New-York tribune., 1877-07-12
I GREAT RAILROAD CASE.
L IpoN MnIrNTAIN RECEIYERsHIP.

ST Loug Iron Mountain and Southern Railroad has
interested large number of influential gentlemen
in New-York and New-England. was known as
"gilt-edged" stock and many Of the most prominent
advocates of railroad and Civil Service Reform IN
vested their earnings in IT. Railroad critics, VINO
were suspicious OF the management OF nearly every
other railroad represented in the stock list,
had profound confidence in this stock. Among
the stockholders were Charles Francis Adams,
jr, T. l.. Godkin, Randolph Robinson, John Bige-
low Charles II. Marshall, and many other well
known gentlemen Of that class. George Cabot Ward
and his brother went in heavily on their own ac-
count and as the agents of the Barngs To the cha
grin of the stockholders of this ideal railroad the
coupons were passed. heavy floating debt was accu-
mulated, and finally the road was thrown INTO the
courts. An application for the appointment OF
n receiver was made by the Union Trust Company,
representing Barring Brothers x Co., and argument
was heard upon the application in the United States
Circuit Court, at Keouk, on May 81. Judges Miller
and Dillon. who had heard the argument, denied
the application on June II. The text of their
decision has just been printed, and as it Will doubt
less interest many persons, it is given below:
The plaintiffs are trustees in amortsage made by the
defendants the payment Of 32So00,000, upon
CSC niles Of railroad and its appurtenances, and some
100000 or 100000 acres Of land
or these bonds only $3,00OO0O have been issued, and
Bros Co., whose interests i'll the mater arc III Ile
hands OF D. G. and G. c. Ward The mortgage was exc,
cuod and bonds dated May 6, 1874. II contained
all the usal stringent c0YeiItts ol !od InOIt7H5c
among others authority 70 the trustees 10 take posses
come OF the roa upon thc failure to pay any instament
of when el due; AID. after three months "
tLo "yg ~ aii ~ nil m t5c CJrc,t Cor
OF the Unitcd states Tor TIE Eastern District OF Missouri
70 70 tS Of ppioaiion 10 indie OF tIat
~ gtlrf II All A
receiver II is not denied by the answer tbat
coaoon. aIs "as Of interest s Ealing & e at vaous % fmcs
hetweon the month OF October, 1876, and the ne Of
April last TIE failure 10 pay certain coupons then due
Il formal demand was made by complainant OF The de-
And insisted by counsel planti that the failure
pay J!ese nsaments or Interest, aud To GeHvcf pos
on 81 the road on demand leave he covenants
Court 10 refuse TO place tie road ~ the hands OF re-
celycr That because income Of the road is pledged
by the mortgage FOR the payment Of the bonds and the
piGinu ls authorized on failure to pay any lnstiment
oi interest to take possession these circumstances with
conceded default without reference the showing OF
defendant without 10 its resources, with 10
danger of ultimate loss to any DynnholGefs
or Uf any serious delay OF payment. require rs
matter Oi law that The Court must sCsess e defend
aus by the appointment OF recsti 10 tahe possession
OF the property Oh the company Inc argument Is Ath
pressed atthe contract PLAN, taa on failure TO pay
TIC trustee Is aatho6eu ~ tahe p1s.crsoh "Ha sIhe
possession has been lese Is me duty of the Court 20.
