Green-Mountain freeman. [volume] (Montpelier, Vt.) 1844-1884, 1877-08-01
Railroad Hearing,

late the ola securities, according 10 sue
priority of leins as the Court shall make
The case comes before this Court on Il
appeal of petitioners from a pro lorna OIL
der of Judge Royce. who heard it as Chan
cellOr, dismissing the petition Their
were present the full bench, eXceptin;
Judge Royce, to wit:-Chief Justice Pier
point, and Judges Barrett, Redfeld, Ross
Powers and Dutton. The counsel in favo
of the sale were b. F. Fifield, of Montpelier
Luke P. Poland of St. Johnsbury, Ashe
Peck, Of Jericho, George F. Edmunds, o
Burlington. Those opposed were Edward
j. Phelps, of Burlington, for Vermont Cen
trail lst Mortgage bondholders; Francis A
Brooks of Boston, I'd Mortgage; Aldace F
| Walker, of Rutland, Vermont and Canada
John Prout, of Rutland, Rutland Railroad
Company; and VIM. G. Shaw, OF Buring.
ton, and Robert Goldman, of Boston, Yer
mont and Canada guaranteed per CEN
bonds.
The hearing closed Friday and the CourI
did not announce its decision which is tc
be written by Judge Barrett. The case
was thoroughly argued by representatives
of the various interests.
We subioin an abstract of Mr.. Fiheld's
statement Of the reasons for the petition.
lie said it was all summed up in brief
proposition, that certain creditors have
loaned their money in good faith to mana
gers authorized by the Court to borrow
They come here and ask for then pay.
The other side say, Hold on, until we get
through the fight" Here is trust debt
Of from six to seven millions of dollars,
which certain other creditors attack.
The object of this petition is to make
title to these railroads. 1t is impossible
that all the security-holders should be got
to agree upon any scheme, but when a
majority has been secured, rs in this case,
the Court should afford remedy. Com
plant is made that the owners of the
property cannot control it, and they want
TO get it out The public of Vermont will
welcome an order to that effect and thus
stop the scandal. But of course it must
be done legally. Fora year past the man
ayers and their counsel have been consid-
ering the subject. They first came to the
conclusion that they could not make title
by forecIosing the LIST mortgage, because
the compromise decree of 1854 was in the
way, that having made the Central and
Canada one indlvisible piece of property,
and it has since been assented to by all par.
ties. They soon found the same difficulty
in the way of foreclosure of the "a
mortgage. Independent of this there was
the insurmountable obstacle that the Can
ada road was under no mortgage, so no
title could be secured TO it unless by vol
untary conveyance, and not by that be-
cause it was subject to the lien Of the trust
debt. They finally concluded that the only
way was to come to the Cour. and frankly
State the whole situation, and ask the
Court to solve the problem. All the differ
ent classes Of security-holders wanted to
be ahead, but after long negotiation the
present scheme was united in by the rep
resenlatiyes of all classes. In this con
nection Mr.. Fiield discussed the character
of the petition, claiming that the property,
real and personal, is an entirety, and can
not e sold in separate parcels, All par
ties have been notified, and the case fully
heard before the Chancellor. He dismiss
ed the case pro Jornaa, SO as to make an
appeal sure, but gave his opinion that the
prayer ought to be granted.
The first question which presents itself
is, doc the trust debt constitute valid
charge on either or both of the two roads?
Mr.. Fitted cOntcnded that the lease Of the
Vermont and Canada TO the Vermont
Central in 1919 was in terms and intent
perpetual, and so practically sale of the
road. Afterwards, when the Central
neglected to pay rent, the Canada asked
10 have receiver appointed. These two
acts were joint and tended to cement the
union. The Canada are actors in starting
this machnc-the receivership. The re-
ceveIS are therefore theirs Afterwards
the case took different shape. 1t is more
or less anomalous. He cited the case OF
The r., and S. r. R. Co. VS., Mills and
Knapp 9th Vt.,) 10 show that the ex-
penses of the receivership or trust consi-
tuled an implied lien on the property, and
the Court would follow the property to en-
force this lien, no matter who has it. The
receivers expenses are the orators if the
orator prevails in the litigation. In this
Vermont and Canada case the roads were
put into the charge of the Canada, to run
under The order of the Court, which prac-
tcally made them receivers. This CON
Linued n year, and then the trustees of the
Contra first mortgage were appointed re-
celvers. The order says, take possession
OF both roads, run them, pay the expenses,
and bring the net income into Court.
There was no order for separate accounts.
Nobody ever could see any separation or
distinction. The owners of the property
were dispossessed and their rights were in
charge of the Court. The expenses, there
fore, bound the whole property. When a
bridge went off on one of the roads, did
the managers stop to see whether any of
the money in their common drawer be-
longed TO the one or the other? Not at
all. They did their duty, leaving their
accounts TO the Court. Originally in the
contest that afterwards arose, the Canada
said, " Give us our rent or give us our
road" and it at first seemed very rca-
sonabIe proposition; but that idea has since
been abandoned, even by the Canada it.
sell, for trust creditors have come in and
demanded to be paid, and then, if there is
anything left, the Central and Canada can
have an accounting between themselves.
1t Is OF no consequence to the trust credi.
tors on which road or in what manner the
money they have loaned the trust has been
expended. Their right is to be satisfied
out of the receivership property, and the
Canada having been prime mover in that,
is estopped from saying, Give us our
rent or give us our road But the last
notion of the Canada counsel is that the
recelVership expenses are II charge, not
upon the property, but upon the income of
the two roads. This puzzle, no Sever,
was OF very easy solution. These re-
ceivers did not get their title of possession
from the Vermont and Canada, but from
the Court. They became the officers of
the Court. When Il trust creditor comes
and demands his pay, he does not ask the
Vermont and Canada for it, or the receiv-
ers as their agents, but he asks the Courts
officers for it, in whose possessions is the
property. The receivers, therefore, had
nothing to do with the companies, but
when they needed money, Or directions,
they went to the Court for it. The thing
that the receivers were placed in posses
sion of was the roads, not merely The in
come. 1t would be cool performance for
the Vermont and Canada to come and
take the splendid road, with all its i'm
provements and leave out in the cold all
the parties whose money made the i'm
provements.