Gregory Farm. The Erie Company bought the property and constructed the cattle-yards and buildings upon the same, and transferred it to the Stock-Yard Company after its organization, taking its bonds and stock in payment thereof. The Erie Company acquired $50,000 of its stock in 1870; in 1873 it acquired from Mr. Gould, in what is known as the Restitution Fund, $182,200 of its stock. The entire issue of the bonds of this company was $666,000. The Erie Company purchased all of the same prior to 1872, except one.

At the time of the appointment of the Receiver $150,000 of these bonds were outstanding and pledged as collateral security for the indebtedness of the Erie Company, and were afterwards redeemed by the Receiver.

The Receiver acquired $549,500 of this stock, which, added to the amount then held as Receiver ($232,700), makes the aggregate amount of $781,700 of its capital stock and $655,000 of its bonds in the possession of the Receiver on the 1st day of June, 1878.

From the time of the purchase of this property by the Erie Company and its transfer to the Stock-Yard Company, this corporation and its property has been managed and controlled as an auxiliary company to, and in and for the interest of the Erie Company.

It was organized by the officers and directors of the Erie Company and others, and all of its capital stock belonged and should have been issued to the Erie Company, but the same was issued and distributed to a large circle of officers and friends of officers, of the Erie Company, without consideration.

Under Mr. Watson's administration, the Erie Company instituted an action in the courts of New Jersey to vacate and set aside the deed of this property, and to have this stock declared void, or transferred to the Erie Company as its real owner.

Pending this action, a large part of the capital stock that was held by Gould & Fisk and others was surrendered and transferred to the Erie Company. Other holders of said stock offered to sell it at nominal rates, and it was purchased to avoid the necessity of continuing this action. And thus all, or nearly all, of this capital stock has been acquired by the Erie Company and the Receiver.

The property of this Company and the cattle yards and other erections thereon, are actually necessary to the Erie Company for a depot for its live freight. The estate and interest of the Erie Company in this property is based upon the ownership of the greater portion of its capital stock.

7. Mortgage bonds of the Newburgh and New York Railroad Company.

Par value $166,000, estimated value $83,000. This company is a corporation of the State of New York, and was organized prior to 1866, for the purpose of building a railroad from Vail's Gate, near Turner's Station, on the Erie Railway, northerly to the main line of the same at a station called Newburgh Junction, a distance of over twelve, and nearly thirteen miles (see Map, Exhibit No. 1 of August 6, 1879).

Before the road was built, and on the 5th day of October, 1866, this corporation entered into a contract with the Erie Company substantially as follows:

This company agreed to construct and complete its railroad within three years, to the satisfaction of the Erie Company, and to lease the same to the latter company for the term of its charter, at the yearly rent of $30,000, payable in January and July of each year thereafter, the first payment to be made in July, 1867, provided the work of construction was

commenced before then (a copy of this contract is transmitted with other leases and contracts of railroads, referred to in said Appendix as No. 34, Exhibit L).

This company issued and sold its mortgage bonds, $250,000. They were endorsed or guaranteed by the Erie Company, and the above amount ($166,003) was acquired by Erie by purchase as early as 1870. At the time of the appointment of the Receiver, $91,000 of these bonds were outstanding and pledged as collaterals for the indebtedness of the Erie Railway Company to the Fourth National Bank, and $75,000 of these bonds were pledged by the Erie Company for its indebtedness to Drexel, Morgan & Co., all of which were afterwards redeemed by the Receiver paying said indebtedness.

It also acquired all of its capital stock prior to 1871, and since then the road has been managed and run by the Erie Company as the Newburgh Branch of the Erie Railway.

This road and the contract relating to it appear in said Appendix (No. 30, Exhibit H), and has also appeared in the annual reports of Erie Company as a leased line, and was so treated and considered in this reference at the time of submission of April 5, 1879.

At the subsequent continuance of the hearings of the case, the fact appeared from oral testimony that this company and its road had been consolidated or merged into the Erie Railway Company under the statutes of the State of New York.

No. 31 of Exhibit H (see Appendix, between pages 56 and 57) was stipulated into the case in June, 1879, but the fact that this road did not appear in this last Exhibit as a leased line was not noticed by the Referee until since the last submission of the case. On inquiry of the secretary of the company for the reason of this omission, the Referee was informed that it was not a leased line, but a part of the Erie Railway proper, and was referred to resolution of said company, adopted March 21st, 1871. This action of the Erie Company was not proven before the Referee, but

he now reports a copy of said resolution, instead of calling the parties together to consider the same, namely:

66

On motion of Mr. Thompson, seconded by Mr. Ramsdell, the following "action was taken :

"Whereas, the greater part of the capital stock of the Newburgh and "New York Railroad Company has been surrendered to this company, "and to facilitate the operation of said road and simplify the reports "required by law,

"Resolved, That under the Act of the Legislature, Chapter 302 of the "Laws of 1855, the Directors of this Company elect to become ex-officio "the Directors of said corporation so held under lease, and manage and "conduct the affairs thereof, as provided by law."

This line was built by the Erie Company for the purpose of shortening the distance between New York and Newburgh, and to enable it to compete successfully with the Hudson River Road, for freight and passenger traffic.

8. Capital stock and bonds of the Jefferson Railroad Company.

This company was organized as a Pennsylvania corporation, for the purpose of constructing a railroad from the main line of the Erie Railway at Susquehanna to Carbondale, Pa., and also a railroad between Honesdale and Hawley, both in Pennsylvania, connecting at the latter place with the Hawley Branch Railroad that connects with the Erie main line at Lackawaxen, Pa., the said Hawley Branch Railroad being a leased branch line of the Erie Railway.

These several branch roads appear on the said map (Exhibit No. 1, August 6, 1879), and are also referred to and fully described in No. 31 of Exhibit L of said Appendix.

The Erie Company leased from the Jefferson Railroad Company that portion of the road lying between Hawley and Honesdale, and called the Honesdale Branch, in January, 1869, and the portion between Carbondale