Evening star. [volume] (Washington, D.C.) 1854-1972, 1890-09-03
TO SELL THE CANAL
Judge Alvey Makes . Decree Orderin,
the Sale.

Judge Alvey Makes . Decree Ordering
the Sale.
TIE WHOLE vopK TO BIZ SOLD FROM ONE
TERMINUS TO TIE oruER-PoINTs YRoM TIE
DECISION RENDERED AT HAaERsTowN YxsTKn-
DAY-THE LEGAL QUESTIONS INVOLVED.
Tho long expected decision IN the question
Of the sale of the Chesapeake and Ohio canal
was rendered yesterday by Judge Alvey ct
Hagerstown, Md. The judge holds ''that the
canal should be sold, and that the present pro-
ceedings furnish proper foundation for de-
cree for sale, and shall therefore pass decree
for the sale OF the entire work, with all the
property and franchises OF the company, from
one terminus Of the canal to the other. The
decree must provide for payment, out Of the
proceeds Of sale. Of all expenses incurred by
the receivers Of this court while In charge of
the property, and which may remain unpaid,
and for just compensation to them for their
services performed"
He refers to the appsintment Of receivers in
March last by the court. who were charged
with the special duty OF making q full and
thorough examination OF the condition Of the
canal with the view Of ascertaining as far a.
possible the cost of restoration and the prospect
Of restoring trade to the work in the event Of
its being repaired that would yield revenue
more than sufficient to pay the ordinary ex-
pensss Of operation. The tddge states that
the receivers have performed their duty
and upon personal inspection and
accurate measurements and calculations
made by competent engineers. and upon all
the data obtainable Ito which they refer IN
their report have been forced to the conclu-
sion that the canal cannot be restored with any
reasonable prospect Of being made to produce
revenue applicable to the payment of its large
bonded ENTHUSIASTICALLY not the bonded
Indebtedness incurred under the act OF 1874.
In this conclusion entirely concur. and my
opinion is based not exclusively upon the re-
port of the receivers, but, in part. upon other
data supplied III these cases. Whatever can or
may be done by others under different condi-
tons am decidedly of opinion that, as these
cases are now presented. and In view OF the
present condition Of the work, this court would
not be justified in attempting the experiment
of restoring the canal by the agency OF receiv-
ers at large cost, to be fixed upon the work
and its income as a first or superior lien. To
say nothing Of the opposition to such an under
taking interposed by the state and the minor
ity bond holders under the act of 1878, on the
facts as now disclosed, there would seem to be
no warrant for such an undertaking.
THE DISTRICT REcEIvERs
At the final hearing of these cases the coun-
sci for the complainants filed among the pro-
ceedings a report Of tho receivers in the Dis
trict of Columbia, recently made to the court
there, in which views are advanced somewhat
variant from the views and conclusions of the
receivers of this court az to the feasibility of
restoring the canal. But am far from being
convinced ty the reasons stated in that report,
however much l may respect the opinions OF
those receivers. At best their opinions are
only conditional
There was also fled at the hearing by coun-
sci of the bondholders under the act of 1874
suggestion, signed by counsel, to the effect that
if the court would displace the present receiv-
ers and appoint in their stead receivers nomi-
mated or selected by the trustees, sufficient
money would be raised on receivers certificates
to repair and successfully operate the canal so
as to make it earn revenue with which to pay
the repair bonds. But this suggestion in no
manner changes the aspect Of the case. No ono
can fail to perceive, in view Of the facts of the
case, that such an undertaking would be moth
ing more than q mere experiment. with the
chances greatly against its success; and. in the
event OF failure, the expense Of the expert
ment would remain q charge on the work to
the prejudice of other lien holders''
THE PROTECTION OF BcSDHoLDERs.
Judge Alvey, while recognizing the fact that
protection to the greatest reasonable extent
should be furnished the holders Of the bonds
under the act OF 1874, thinks that the rights
and interests OF other parties need not be
sacrificed in vain effort 70 furnish such pro-
lection. He adds that IF q sale Of the work
is to be made. and the holders Of the bonds
issued under the act Of 1874 are at all sanguine
that 1t is feasible to restore the canal to prac-
ticat operation and make it earn revenue that
would be applicable to their bonds, they will
have an opportunity, and it will be their right
to become purchasers Of the work, and then
to restore it and operate 1t under such con-
ditions as may be made to produce the best
results"
The judge concludes that if the canal is to
be sold no good can result from delay. but, on
the contrary, considerable delay will most GER
tainly depreciate the salable value Of the work.
THE CONTENTION IN THE CASE.
The decision then sets forth at some length
the position and claims of the respective par
ties to the suit. Two bills Of complaint were
presented, the first by the trustees for the
bondholders under the act of 1874 and the Sec
ond by the trustees for the bondholders under
the act OF 1878, which were consolidated into one
case. The objects and prayers OF the first bill
were simply for the appointment of receivers
to take charge OF and repair and operate the
canal to the end that revenue might be earned
that would be applicable to the bonds that
were issued under the act Of 1874 and for gen.
eral relief. The objects and prayers OF the
second bill were for the appointment Of re-
ceivers. the foreclosure Of the mortgage exc
cuted under the act Of 1878 and the sale Of the
canal and for general relief. Both bills allege
the broken and ruinous condition OF the canal,
the default Of the company in the payment OF
its overdue debts and its utter insolvency and
inability to pay any of its creditors whatever.
In its answer the canal company, while ad-
hitting the material fscts alleged, opposed the
appointment Of receivers and asked and in
sisted that there should be a decree at once
for a sale OF the canal and all the property and
franchises Of the company.
THE INTERESTS OF THE STATE
The state Of Maryland becomes a party de-
PENDANT to both bills, answered them sepa-
rately, set forth the mortgages or lien claims
held by the state and resisted the appointment
of receivers and submitted the question of i'm
mediate sale to the court At the final hearing
the state obtained leave and amended its an
swer BY inserting therein Q clause praying
specifically for an immediate sale, thus doing
by way of pleading upon the record what was
done orally in argument by the attorney gen.
eral at the hearing for tho appointment Of re-
ceivers. Treating the amended answer Of the
state to the first bill ~ being in the nature Of
cross bill for foreclosure Of its mortgages
the trustees for the bondholders under the act
OF lS44 replied that the state having waived its
prior lien upon the canal and the revenues to
be derived therefrom, to allow said bond
holders to obtain, as they did under the act Of
l644. u first and preferred lien upon the tolls
and revenues Of the company, it 10 estopped to
ask for a sale Of the work and thus destroy the
security of the bondholders for the payment
Of the debts due them, and they deny that the
canal cannot be restored 20 a. to be made to
earn revenue to pay their honda
Judge Alvey discusses extensively the ArRu-
ments advanced by the counsel for the bond
holders of 1874, in which they argued that the
all the property Of the canal company a. we'll
the tOIla and