The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-04-30
REPORT OF THE SPECIAL MASTERS
Vindication Of the Receivers and
Managers.
FINANCIAL OPERATIONS EXPLAINED
Contracts With Other Roads and
the Benefits Derived.
sr. ALnANs. April 2s, 1877.


son and John L. Edwards, appointed special masters
by the Court OF Chancery Of Franklin county. to OK
anime, audit and report upon the accounts OF J.
Gregory Smith, Joseph Clark, W. G. Smith, Benjamin
p. Cheney aud Lawrence Barpes, and their predeces-
sors In Office, receivers and managers OF tho Yer
mont Central and Vermont and Canada railroads and
property These accounts having been hed 10 obo-
dience TO an order OF the Court objections were made
TO them by counsel for tho Vermont and Canada Rail-
road Company aud the above Board Of Masters having
been appointed the hearing before them commenced
in the Office Of tho aud here, July
81 1875 and was continued at Intervals to suit tho
convenience OF parties, until October 30 1885, when II
closed, and this elaborate ana voluminous
report completed and 1led In court April
"a, 1877. Az the hearing tho receivers and
managers were represented by Hon. l. r. Poland,
Hon. Lew Underwood and Mr. B. F. Fihed.
Messrs. G. W. Willard and Z. A. Sowles appeared Tor
the Vermont and Canada Company; Mr.. Q. n. paven-
port appeared for Rush G. Hawkins OF New York
Austin Burchurd. of Newfane sand others, holders Of
first mortgage bonds;n Mr. A. r. Walker appeared Tor
William Sohicr party defendant and FIRST mortgage
bondholdcr; A. G. Stafford appeared for Francis A.
Brooks but Withdrew during the progress OF the hear
ing. At tho commencement OF the hearing counsel Tor
tho ana managers requested counsel appear
ing Tor the bondholders give of their princ
was refused.
The accounting covers the period from July l. 1861,
10 July /, 1873. The report summarizes the various
charters with amendments thereto leases, &C., affect
ing the roads included IN the trust and gives history
of tho property and litigation in which IL has been in
volvcd. condensed, but still volumnous.
TIKI
The Vermont Central built In spirit o. high
rivalry with the Rutland and Burlington, and began
to be operated while in very imperfect state Of
pleton The various stages by which the property
passed. into the hand5o OF receivers detailed at
length, together with the changes from
time in the Board. The first steps looking TO
a pacicaton OF the bitter enmity existing between
different factions OF parties IN interest taken
upon the appointment of j. Gregory Smith
and manager In place Of his father John Smith. who
died In 1858, and alter all the interests
harmonizcd a part of this settlement of difficulties
was the establishment OF amicable relations between
the Central and It's old Toe ana rival, the Rutland and
Burlington, and the expenses OF this settlement, as
agreed upon, paid by Mr. Lawrence Brain
crd to Mr. David A. smalley, the recently deceased
United States District Judge Of Vermont, as
tho representative of the Rutland and Buriing-
ton Company. This payment and Judge Smailey .
receipt therefor have been made the foundation OF
great amount OF slaudcr and nose by representatives
or opposing Interests "The Smaey Voucher'' became
quite celebrated through the press ana made tho
foundation of many grossly UNJUST ABUSIVE attacks
on Judge Smaey's reputation. which were con-
cusively reiuled at the tme and completely dis.
posed OF BY the Official findings OF tins report.
The nd that the original decree ordered by
the Supreme Court in 1861 created reccivership
which was evidently intended by the parties in
terested to cmS0dy in it's operation more the character
OF the rights aud duties Of corporation In relation TO
the and development OF the property than those OF
strict technical reccvershp generally understood
BY that term" Also that while the recevershp OF 1855
regarded rs temporary after the compromise OF
interests It WAS expected that the property would re-
nnuin nprnu mani n N
ayers who would be virtually Clothed with the powers
OF a corporation III reference TO tho management and
development OF the property and IN constant connec-
and consultation with the parties IN interest,
the Trust estate being kept IN the hands OF the Court
Cbancery Tor the protection the court could give
IN its weak condition. The masters ind that .'The
management OF the property has icon conducted IN
conformity TO thus understanding, ana t.e action o.
conform to and carry out the plans and policies OF
the various security holders parties in interest,
settled and agreed upon In consultation with the re-
ceivers and managers"
FIxAScIAL OPERATIONS.
