By David Dayton McKean
The committee had the same difficulty when it sought to
obtain information about some mysterious condemnation
matters that occurred during the early years of the Hague
regime. In this case someone certainly made politics pay:
In 1919, Hudson County condemned this tract of land in
order to build a county institution upon it and paid for it
$386,215, a profit to Mr. Kerbaugh of $326,215. The Secaucus
Land Company was immediately dissolved, its records cannot
be found, and Mr. Kerbaugh refused to appear before the committee
to disclose the ultimate recipients of the profit which
accrued on the transaction. (Report, Senate Journal (1929), p. 1131.)
On December 19, 1922, Jersey City acquired the property by
condemnation proceedings, in which the Montclair Service
Corporation was awarded $325,000. Mr. Kerbaugh made a
profit of $200,000. Mr. John Milton represented the city....
Mr. Milton testified that the financial records of the law firm
of Treacy and Milton, of which he was a member while this
proceeding was in progress, had been destroyed. Mr. Kerbaugh
refused to appear and testify.
The Committee, therefore, was unable to ascertain affirmatively whether the $200,000 profit accruing from this transaction remained with Mr. Kerbaugh or was shared with others. (Report, Senate Journal (1929), pp. 1131-1135.)
During the pendency of the Bowl condemnation about to be
referred to, Mr. McMahon acted as dummy for Mayor Hague
and held for him title to real estate at Deal, New Jersey, for
which Mayor Hague paid in cash money.
At the time that Kerbaugh transferred the Bowl property
to the New Jersey Bergen Square Realty Company, the Board
of Freeholders of Hudson County was planning the Journal
Square Improvement. It was originally contemplated that
there should be a two-way bridge, one leg of which terminated
on Magnolia Avenue. In July, 1922, one Thomas Davis
acquired several properties in the path of this leg of the bridge.
He was represented by John Milton, who testified that Thomas
Davis's principal was Patrick Casey, General Manager of the
Keith-Albee theatrical interests, with offices and residence in
New York City. Mr. Milton testified that these transactions
were handled in cash. The Committee was unable to locate
either Thomas Davis or Patrick Casey to obtain their testimony.
No aid was given to the Committee by Mr. Milton in
this respect, and neither appeared before the Committee.
At the same time a property lying between the two properties
acquired by Thomas Davis was acquired by The Duncan
Corporation, owner of the Duncan apartment, in which both
Mayor Hague and John Milton were stockholders.
Subsequently the plan of the bridge was changed, and the
leg leading to Magnolia Avenue was never constructed. These
properties are still in the name of Thomas Davis. The revenues
are insufficient to pay carrying charges, which are paid by
check of John Milton, who testified that he is reimbursed in
cash by Mr. Casey.
On July 16, 1924, Hudson County instituted condemnation
proceedings for the acquisition of about one twelfth in area of
the property acquired by H. S. Kerbaugh from the United
Railway and Canal Company, as hereinbefore mentioned.
The condemnation resulted in an award of $320,430 for one
twelfth of the property which Kerbaugh had acquired ... for
$218,500.
John J. McMahon declared in answer to specific questions
that Frank Hague had no interest in the New Jersey Bergen
Square Realty Company or in this transaction....
The condemnation award was made August 18, 1924, to the
New Jersey Bergen Square Realty Company. The Company
kept its account at the Steneck Trust Company, Hoboken,
New Jersey, and the check was deposited at that bank. A
transcript of the Company's account at that bank was produced.
It showed that on August 19, 1924, the day after the
payment of the award, the Company paid to H. S. Kerbaugh
$200,000, which he deposited in his individual account in the
Steneck Trust Company. On that same day H. S. Kerbaugh
drew against this deposit of $200,000 in his individual account
five checks, two for $25,000, one for $13,000, one for $10,000,
and one for $12,000; in all $85,000.
