The herald., 1897-04-08

Colorado river at The Needles TO Mo.
jave junction embracing about 24t
miles of track The price to be paid
was placed at $4,000 per mile. S7,271 ,10t
for the whole road II was expressly
agreed that the sale should be consum-
mated whenever the Southern Pacific
company should be able to make clear
| title to the property.
In the meantime it was agreed to lease
the line of road to the Atlantic and Pa
cific at an annual rental of 1926, and
| in 1884 the Atlantic and Pacific took pos
session. On September l, 1887, a mort
gage was executed on the property in
| favor of the Mercantile Trust company
, of New York to secure the payment OF
certain bonds Previously another
mortgage had been executed in favor
of the Union Trust company of New
York to secure the payment of certain
| other bonds.
On January s, 1894, the Mercantile
Trust company commenced suit TO fore
close this mortgage and for the ap-
pointment of a receiver c. w. Smith
was appointed by the court to take
charge of the road. The Southern Pa
cific company in 1896 presented to the
receiver a bill of $4S, ,6S3. "A for their pro-
portion of the delinquent taxes of the
company for which judgment was given
in 1898, and which it was claimed was
due from the Atlantic and Pacific ac-
cording to the terms of the contract.
This bill included s5,9S1.S7 as the portion
of attorneys fees collected by the state
Of California. There was also added the
bill of s12. $50 Sc for interest on the judg
ment from the date of its rendition to
the date of its payment.
The receiver objected 10 the payment
of the bill and filed a petition in the
court asking for instructions in the
matter. He alleged that the action of
the Southern Pacific railroad company
in permitting a penalty to be added to
the tax and attorneys fees, costs and
interest to accrue thereon was without
the knowledge or consent of the Allan
tic and Pacific company or it's receivers.
He also stated that the United States
Trust company objected to the payment
of any part of the bill. The Mercantile
Trust company and the United States
Trust company each filed an answer to
the complaint. Then the Southern Pa
cific company filed an intervening pc
tition asking the court to direct the pay
ment of the bill.
The matters at issue were thereupon
referred to a special master to take
the proofs of the respective parties and
report upon them. This report was
filed December II. 1896. and a short
time later the Southern Pacific company
filed a bill of exceptions to the finding
of the master on the ground that all of
the testimony upon which the report
was based was enormously admitted,
and that the finding is unsupported by
the evidence as given. Exceptions were
also taken to all of the conclusions of
law reported by the special MASTER
In his decision Judge Ross says: 'It
is perfectly evident. 1 think, not only
from the language of the contract. but
also from the actions of the parties
thereto, that the contract was not a
mere lease of the road The right of
possession and use conferred
under the term lease was but an in
,ident of the principal contract which
the sale of the line of road
FOR the sum of s7,271 100, the payment of
which was not only promised on the
part of the Atlantic and Pacific rail-
road company. but guaranteed by the
Atchison, Topeka and Santa Fe. The
Southern Pacific company by reason of
an existing mortgage not then being
able to give a clear title to the line of
road the respective parties stipulat-
ed for its immediate use and control by
the vendee.'
The Southern Pacific company had al
the taxes on the whole line and
then been reimbursed by the Atlantic
and Pacific. but Judge Ross holds that
this does not alter the fact that accord
ing to the terms of the contract the lat
ter was the real possessor of the road.
The bill of exceptions is therefore sus-
tained and the Atlantic and Pacific will
be compelled to settle up the account.