The report details ut length the history OF tho SOW
era loans which been negotiated upon the credit
Of Trust Company, and rectcs the dccrees oil the
Court rayng tho same and all the proceedings IN re-
lation thereto In detail and finds That all the steps
taken with the knowledge and appreciation OF the
Vermont and Canada Company ana the committee
duly authorized to represent tho first and second mort
gage bondhoders. The masters lind that 'money re.
ccvcd from all sources was PAID into tho general funds
OF the trust and money paid out Tor any purpose was
paid from tho general funds OF trust But fund
was kept The books OF the trust were so Kept as TO
indicate the receipts and pay men.s pertaining TO any
one branch OF tho Dusinessn This to tho
various requests for findings IN relation to what funds
payments maze from and requests as TO the sew
eral sinking funds provided for ny the equipment
loans The several payments of interest on the Yer
mont and Canada stock and first and second mortgage
bonds and equipment loans are allowed AS charged,
under objection vi counsel
The masters hnd that the receivers realized all they
able TO all the bonds, stocks and securities
disposed vi by them. VI the .incOme and extension
bonds j. Gregory smith, Joseph Clark and b. r.
Cheney each took 500 at ninety cents the highest
pricc they would bear and II the opinion OF tho
bondnoiders committee that unless they started the
subscription IN this manner the bonds would be dun
cult to place the market These bonds we're hego-
tia,ed by Spencer, Villa 4 Co., OF Boston. and me
commissions paid them are declared reasonable and
roper ami allowed.
The report details. from testimony adduccd before
the masters the history and disposition OF the "sccret
fund.- 50 called, showing whence " was DC
rived aud Tor what purpose u was u5ed-viz, IN tie
main Tor detective service on tho line OF the trust
roads, fees counsel IN certain cases anu generally
ior the benefit aud interests OF the trust property
The masters lnd that there now 81 900 Of SAID iund
Id tho hands OF j. Gregory smith, which should be
charged to HIM with interest since November 20, 1871,
and tho balance has been expended Tor the benefit
oi tho trust. They do not lnu mat any oil the same
has been applied 10 improper uses
Concerning the retainer Of $25, 900 paid TO Judge
Brown upon The cousummation OF the Ogdensburg
lease the testimony quoted by the masters shows that
that sum all services winch had becn and
were rendered by Judge Brown, who was cfni-
ncut lawyer and had been long familiar with the Affairs
OF that road and that pro rata proportion OF that
was pa by the other roads IN tho through East
ana Wcst line. Tho masters ind that tho payment To
Judge Brown was made IN good faith and by tho con-
currcncc OF tho igcrs OF the whole line, believing
II be for the Of the line 10 do TbK item
OF account rs allowed undor the objection OF counsel
INC items Of account representing the expenses OF
Keeping up the organization OF the vermont Central
ana Vermont and Canada companies, the masters liid
wcrc necessary and proper expenditures aud they as
well as number Of items OF incidental expenses. are
allowed under objection Of counsel
In relation 10 alleged cxtravagances In the construc
ton aud furnishing Of buildings At ST. Adams and else
where for The use Of the trust the building ana httiag
up OF directors Car subsequently altered over INTO
ordinary passenger Carl &c, the masters Ind that
the crecons arc no more expensive nor better than Is
needed Tor the business oil the trust and the furniture
used about them no more than iairy COMFORTS with
such business
In relation 10 certain inscriptions made and paid by
the receivers and managers IRON the trust fund TO aid
encourage the construction OF hotels at places along
the inc IN two or three Instances, tho masters ind
that u Is customary for railroads 10 contribute 10 such
purposes at prominent places along their lines
OF road and particularly, as IN these cases,
of nuuul4 aI.Il Iu..r rnanIl a vLnA