Cochran v. Richmond & A.R.Co. 1

• Decision Date: 18 April 1895
• Citation: 21 S.E. 664,91 Va. 339
• Court: Virginia Supreme Court
• Parties: COCHRAN . v. RICHMOND & A.R.CO. et al.1

21 S.E. 664

91 Va. 339

COCHRAN .

v.RICHMOND & A.R.CO. et al.¹

Supreme Court of Appeals of Virginia.

April 18, 1895.

Trustees under Railroad Mortgage — Compensation of Counsel — Settlement of Litigation—Obstruction by Bondholder—Right to Interest.

1. Trustees, who in good faith engage counsel to aid in the execution of their trust, are entitled to pay them out of the trust fund.

2. Where a loss has occurred which must fall upon one of two persons, it must be borne by him whose act occasioned it.

3. Pending the reorganization of a railroad, money to discharge existing liens was paid in court. After this was done one of the bondnolders contested the payment of proper counsel fees until the fund was insufficient to pay interest and principal on all the bonds. Held, that the loss should fall on him, as having delayed the settement, rather than on others, who raised no such obstructions.

Appeal from circuit court of city of Richmond; B. R. Wellford, Judge.

Appeal by J. C. Cochran from a decree against him, and in favor of the Richmond & Alleghany Railroad Company and others. Affirmed.

A. B. Guigon, for appellant.

H. T. Wick-ham and W. J. Robertson, for appellees.

KEITH, P. The controversy before us presents but a small portion of a very important litigation conducted in the circuit court of the city of Richmond, having for its object the enforcement of certain liens by deed of trust upon the franchises and property of the Richmond & Alleghany Railroad Company. The defendant acquired the franchises and property of the James River & Kanawha Canal Company subject to two deeds of trust for the payment of certain bonds, and proceeded to create other liens by deed of trust thereupon in favor of creditors of its own, which resulted in bills for foreclosure brought by the trustees in the last-mentioned trusts. Into the suits thus instituted against the Richmond & Alleghany Railroad Company came T. W. McCance and James Pleasants, surviving trustees in a deed from the James River & Kanawha Canal Company to secure certain bonds of said last-mentioned company, and John Dunlop, surviving trustee in the deed to secure its second-mortgage bonds. It appears that the parties interested in the suit were at one time upon the eve of an amicable arrangement of all the questions at issue, and the negotiations with respect to the reorganization of the affairs of the Richmond & Alleghany road had so far progressed that the decree for sale had been drawn by which the scheme was to be carried into effect The proposed plan involved the sale of the Richmond & Alleghany Railroad subject to certain incumbrances, among them the deeds to secure the first and second mortgage bonds of the James River & Kanawha Canal Company. This feature seems not to have met with the concurrence of those charged with the control of these interests, and a change was made upon the motion of the aforesaid trustees, by their counsel, by which it was provided that the property should be sold for the cash payment sufficient to meet the demands, principal and interest, of holders of these James River & Kanawha Canal bonds, up to the day of sale. The property was sold to the Chesapeake & Ohio Railroad Company, one of the appellees, and the cash payment required was brought into court. In the meanwhile a controversy had arisen between Messrs. Cabell & Smith, counsel for the trustees of the James River & Kanawha Canal trusts and some of the beneficiaries under said trusts. Cabell & Smith had been employed by the trustees, and had received compensation for what they had done, but, having performed additional serv.ices,...