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

tory of the case shows that both classes of bond
holders directly or indirectly received a portion
Of the avails of said bonds, thus adopting and rat
flying to that extent the acts OF the receivers and
managers in issuing and negotiating them. It
probably would not be claimed that II the bond
holders had individually assented to the issuing
and negotiating Of said bonds upon the represen-
tations made in the petitions upon which the de-
crees were made, giving authority to issue them,
and which the court found to be true, that they
could afterwards question the right OF the receiv-
ers and managers to issue them in that capacity
and in view of the power and authority given to the
committee by the decree of 1864, and what has
since transpired in the matter OF adopting and rat
flying the action Of the committee we think that
the bondholders are bound by their action in the
premises and as fully as II they had individually
assented. The bonds were negotiated by the re-
ceivers and managers and 1t Is alleged In the bill
that the avails were used for the purposes desig-
mated in the DEGREES authorizing their issue. The
interest was paid on them out of the income OF the
trust property down to 1876 The receivers and
managers were not discharged by the court until
the appointment Of the Central Vermont Railroad
Company and no persistent attempt has been
made to have them discharged by the bondhold-
ers or any one else interested in the property.
THEY WERE RECOGNIZED
as receivers and managers by all the parties in
terested in the property by the legislature of the
state, and in all courts where questions have
been adiudicated affecting the rights and liabil-
tiles Of those interested in the property. Pur-
chasers of the bonds relied upon the apparent
authority of the receivers and managers to issue
them and upon the security that such obliga-
tons usually give Which has the superior
equity; such purchasers or the mortgage bond
holders? 1t is claimed that the persons claiming
to be receivers and managers, were not strict re-
ceivers and hence that the obligations that they
gave cannot in a court Of equity be treated as re-
ceivers' debts but in our judgment it is inmate
rial whether they were strict receivers or not.
The bondholders suffered them to appear to be
md to nan ttah 10 hnn Ids NJ n
and where one of two innocent parties must suffer
by the act of third, he who gave the power and
opportunity to do the act must bear the burden
of the consequences. II there was any defect OF
authority the part of the receivers, the acquies
cence of the bondholders in what has been done
by them is as effectual as the most formal author
ization in advance, or ratification afterwards,
would have been. So that as between the
bona fde holders Of the funds that have been
issued and negotiated under the so-called orders
and decrees and those that have been received
in exchange for them and the Vermont Central
Railroad Company and the mortgage bondhold-
ers, the former have the superior right and must
be first paid.
THE cANADAs CLAIM
We come next to the consideration of the claims
of the stockholders of the Vermont & Canada
Railroad Company The contracts entered into
between the Vermont & Canada Company and the
Vermont Central Company, in 1Si9 and 1850, have
been substantially stated. The history of the
litigation that ensued between the parties to
those contracts, and which resulted in the decree
of 1861, is deliberately stated in the report of the
case in Thrty-fourth. Vermont. The validity OF
said contracts and the right Of the Vermont &
Canada Company to the security given by the
contract of 1850 for the rent agreed to be paid
was then established 1t is important, in deter
mining what the present rights of the Vermont Il
Canada stockholders are, to state somewhat in de-
tail the questions and how they arise that were
then adjudicated. Neither the Vermont Central
railroad, nor its income, was pledged for the Yer
a. anxrfa frFdn thn
tract of 1849. Under the contract of 1850 it was
agreed that II the rent reserved to the Vermont
& Canada Railroad Company should be in arrears
and unpaid for the space of four months after
due, it should be lawful for the Vermont Il
Canada Company to take possession of and use
and run both roads and receive all tolls fares
and income receivable for the use Of the said
roads, and after paying all reasonable expenses
of running and working said roads, and making
such repairs of the same and the buildings and
structures connected Herewith and the expenses
of all such engines and cars as might be neces-
sary, to apply the residue of such receipts to the
payment of rent then in arrear and unpaid,
whether it shall be payable before or during the
time while so in possession The Vermont &
Canada Company reserved the right of resorting
to an action at law to recover any rent in arrear
II they should chose to do so; there was further
stipulation in that contrac. which it is claimed by
the Vermont Il Canada Railroad Company was
in legal effect, mortgage by the Vermont Gen.
trail Company to the Vermont Il Canada of its
TOdu anu lTd0cDlst rs security lOT shlu rent Inc
Vermont x Canada Company brought its bill in
equity praying that it might be let into possession
OF both roads, or that the court would aid It in
receiving the income of the same pursuant to the
contract Of 1850 or that II 1t did not seem fit to
the court TO make an order putting 1t in posses
sion that the court would appoint some suitable
person persons to be the receiver or receivers
the manager or managers of said roads and
property. 1t was under this prayer that the court
in 1861 ordered and decreed that the possession,
control and management of said roads and prop
erty should be continued in the then receivers,
subject to the order and direction of the court;
1t was upon the application of the Vermont &
Canada Company, and to render the security
given by the contract OF 1850 valuable, that the
order was made, and the receivers were ordered
to pay over to the Vermont & Canada Company,
on the first days of June and December in each
year, such sums as might accrue from the earn
ings of said roads and property until the sums
then due and growing due to them under the con-
tracts of 1S49 and 1850 should be fully paid and
satisfied.
NET INCoME--NoT GROSS.
1t is claimed that the rent of the Vermont and
Canada company was secured under the decree
of 1861 upon the gross income Of the property,
but we do not understand 1t. The court did
not by that decree change or vary the contract of
1850, but decided it to be valid and binding con-
tract and made provisions for carrying it into eff
feet so that in ascertaining what income was Sc
cured for the payment of said rent resort must be
had to the contract of 1850. 1t will be seen that
by that contract certain expenses were first to be
paid and the residue OF the receipts to be APP
piled to the payment of rents. The fund that was
made applicable to the payment of rent was what
might remain Of the earnings or income after the
| payment OF said expenses, and this would be the
net income. There Is no ambiguity in the con-
tract; and to construe 1t as pledging the gross
earnings or income would be giving 1t construc-
ton not warranted by the plain report OF its Ian
guage or the evident intent of the parties who
made it, In the Vermont and Canada Company
u.s. Vermont Central company et al fifteth Yer
mont, Page $50. Judge Barrett says in remarkng
and Canada railroad was TO have the net income
from the use OF both roads applied to the pay.
ment OF its rent, and on page 5S7 he defines net
earning to mean what is left after paying the le-
Ultimate expenses of making earnings by the use
of the property.
THE EQUIPMENT BONDS.
The receivers and managers and their success.