Evening star. [volume] (Washington, D.C.) 1854-1972, 1874-02-10
An Interesting Law Case.
W. W. CORCORAN AGAINST THE CHRsAPYAKE
AND OHIO CANAL COMPANY.

ct al, against the Chesapeake and Ohio Canal
Company, was commenced, Carter and Poe, of
Baltimore, for the company, and Messrs. Car
Isle, Mcpherson and J. b. Bryan, tef Rich
mond) for complsinaDts- The comPlainants
filed some few years since a bill TO compel the
defendant 70 apply the net tolls and revenues
to pay the interest on certain bonds ard securi-
ties of the defendant held by them and secured
by a mortgage dated June 5th, 1915, and the
court below Especial term) dismissed the bill, on
the ground that complainants had a remedy on
the law side, and they appealed.
THE HISTORY or THE CASE
lie set forth as follows: The company was char
tered by Virginia in 1924 and the charter shortly
afterwards confirmed by Congress and the legis-
incorporated by this concurrent legislation, the
company had no express power to borrow mo-
ney; but by an act of the General Assembly of
Virginia, passed on the goth OF January iS4I
confirmed by the General Assembly of MARY
land on the eth OF February, 1874, and by Con-
gress on the 9TH of February, 1915, express au-
thOrity was conferred on the PRESIDENT and
directors "t0 borrow money, from time To time
to carry into effect the objects contemplated by
me ehsI1er, 70 issue bonds or other evidences of
enues OF the company for the payment of the
same, and the interest to accrue thereon in
such form and to such extent as they mi ght
deem exponent, provided that nothing In said
acts should be construed to impair the prior
rights or liens OF the state of MARYLAND under
the mortgages executed by the company to her,
except IN 30 Tar as the same might be waived,
deferred, or postponed by her legislature
Ten years prior TO this, the state of Mary
land had loaned TO the company, under act OF
1884, two millions of dollars, and had obtained
works, property, rights, II tolls and revenues
to secure this loan with the interest TO accrue
thereon, at the rate of six per cent. per annum.
This mortgage was the first lien upon the prop
eTty and revenues Of the company. By the act
of 1S35 the state OF Maryland subscribed three
millions OF dollars, and by the act of 1888 one
million three hundred and seventy-five thousand
dollars to the capital stock OF the company
eIacting, however, as condition TO these cub
scriptions, guaranty, after the expiration OF
three years, of dividend of per cent, payable
semi-annuaily out of the profits of the company.
This guaranty was executed, and in payment
of the subscriptions the state issued bonds to
the amount OF 81 ,3I5 900 TO the company, upon
the further condition that the COMPANY paid
the interest tor the three wears ending July
LIST, 1872. The canal company failed TO meet
this engagement, and the state was compelled
TO provide a sum necessary for the purpose of
paying the interest, SECS, Oil "a, ana to secure
this sum executed mortgages to the state con-
stltutlng the second lien. Before 1871 the canal
had reached dam No. 6, but the means of the
company were exhausted. and the work was
still fifty miles east OF Cumberland, its destina-
ton, and from that year to 1916 but little was
done beyond using the work as beneficiallv a.
possible. Its receipts were less than its ex-
penses, and the investments of the state of
Mary land-SI ,O00, Goethe subscriptions of the
Cmted states, Virginia, WashingtOwn, George
town, and Alexandria, over s3 GOO 900 more.
appeared to have been to no purpose other than
TO leave the work on the hands OF the company
in an imperfect condition, of no practical value
Being fully alive to the necessity OF an early
completion of the canal to the rich mineral
regions or Allegheny, Maryland determined to
tempt others TO come forward with the means
necessary TO finish the work, by a waiver in
their favor of her liens upon the tolls and reye-
nues, upon the pledge OF which she had herself,
IN former years, been induced to contribute so
Literally 10 the enterprise. Accordingly the leg
islature, On the 10th OF March, 1915, passed an
act which authorized the company to borrow
money upon the bonds of said company, with
preferred liens on its revenues x ia
secure the payment OF the came and the interest
to accrue thereon 1t also provided that the
said bonds shall be issued in sums of not less
made payable i'll not less than 35 years and bear
an interest not exceeding per cent. per annum
payable semi-annUaily on the first day of Janu-
.ry ana the hrst day OF July in each year.
