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

ROAD COMPANY.
BALTIMORE, April G. 1858.
Hon. JUDGE LEE,
Dear Sir:
As much interest is felt in our community to set
your recent decision in the case of Nav and other
as. The Central Ohio Railroad Company and tb,
Messrs CARROTS, involving the questions of III,
priorties and rights to which the holders of tn,
income bonds of this road are entitled. we mos
respectfully request from you copy of your opinion
for publication,
And have the honor to be,
Very respectfully, yours,
G. w. LURMAN.
WIN. H. NORRIS,
ROBERT j. BRENT,
May and others rs. Garrett 4 Sons and the Cen.
trail Ohio R. r. Company. In Chancerv
This case has been fully argued upon the bill
answers and evidences at final bearing and am
called on now to decide the questions involved
The bill was filed and an Injunction granted on
the 10th February, 1856, upon the allegations and
prayer of the complainants, III. May and James H
Carter, VIM. F. Dalrymple and G. Cover. trading
as Josiah Lee Co., for themselves and all other
creditors of the Central Ohio Railroad COMPANY
who might show themselves entitled to participate
in the benefits of the suit, and sets forth that the
| Central Ohio Railroad Company and Robert Gar
| rett, Henry S. Garrett, and Jonn w. Garrett, the
| ueienudnts, IraulnS as ROBERT Garrett Il Sons.
being the authorized agents of the said Central Ohio
| Railroad Company, in Maryland, did at various
times prior to the filing of this bill, sell or cause to
be sold to divers persons certain income bonds of
the said Central Ohio Railroad Company bearing I
per cent. interest, and purportng on their face to
be secured by ga specified pledge of the income of
said road"
That the complainants, Henry May and Josiah
Lee Co., (under which firm the other COM
plainants traded) became the purchasers and are
now the holders of some of these income bonds
for valuable consideration to the amounts stated in
the bill, and the interest thereafter accruing on
the same, to be paid from their date, the 1st day
of April 1854, and the principal to be secured by
the specific pledge of the said income until re-
deemed at the time named in said bonds The COM
plainant FL. May further states that he purchased
his income bonds directly from the Messrs Garrett
d Sons upon the representations and assurances
referred to in the bill and shown by the testimony
of Mr.. Oelrichs, a witness in the cause; Josiah
Lee 4 Co., the other party, complanants allege
that they directly loaned to the Messrs Garrett
Sons agents of said road, large sum of money
and received therefor, income bonds to the
amount of $4,000, as security for said loan
upon representations and assurances of the said
Garrett that the only liens or mortgages on said
road were the first and second mortgages, which
could have priority over these income bonds, and
that If third mortgage issued or given it
would be to secure and not to impair the income
bonds but to be substituted in their place and stead
The Bill then states, that notwithstanding these
assurances and representations of the said defend
ants that afterwards third mortgage was executed
by said Central Ohio r. r. Co., (at the instance,
and with the knowledge of Messrs. Garrett Sons
and bonds under it to large amount were is
sued, being now in the hands of the said Gar
retts to be sold in the market and negotiated,
or to be held by them security for debts
due and owing, by the said G. r. r. Co. to the
said Garrett Sons, who insist now on the pri-
ority and preference of said Sd mortgage bonds
thus procured to be issued, and now held by them
and in depreciation of the income bonds
AltlOuuh. e
Sons had notice Of the prior equity and lien of the
holders of these income bonds, and particularly of
the rights and equities of the compliments Henry
May and Josiah Lee Co., who purchased their
bonds upon the express representations and assu-
RANGES of the said CARROTS.
The complainants also further allege and insist
that independent of any notice to the said defen-
dants, the Messrs. Garrett and the Central Ohio
Railroad Co.. that the said income bonds having
been issued under law of the State of Ohio, and in
conformity to the powers given in the charter of
SAID road that they should now be regarded as in
the nature of mortgage, and entitled to priority
after the first and second mortgages referred to have
been satisfied and that the third mortgage cannot
in equity be decreed to snpercede or impair their
just, legal and equitable priority. The bill then
prays that the Messrs. CARROTS may be decreed to
to account and show what are the nature and
amounts of the liabilities incurred by them for the
said Central Ohio Railroad Co., and being the hold
with notice of the prior lien and equity of the
income bonds, shall hold the said third mortgage or
the new bonds issued to be issued, under it, as
in trust to secure first the holders of the income
bonds and especially the complainants, who pur-
chased the same upon the express representations
and assurances of the said Messrs. Garrett Sons
that these bonds were to be secured protected by
the third mortgage, &c.
To this bill the defendants have answered. admit
ting the formal averments to the incorporation of
the Central Ohio Railroad Co., and state that in the
fall of 1853 they became the agents for their codeen
dants, said dRaroadCompany in the negotiation of
certain of its bonds, and making loans for said road
Since that time, in advancing themselves moneys
and credits to said road upon securities, but that
they never held themselves out as the general agents
OF SAID company, but were special agents. that
among the bonds entrusted to them by said road
for sale and hypothecation, were certain of the in
come bonds named in the bill; and that they were
known in the New York and Baltimore market
and derived their name from the pledge of the in
come OF the road-as set out on their face the Sc
curity and the only security offered for their paw
ment over and above the general liability of the
company; that from the short date for which such
bonds were to run, compared with usual mortgage
bonds they became, if purchased at a large dis
count highly profitable to the holder rs they were
to be redeemed on the lst of April 1859 and 1860
paying in the meantime half yearly per cent. in
terest, which, besides giving to the holder as to
change temporary into a permanent loan the OPP
ton to convert his income bonds into ordinary
stocks of the company, at par; which sold at par
as late the 10th September, 1888; that this con-
vertible feature embodied in all the income
bonds except of $1,000, and was in those pledged
" the eohlPialnants, oosiaii hee w., III March,
1919, and also In those sold to complainant May,
or rather to Henry Oelrchs for II. May, about
the same time.
The defendants. the Messrs. Garretts in their an
swer deny that they ever entered into any stipua-
tlons or agreements on behalf OF said company, that
it was to be liable to the purchasers of the income
bonds, in any other manner than is apparent the
lace of said income bonds, and were not authorized
so to do; and that with the exception of the complain
ants. no purchasers or holders of said income
bonds ever claimed, to their knowledge, that the
bonds SO sold by them, had been sold with any
agreement understanding that the holders had or
expected any other right or lien than such as the
| bonds by their terms express; and that the COM
| painants made such pretence from the time
| of their acquiring these bonds until within few
! days before the filing of their bill.
That the defendants never did make any agree