eni0rcc tho contract speccaly II ne coAlract cQneh
plated any very rOracteu tenure O 'nis possession by
The trustee Tor instance during Tue otty iGtin Nhch
tle bond. haVc before maturity, ana q hi was
ed looking maialy the specific enforcement Of this
part 81 tr contract. equity might DE bound To do 80 D
thar Is Hc case. lhc possss" can ~ tne terms OF
thc contract Dc only temporary, anu - aAlIl ~ o''L
and more important relief II the default confines Tor
three months the trustee in possession IS bound 10 adyer-
taa al so th6 properly 50 ts his posat'sou uIict
the contract can bo tut Tor short time, aud only 10
enable nm 10 sell and deliver To property, aud take
Of IT IN the meantime -be a! anne OF the li-s-
euU bin j. very different NON tAis. III abaAdohs
the right Of foreclosure By sale o. the trustee, ana
seeks the regular and aar mode o te OAaceiy court
II ask mat Palntlh be PAT tO possession as OF
right Lcoi siug 10 trustee hut that receiver pEnntu
or any one else, TAX po.aesslo as lIc 'cSl % nc
IL u PLAN thatany receiver We may app0ht Is
officer, ameane 10 the order O the Court iesg1ns
BIZ to t all he does and completely under It's control
hs au hovity yCsug IL CappOnmeut 0i lhc COnrt ana
sell tine road - required By lie hortzase ou SUCH
sale, Il made "a b. decree 0i M Couf; nor con he pay
overdue coupons 10 the bOuGhudcrs without an ufdcr
I."n t riC ~ ', @ nd lo s,aa relief T.. rayc,t in
hs bi l. also said that the income Ol tile rOad mort
gagged plaintiff can be secured in no other Way than by
arpoinlqng n receiver and perhaps this is the way
But The income is 30 more mortgucca than the visible
oretv ana the franchises IL the tonragy and unless
there Is danger OF loss TO Tie bondnoldcrs there Is no
reason Why the income Should be sequestlcd than
nc other properly of tie company We Ire not oi opd
ion that Court 0f Equity is bound N every such case
failure 10 pay, 20 appoint receiver NltAou, consider
INK other circumstances which have proper hearing on
lie Question OF appointment The 81. LOUIS,
Iron Mountain AMI SoutLtih haiiWSt Coh--
pany owes its existence to The Consolidation Of
several OtLcr railroad companies whleh II alb
sorbei road was largely Dut before the present
defendant bad corporate beiug Each oI 'hc Dui com
uaDies which became consolidated had heavy mort
cages OH the pieces OF road which IL brought INTO the
combined cor orauoi ana tue ma purpose o. the mort
gage whic pl linth Is proceeding was To convert
various mortgage debts INTO one deDt anu one mort
g.gc by exchanging The Ouhds O hls he" company ae,
cured by tine mortgage on the "hOe load ana an
its properly, FOR tine bonds ISSUED ~ thG com
paies, secu ed Dy ih"I I7,.Ies ,i .to @ - , 4 % i - &
road For hs purpose q2l 100000 of THESE bonds were
set ape46 10 be exchanged for the Old bonds, whlch
amounted 10 tbat sum- Inc new Ul'-dse poglu my
new company 10 pay The old bonds, II not eNchahged
and 10 pay tle In.ersst pioAp! as 80 ~ S '01, w. T ~
failure 10 DO tlls was Si"hhl IOI s 'i'CcS !" NN.
and tako POSSESSION, well &c Ianfo IN regard 10 the
same bonds, This part OF the CANINE was complete
failure, aS less man Two hiiChs % tnN 'l,. .i ~
been eXcna ed FOR new atcr rec years oLtha oAer II
became paroni, very soon after t4e mortgage rs made
tlat NO CO.. p"h5 c1ulullo 40 t.'
~ Aana Ark, where was expected 10 hhe win
Texas system of railroads ana pay Tue interest on its
bonded utbf, and an arrangement was hddo ~ Nblch
the interest coupons on ali the od Donds ana win new
~" y 90 80, ~ - p,,,Isu ~ t.c ,,,teret Tou,s t,t
I'M, carried fhem past October, 1876. In the making
I '9 a. nd ils ss,de ygs Ilalir s,i 40 th.r exert ous
Durng years the road ws completed 10 IeNar
kama, The A0aiiug Uebt was considerably reduced and
liz gross income as Wi, as the let iacone increased
Inor or less every year TIE AutumA OF 1876, Uhon
ihe nrst coupons OF interest were soon 60 faa due
moi embraced in those 10 he funded, examination
ol tic resources OF the company showed thlt tley
would not bo able tn pay out Of the regular nN
clue rf tle road those bonds as they would IAN due
rough thai Autumn sud tne next year. The agents Of
arug ~ Co.. :. G.. ana q &. Ward, MhO La be- n
vrry nnuen il m tAe lnunaeement Of tue road having
also IN effect Two InemOers IN Tue Board OF Directors
agin freely consulted ana tAcli au'ise followed
ho company. In ths divergence Of yluws. tao plans
were suggested, namely: ~ me President ana Wee
President Ol tue company that tAo coupons soon coming
due t0 themselves ana to Barn. Bros. Co. should not
Le presented 0r pay mcnt, winnie AL othefs ahond be pad
M ii And 10y 1leers Ward, that hal! oi eacE coupon
presented should be PAID, relying On tie lenicho OF the
holders Tor sucn extension Of tno Tor the oter hf as
should be ntceSs.iI usciu. Which Of these p.4ns
~, rst presented AMI which c eountcr praJoOt u
nor V,ry scru very tIal against
view, uf the Sidcnt and EieePfesieut TIE plan II
Aic,sr prevailed aad MAS 1dtcd On All, CA very
n. iry al, the coupons ialiinS dAc prior 10 APrh l.
Is77 were prcscItcd, hal tAo amount diit on each
was paio accepted and iGcOfscd on the eO2pons
,tuogt objection, shown On tic part OI tle