Evening star. [volume] (Washington, D.C.) 1854-1972, 1890-10-03
THE BONDHOLDERs, CHANCE.


THE BONDHOLDERs' CHANCE.
Judge Alvey Will Give Them Until May
to Repair the Canal.
IN THE EVENT OF THEIR FAILURE THE CANAL
WILL BE SODA DECREE PASSED AT HAaERs-
TOWN Observation-Disclosures FOR -FOUR
T1Ans TRIAL OF THE CANAL As 4 WATERWAY.
Yesterday at Hagerstown Chief Judge Alvey
passed o decree for the sale Of the Chesapeake
and Ohio canal provided the. bondholders of 1874
fail to repair and run the canal. Jos. D. Baker,
Robert Bridges and Richard D. Johnson, the
receivers heretofore appointed by the court,
are named a. trustees to sell, but the bond
holders Of 1874 are granted permission, in 40
cordance with their petition, to pay Of tho
bonds Of 1873 and to take charge of, repair and
run the canal as . waterway at their own cost,
provided the canal be 30 repaired by the LIST Of
May, 1891, and Q deposit Of el0, 900 is made to
defray expenses Of litigation up to this time.
The bondholders Of "A must give bond with
in sixty days in the penalty Of S600, 600 that
they will fulfill their obligations. II the bond
the decree for sale will go into effect.
Judge Alvey in his decision said: There can
the debt due the bondholders under the act Of
1914. The creation of that debt furnished the
means Of completing the canal, and without
the loan obtained under that act it 10 doubtful
whether the canal could ever have been fin
ished. The state, the previous ienholder, to q
large amount, was unwilling, indeed unable to
supply further pecuniary aid to the prosecution
nf hn nd 4 vyoo mi u hy,f laAn ov,I
security offered by the special terms and condi-
tions of the act OF 1874 that the necessary
funds were obtained to complete the canal to
Cumberland. The state waived its prior lien
to the extent, and only to the extent, of allow
ing the prospective net tolls and revenues of
the work to be dedicated to the payment of the
principal and interest of the bonds issued under
the act and it was upon the reliance of that Sc
curity that the money was loaned. This was the
security expressed upon the face Of
given by the statute. This preference
was given with the reservation to the
company of the right and authority, at all
times thereafter, to use and apply such portion
OF the tolls and revenues as might be necessary
to put and keep the canal IN good condition
and repair for transportation, provide a supply
of water and pay the current expenses Of the
company. To this extent the company re-
tanned prior or superior right to the bond
holders under the act The mortgage executed
under the act OF date the 9Th of Juno, 1913, to
secure the bondholders, provides that upon
failure of the company to fulfill its engagement
according to the terms Of the mortgage, the
trustees or their successors should have power
and authority to enter into possession, subject
to q condition no longer operative, and execute
the provisions of the act By collecting and ap-
plying the tolls and revenues OF the
for default has never been exercised.
and the right to exercise it, though default
in payment had been made, has been suspended
by the operation OF the act Of 1875 chapter So,
while the right to take possession and apply the
tolls and revenues has been thus suspended,
in order to make effectual the security for the
bonds issued under the act of 1878, the right
itself has not been finally destroyed II the
bonds issued under the act OF 1878 were taken
up and paid clearly the right to enter under
the mortgage of lS4S would exist, and 30 if that
entire mortgage debt be redeemed and taken
up by the trustees for the bondhoIders under
the act Of 1874, and subrogation be allowed
them, their right to enter and collect and apply
the revenues, under the mortgage of lS48,
would be available for the bonds under the act
of 1874, as would be all the rights and remedies
provided by the act of 1878, as security for the
bonds issued under this latter act"
THE RIGHTS OF THE STATE.
He did not believe the bondhoiders Of 1874
could justly be denied the relief they asked;
still the rights Of the state, the largest lien
holder, must be protected 80 as to make sure
Of the sale OF the canal, If it be not repaired
and put IN operation within such reasonable
time as may be prescribed, and, even if it be
repaired and put in operation, that it be
kept in repair and operation SO as to insure the
earning OF revenue more than sufficient to de-
fray ordinary expenses. The expenses incurred
by the receivers now ID charge of the work and
their claim for just compensation constitute
charges upon the property and must be pro-
vided fer III the decree.
DISTRICT DECREE NEEDED.
81 shall enter a decree for SALE" said the
court, sin accordance with the opinion hereto
fore filed; but shall insert clause for stay
or suspension of its execution, upon compli-
ance by the trustees acting under the mortgage
OF June 3. 1846, with the requirements terms
and conditions prescribed and set forth in the
decree. But before that clause in the decree
can be made available to effect a subrogation
to the rights OF the bondholders under the act
Of 1878, or to authorize the trustees under the
mortgage of 1913 to take possession of the
canal to repair it, it will be necessary that they
obtain concurrent decree from the Supreme
Court OF the District Of Columbia sitting in
equity, In the proceedings now pending in that
court or that such proceedings be dismissed
No possession of the canal can be given by this
court while an important part Of it remains in
charge of receivers appointed by q court of
another jurisdiction"
TIE CONDITIONS IMPOSED.
Under the decree the trustees for the
bondholders Of 1874 are required to shave
put in good repair and condition the
entiro canal from one terminus thereof
to the other, SO that it be fit for and
capable OF safe transportation thereon" and
upon SO restoring said canal to a state of good
repair and condition the said trustees shall
proceed to operate the same as a public water
way, with all the rights and subject to all the
conditions and limitations granted and pre-
scribed by the charter Of the said company:
and the said trustees shall keep said canal in
good repair and condition and continue to
operation may be suspended by the action of
causes against the effect of which prudence and
due care in management will not provide
The revenues Of the canal are to DO applied
to paying first, the current expenses; second
the expenses incurred by the receivers; third,
the expenses incurred by the trustees in re-
storing the canal; fourth, to pay of liens for
labor and supplies; fifth, to pay the interest
and principal of the 1873 bonds, and sixth, to
pay of interest and principal of the 1874 bonds
Upon the full payment Of these aforementioned
bonds the possession and control Of said
trustees shall cease and terminate.
FOUR YEARS TRIAL.
In another clause the decree provides "that
il at the end of four years from the first day of
May next there shall not have been tolls and
revenues derived from the said canal, and the
property and rights appurtenant thereto over