Evening star. [volume] (Washington, D.C.) 1854-1972, 1890-02-24
RECEIVERS FOR THE CANAL.
Judge Alvey Decides the Suit Brought
at Hagerstown.

| II n0&efSCOW0s
He SAYS He WILL APPOINT PRACTICAL MEN AND
| LIMIT THEIR POWER TO CREATE FURTHER IN
pEBTEDNEss-A REVIEW OF THE CANALS con-
DrrIoN AND OF THE RECENT LITIGATION.
| Judge Alvey of the circuit court of Washing
ten county, Nd, has prepared long decision
in the Chesapeake canal case, refusing to order
an immediate sale of the property and deciding
to appoint receivers. The opinion will be an
nounced today. Judge Alvey in reviewing the
case says:
| There have been two bills filed against the
Chesapeake and Ohio canal company and
others, both seeking the enforcement of large
lien claims against the property of the COM
pany and the appointment Of receivers. And
! as both bills relate to the same subject matter
and. to a large extent, seek to effect the same
objects as means Of relief the two cases will be
consolidated, without prejudice, Of course, to
| any conflict Of claims that may arise.
| The first of these bills is that by the trustees
| acting under the mortgage executed by the
canal company In pursuance OF the provisions
of the act of the general assembly of Maryland
| of 1884, chapter 281, to secure the bonds au-
| thorized to be issued by that act now amount
ing, with the arrearage of interest, to about the
sum Of a, 260, 600, and the second bill is filed
/ by the trustees to whom the mortgage author
| lied by the act of 1878, chapter 5S was exc
| cuted by the company to secure the bonds is
sued under this latter act, which bonds. with
the arrearage of interest thereon, now amount
to nearly $500, 600 In both of these bills it IL
charged that the canal is in broken and waste
condition, and that the company is and has
been for a long time past i'll default in paving
overdue interest and meeting its obligations;
that 1t Is hopelessly insolvent and that it is no
longer able to maintain and operate its work,
and that it has, to all intents and purposes,
abandoned the canal, with no prospect what
ever of being able to resume operation.
The relief prayed for by the first bill is that
there be receiver appointed to take charge
OF the property and works of the company
anu 10 repair and operate the canal for the
purpose of raising revenue with which to pay
OIL the debts OF the company and for general
relief And by the second bill the relief prayed
is that the mortgage Of 1878 be fore
closed, and all the property embraced in the
mortgage, including the canal itself and the
franchises OF the company, be sold under de-
cree OF the court, and, until such sale can be
made, that receiver be appointed to take
charge OF the property and to repair and oper-
ate the work. The first bill is filed against the
canal company and the trustees named in the
mortgage of 1878. and the second bill is against
the canal company and the trustees acting
under the mortgage made to secure the bonds
issued under the act OF 1874. The defendants
have all answered except the trustees for the
bond holders under the act of 1874
QUESTIONS CONSIDERED.
The following questions are considered in
the decision:
First. Has the canal company, as the debtor
of the complainants, any right or standing in
court to resist the appointment of receivers or
TO Insist upon the lmme diate sale of all its
property and franchises for the reasons stated
IN Its answer? Second Has the state Of Mary
land, as deferred or subordinate lien holder
IN view of the provisions of the acts of assembly
referred to, any right to resist the appoint
ment OF receivers and to insist upon an i'm
mediate sale of the work? Third Have the
intervening bond holders, either those under
the act OF 1874 or those under the act of 1878
any right, under the circumstances of the case
to resist the appointment OF receivers and in
slst upon the sale of the canal, Notwithstanding
the trustees representing the bond holders ask
for receivers and not for an immediate sale?
A complete and comprehensive review is
made OF the history of the canal from its Or
ganization by act of the Virginia legislature
During the early periods of the embarrassment
OF the company that this state (Maryland), by
large subscriptions to the stock and the loan of
Its credit, became creditor to the extent of sew
eral million of dollars. AS security for these
loans and the guaranty given Oh the subscip-
lions to stock the state exacted liens and mort
cages upon the entire works and property of
the company and Of the tolls and revenues that
might be received. This aid, however. proved
quite insufficient, and after the canal had been
constructed to dam No. 6 all further work
ceased for the want of money. 1t was in this
state OF affairs that, in 1874, another appeal
was made to the state for aid. This appeal was
yielded to. not by the loan of money but by
t he waiver OF all priority of liens in favor OF
bonds that might be issued by the company to
the extent Of 81, 700, 000-that being the amount
| supposed to be necessary to complete the canal
to Cumberland This waiver on the part of the
! state, and authority to thu canal company to
issue preferred bonds, was effected by the act
OF 1874 chapter 2sl, passed on the 10th of
March, 1845.
THE PRESENT CONDITION OF THE CANAL.
The decision further reviews the various
business complications, stating the conditions
i'll the issue Of other bonds and showing the
status of the state of Maryland as regards the
canal
Coming to the present condition of the canal
the decision states that there is no controversy
as to its broker condition and as to the utter
insolvency of the company, and that interest
has not been paid OH the 1874 bonds since 1864
and that the principal is overdue and unpaid;
that, in fact the canal is going to utter waste
and ruin. There can be no doubt. the Judge
says therefore, that these facts are amply sufli
cient. both upon principle and authority, an
especially in view of the express stipulations
for possession in the event of defaults by the
company, to entltle the compliments to the ap-
pointment of receivers.
Several cases cited to show the decision
of the courts under similar circumstances that
the bonds should be preferred over all other
debts.
RECEIVERS TO BE APPOINTED.
In conclusion Judge Alvey says: Upon the
whole l cannot doubt as to the right of the
complainants to have receivers placed in
charge OF the canal and all the property and
effects OF the company within the limits of
this state. l shall, therefore, appoint receiy-
ers. But 1t Is not to be understood that be-
cause receivers are appointed it is tv follow as
matter OF course that power is to be conferred
on them to issue certificates to constitute addi-
tional liens or charges on the property That
will depend upon what may be shown to be the
actual condition Of the work, the amount re-
CURED to put it in good repair, the feasibility
OF restoring to the operation of the canal a
| sufficient number OF boats and boatmen with
reasonably certain prospect of such an
amount OF tonnage as will pay not only ordl-
nary expenses but yield revenue applicable
to the payment of the interest on the preferred
debt. Without this IT would be simply an ex-
pertinent of doubtful success and which might
prove disastrous to the bond holders having
the preferred liens. Assuming the power of
sale to be available, the bond holders under the
act of 1878 would be entirely secure in the sal
able value of the canal, provided there be no
superior liens created. But the situation of
those standing behind them is very different
aud the rights of the deferred lien holders
must not be sacrificed or impaired by expert
ments OF doubtful propriety.
PRACTICAL MEN TO BE CHOSEN.
In the selection of receivers shall aim to get