The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1889-10-12

was the case involving the legality Of the
issue of 2,S35 shares Of stock in the Portland
& Ogdensburg Railway to the city. The de-
cision Of the cuurt sustains the issue to the
extent of S1556lO and disallows the re-
mainder. amounting to sl27,S9O. The effect
of the decision will be to add Immediately
over $500 to the amount the city receives
yearly as rental of the Portland q Ogdens-
burg Railroad, and after two years to in
crease 1t over S3,OOO The history of the case
is given in our editorial column. The opinion
was drawn by Judge Haskell, and is as fol-
lows:
Lincoln National Bank Of Bath ct al. in
eq. VS.. Portland & OgdensbuIg Railway Co.
ct al.
Haskell 1.-THE Portland & 0gdensburg
Railroad Company issued its mortgage bonds
dated November l, 1871, with interest cou-
pOns attached, payable semi-annually at the
rate of six per cent per annum, until the
bonds should fall due at the end OF thirty
years.
The mortgage securing these bonds be-
came foreclosed December 10, 1885, and un-
der chap 5O7 of the private and special laws
of that year, these bondholders formed them
selves into corporation under the style of
"The Portland & Ogdensburg Railway" one
of the defendants in this cause, and became
shareholders therein according to the
amounts due on tie bondsiheld by each re-
spectively.
The plaintiffs are holders of these bonds
of the par value in the aggregate OF $1,000;
and the defendant city is the holder OF the
same of the par value of S1,350.OOO. i.
The defendant corporation, on the list OIL
December, 1886, voted to Issue "a, $40 shares
to the city of Portland as its proper propor-
| tion of stock, computed from the aggregate
| of its bonds and interest thereon from the
| the date Of their issue. November !, 1871,
amounting to S2,4S4.000.
The plaintiffs deny that the city is. en-
| titled to so much interest upon its bonds as
| to give it the amount OF stock voted 10 u oy
| the defendant corporation, and therefore,
| in behalf of themselves and others OF IKE IN
| terest, ask an injunction to restrain the
| threatened issue of stock to the city.
There was no overissue of bonds under the
mortgage, and, II the city be allowed the full
| number Of shares voted to 1t, the plaintiffs
proportions in the mortgage debt would not
| aliquot parts thereof Their rights flow
| from owning fraction of the whole mort
| gage debt; and their equity to restrain the
| threatened issue OF shares must arise, III at
| all, from an unlawful attempt by the defend
| ant company to give the city more shares
| than it il entitled to under any legal con-
tract or arrangement between the city and
| railroad company
1t was competent for the city and old cor
pUIatan %ent that would give % the city Interest upon
it's collateral from the date OF its issue;
1 and the question, therefore, Is whether such
| an agreement was made; for, If 1t was, then
| the plaintiffs have no equity that calls for re-
made to increase the debt beyond the amount
| specified in the mortgage, OF which the
| plaintiffs are entitled to their proportionate
/ shares only.
| beyond the limit named in the mortgage, the
/ plaintiffs would have been threatened with
| diminished proportional shares In the mort
| gagged property, and clearly would have an
| equity to prevent it; but as that Is not the
| case, their equity must arise from viola
tion of contract between the defendants
and unless that be shown, they cannot main
| tain their bill.
BY chap. 165, of the private and special
| laws of 1872, the city of Portland was au-
| ceeding S2,5OO,0OO. to aid in the construction
OF the Portland 81 Ogdensburg railroad, up
| on the security,
| First, of a, bond of the company in
suitable penal sum-" conditional to pay the
| interest and principal of the scrip as the
| same should fall due, and to save the city
harmless on account thereof
Second, of the mortgage bonds Of the
company, ISSUED and bearing date on the
first day of November, 1871" equal to the
| amount of scrip issued and delivered under
the act as collateral security for the penal
| bond.
Third, of paid up shares of the company
| equal in amount to the city scrip received
| from time to time until the whole number Of
shares authorized by the charter of the COM
| pany shall have been issued to be held also
as collateral security to the penal bond.
