The New York herald., 1877-10-05
A Suit Against the Atlantic and Great
Western Railway Company.
IMPORTANT DECISION BY JUDGE DANIELS.
Ben Holiday Defending His First Wifes
VIII in His Favor
INCIDENT OF RAILWAY TRAVEL.

An important decision has been rendered by Judge
Daniels In the suit brought by william h. Taylor ana
william Dunphy, trustees, against tho Atlantic and
Great Western Railway Company. Tho facts have
heretofore been fully published IN the HERALD, and
their recital is tn ereiore unnecessary Owing TO the
largo interests involved, the peculiar compexty OF the
case and tho !mportan, legal principles decided, tho
opinion ofJudge Daniels is given below In rul:-
Tho application in this for the confirmation
OF an agreement made with tho holders Of certain first
mortgage bonds for the extension OF tho period for
their payment for the torn OF three yoars from
day OF October 1876 To induce the persons oding
bonds TO agrcc to the IL has proposed 10
pay tho interest accrung upon them the OF
per cent In quarterly gold payments instead Of seven
per cent In currency according to their This
has been objected 10 by small percentage OF tho
noidcrs OF these bon1s but as they very obviously
could not DO injured by the increase Of their interest
by changing The payments from currency into tho
more expensive and valuable medium OF gold, their
objection cannot bo because OF any appre.
hcnded injury probably resulting to them by reason
Of tho change. Stlll. II they have legal right 10
succeed upon the objection IL should, OF course, bo
permitted 10 prevail But without deciding that point
now 1t may be as well to consider others appearing
be insurmounable In their character The application
for the confirmation aud approval OF tho agreement
has been mado by the plaintiffs trustees OF tho
ond mortgage bondhodcrs. for the that 1t has
boon considered by them specially advantageous 10
shcr interests on account OF the present deprecated
condition Of tho mortgaged property. And II all tho
bondholdcrs secured by the second mortgage as
Eentcd to the arrangement very serious OBJ
Btaclc In the way OF It's would DO out OF
the case. But they do not and among those
opposing 1t Is the defendant tho Banque Franco
Eayptenne, the holder of such bonds tho amount
.
small amounts Of tho bonds. Notwithstanding this
resistance the Court Of Common Pieas OF summit
county, In the State Of Ohio, has confirmed tho agree
ment, and the present application has IN great part
beon placed upon tho basis OF that action not, how
cvcr because It should DO adopted conclusive upon
tho courts OF this State, for, as mere nterocutory
(Brinkley VS.. Brnkley 90 n. r., 1867 But par
ucuiarly, BECAUSE as matter Of comfy. tho same
der should be made in the courts OF this State tho
court in the state of OHIO had deemed 10 be proper
way OF dlsposing OF similar application. And tncrc
would be decided inclination TO y!cld assent to this
positon II that could consistently be allowed under
tho views taken OF the mcrts OF tho application.
But that cannot be done, becausc the agree
ment itself contemplalcs a distinct and indepcn-
dent approval by tho courts OF each one OF the
States III which actions are pending Tor the foreclosure
OF tho mortgage and the SAFE Of the companys prop
erty. What IL was agreed should be done this
spect TO render the agreement operative was that Il
should FIRST receive Tho approval OF tho
tho States OF Pennsylvania aud New York
And that was an entirely different ihing from the
approval what in terms rc-
CURED, according to the conclusion reached
the courts respectively OF these dilorcnt states.
And that rendered an examination OF tho facts upon
which tho application has becn made necessary for
4he purpose OF determining whether such approval
ought to be given. AS 1t has already beon intmaed,
che evidence furnished hearing OF tho applca-
ton clearly supports tho conclusion that tho encum-
brances upon the property OF tho company much
oxcoed It's value A large loss m ust DO IN any event
m
Second mortgage And by virtue Of that instrument
they have become both legally and equtably cutitcd
TO have tho proceeds OF tho property applied upon
thor debt, alter paying of the first cncumbrances.
