Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1880-12-22


they had no funds with which to make them that
II the income of the property was to be devoted to
that purpose, the payment OF rent and interest
provided for In previous DEGREES would be neces-
sarily suspended. The Vermont & Canada Com
pany, upon the return-day Of the petition, ap-
peared by its solicitor and q majority Of its di-
rectors, The court found the matters stated and
set forth in the petition to be true and made de-
cree thus enabling the receivers by the avails Of
the bonds issued under the decree, to provide
the necessary structures, fixtures and equip
ment with which to earn income by the use OF
the property that was applicable to the payment
of the Vermont Canada rent. What has been
said In relation to there being rent In arrears to
the Vermont Canada Company at the time that
decree was made, and the bonds issued under it,
need not be repeated In the petition for leave
to make the second equipment loan the receivers
represented that they had expended the whole
income of the property In making the improve.
ments and purchases specified In the petition and
were still under liabilities on account Of such ex-
penditure for the benefit of the trust Of about
S753,000, and without funds with which to pay
the accrued and accruing rent OF the Vermont Il
Cannda Company and the interest on the trust
debt. Public notice was given OF the tendency Of
the petition, and neither the Vermont & Canada
Company, nor any other party in interest, appear
to have objected to the granting of the prayer
therein and upon the finding by the court that
the facts set forth in the petition true, the
decree was made. The petition for the third loan
set forth the same reasons substantially to justify
it, as were set forth in the petition for the second,
directors of the Vermont & Canada Company at
a meeting called aud held on the 9th of April,
1869, voted to assent to a further issue of equip
ment bonds not exceeding million dollars
over and above the present; and the decree made
authorized the issue Of one million dollars
THE GUARANTEED BONDS.
The petition for the fourth, and what Is CON-
monty called the guaranteed loan, alleged that
there was outstanding against the receivers float
ing debt of about one million and half of dollars,
which had been created in improving the road-bed
and superstructure of both roads, and providing
such additional equipment necessary for
the useful and efficient operation Of said road,
and for other purposes incident thereto; that If
said debt should not be paid out of the net earn
ings of the roads 1t would embarrass the payment
of dividends and interest and that the Vermont
& Canada Company, at stockholders meeting,
had voted to endorse and guarantee their notes
to the amount Of one million of dollars, If the
court should give authority to issue them. The
vote passed at the stockholders meeting therein
referred to- has been herein before recited All
parties in interest being represented and assent
ing to the granting of the prayer of the petition,
the decree was made accordingly. The fifth and
last petition asking leave ~ make loan repre-
scented that the first equipment loan of 100000
would become due on the LIST day of November,
1876, and that provisions should be made for Its
payment, that there was a large debt outstanding
against the receivers and managers in the form of
a temporary loan which had been contracted, in
part, by the purchase of personal property, sup
leased by them, and that further equipment was
required for the use Of said roads. Notice was
given to the Vermont & Canada Company of the
tendency of the petition, and the president of
that company appeared upon the hearing No
one objected to the prayer of the petition being
granted, and decree was made authorizing
the issue of not exceeding 81, 600 Of bonds
for the purpose of retiring the first equipment
loan and for the other purposes stated in said Pc
titon.
THE TRUST DEBT AUTHORIZED.
This constitutes the history Of the manner and
circumstances, so far as the same need be given,
under which the persons assuming to act as recev-
ers and managers issued the bonds authorized by
said DEGREES The bonds were negotiable in form
and have been sold and transferred like other ne
gotiable paper. There is no evidence tending to
show that anybody who has held, or now holds
them, had notice Of a want of authority to issue
them for just what they purported to be, oblga-
tons of receivers and managers. All that has
been said in relation to the claims made by the
mortgage bondholders applies with equal force
to the rent claim of the Vermont and Canada
company. That corporation and its stockholders
with knowledge that the receivers and managers
were acting as such, and appearing to the world
as their receivers, and issuing negotiable obliga-
tions as SUCH have remained passive and suf-
fered the deceit, If there was deceit, to continue
without giving a note of warning to parties who
were liable to be deceived by such appearances, or
putting on record a single fact that might have
led to the discovery that obligations thus issued
were being issued without lawful authority The
rights and liabilities Of the parties not de-
pendent upon the rules of law as understood and
administered in a strict receivership.
THE CANADA EsToPPED.
The Vermont & Canada Company has so con-
Quoted that it Is estopped from denying that the
acts OF the receivers, while acting as SUCH are as
binding upon them the acts of strict receivers
would have BEEN hence the payment of the rent
claim of the Vermont Il Canada Company must
be postponed to the payment of the bonds issued
hui ha hat hatxu t1ah n.a..
holders of the bonds 80 issued, and those that
have been received in exchange for them, and
the Vermont Central Railroad Company, the
mortgage bondholders, and the Vermont &
Canada Railroad Company, the former have the
superior right and must be first paid and that the
holders of such bonds entitled, after the
special security which was pledged for their pay
ment has been applied, to have the property Of
the Vermont Central Railroad Company and the
Vermont & Canada railroad, or the earnings or
income thereof appropriated to pay what may
then remain due on the same.
NO DECISION AS TO THE FLOATING DEBT.
The floating debt, the orators claim, has been
contracted from money borrowed for the current
business OF carrying on and operating said roads
and the purchase Of material and supplies that
without the assistance of said money the roads
could not have been operated and that 1t is unse-
cured by any special pledge of property the ora
tor, the Central Vermont Railroad Company AYERS
that at the time of its taking possession Of the
roads and property, there was large floating
debt outstanding, incurred by the former mana
| gers In the operation and management of the
property which they were obliged To pay, and
that without the payment of said money by them
the roads could not have been run and operated,
and that II now constitutes a proper debt due to
them from the trust or the trust property. The
defendant claims that the money so paid by the
Central Vermont Railroad Company paid
without legal authority and unauthorized by
them, and that the Central Vermont Railroad
Company and others making such payments and
advances has no lien upon the property or income
to secure its repayment The same claim is made
in relation To the rest of the floating debt and the
additional claim that that debt was incurred in
part in the execution of contracts made by the re-
ceiyers and managers which were the outcome of,
and wholly disconnected from, the management
of the property which constituted the subject mat
ter Of the receivership under the decree OF 1861