This act also provides tnat upon payment
| by the company OF the interest which shall,
| from time To time, accrue upon said scrip,
the city treasurer shall cancel and surrender
| to the company an amount of interest war
| rants attached to said mortgage bonds, equal
| to and corresponding as nearly as may be in
date, to the amount Of interest 50 paid on
| said scrip" and that the shares of the COM
| pany held as collateral, may be sold and
| transferred, with the consent of the direct
ors of the company, whenever an exchange
| thereof can advantageously be made
for ma any 9y Of the sSaI city na scrip
| celled. and that the amount thereof shall be
| endorsed ON the respective bonds of the rail-
road company given on the issue and deliv-
| cry of such scrip.
July 2,1S72, the bond of the company in the
| penal sum of $2.700,000 conditioned to save
| the city harmless as required by the act be-
| fore referred to was delivered to the city !;
| and upon the oath Of the same month the
| city, in exchange for its scrip OF the par
| value of $4,000, received an equal amount OF
| the mortgage bonds Of the railroad company
with interest coupons attached payable SEMI
| annually after November /. 1871, the date of
| the bonds fixed by the act before named.
| One of these coupons upon each OF the bonds
| received by the city upon this first exchange
| of bonds had been overdue since May 1. and
| to make the rights of the parties more clear,
| the city and railroad company entered into
| an agreement in writing on the same day
| that provided among other things; said city
mortgage bonds of said railroad company,
| overdue, and as they may become due, and
| so much of the principal of said mortgage
bonds when the principal comes due, as will
| indemnify the city for all existing defaults,
/ with expenses and costs"
| Under this agreement exchanges of bonds
| were made, the city always taking railroad
| bonds with all the interest coupons upon
| them, with possibly atrifing exception, until
the fall of 1873, when the city availed itself
| of stipulation in the bodds allowing their
| registration, and to accomplish this, cut off
| all the coupons upon its railroad bonds and
| surrendered them in sheets Of sixty coupons
each to the railroad company, but retained
the bonds as registered bonds.
The treasurer of the railroad company
| punched each coupon surrendered by the
city, and did the same thing with all the cou-
/ pons as they were cut in sheets from
bonds when future exchanges were
%Sds Seb ali lie the Fept SoDas Sersd S9Sk to tbe
city were entered as registered bonds, indi-
eating the exchange Of railroad bonds with
all coupons on, precisely as had been done
| before the bonds had been converted into
| registered bonds.
The registration did not change or vary the
| rights of the parties as they existed at the
| time; nor does it show any intention OF new
or different rights for the future.
The railroad company had right to issue
| bonds bearing interest from Nov. l, 1871, and
| by doing SO did not invade any rights of the
| plaintiffs. The case indicates that both de-
| fendants understood that all the coupons
| originally upon the railroad bonds should be
| held by the city as collateral Tor Its loan
equally with the bonds themselves, The
company pledged over 100000 OF these bonds
/ To parties other than the city Oh fortland
without regard to overdue coupons upon
| them. That was a custom OF the company,
| and it strongly shows its intent concerning
the city collateral.
| The last exchange of bonds was in August,
| 1875: and the company for the last time paid
| Interest upon the city scrip September 1 Of
| that YEAR Since then the city has paid on
| the same $S1, 900 yearly.
| The mortgage Of November l, 1871, secured
| bonds of that date amounting to $3.300, 900
/ SSOOOO0 of these were reserved to take up a
/ first mortgage of that amount but have not
/ been issued S1,350,O00 of them were issued
| to the city of Portland as collateral for its
| loan. SlOS,00O were pledged as collateral for
| tine dalton loan" of SOL, ,O41.88. $S05 600 were
| pledged to various parties for loans. $2l3,000
were sold to contractors at par. $19,5OO were
| sold in payment for matt rial and equipment,
| and S4,500 are unissued.