The Corvallis gazette. [volume] (Corvallis, Or.) 1862-1899, 1895-04-18
THE APPELLANTS BRIEF.
Some of the Principal Points
Relied Upon for Setting
Aside the Oregon Pacific
Sale.

many plopOSlllonS OI law CldiIHeu Dy INC
appellants, evidence that much time and |
pains have been taken by the attorneys
in the preparation of the brief. Among
the principal propositions to be consid-
cred by the supreme co-.rt as presented
by the appellants are: THAT the cred
itors of the court may intervene and ap-
peal and in admitting these intervening
and appealing parties the court below has
exercised its discretion which is not now
to be questioned by the appeal court.
''That a sale on Dec. 22nd was not a
sale between the 18th aud 22nd.' That
an upset price should have been set by
the court to cover the courts liabilities
"The court below had no power to
change. modify or vary the original de-
cree after the expiration of the term in
which it was rendered. the orders appealed
from involved substantial variation from
the original decree, and must therefore be
reversed. Bondholders and certificate
holders, through modification of original
order, were deprived of their right to bid
their securities as purchase money. This
is held to be substantial right which
the court is bound to protect. By the
terms of the securities and the conditions
of their issuance the faith of the court is
pledged that the property ON which they
are made charge is in the possession of
the court, and that it will provide for the
payment of the certificates before the
property or its proceeds shall pass out of
its control. Hitherto, courts have kept
faith with their creditors, and when rail
roads have been sold for sums insufficient
to pay the courts Indebtedness the pur-
chasers have been compelled to submit
to conditions securing the payment of
the receivers Indebtedness before sales
would be confirmed or the property deliv-
cred to them. This is held to be uni
versal rule. The good faith of the court
Is the security of the lender"
The inadequacy of price is claimed to
be such as to invalidate the sale. 'The
duty of the court was to protect its cred
itors by arranging or fostering re-organi-
cations in the interests of the creditors -
In regard to taxes, the payment of
which was provided for in the order of
sale out of the purchase money, is held
by the appellants to be prejudging of
the right of lien holders before the court
to dispute the priority of the taxes, and
invalid on this accent. Also invalid as
operating to reduce the purchase money
by causing the reduction of purchasers
bid by the uuascertained, and therefore
deterring amount of taxes accruing after
April Ist, 1894. When not given prece-
dence, the lien of taxes is 1narsha1led ac-
cording to the general law determining
the rank of liens. The mere declaration
that taxes shall be lien is not sufficient
to give priority of liens.
In the argument of the case it is claim
ed that the order of Oct, 1894, involves
wide and substantial departures from the
decree of April, 1891
THE original decree looked to recon-
struction Or reorganization of the COM
pany. 1t gave powers to holders of
receivers certificates to bid their secur-
tiles as part of the purchase money at
the sale, and to bondholders to bid their
bonds and coupons at such rate and per
centage as shorld be returnable to them
from the ultimate proceeds of sale, the
deposit of $1,000 being reserved to be
paid in cash.
''The bondholders and receivers certi-
dcate holders are both eliminated from
the order of sale of October 20, 1904,
which is to be for cash to the highest bid
ders; the purchase money, including the
deposit of 100000, being to be paid in
cash or its equivalent in certified checks
or drafts satisfactory to the sheriff and to
the court and not otherwise. The result
of such an order is apparent in a sale of
property valued by hostile experts not
much more than two years ago at not less
than $3,ooo,ooo or IS, 500, 900 for 500, 900.
The effect of the provision in the
decree of April, 1891, for the benefit of
the bondho1ders and certificate holders
was two fold; it enhanced the value of
their securities by permitting their use as
cash IN the purchase of the road, and
also induced corresponding reduction
of the indebtedness of the court, denim
lshed pro tanto the amount of cash
required to clear off the labor and mate
rial Indebtedness of the court through its
receivers, and forestalled and prevented
the litigation between lien holders, certi-
ficate holders, preferred creditors, and
labor and material claimants, which is
inevitable in the proposed distribution of
the almost ridiculous sum which will