The daily exchange. [volume] (Baltimore, Md.) 1858-1861, 1858-04-10

vances in 1855, and further to per centage out o
| sales till their entire debt is paid.
| Ihat at the time of filing this bill the Centra
| ONO Railroad Company owed the defendants S24
360.50 due 18th September, 1855, and the further
sum OF S314 4S92.92, due 9Th February, 1885, an(
they had power to sell and hypothecate the bonds
and are secured for this debt by these Sd mortgage
bonds, and Sl57, 800 of the income bonds and will
coupons OF lst and I'd mortgage, and also deed O
mortgage, dated 2Sth September, 1850 and an or
der on r Nj. General for S6,893.75, since paid &c
The defendants in their answer admit that they
stated to some of the holders of these income bonds
that the object of the Sd mortgage bonds was tC
! take up money for longer period than allowed bv
the income ponds, and that the Companys condition
! was such that probably not more than $500 600 OF
| the SS50,OO0 to be issued would be needed And il
| such proved to be the case, and the money from
revenues should not be realized when the princpal
| of the income bonds became due that the residue
| OF the Sd mortgage bonds, if any remain unsold,
| would be source from which the necessary means
might be realized for that purpose and this was all
they stated, which may have been misunderstood
and may have given rise to the complainants allie
cations which they positively deny set forth in
the bill.
The defendants, upon this state of facts as given
in their answer, claim that but for the issue of this
Sd mortgage for the purpose of relieving the com
pany, the road mi ght have been seized BY lst and
"a mortgages, and the means of earning an income
lost and refer to their advances and aid for the
purpose of sustaining the road &c.
The answer upon these averments and responses to
such representations and agreements alleged in this
bill were verbal, and not sufficiently supported by
written contract or memorandum to be available
to sustain the equity of the BILL and, therefore, set
up tins as a bar to the relief asked: and which
should be so considered as if pleaded at law
The defendants also deny in their answer the
jurisdiction of this Court upon a construction of
these bonds, and the equities arising in the case
because the securities of both bonds is local. and
situated exclusively in the State of Ohio and no de-
cree OF this Court can bind said property in Ohio:
put that these questions must be determined by
Courts where the subject of the controversy lies
And they also insist in their answer, that the
question of priority between the bonds can not
arise until the Central Ohio Railroad COMPANY is
lnsovent, and then only for the purpose of dstrbu-
ton, and that the lst and I'd mortgagees if they
exercise their power to sell the road would render
vain all enquiries to the present bonds
IN controversy which could only arise when a sur
plus was found in Ohio for distribution, &c: and
they further plead in view to the relief asked that
the bill Is creditors bill; and that no such bill can
be filed except for the distribution of the estate of
debtor who resides within the urisdiction &C.: and
that neither the person the r0ad) or property re-
SIDES or situated in this State and decree can
be available &c And therefore the Court has no
jurisdiction: and finally that the complainants have
complete relief and remedy at law.
After the granting of the injunction upon this BILL
and before hnal hearing on the answers, proof, &c.
1t was agreed that the complanants Josiah Lee &
Co., should withdraw from the suit: and certain 9th
er parties are joined with the complainant H. Nav.
as by the agreement appears that the allegations
OF the bill, as from Carter, Dalrymple Cover
are withdrawn; and also that part of the answer
directly responsive to them. And upOn the case as
it now stands with the testimony of Carter after
wards taken and referred to with the other testi
mony, the questions for my decision as a chancellor
now arise.
The first is, what are the obligations of these in
come bonds, and what rights and equities do they
confer on the holder for value against subsequent
liens or mortgages with notice?
1t has been asserted in the answer and cOntended
for in the argument, that the income bond afforded
no other security than its terms upon its face can
give. That it is however more than mere note of
Indebtedness is conceded, the terms of the income
bond directly and specifically pledge the income of
the road for the faithful payment of the PRINCIPAL
and interest thereof.