sO, that the rights and liens OF this state upon
The revenues of the Chesapeake and Ohio canal
comp any, shall be held and considered as
waived, deferred and postponed in favcr of the
bonds that may be issued under the foregoing |
sections, so as TO make the bonds and the |
interest preferred and absolute liens on the |
revenues; the company to pay the interest semi |
and also - 600 per year 10 the Potomac
company and 80, 900 to form a sinking IN n |
and the president, and directors were author |
Zed to execute any deed, mortgage, or other |
instrument TO give the fullest effect to the oro-
visions. Under this authority the companv |
made the deed OF trust, reserving an amount OF |
revenue sufficient to keep the canal in repair !
and ray the expenses Of management, and de- |
'otes the residue to pay interest of the bonds in
luesuon; 5000 per ann1m to the creditors OF |
Potomac company and SIS, 900 annually /
o form sinking fund. The interest on |
ne bonds Was at times partially paid,
md in ISL II was in arrears from ,Jsnanrv J
st, ls53. The bill charges that the COMPANY
lad accumulated an amount of net revenue
y cient to pay the interest but refused to pay
Q the extent OF its ability unless they were sur
endered and payment of the face accepted as
'aS rnenf IN mi & The daAd of trust gave the
rustees power to take possession OF ana collect
he tolls and revenues upon the default of the
company to pay the interest, the complainant,
,orcoran. being holder of bonds and cou pons,
mi unwilling TO surrender his coupons without
eceiying the amount legally due thereon filed
us bill against the company, which has a con-
iderable amount OF net revenue annually accru-
ng in this District, to cause such revenues to
e collected by a receiver, and applied to the
laims Of all persons entitled under the deed OF
rust.
THE BRIEF or COMPLAINANT.
The brief Of complainant states that the an
wer admits that the company has money an
licable to the payment Of the eeapons. AMI
vers its readiness to pay them Wnen surreI,
ereH, out denies its liability for interest there
n, being advised that while it is bound to nav
ne coupons themselves, it cannot lawfully nav
Ut OF the said revenues any interest tberen-
Dr. reasons set forth in the answer This re-
be controversy to the single questir- - .h
sHSd1on VI inc company 10 de- ota tha na+
evenues As they accrue to the ,,a,,r,, nS ne
oupons and the interest s,sp - ra,S oa 'ns
ne Snestlon is IN Is perfectly well settled,
~ ansTNo whether the matters set up in
la or constitute defense to the COM
--hant's demands.
The complainants further state that there are
w0 preliminary objections made in the answer
o the cOmplainants right to maintain the suit,
liz: That the trustees are not authorized to
AXE possession unless the default shall be
wing to some other cause than a default Of
Syenue without fault on its part. This aver
nent, they state, was not necessary in the bill,
md IL was a matter OF defence and is pleaded
N the answer, and would have TO be proved by
The defendant, but complainant has proved il. |
Tho evidence shows that Maryland owns /
900 900 of the stock, out of -, 225 coo, conse
quently she had controlled and exercised it. |
The testimony shows that parties who rarely |
had any interest were appointed TO represent /
the state, and were expected to subserve some /
political interest and it was mere political !
machine. This state of things continued till |
$50, when, by the influence of Governor |
Bowie, urged on by the bondbOlders, Mr.. James |
q. Clarke, competent person, was made pres |
ident OF the company, with an amount OF salary
which warranted him in giving his attention to
his duties. The result OF this was, that the
revenue OF the company was increased fifty per
cent. the first year, and doubled the second
wear, being in 1Sf9-'sO. the wear prece ling Mr.