directors of the Central also served on the Harlem's 13-member board.
17. The Harlem shareholders approved the Second Supplemental Contract (1898) on October 5, 1898, by a vote of 145,519 shares for and 11,042 against.
18. In 1943, a dispute and ensuing litigation arose concerning the Central's obligations under the original lease to pay income and excess profit taxes of the Harlem. The Central contended that any such payments made on behalf of the Harlem were to be subtracted pro rata from the $ 5 per annum dividend rental. In 1942, said payments on behalf of the Harlem were $ 330,630.
19. The Third Supplemental Contract to the original lease as theretofore amended was executed as a means of amicably settling this dispute. Under the Third Supplemental Contract:
a. The Central terminated its litigation;
b. The Harlem agreed to issue $ 7,800,000 in principal amount of Second Mortgage Bonds to be purchased by the Central;
c. $ 2,500,000 of the purchase price of the bonds were to be turned over by the Harlem to the mortgage trustee of the Harlem Gold Bond Mortgage to be used as a sinking fund to retire but not cancel Harlem Gold Bonds. The mortgage trustee was to receive interest on the retired bonds;
d. The remaining $ 5,300,000 in purchase price was waived by the Harlem in consideration of the Central's release of all claims for past due tax payments, cancellation of certain Harlem debts arising from operation of the street railroad during the 1920's, and the costs incurred by the Central in the bond issue and associated formalities;
e. The $ 7,800,000 in principal amount of Harlem bonds acquired by the Central were to be used for an exchange offer to the non-Central shareholders of the Harlem on a basis of $ 125 principal amount of 4% bonds for each share of Central stock;
f. 4% on $ 125 returned $ 5 per annum to the holder, the equivalent of the return to the stock under the rental provision of the lease as modified;
g. The Second Mortgage was specified as constituting, for the purpose of the lease as modified, a refunding of the Harlem Gold Bond Mortgage, and, hence, the Harlem Gold Bond Mortgage could not be refunded again;
h. Central agreed to pay the interest and principal of the Second Mortgage bonds; and
i. The lease was modified to require payment of the $ 5 per annum per share only to non-Central shareholders of the Harlem. The Central's Harlem stock had been pledged as security for the Central's Refunding and Improvement Mortgage of 1913. The lease provided that suspension of rental payments to the Central as shareholder would not apply if the R&I mortgage trustee was not required under the mortgage to turn over stock dividends on pledged stock to the Central.
20. By 1943, the Central owned 23,119 shares of the Harlem's 26,879 outstanding preferred and 114,321 of the 173,121 outstanding common.
21. Eight of the Harlem's 13 directors in 1943 also served on the board of the Central.
22. The Harlem shareholders approved the Third Supplemental Contract (1943) on August 5, 1943, by a vote of 174,525 for and 2,951 against.
23. Outside independent counsel was retained to act as counsel to the Harlem relating to the 1943 dispute, and they recommended acceptance of the agreement by the Harlem.
24. The Central and Harlem submitted in support of their petition under § 20(a) and § 5(2) of the Interstate Commerce Act, the Third Supplemental Contract and Second Mortgage along with summaries of the terms of said contract and mortgage.
25. Fidelity offered exhibits 7 and 10 secured from the files of the Central. The documents purport to be a reconstruction of the property transactions from 1876 to 1953 involving the property covered by the 1873 lease.
26. The documents recite that about 90 sales or exchanges of property to third parties or to condemning authorities took place in the period 1876 to 1953.
27. The documents further recite that in most instances the proceeds were delivered to the Harlem and then transferred to the Central for application toward additions and betterments to the Harlem line. The total consideration received aggregated $ 1,875,129.39.
28. On July 1, 1970, a $ 2.50 semi-annual rental dividend came due, and on January 1, 1971, a second semi-annual dividend came due.
29. The directors of the Harlem at the time the reorganization petition was filed and thereafter were employees of the Debtor.
30. An officer of the Harlem made formal demand on the Trustees for payment of the rental dividends mentioned in Finding No. 28, on March 29, 1971.
31. The two rental dividend payments mentioned in Finding No. 28 were paid by the Trustees on April 30, 1971. Neither payments were within the 90-day grace period of the lease.
32. The semi-annual rental dividend payment due July 1, 1971, was paid by the Trustees to the Harlem on October 8, 1971. It appears subsequent payments were made in due course.
33. Real Estate taxes payable annually by the Debtor on Harlem properties (not including tax payable by tenants pursuant to the leases or orders of this Court) are approximately $ 1,700,000. Tax liabilities in this sum have been accruing and remain unpaid since the filing of the Debtor's reorganization petition.
34. The indenture trustee of the Harlem Mortgages has declared a default under the mortgage and accelerated the principal of the bonds premised on the failure of the Harlem to meet tax obligations. The Trustees' failure to pay taxes assessed against Harlem property constitutes a default under the lease.
35. Since the reorganization petition was filed, the Trustees have failed to pay corporate taxes assessed against the Harlem. The total sum due is substantially less than $ 50,000.
36. Pursuant to New York State legislation, the Harlem rail lines were relocated underground in the early years of this century.
37. The Central has developed the residual surface rights. In most instances, the Central executed long-term ground leases and the lessee constructed the improvement.
38. The Harlem has some reversionary interest in the following Park Avenue Properties:
Air rights over Grand Central Station
Pan Am Building