In 1894, Sherman and Clark began an inter-urban line between LA and Pasadena, The Los Angeles and Pasadena Railway, and acquired all the street railways in Pasadena. But in 1895, Sherman and Clark faced difficulties themselves. In April, 1894 LACE missed a scheduled bond payment. The bondholders, unhappy with Sherman and Clark management and their attention to their new interurban railway, secured control of the company. Sherman managed to retain 49% of the outstanding stock, but he and Clark no longer had any management responsibilities. The bondholders created a new corporation called the Los Angeles Railway (LARy) and March 23, 1895 LARy acquired all of LACE’s assets, except for the Los Angeles and Pacific Railway and the Pasadena street railways.