Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1883-08-16
THE GREAT LAW SUIT.
The Chicaga, Milwaukee ana ST
Paul Railroad Company Win.

q
this morning, decided the famous suit
of VIM. Barnes, trustee, against the
above named company The history
of the litigation IS long one, but the
skeleton facts are as follows:
In 1858, the La Crosse and Milwau-
kee railroad company issued bonds to
Barnes, as trustee, for large amount
of money. The mortgage provided
for of 81, 600, 600 bonds, but it is a
question how many Of these bonds
were sold for value and how many
were fraudulently retained by the di
rectors of the company. In 1859,
after default IN the payment of the
interest on the bonds, Barnes for
closed the mortgage, having first OBJ
tanned an act of the legislature au-
thorizing him to purchase at the sale
for the benefit of the bondholders
The sale took place in 1859, Barnes
buying the property for the bond
holders, bidding 70 per cent. of the
$2,000,000. Immediately after sale
Barnes organized the Milwaukee and
Minnesota, composed of holders of the
bonds. A large proportion Of the
holders OF the bonds secured by the
mortgage came into the new com
pany and exchanged bonds for stock.
Some years later one James, as the
owner of several judgments against
the old La Crosse company, subse-
quent 10 the Barnes mortgage, filed a
bill to set aside the Barnes foreclosure
and sale us fraudulent and VOID. Upon
appeal the United States supreme
Il 10 I i
the sale to Barnes void for fraud and
held that the mortgage to Barnes was
still security for all bonds in the
hands Of bona tide holders and per-
petually enjoined the Minnesota com
pany from setting up any rights I'M
Ter the foreclosure sale. Prior to this
decision the Minnesota company had
paid $462, 900 interest on a mortgage
executed prior to the Barnes mort
gage. After this decision the MIME
sofa company having lost possession
Of the property, which had passed
INTO the hands Of the Chicago, Mil
waukee & st. Paul Ry. Co. by the
foreclosure of a mortgage prior to the
Barnes mortgage, brought suit to re
cover the $462, 900, alleging that it
had paid that sum under a mistake of
fact, BELIEVING the mortgage property
to belong to it. Upon the final dis
position of this cause in the United
States supreme court it was decided
that the Minnesota Co. could not re
cover the $462, $50.
Theme step in this legal fight was
the filing by Barnes, in June, 1873. of
the bill in the present case In this
suit Barnes alleges that the So 600, 600
of bonds were issued bona fide; sets
up the decree in the James case; al
leges that the mortgage has never been
fOreclosed and now seeks to forecloSe
the mortgage and sell the mOrtgaged
property, and to be allowed to redeem
from the prior membranes under
which the st. Paul company acquired
title and asks that the st. Paul COM
pany be compelled to account for rents
and profits.
To tins bill the ST. Paul company
set up that all the holders Of
the bonds under the Barnes
mortgage had exchanged bonds for
stock in the Minnesota Co., and
claimed that all who had done so were
IIOI1 ICIICI Vic
gage. The court held the plea good
If true, and set the parties to work
taking testimony. After testimony
had been returned and the case further
argued, the court made an interlocu-
tory decree III which it held that 81,
40, 500 of the bonds had either been
exchanged for Minnesota railroad
stock or cancelled and were no claim.
As to the remaining $3.50, 200 of the
bonds, parties claiming them were di-
rected to file claims with
clerk of court and a ref
erence was made to enquire what
of said claims were Justly due and
ought to be enforced Hearing was
had, upon which the case was argued
at great length. The claims submit
ted were fifteen, aggregating $21, SOC
principal.
The master reported that all these
claims, amounting with interest to
$40, 900, ought to be enforced against
the property. The st. Paul filed ex-
ceptiOns to the report and made q mo-
ton to have the interlocutOry decree
mentioned above so modified as to
sustain its plea to the bill and for
decree dismissing the bill Barnes
sled a motion for modification of
the interlocutory degree, asking that
parties having claims based upon any of
the 81, 740, 800 of bonds excluded by the
court from the former reference should
be allowed to come in and present
their claims and be heard. Certain
bondholders also filed petitions to in
tervene. Upon these various motions
a hearing was had before Judges
Drummond and Dyer in June last, at
which all the issues in the case were
deliberately argued by Judge Francis
Francis Fellows and Joshua Stark for
the complainant and the bondholderS,
and by John W. Cary for defendant.
JUDGE OVERS IMPORTANT DECISION.
The decision of the court is in favor
Of the ST. Paul Co. the decision of
the special master being reversed.
The court reaffirmed its former de
cision that these bonds had been ex-