Mr. McMahon was unable to tell who received the money
represented by these checks. H. S. Kerbaugh refused to appear
and testify. The only documentary evidence consisted of
Kerbaugh's check book and the canceled vouchers which were
in his possession in New York City. The Committee, therefore,
does not know who received the $85,000.... The financial
result of this transaction is, in short, that H. S. Kerbaugh and
his associates paid $218,500 for a tract of land, one twelfth of
which was acquired by Hudson County by condemnation for
$320,430, a profit of $101,930 plus eleven twelfths of the
original land .... (Report, Senate Journal (1929), pp. 1133-1134.)
The extraordinary coincidence that H. S. Kerbaugh three
times in five years found himself in a spot about to be struck
by the lightning of condemnation, with such fortunate pecuniary
results, the disappearance of the records of the Secaucus
Heights Land Company, the utilization of a Delaware corporation,
manned by dummy non-residents of New Jersey as a
means of transferring the Split Rock property ... and the tremendous
financial gain accruing to those involved, compel the
Committee to find that public moneys were wasted as a result
of a conspiracy operating under cover of legal forms. (Report, Senate Journal (1929), pp. 1134-1135.
This Web version, edited by GET NJ, COPYRIGHT 2003
Mayor Hague told the committee that he had known the
fortunate Mr. Kerbaugh for some years, but of course he had
no first-hand information about the land deal. The committee
prepared a letter requesting Kerbaugh to come to
New Jersey and to answer questions, but the Mayor refused
to sign it. The Secaucus land deal was not the only one from
which the elusive resident of New York profited handsomely:
In 1915, H. S. Kerbaugh, a resident of the state of New
York, owned a one-half interest in a tract of land at Secaucus
[Hudson County], New Jersey. In that year he acquired the
outstanding one-half interest, and conveyed the land to the
Secaucus Heights Land Company, which he controlled.
It would appear from the record that Mr. Kerbaugh, living
in New York, had an uncanny prescience concerning real
estate in which Jersey City was about to become interested.
It appears too that John Milton was very likely to turn up
somewhere in the transaction:
On December 28, 1921, the Montclair Water Company, a
New Jersey corporation, owner of a property in Morris
County comprising a natural lake and considerable acreage
known as Split Rock Pond, entered into a contract to sell the
property to Joseph G. Hoffman for $125,000, payable $15,000
in cash and $110,000 on a purchase money mortgage. Hoffman
was Kerbaugh's secretary. The property, which lay in
Jersey City's watershed, had been in the market for a long
time at $150,000 to the knowledge of various Jersey City officials
and had been offered for sale to the city. Immediately
after the execution of the contract, Kerbaugh caused to be
organized the Montclair Service Corporation, a Delaware
corporation, the officers and organizers of which were all residents
of New York. Hoffman's contract was assigned to this
corporation, which acquired title April 4, 1922.
The committee felt that Mr. Kerbaugh's unusual and consistent
good fortune in his real-estate operations deserved
comment:
In 1922, H. S. Kerbaugh acquired from the United Railway
and Canal Company, with which the Pennsylvania Railroad
is affiliated, a tract of land at Journal Square in Jersey City,
known as the Bowl, and paid for it $218,500.... Mr. Kerbaugh
conveyed the Bowl to the New Jersey Bergen Square Realty
Company, in which he and John J. McMahon, Register of
Hudson County, who was a close political associate of Frank
Hague ... were the controlling stockholders.
With the satisfactory conclusion of his last real-estate deal
Mr. Kerbaugh left New Jersey, as far as the record goes,
never to return. The evidence turned up by the Case Committee,
not only on his activities but also on those of Hudson
County officials, was submitted to the Hudson County prosecutor;
but no indictments ever resulted.
Between 1919 and 1924 11. S. Kerbaugh happened to find
himself the owner of three tracts of land required by Jersey
City or Hudson County for public purposes.... The Secaucus
tract yielded a profit of $326,215, Split Rock $200,000, and the
Bowl $101,930, plus eleven twelfths of the original land, a grand
total of $628,145....
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