That Is the plain effect Of tho instrument mado for
the security OF their demands. And this Court has
no power TO sanction any change IN tho elect OF It's
terms. BY changing the payments oil interest from
currency to gold such change would clearly be mado
II would increase the amount oil the first encum-
brancc by tho increased value Of gold currency
and corrcspondingly diminish tho security OF
the holders OF the second mortgage bonds. That
would be no trl'ng sum OF money, Tor the amount Of
the bonds secured Dy the first mortgage, ana now out
Standing against the company, the OF
81, 800 The Court has no authority which would
permit to take that difference for period OF three
years from the holders the second mortgage bonds
ind give to the fortunate owners Of the first,
against the objections o those resisting the proccod
Ing. Tho same principle which would sane
ton q small increase of tho prior cncum-
brarce would sustain ono which might provo
entirely destructive TO those designed to be protected
by the succeeding encumbrance. And If tho Court
Lad the power over the agreement o The parties to
change II in any material respect IL could entirely
principle solely, Tor II tho power exists It can be
limited In It's application only by the subject DO
Affected by It, Every bondhoIdor is equally entitled.
by the agreement made with HIM and with the
rustccs for his benefit, TO DO protected IN all tho
vntagcs legally secured by It, And for that reason
the courts cannot disregard tho principle protecting
him, because tho amount due to him, aud tho extout
10 which no may be entitled TO participate Ia tho
advantages OF tho security may be, comparatively
speaking, not very significant IL is enough that a
material right may bc preJudiccd and tho party do
prved OF the full advantage OF his contract and
hnf fha aCnfIrf Quufl
manifest INJURY. And such right has been clearly
shown in thus casc
upon the approval OF the trustees under the frst
mortgage One OF them has since resigLod and tho
other has simply placed himself under % the advice
what was provided Tor by the terms OF the agrce-
mont His judemoat upon tho subject was required,
for his approval could not DO gwen Withheld with
out the exercise OF Judgment by his nrst ho
svadcd the performance OF this duty, and In terms
yubmttod the entire matter to the consideration OF tho
Court, aud asked It's advice anu direction And the
second, though more elaborate was not designed to
DC more extended IN that respect For IN that
cutting the said contract and from promoting
or forwarding 1t; ana hus limited himself TO
submitting the entire question to the Court for ircc
toE and prepared 10 act as the Court may instruct
HIM" lie further added his opinion, "that II tue
ultimate security Of the Uonds represented Ny HIM as
trustee Will DC III no way impaired Weakened or pre-.
JUDGED by tho forbearanco contemplated by the said
contract, he deems the arrangement embodied therein
W be generally beneficial to the interests oil ms cosus
que ruA and 10 be as advantageous an adjustment OF
existing complications us can reasonably DO
hoped Tor. " This was not added ior the
purpose OF supplying the approval mentioned
In the agreement, but simply by way of showing that
he had discovered no reason why u should not be
given. And whether that advisable or not was
Lett entirely to the direction oi the Court Upon this
subject the Court was entitled 10 have hs action Tor
It's guidance ana was not required 10 determine what
was proper in the promises both Tor i,sc and tho
trustee. The agreement, IN terms, also required the
approval OF both the trustees IN the preceding mort
gage and this Court cannot dispense with tho OBJ
scrvancc OF that requirement because OF the por
sons named alierward resigned his Office Tho
judgment OF the two individuals was stipulated tor,
and that OF Schuchardt has never IN any form been
obtained. Then u has boon shown that tho remaining
trustee enjoncd by tho order OF tins Court from
approving OF tho agreement. And while the Court
Ono was not restrained IN It's acon by that proceed
Ing this Court certainly cannot with the least propricy
sanction violation OF It's own prohibition. Boln
proceedings are OF an equitable description. And
while courts OF law have refused TO be bound
by tho lnJunctions OF the courts of equity
the tribunal Itself which has issued tho pro
has never knowingly allowed its restraints be
disrcgarded ltappcars that the property OF the
poraon has for series OF years been the hands of
receiver, who has continued operate II under tho
direction OF the courts During that tine his cx.
ar L,..