American Loan & Trust Co. v. Central Vermont R. Co.

• Decision Date: 08 March 1898
• Court: U.S. District Court — District of Vermont
• Parties: AMERICAN LOAN & TRUST CO. v. CENTRAL VERMONT R. CO.

86 F. 390

AMERICAN LOAN & TRUST CO. v. CENTRAL VERMONT R. CO.

United States Circuit Court, D. Vermont.

March 8, 1898

Elmer P. Howe and Henry Crawford, for plaintiff.

Benjamin F. Fifield, for defendant.

WHEELER District Judge.

This bill is brought and filed, as an independent proceeding, upon a mortgage which is first upon a part of the defendant's railroads and property, and second as to part, and which provides, as is alleged, that:

'If default be made in the payment of any installment of interest upon, or the principal of, any of the bonds secured by this mortgage, when the same is payable, and such default shall continue for six months after due demand, the trustee is authorized, in its discretion, to enter upon and sell at public auction in the town of St Albans, Vermont, after notice in writing to the party of the first part at least six weeks before the sale, and publication of the notice of the proposed sale at least once a week for six weeks before the sale, and publication of the notice of the proposed sale at least once a week for six weeks next preceding such sale in a daily newspaper published in the city of Boston and the city of New York each, and a newspaper published in the town of St. Albans and in the city of Burlington, Vermont, the whole of the lands, property, premises, railroads, stocks, bonds, and franchises herein conveyed, or as much thereof as shall be necessary to satisfy such overdue obligations of the party of the first part.'

The bill further sets up:

'That on or about the 14th day of March, 1896, the Grand Trunk Railway Company of Canada filed its bill of complaint in this honorable court against the said defendant, the Central Vermont Railroad Company, in behalf of itself and all other creditors, both secured and unsecured, of said Central Vermont Railroad Company, in which said bill the orator set forth the leases by the Central Vermont Railroad Company of the various railroads hereinbefore stated, and the issue of $7,000,000 of bonds by the Consolidated Railroad Company of Vermont, secured by a mortgage on said Consolidated road and the Vermont & Canada road, and the execution and delivery of said mortgage of the Central Vermont Railroad Company sought to be foreclosed in this action, and the issue and delivery of about $3,000,000 of the bonds secured by said last-named mortgage, and the failure of the Central Vermont Railroad Company, amounting to about $2,500,000; the inability of the Central Vermont Railroad Company to meet its obligations; the ownership by said Grand Trunk Company of $700,000 of said mortgage bonds of said Consolidated Railroad Company of Vermont, and of $1,000,000 of said mortgage bonds of the Central Vermont Railroad Company, and that, unless receivers were appointed, the whole Central Vermont system would become disintegrated and broken up by attachments and sequestrations in different jurisdictions; and praying that the rights of the said Grand Trunk Company and other creditors of the Central Vermont Railroad Company, including all holders of the bonds of the Consolidated Railroad Company of Vermont, and of the bonds of the Central Vermont Railroad Company, in or to the property, real or personal, of said Central Vermont Railroad Company, might be ascertained and protected; and that the court would administer the fund constituting the entire railroad and assets of said corporation, and for such purposes would marshal its assets, ascertain the several separate liens and priorities existing upon each and every of said mortgages and other liens, and would enforce and decree the rights and equities of each and all the creditors of said Central Vermont Railroad Company as the same may be fully ascertained and decreed, upon the respective intervention or application of each and every such creditor or lienor in and to not only the said lines of said railroads, their appurtenances and equipments, but also to and upon each and every portion of the assets and property of said defendant company, and for the appointment or receivers of said defendant company and of its property of every description, and for an injunction against said defendant company restraining it from interfering with the possession and management of said property under said receivers.'

That the defendant therein, the...