The Sun.
London, England, 1868-01-02 00:00:00

ATLANTIC AND GREAT WESTERN.

The committee of debenture-holders, appointed
at a private meeting of debenture-holders held at the
London Tavern on the 21st of November last to ob-
tain the best opinion of counsel on the question of
the propriety of the debentures over the consolidated
bonds, state in their report that on a question of
such magnitude as the priority of £2,800,000 de-
benture debt over nearly £4,000,000 sterling of con-
solidated mortgage bonds, the debenture-holders were
entitled to expect that a committee of administration,
professing to represent the interests of all creditors,
would have sought the best legal advice on the ques-
tion of the priorities of the different classes of securi-
ties before inviting creditors, representing nearly
£3,000,000 sterling of securities, to sanction a plan
which would in effect have swept away three-fourths
at least of their claims. The committee prefaced
the opinions recently taken by an opinion delivered
by one of the very highest American judicial autho-
rities at the time of the debenture issue—the opi -
nion of the Hun. J. S. Black, late Attorney-Gene-
ral of the United States and Chief Justice of the
Supreme Court of Pennsylvania :—" I have ex-
amined the laws of New York, Pennsylvania, and
Ohio, which define and limit the powers of the
Atlantic and Great Western Railroad Company of
Pennsylvania, and the Atlantic and Great Western
Railroad Company of Ohio—together with the
statutes regulating such companies in general, as
well as the special acts incorporating the companies
named. These corporations have a right to borrow
money and secure the payment thereof as proposed
in the prospectus of the certificates of debenture
submitted to me. The pledge of the securities
there mentioned is a legal execution of their cor-
porate power. The holder of a certificate of deben-
ture in the form given will be entitled to the full
benfit of all the collateral securities pledged for its
redemption. He may recover principal and in-
terest, and, if payment should be withheld, no
Court in the country—State or Federal—having
jurisdiction of the parties and the subject, would
refuse him the proper remedy. Nor can the obli-
gation of the contract be impaired by any future
legislation without violating the Constitutions of the
several States, and that of the United States."
After giving the opinions of the Hon. Mr. Wigfall
and of Judge Thompson to the effect that no rea-
sonable doubt could be entertained on the point
submitted, that the consolidated mortgage bonds
were subordinate to the certificates of debenture,
and all other indebtedness existing prior to consoli-
dation ; the committee state as to the position of
the debentures, that, in accordance with the legal
opinions just expressed, the debenture-holders
had, over and above the value of the collateral
securities deposited in the Bank of England, an
equitable lien for the balance of their claim on
the property of the three old companies, subject
only to the prior liens of the three old companies.
In order to determine the amount of this lien, it
was necessary that the collaterals should be sold
either under the direction of the Court of Chancery
or otherwise. The collaterals could be bought in
by the debenture holders or their accredited agents,
and this course the committee strongly recom-
mended. The deed of trust provided that the secu-
rities were to be sold at the written request of any
debenture holder, and the appointment of accre-
dited agents to buy in the securities for the deben-
ture holders would prevent those securities being
improperly sacrificed. Whatever balance might
be thus determined to be due to the debenture
holders would, as their debt was already overdue,
follow the divisional bonds as a claim against the
railroad ; so that after the payment of the interest
on the divisional bonds any cash that might be in
hand must be divided rateably among the deben-
ture holders in liquidation of the capital and
interest of their overdue debt, until the same be
fully discharged,