Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1880-01-09
Chesapeake and Ohio Canal.

"ns htcu htuay in1t ~ tno uiteu Cthtts Cif-
cult Court for the dislict of Mary land, BY
counsel for Daniel K. Stewart, of Eoclspd.
on behalf Of himself and any other holders OF
preferred construction bonds OF the Chesa-
peake and Ohio Canal Company who may
elect 70 Join in the suit against the Chesapeake
and Ohio Canal Company, Arthur p. Cor
man, president OF the company, and J. Bayard
II. Smith, A. Bowie Davis, George S. Brown
and George Hawkins Williams, appointed in
place of the original trustees, under q mort
gage of the canal company Of June, l84S, and
George s.. Brown, James Soan, Jr., and
Lloyd Lowndes, Jr. trustees under a mort
gage Of the company, OF May, 1878 VIM.
W. CorcoraD, one OF the original trus-
tees in the Mortgage Of ls4s, is a citizen
Of the District Of Columbia, and could NOT be
made party, the bill says. The counsel for
the complainant are Messrs. Johnson l. Poe, A
Sterling, Jr., Marshal & Fisher, of Baltimore,
and Joseph Bryan, Of Richmond
The bill sets forth that up to the year 1874
the canal was constructed up 10 point about
fifty miles east Of Cumberland, but. that the
company was unable to complete the work to
that city. 10 this emergency the General
Assembly of the Stale OF Maryland passed
the act Of 10th March, lSi5, known as the
act of 1874, chapter 28l 10 complete the
canal to Cumberland and for other purposes, by
which the canal company were authorized to
borrow money necessary 10 complete the canal,
and TO issue bonds therefor not exceeding
81, 700, 600, payable In not less than thirty
five years, with interest semi-annually, pay
ment thereof to be secured by preferred lien
on the revenues and tolls of the company
On June ., l848, the company conveyed BY
way Of mortgage to W. W. Corcoran, phineas
Janney, Horatio Allen, David Heushaw and
Geo. Morey, trustees, the revenues and tolls OF
the entire canal TO secure the payment OF in.
tercst on said bonds, payment OF interest on the
certificates Of debt therefor issued TO the
creditors OF the Potomac Company, not ex-
ceeding So, 900 annually, and 10 pay annual
ly, out Of the surplus revenues, a sum not
exceeding $25, 900 on an average of years for
a sinking fund to be applied to the payment
of the principal OF said bonds. On the secu-
rity Of this deed the company issued coupon
bonds to the amount Of 81 500, 500, and with
the proceeds OF sale Of these bonds completed
the canal TO Cumberland Mr.. Daniel X.
Stewart, one of the compliments, declares
that he is the possessor of about $3.50, 900 OF
said bonds, with interest coupons attached
overdue and unpaid since January /, 1866,
that the company has paid no coupon on any
OF its bonds, with the exception Of that due
January 1864, which was paid in January,
l875,and that due July 1864, which was paid
in January, 1876. This failure, it is charged,
has not been caused by deficiency of revenue
arising from a failure OF business The com
plainant charges that there are now due 10
the holders Of preferred construction bonds
the coupons thereon from January /, 1866,
amounting to more than 81 800, 900: that the
company is largely insolvent and wholly I'M
able to pay its debts; that under the act of
1914 it's the compony's duty TO keep the
canal in good repair, &c. and to provide Tor
the performance OF this duty power was re-
served TO the company TO borrow money to
keep The canal in proper repair, the money
thus borrowed to be first repaid. II is
charged that by the passage of chapter SO OF
the acts OF the General Assembly of Mary
land for 1873, authorizing the company TO
issue its bonds to the amount of $500, 900,
and secure the sane by mortgage Of the canal
the State waived its priority of lien on the
property so authorized to be nortgaged
so that the bonds and mortgage thereby au-
thorized should become n first lien thereon :;
that the effect of the act is TO expose the hold
crs OF the preferred construction bonds to the
total loss OF their security by making the
mortgage liable 10 be foreclosed on demand
OF holders of bonds on failure of the company
TO pay three successive coupons II is charged
that the company accepted the act and exc
cuted a mortgage on July Is, 1878, convey
ing the canal, &c, to Geo, S. Brown, james
Sloan, Jr., and Lloyd Lowndes, Jr, trus-
tees, 10 secure the bonds OF the company to
the amount OF $500, 900, and that it also is.
sued some OF said bonds. II Is charged that
thede was no OCCASION Tor the passage OF the
! 49, sof io7s that tae General kssseinby o.
hayland cannot confer upUu ruei cans ,,.e
pany the power 10 borrow money and plad r. It's
tolls 10 the prejudice OF the holders oi pre-
ferred construction bonds without their con-
sent, and that when the ACT OF 1878 was ac-
cepted by the stockholders, the repairs for the
payment of which 1t was osiensibly pro-
cured had, 10 large extent, been completed
and paid for. The DILL further charges that
it is unlawful for the company to exercise the
power which it seeks 10 DO under the act of
1878, In order 10 provide for anticipated me-
cessities, and that the alleged deficiency Of
means to meet charges for keeping The canal
in good order did not exist when the company
executed said mortgage that the canal cor
potation has been and is now being used
rs political machine for the promotion
Of partizan purposes; that the president
Of the company is the chairman of the
State central committee OF political par
ty in Maryland and member Of the State
Senate; that those who control the company
have, during the last three years, kept their
own political agents in its pay, that since
1873, while the tonnage of the company has
not decreased 25 per cent, the receipts have
diminished more than 60 per cent, and the ne,
income has been reduced from $3.50 00o IN
nothing. II is further charged that the affairs
Of the company have been purposely sbrouded
In mystery, and that no statement OF r-cein,s
and expenses has been published for several
years. For alt of these reasons the rights nj
bondholders are believed to be in imminent
danger of irreparable iuiury unless the rourt
iuiervenes and deprives the corporation and
It's managers of ali control or bower. 4, ia
therefore asked that n writ of iniapc,ios may
be issued against the president and The canal
company, enioininp them from exercising anv
OF the functions Of the said corporation and
from issuing any bonds under The no, ~
1878; also that AN order may be .nnssed an.
pointing a receiver TO take posses,ion nj ,he
properly of the company with mower N oner.
ate the canal and pay over its ne, reyenu.s
to the preferred bondholders. unIil Ihey arr,
paid in fnll. subject Ia tho dirac,ion ~ ,ha
court, and permitting the commandments IN
examine the books, accounts and yonrhers of
the canal compapy since JnL 1870
The interroratories lied with The hin covo,
wide field, and refer 10 The ,y.rmon,s in tho
bill. They ask how many bonds have hesn
issued under the act of ls7s9 How ,srY