Standing therefore in their order. if no subsequent
bonds had been issued, they would unquestionablv
be regarded as next in priority to the first and second
mortgage bonds and a Court of EQUITY would en-
force this priority against subsequent liens ac-
CURED with notice under assignments or mortgages
OF the same subject matter or property; for in the
hands ofJona fde purchasers and holders they would
in equity be considered as binding MORTGAGE or
pledge, to be superseded only by the prior first and
second bonds, whose satisfaction could alone by an
entry and sale of the road under them exhaust the
funds derived from such foreclosure and sale but
II any surplus remained these income bonds woul
be entitled to it in equity, unless some construction
shall be given to them, deprving them of the
Pedge expressly made on their face. The right of the
".
ter and by the laws of Ohio is not questioned to
make conveyance by way of ofmortgage of any land
machinery or property, not inconsistent with prior
membranes. So they have done and can do but
is the third mortgage by its terms such convey
ance, and can the holder of the third mortgage
bond, to secure which the tolls received from said
road are among the property named as mortgaged.
supercede In Court of equity, the holder of the
income bond, which, before the execution of the third
mortgage of said tolls, was secured by pledge of
the income of the road? This will depend on the
meaning of the terms income and tolls both embra-
eng the earnings of the road, and in fact meaning
the same thing.
Bouvier in his Law Dictionary defines "tolls to
mean sum of money for the use of something gem
rally applied to the consideration which is paid for
the use of road or bridge the like of a public
nature. And ''income,' the gain which proceeds
from business; when applied more generally to in
dividuals, and as to governments, &C., &c, called
revenue"
1t has been held therefore, that the devise of the
income OF land is in effect the devise Of the land it
self. Mass. reports. 3T2. Reed Us. Reed, and
Hudson as. Walker Vance, 2 Harris Il Gill, Nd
reports, p. Ais.
The Sd mortgage executed on the 1st of
March, 1852 and bonds under it were issued re-
deemable in 1885, bearing per cent, the same now
enjoined by this Court in the hands of the defen-
dants to the amount of $50, ,000-the Injunction as
to the rest having, by agreement, been dissolved;
which mortgage to raise the sum of $3.50. 900
upon the bonds, for the purpose of paying off the
floating debt of the road, and conveyed, as it
purports to the trustees named. all the present and
IN future to be acquired property of the said Cen
trail Ohio Railroad, that is so much of their
road as is already made between the city of Column
bus in Ohio and Belaire, in said State including the
right of way and land occupied, together with the
superstructure and tracks and all rails and other
materials used thereon or procured therefor, inclu-
ding all bridges, viaducts, cuverts, fences, depot
grounds and buildings thereon, engines, tenders
cars, tools, machinery and contracts, and all the
personal property right thereto interest there
IN together with the tolls rents to be had levied
thereupon, and all the franchises rights and privi-
leges of the said central Ohio Railroad Co.. with the
power to dispose of the land for the purposes of the
road and collect the rents, long as no default is
made IN paving the interest principal of said
bonds so to be issued but upon failure to pay the
same at the end of sixty days. then the trustees in
behalf of the bond holders NAV enter and oreclose
the road it, and out of the proceeds pay the
bonds due; and when more than half the bond
holders require it, shall then sell the road
at public auction, in the manner prescribed
and pay the proceeds according to priorites as fol-
lows: First to pay $3.50, 900 loan on mortgage on
part of road, between GAINESVILLE and Columbus the
lst mortgage; and then 2nd, to pay $500 900 of
mortgage loan on road, between GAINESVILLE and
Wheeling, and also the mortgage debt of $500 600
on the whole line of the road, from Columbus to a
point opposite the city of Wheeling. And this deed
authorises the Trustees to receive and appropriate
the nett earnings of the road to the sinking fund for
the purposes set forth therein.
Thus there is an absolute conveyance of all the
rights property and franchises of the entire road,
including its tolls and nett earnings, and no provS-
ion is made for reference to the payment of the
income bonds which had already been issued, and
were bought by the present holders upon a specific
pledge of the income of this very road thus subse-
quently mortgaged by deed which recognizes, as it
was compelled to do the priority of the liens of the
LIST and I'd mortgage, butts silent as to the pledge,
which Court of equity must regard in this case as
mortgage of the very tolls and earnings. which
IN my Judgment are INCOME, and presents now
the extraordinary and inequitable aspect of this
case 1t has been, however, argued that
these income bonds, secured by no formal re-
garded as nothing more than preferred stock,
and should share the fate in the hands of bona tide
holders purchasing them upon the specific pledge of
the income, of mere stock indebtedness. In this view
| cannot concur, nor do think any high authority
in the books can be cited to sustain it,
The Court of Anneals of Nd. in 4th Nd Rnnnrts