Montgomery County sentinel., 1890-10-10
Judge Alvey's Decree in the G. & o,
Canal Case.
POSSIBLE REVIVAL AS A WATERWAY

Chief Judge Alvey on the 2nd instant
passed conditional decree for the sale OF
the Chesapeake and Ohio canal. Joseph ID
Baker, Robert Bridges and Richard u.
johnson, the receivers heretofore appointed
by the court, are named as trustees to sell,
but the bondholders of 1874 are granted
permission, in accordance with their peti-
| ton, to pay off the bonds of 1878, and to
take charge of, repair and run the canal as
a waterway at their own cost, provided the
canal be so repaired by the first OF May
| 1891, and a deposit of ten thousand dollars
| is made to defray expenses of litigation up
to this time The bondholders of "A must
give bond within sixty days in the penalty
of six hundred thousand dollars that they
will fulfill their obligations. The decree
for sale will go into effect, provided the
bondholders of 1874 fail to repair and run
the canal.
RIGHTS OF THE BONDHoLDERs.
In his opinion Judge Alvey, after reciting
the points contained in the petition of the
| bondholders of 1874, and the legal proceed
ings heretofore reported, says:
"There can be no dispute or question as
to the merits of the debt due the bondhold-
ers under the act of 1874 The creation OF
that debt furnished the means of complet-
| ing the canal, and without the loan obtained
under that act it is doubtful whether the
canal could ever have been finished. The
| State, the previous lienholder to large
amount, was unwilling, indeed unable to
supply further pecuniary aid to the prose-
cution of the work, and it was only by the
pledges and security offered by the special
| terms and conditions of the act of 1874 that
the necessary funds were obtained to COM
plete the canal to Cumberland. The State
waved its prior lien to the extent, and only
to the extent, of allowing 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
the money was loaned. This was the secu-
rity expressed upon the face of the bonds,
and it was.the only preference 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 tor trans.
portation, provide supply of water and
pay the current expenses OF the company
! TO this extent the company retained prior
or superior right to the bondholders under
the act. The mortgage executed under the
act, of date the 9Th of June, 1S48, 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 condition, no longer operative,
and execute the provisions of the act, by
collecting and applying the tolls and reve
nues of the work. This express power to
| enter for default has never been exercised /;
| and the right to exercise it, though default
| in payment had been made, has been sus
pended by the operation OF the act OF 1878,
chapter So, and the issue of the bonds there
under. But while the right to take posses
sion, and apply the tolls and revenues, has
been thus suspended, in order to make ell
feetual the security for the bonds issued un-
der 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 1S48 would exist, and so if that
entire mortgage debt be redeemed and taken
| up by the trustees for the bondholderS un-
der the act of 1874, and subrogation be al
| lowed them, their right to enter and collect
and apply the revenues, under the mort
gage OF 1S48, 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 first question
therefore upon the present application IS
| Wnetner inc riSht VI iouoihPeoh 80, 80
rogatioh eXlsts IN the lIustees ~, 'no ooau,
nolscrs uhuer the ac. VI lott, a. wy J,
lacts US they apPeai III 'ie'o Pioo'oo9'
RELIEF CANNOT BE DENIED.
"As has been shown the only security for
the payment of the bonds issued under the
act Of Is44 depends upon the working con-
dition Of the canal to earn tolls and revenue.
| That eecnritv has heen subordinated to the
secnritv given to a juulor class of bonds is.
euad under the act of 1878. the lien given as
secnrity for these latter bonds embracing
| hoth Tho cornna of tho canal and all the
revenue derivable therefrom The canal in
ito present broken condition cannot be op.
erated and this court has concluded that it
| ia NOT feasible to restore the work to an OPP
arative condition and To have it operated
hv the agency of its own receivers, and the
aIternative is presented of a sale ofthe entire
work Il is not possible to sell the canal
subiect To the continued existence of the
nroierred lien an the tolls and revenues
thereof in favor of the bonds under the act
of 1874. To make such sale, if sale could
be made at all, encumbered WIN sucn con,
dlton, Would SIMPLY result III d aaoi my .p -
the rights Oh al creuitoIs cohceineu, ~ ~,
lien OF the bondhoidefs 1huer tne aes ~; % .,
1915, on Doth WORKS anu ieVonue, poinE
paramount, the TRUSTEES ioi ehooo poi.,no'a ,i ~,
ers are entiteu Vi liRnt w h"Yo a. e o.e
properly Oh tne cahai conpah e1,u, -
ana clear Oh an ileno iili9i'oi W - onont :" 49,
10 prevent thls saie, anu W ptoIo, pi w sn'
only security 10 which JUG uohuho.Gn1 , ,t ~,
der the ACT OF lo44 are ehtieieu, sho,' i VI @
tees under the mortgage come ~ "a III p,ay
to be allowed 10 lakc possessioh y. sno oana
and 10 repair ana operate ~ at snoli -" -, i.
cost, depending alone ior feinioui sG'isnS VI
| the outlaw upon SuCD revenues us tilcy mdJ