The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1877-05-21
THE PORTLAND a. OGDENsBURG
RAILROAD COMPANY
And FITS First Mortgage ssondhoIders.


the Portland s. Ogdensburg Railroad Compan.
and about the reasons which have decided th'
first mortgage bondholders of that company t.
begin, them. AS the subject is likely to d.
brought before the city government for action
at an early period, it is manifestly proper tina
existing misapprehensions should be removed
If it is possible to remove them, by franz
and public statement of the facts Of the case
The difficulties of the corporation 10 question
are well known to all citizens Of Portland, wht
have read the able AID exhaustive report OF thu
commission appointed by the last city govern
ment They have arisen from causes which nj
ordinary provision could have foreseen, aud
since no person or persons can be justly heit
responsible for them, it is not necessary or .de
sirable, to enquire further into them at thi:
time. 1t is matter Of public notoriety, bow
ever. that the company Gefaulted on its second
mortgage Obligations 10 1876, and made publ,
default on its first mortgage bords in January
1877. In point of fact, the company defaulte(
(although not technically SOY on its first mort
gage bonds in July, 1876, an arrangement
having been made at that time, with bankers
in this city 10 purchase the coupons theI
maturing, under contract which Hypothetical
the earnings of the road for the fufillment o
the same. This contract was carried oat or
the part of the bankers, aud the total semi
annual interest maturing in July, 1876, was
purchased by them at its face value in gold
The company, however, was unable, for a va
riety of reasons, to fulfill its portion of the con
tract, and the coupons, up to this time, have
not beer redeemed. This fact is mentioned to
show the financial distress Of the company, and
not because it has any particular bearing upon
the questions now under discussion.
1t is also well known that the company is
without credit to purchase supplies or equip.
ment, which it can only obtain under great
Disadvantages, and by means of personal guar
antics, which, to say the least, it is undesirable
to impose upon officers of corporation. 1t is
also largely in arrears to employees, aud is, Oh
has been harassed and annoyed by trustee
processes and other vexatious litigation.
When, in January last it was found that the
coupons on the first mortgage bonds had moi
been, and could net possibly be, paid the bond
holders came together, reviewed the situstiou
in the light of the report Of the city commits.
sion and such other information as they could
procure, and consulted upon what was the best
course for them to pursue in order to protect
their property, and to secure an early payment
of the interest due them. They were confirmed
in their belief as to the earnings of the division
covered by their mortgage, which they found
had been more than enough to pay their inter-
est; but had been diVrted from its just dispo-
sition to payments fer construction, interest
upon floating debt, and other accounts to
which it did net properly belong. They were
advised by COUNSEL that OF the various legal
proceedings open 10 them to protect their inter-
ests, the simplest most expeditions, and pos
sibly the safest was, to take possession of the
road covered by their mortgage, IN accordance
with the statute. After very careful consid-
Grafton OF the case, however, q consideration
proportionate to the magnitude of the inter-
ests involved.-they came to the conclusion
that such a proceeding would bring about q
state of things that would be preiudicial to the
enterprise, as whole,-and naturally and con-
sequently, in some degree to their own particu-
lar interests They thought that the road, cut
into two sections and under two arrangements,
as it would necessarily be, could not be nan
aged with advantage to either section, and
that the favorable results hoped for, from the
western connections now reaching completion,
would not be likely to be realized. They there
fore instructed their trustees to proceed, in
consultation with other parties interested, TO
secure a receivership for the entire property,
which should manage both sections of the road,
as a whole, keeping, however, separate ac-
counts OF the two, sections, and apportioning
repairs and payments for interest in accordance
with amounts separately earned. To this end,
meetings were held, during the last city ad-
ministration, with the Mayor and other mem
bers of the city government, with the city
commission, and with parties representing
other interests, and it was generally agreed, at
that time, that receiVership was not only the
best, but possibly the only way to eXtricate the
road from its difficulties.
The charter election, and the consequent
change in the administration of the city affairs
put temporary stop to the proceedings that
we're then begun, ard since that time not only
has no agreement been reached, but agreement
seems quite as far off as ever. The first
mortgage bondholders have been, and are,
unwilling to assume a hostile position until
they are convinced that friendly arrangements
are impossible. They have no desire to take
advantage Of the priority of their lien, or of
the superior value of their security, except so
far as they may justly and equitably be entitled
to such advantage. Their only claim is that
some arrangement shall be made, whereby the
earnings of their property Shall be expended
upon their property or applied to the payment
OF their interest. They are satisfied, and all
reports show it, that the division covered by
the first mortgage has earned and is earning
net, sufficient amount to pay the interest on
the first mortgage, and they believe that the
appointment OF receiver or receivers il the
most suitable way to secure proper accounts
ana proper ulSpOSlllou VI SuCu tdTuiuRS.
The first mortgage bondhoiders have not
been disposed to dictate who should be ap.
pointed to the receyersbip. 1t was the opinion
of a majority of them that it would be bett er
to appoint single receiver, and he a person in
no way connected with the previous manage
ment of the company, or N any way interested
in its securities or debts. They suggested the
appointment of such an experienced person
and would doubtless have consented to the
appointment of any one, with the necessary
qualifications. 1t was thought, however, that
as a measure of Cancellation to all interests
it would be better that the receivership should
be filled by three persons, one to represent the
first mortgage bonaholders, and t. be
nominated by them, one the corporation, to be
nominated by it, and one to be appointed by
the city, as its representative.
This arrangement was asserted to by the
first mortgage bondholders, and since no other
parties in interest were willing TO assume the
responsibility of proceeding, they instructed
their trustees to procure counsel, file bill in
equity, and secure, if possible, the appoint
ment of three receivers to take charge Of the
entire property, and manage it in the interest
and for the benefit of all Grasses of security
holders.
This bill in equity has been long prepared
and action upon it has been delayed only tt
secure, if possible, friendly cooperation from
the City of Portland, which is the largest
holder of second mortgage bonds This friendly
reported that the committee of the city govern
ment recently appointed to consider these
questions is about to make report advising
the city to oppose the appointment of receivers
1t is possible, though unlikely, that sucf
opposition would result in the defeat Of the
action desired, but tits plain that whether the
application is or is not granted by the court
this action on the part OF the City will be likely
to place the first and second mortgage bond
holders of the company in a position Of
antagonism which cannot fail to be injurious to
all parties. The first mortgage bondholders
are, as has already been SAID, very unwilling tt
begin hostile proceedings until they find thai
friendly arrangements are impossible. If they
are, they are bound, as the only other course
open to them, to take immediate steps toward
assuming possession of the property covered
by their mortgage.
1t seems strange that the city authorities Of
citizens should prefer an obstructive and de-
structiye policy, when there are easy method:
for the protection of all interests with disad
vaDtages to none 1t can be proved, but not in
the limits of this Communication, that the sec
ond mortgage bondholders have large interes
in the division covered by the first mortgage
which is likely TO be lost if the first mortgage
bondholders take possession. There is room,
however, for these figures: The mortgage OF
the first division is for SIS, 600 M lie, aad thu
road covered by it is valued By competen
experts at at least $4,000 mile
and it is not unlikely that when tn,
western connections, now nearly completed
have begun to furnish business, the interes