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


mark as to the character in which the Central
Vermont Railroad Company took and have since
retained the possession Of the property for Civ
ing any direction to the court Of chancery for Its
guidance in the ascertainment OF the amount
which has been received by that company, and
how IL shall beappropriated
THE RECEIVERS ACTS BINDING.
In passing upon the questions in issue in this
cause we have proceeded upon the theory that as
between the Vermont Central Railroad Company,
the mortgage bondhoders and the Vermont &
Canada Railroad Company, and the parties that
are making claims against the property In oppo-
sition to them, the Vermont Central Railroad
Company the mortgage bondhoders, and the
Vermont Canada Railroad Company are csc.
topped from denying that the parties protesting
to act rs receivers and managers had power and
authority TO bind them and the property TO the
same extent and for the same purposes that strict
receivers might. Enough appears 10 clearly JUS
tify the application OF that rule to the Vermont
Central Railroad Company and the mortgage
bondholders. From 1864 to the time OF the last
issue OF bonds by the receivers and managers
the bondholders by their advisory committee as
scented to the issuing of the obligations that were
issued, knowing that they were being issued by
the receivers and managers such, and being
negotiated and sold TO innocent purchasers, and
that the avails, in part, were being used for the
payment OF the interest upon their bonds, and in
making valuable and permanent improvements
on the property. There is a seeming hardshlpin
applying the rule to the Vermont & Canada Com
interest in the improvement, or conservation OF
the property, than that 1t should be in position
to earn net income with which to pay their rent
They might well have remained passive as long ~
their rent was paid, and 1t was their right to APP
ply to the court to enforce the remedy provided
for in the contract Of 1850 when their rent should
be in arrears. When the receivers who were APP
pointed upon their application had executed their
duty by paying the rent In arrears, 1t was the
right and duty OF the Vermont & Canada Com
pany to see to 1t that they discharged II 1t
would avoid the consequences that might result
from their longer continuing to exercise the du-
ties Of receivers and to appear ostensibly its
cevers. From what was done by the Vermont
& Canada in participating in the issue Of the
bonds by the receivers and managers, the parties
who purchased them doubt understood, and
had the right to understand, that they were pur-
chasing paper that the receivers and managers
had the lawful authority to issue such, and
that the Vermont 4 Canada recognized them as
its receivers The Vermont IL Canada Company
claims that it should be RENTED to its rights
as defined by the contracts of 1Si9 and 1850 I'M
affected by anything that has since TRANSFERRED.
SPECIAL PLEDGES
In determining the equitable rights of the par
ties it seems to us that the rights of the holders
of the bonds issued by the receivers and man
ayers are superior In equity to the rent claim of
the Vermont Canada Company, and that they
are entitled to the realization of the equity which
they supposed they were mourning, as far as
it can be awarded to them, in preference
Company. 1t was held in the Fiftieth Yer
mont, supra, that the holders of said bonds
were entitled to the benefit of the securities
pledged for their payment, but whether they
were limited to such securities as the only re-
source for compelling payment, was left unde-
cided 1t will beobserved that the bonds con-
tain absolute and unconditional promise to
pay, and that the pledge was collateral to
that promise, whether the taking of special
security, Is in law waiver Of all other securities
or not, is generally to be determined by finding
what the understanding of the parties to the
transaction was at the time of the making of the
promise and giving OF the security. The proof
clearly shows that 1t was not understood at the
time the bonds were issued, that the security
which was pledged was the only security which
the holders had the right to rely upon to enforce
their payment The debt that can be claimed by
the other parties interested in the property is
that the property specifically pledged shall be
first appropriated The dffere classes Of bonds,
after the application of securities pledged for the
payment OF each, stand upon the same common
right and upon perfect equality in the matter Of
exacting payment
A SUI oENERIs CASE
We have not been much aided by presidents
In the determination of the questions involved in
this controversy. We have not discovered any
case analogous to this in its facts TO be au-
thoritatve, but in its decision we have endeav-
ored to follow and be guided by those familiar
principles of equity law that are universally APP
piled in the determination and enforcement Of
now held to override the decision made by this
court in Vermont & Canada Railroad Company
Us. Vermont Central Railroad Company ct ais,
Fiftieth Vermont 1901 The opinion in that case
defines the equitable rights of the parties SUB
stantiay as they are now determined. We have
built upon the foundation there aid. tits expected
that what is now decided may result In the ap-
portionment and distribution of the property in
litigation, or the avails thereof, among those en-
titled to it, and by placing it under their own
control to get rid of the disastrous litigation that
has lain like a nightmare on the property for SO
many years.
MEDICATION OF THE CHANCELLoRs
And in view OF the criticisms that have been
made upon the actors and DEGREES which, it is
claimed, have resulted in such disaster to the
property, 1t IL but an act OF justice 10 say that
there is not one OF them that authorized the in
curing OF any pecuniary liability, or the making
of any contracts that have resulted In loss 10
which the parties in interest had not given their
assent, or failed to make any objection to, after
having notice and opportunity to do so. In maxi
ing such orders and DEGREES there was oc-
casion for the exercise of judgment 1t was the
method devised and agreed upon by the parties
to give what 1t was then understood would be al
judicial sanction to acts and agreements Of the
parties; and the court has never been called upon
to interfere by direction advice in the manage
ment or control of the property.
THE MANDATE
OF the supreme court, accompanying the opinion
il rs follows: The pro t0rnpd degree OF the|
court of chancery Diminishing the bill is reversed
and cause remanded with a mandate that it bel
referred to master, or masters to ascertain andI
report the amount due of principal and interest
all the bonds issued and negotiated by the re-
ceivers such, receivers and managers, or|
trustees and receivers, as trustees and man
ayers and the consideration upon which they areI
held the kind and value OF the property pledged
to secure the payment Of each of the different
classes OF said bonds at the time 1t was sol
pledged and its present value; the kind and value|
OF the property purchased with the avails of the|
car-servce pledged to secure the payment of said|
| bonds when purchased and its present value; thel
amount received from the car-service pledged to|
secure them. and how the money received on ac-|
count of said car service has been used and ap-|
proprlated; the amount due on account OF theI
floating debt; how, when and under what cir