The Democratic advocate., 1901-04-27
THE C. & o. CANAL CASE.
Arguments Before Judge Stake At
Hagerstown.
From the Baltimore sun.

the cdutl UC pOotfChCN ~
Iudpe Stake took the matter under advise
ment. The trustees have already had posses
sion of the canal for 10 years.
Mr.. Hugh L. Bond, Jr., general counsel OF
the Baltimore & Ohio Railroad Company, and
Mr.. ] Clarence Lane, the local counsel TOR
The company. represented the canal trustees
and Attorney-G General Rayner represented
the State by direction Of the Legislature
Mr. Rayner, iii the course OF his argument,
said that the Chesapeake and Ohio Iranspor-
tatioa Company, with whom the trustees had
made the contract was a misnomer-that it
ought to be called the Baltimore and Ohio
Transportation Company. When counsel on
the other side interrupted bim and asked where
he got his figures, he said: Il did mol get
them from Court, because you have failed, for
good and sufficient reasons, to give them to
The Court in your report. Your superintend-
emf. who was not well disciplined, gave them
TO the Coal Trade journal, and ! got them
from It's columns When Mr.. Bond was
speaking he said "We have been trying for
10 wears to wipe out the interest of the Slate.
.,And / congratulate you" said Mr.. Rayner,
"upon the eminent success which has so iar
crowned the administration of your trust.
INTEREST IN THE CASE.
The whole bar of Hagerstown attended the
hearing of the case. Mr.. Rayner was warmly
congratulated upon what was conceded to be
an unanswerable argument in favor OF the
rights of the State.
Mr.. Rayner spoke for an hour and half.
He called upon the counsel on the other side
time and again to deny his figures or his state
ments. but when Mr.. Bond arose to reply he
virtually admitted them and was forced by
Mr.. Rayner's line of argument to admit that
il was the intention of the trustees to keep per-
petnaI possession of the canal and to prevent
the State from ever selling it.
Mr. BONDS ARGUMENT.
Mr.. Bond in his argument declared that the
trustees have been faithful in operating The
canal under the decretal orders OF the Court,
had fulfilled all of their contracts. maintained
the canal in good condition, aud insisted that
the trustees we're perfectly right IN asking for
a postponement of the sale OF the property.
He stated that the trustees had received in the
past FIVE years from the Chesapeake and OHIO
Transportation Company of Washington
County, with whom the trustees had entered
into n contract, $500, 900 in revenues. Out
side of the contract with the Chesapeake and
Ohio Transportation Company,h maintained,
the trustees have valuable interests IN the
canal He cited The Court of Appeals decl-
sions in the canal case as having decided ln
unmistakable language that, IN view OF the
guaranteed revenue derived from the contract
MARYLAND had no right 10 step In al this time
and press for a sale Of the canal.
MR. RlYNER's ARGUMENT.
Mr. Rayner opened his argument by saying
that he had two propositions to advance to the
Court
First. That the trustees had shown no
ground whatever authorizing continuance OF
their possession, and that the terms OF the de-
cree under which they hold the control Of the
canal have not been complied with, and that
a sale should be ordered.
Second. That another postponement means
that no sale will ever be ordered and that the
States interest is destroyed and the canal vir-
tually handed over to the bondholders.
Upon the first proposition Mr.. Rayner took
up the accounts of the trustees and, analyzng
them, showed TO the Court that although the
trustees had been in possession for 10 years
they we're not within $4,000 OF paying the
costs which they had incurred for the repair
of the canal; that not dollar had been paid
for the preferred liens for labor and supplies
furnished to the canal, and that no interest
nor principal whatever had been paid under
the bonds of 1874 or under the bonds OF 1878.
He went on to show that the whole gross
revenues of the canal did not amount to $780,,
900 year and that its business was constantly
decreasing and vanishing. 1T follows, there
fore, said Mr.. Rayner, THAT there has been
an utter failure upon the part of the trustees
to comply with the terms of the original decree
under which the sale of the canal has been
ordered. the decree providing that unless the
cost of repairing the canal was paid by the
trustees. and the liens for labor and supplies,
this should be conclusive evidence OF the right
of the Court to proceed with the sale.
SALE NOW OR NEVER.
Upon the second proposition Mr.. Rayner
said that he could show the Court conclusivey
and by mathematical demonstration that II
there was another postponement the time
would never come when the State could sell
the canal, and that il would virtually mean the
transfer Of the canal to the bondholders and
the elimination of the State interests. Upon
this point Mr. Rayner said that the interest
upon the repair bonds of 1874 aud OF 1878
amounted to more than the S1O0, 900 year
which the canal company was receiving from
the Chesapeake and Ohio Transportation
Company; that the interest amounted to nearly
three times as much as the whole amount
guaranteed by the transportation company;
that, therefore, If the bondholders were al
lowed to remain in possession OF the canal the
time would never arrive when they would be
able 10 pay the yearly interest upon the bonds,
and that, therefore, the payment OF any part OF
the principal was entirely out Of the question.
FABULOUS DEVICE.
Upon this branch of the discussion Mr.
Rayner dwelt with great force and insisted
upon the proposition that the transportation
company was fabulous device of the railroad
interests that now had possession of the canal;
that the Court was being imposed upon; that
the veil ought to be lifted from the transaction
and the situation exposed; that it was not nee
essary for the transportation company to nay
a dollar; that it was merely matter of book
keeping and of balancing accounts, and that
all that it was necessary for the trustees 10 do
was to give a credit of 500, 900 year upon
the claims of the bondholders without the pay
ment of single cent from the transportation
company; that by this system Of Juggling with
figures the trustees, who ought to represent
the interest of the State as well as the interest
of the bondholders, could keep their clients in
the possession of the canal forever and extin-
guish the slightest vestige of interest which the
State has in the work, and that they admitted
this to be their intention; that all it was neces-
sary for the trustees to do was thus to credit
to the interest account of the bondholders
500, 900 year, and that as by this system of
figuring not dollar of the principal could
ever be paid, the trustees would be substan
tally in perpetual possession of the canal.
THE INTENTION OF THE COURT.
Mr. Rayner concluded by saying this was
not the intention of the original decree, nor
was it in the mind of any of the judges who
passed or affirmed that decree. This was not
within the intention of the General Assembly
when it passed the statute that gave the bond
holders of 1874 preference upon the tolls and
revenues of the canal. This was not within
the contemplation of the State authorities
when they yielded priority to the bonds; the
intention and purpose Of everyone connected
with this litigation was that the bondholders
should have a reasonable time to experiment
with the canal and ascertain whether it was
possible to pay the bonds from the tolls and
revenues thereon. Ten years have been given
to make this experiment; it has utterly and
signally failed And still today, in violation
of their trust, the trustees are in court not in
the interest of those whom they should repre-
sent, but in the interest of the bondholders
whose claims they have purchased at a rihiug
percentage, demanding perpetual continu-
ance of their control and an custer OF the State
and an annihlation of every dollar of the
thirty millions of dollars that the State has in
vested in this enterprise.
''In the name of the State and in the name
of the people of the State said Mr.. Rayner,
II protest against the Court sanctioning con-
tinuance of the scheme and the farce which
has now been enacted for 10 years, with every
promise broken and with every legal obliga-
ton and requirement imposed by the decree
in this case spurned and repudiated. F"