Grand Trunk Ry. Co. v. Central Vermont R. Co.

• Decision Date: 04 June 1898
• Parties: GRAND TRUNK RY. CO. v. CENTRAL VERMONT R. CO.
• Court: U.S. District Court — District of Vermont

88 F. 620

GRAND TRUNK RY. CO. v. CENTRAL VERMONT R. CO.

United States Circuit Court, D. Vermont.

June 4, 1898

Henry G. Newton, for claimants.

Moorfield Storey and Elmer P. Howe, for mortgagees.

WHEELER District Judge.

When receivers of the defendant's roads and property were appointed, March 20, 1896, they were directed to pay claims for, among other things, supplies used in operating the roads during the six months next previous. Afterwards, May 29th, on motion of the American Loan & Trust Company, mortgagee payment was restrained for classifying the accounts and funds. Upon classified accounts filed by the receivers, and a motion to so modify the restraining order as to allow payment of such claims as accrued on the New London Northern system and those less than $100 each and 25 per cent. of others that accrued on the main line, payment of the face of the New London claims and of the small claims has been allowed, and that part of the motion relating to the main line has been heard. The classification was asked, and the payment has been opposed, because, as has been said, the payments would or might, if made, come out of funds belonging to the mortgagee. All of the claims appear to have amounted to $284,083.48. The receivers appear to have taken over from the defendant stocks of supplies on hand amounting to $271,722.33; of station agents $142,879.96; and other miscellaneous items amounting to $82,267.68,-- in all, $496,869.97. The conditions of the mortgages were not broken till January 1, 1897, and the mortgagees would not be entitled to possession, nor to the net earnings as profits, till then. By conservative estimates as to what are operating expenses and what are permanent improvements, the roads now in question much more than paid all operating expenses from the beginning of the receivership to the breach of the conditions of the mortgages. Besides this, the excess of net earnings, which came to the hands of the receivers, over operating expenses and fixed charges paid by them before breach of the conditions of the mortgages would seem to exceed the amount of these preferred claims and, with the permanent improvements made by the receivers during that time, would largely exceed them. In this view, the payment of the residue of these preferred claims would not come out of the mortgaged property, nor out of any net earnings to which the mortgagees may be entitled, but out of the...