The Somerset reporter., 1898-12-01
Against the Towns.

account OF the decision Oh the U. -.
supreme court In the matter 80 long in
litigation between the towns of Arson
and Emblem and the Somerset railway:
The litigation of many years standing
about the legality of the somerset rail
way is at an end. The decision of the
supreme court of the United States,
recently announced as favorable to the
railway and against the bondholders, Is
now printed and made public. The
opinion of the court was delivered by
Mr.. Justice Peckham. This suit has
been, perhaps, one of the most famous
in the annals of railway litigation in the
Pine Tree State. The towns of Arson
and Embden, in Somerset county, were
deeply interested in the outcome, as
both towns held bonds in the old Son.
erset Railroad company and refused to
accept railway holdings in the later
corporation, now known as the Somerset
Railway. The case reached the supreme
court of the United States on writ of
error directed to the supreme judicial
court of the State of Maine, for the pur-
pose of reviewing a Judgment of that
court in favor of the defendant in error
who was plaintiff below. The plaintiffs
in error, as technically known to the
United States supreme court, were
Lewis Pierce ct al" This included
the two towns mentioned and some of
the old bondhol1ers Really two suits
were decided by the supreme court, one
against the Somerset railway and the
other against John Aver, president, and
other officers of the Somerset railway.
The Somerset Railroad company was
organized in 1871 for the purpose of
building railroad between Oakland on
the Maine Central in Kennebec county
and Scion in the county of Somerset. A
mortgage was executed to three trustees
to secure bonds for $450,000 and semi
annual interest coupons. The proceeds
from the sale of these bonds were used
in building and equipping the road from
Oakland to North Anson the latter sta
ton being four miles this side of Scion,
the proposed terminal. The road to
North Arson was completed in 1875
This much of the road was operated till
1888, although in the meantime the cor
poration had become insolvent. BY
April /, 1888, the interest on the bonds
had remained unpaid for more than
three years and this fact was taken ad-
vantage of to reorganize the road under
laws of the State. In 1878, seven years
after the execution of the mortgage, the
State Legislature extended the provisions
of law allowing the formation of corpo-
rations by the holders of bonds to in
clude the case of railroads where the
principal of the bonds should have re-
manned overdue for the space of three
years. On March g, 1888, by some
shrewd manipulation the legislature was
induced to further extend this law so
that it should apply to the case where
no interest had been paid for more than
three years.
This last enactment gave the bond
holders of the Somerset Railroad com.
pany the desired authority, and August
10, 1888 they formed a new corporation
under the name of the Somerset Rail-
way. The capital stock was fixed at
$736, 648. 76 made up of the principal of
$3.50, 600 of the unpaid outstanding
bonds and 1886, 648.7 70 of interest thereon
up to August Is, 1888. Possession was
taken September l, 1888, the stock
holders of the old company having pre-
viously assented to this by vote on
July 10, 1888. The holders of a very
large majority of the bonds participated
in the reorganization of the road. Some
of them were parties in whose interests
the plaintiffs in error now act. Stock
was issued for outstanding bonds to the
amount of $3.50, 400 but the amount of
bonds not surrendered was S11O, 600, not
counting overdue coupons. The new
company continued to operate the road
and in July, 1887, issued twenty year
bonds to the amount of 1926, 900, mortga-
cling the entire road of forty one miles,
| from Oakland TO North Arson up the
Kennebec river. The giving of this
mortgage was matter of public noto-
riety and the road was in due season
extended to Bingham, to which point it
is now and long has been operated.
In December, 1892, the trustees in the
mortgage of 1871 commenced two actions
at law, one in each of the two counties
in which the road is situated, in which
actions the president of the new corpora
ton and various officers and agents
were made parties defendant, and the
plaintiffs claimed to recover from the
defendants as disseizors, the possession
of the railroad and from the defendants
as individuals, the sum of $18O,OO0 as
mesne profits. The plaintiffs claimed
that the road was illegally reorganized,
that the trustees alone could take pro-
ceedings to foreclose and that the acts
of the Legislature subsequent to the ex-
ecution of the mortgage had no validity
as against the contract rights of the
plaintiffs. Upon these facts the railway
began two suits in equity to enjoin the
further prosecution of the suits at law,
and on these two equity suits the SUI
preme court has just passed. When
the equity suits reached the supreme
judicial court of Maine that court sus-
tanned the railway, where it was held
that the subsequent acts of the Maine
Legislature did not impair the obliga-
tons of contract contained in the mort
gage, but simply afforded more con-
venient and quicker remedy for the
violation of the agreement and for the
foreclosure of the mortgage than existed
at the time of its execution.
This action of possession the Maine
court held, "was authorized by the
statute, consented to by the Somerset
Railroad Company, the mortgager, &C
lively proposed and aided by at least
one of the trustees, and ever since
acquiesced in by all the trustees" The
Maine court further declared it was too
late for objections to be made. 1.-THE
long acquiescence of the parties with
out objection coupled with the changed
conditions and relations resulting from
the possession and management of the
property by the somerset railway stops
them from now questioning the legality
of the organization of the new corpora
ton" The Maine court also held that
the bondholders, who had refused to
take stock in the new company still re-