Merchants' Loan & Trust Co. v. Chicago Rys. Co.

• Decision Date: 07 September 1907
• Docket Number: 1,415-1,417.
• Citation: 158 F. 923
• Parties: MERCHANTS' LOAN & TRUST CO. ET AL. v. CHICAGO RYS. CO. (THREE CASES).
• Court: U.S. Court of Appeals — Seventh Circuit

158 F. 923

MERCHANTS' LOAN & TRUST CO. ET AL. v. CHICAGO RYS. CO. (THREE CASES).

Nos. 1,415-1,417.

United States Court of Appeals, Seventh Circuit.

September 7, 1907

These appeals were taken from the order entered the 12th day of August, 1907, in the matter of the petition of the Chicago Railways Company filed in the three cases of the Guaranty Trust Company of New York, one against the Chicago Union Traction Company et al., another against the North Chicago Street Railroad Company et al., and the third against the West Chicago Street Railroad Company et al., reported in 158 F. 913. The order entered by the circuit court contained these specific findings:

And it appearing to the court that the rights of the owners of a large portion of the lines of street railway operated by the receivers of the Chicago Union Traction Company under ordinances from the city of Chicago have expired, that the rights of a considerable portion of said lines will expire from time to time at short intervals from and after March 1 1908, and that the rights with respect to a considerable portion of said lines are subject to be terminated by the city at any time on six months' notice and upon purchase of the tangible properties of said companies, respectively;

And it further appearing to the court that the said properties are and have been for several years past so commingled and connected that it is impracticable to separate them without great loss to all parties in interest;

And it further appearing to the court that Chicago Railways Company has promulgated a plan of reorganization and readjustment in accordance with the provisions of the ordinance of the city of Chicago passed on February 11, 1907, under which plan an opportunity is conferred upon each individual holder of a direct or indirect interest in or lien upon said property franchises, or claims, or any part thereof, or of any right claim, or demand as creditor, or otherwise, entitled to enforcement against such property, franchises, rights or claims, or payable out of any part thereof, to participate in the transfer of said property, franchises, rights, and claims to and the acquisition thereof by the said company, and to receive such stocks, securities, or other benefits as said plan of reorganization and readjustment may provide, on the terms and conditions in said plan set forth, which plan has been approved by Peter S. Grosscup and by John C. Gray, in accordance with the provisions of the deposit agreement annexed to said ordinance marked 'Exhibit D'; copies of which ordinance, plan, and approval have been filed with this court in these causes;

And it appearing to the court that unless said plan and agreement be availed of, and the Chicago Railways Company be vested with possession of the lines of street railway above referred to on or before the 15th day of September, 1907, the right to avail of said ordinance will terminate, and great loss will ensue to the holders of all liens upon, claims against, or interests in the said property, and that in view of such exigency this order should be made;

And it further appearing to the court that all of the said lines of street railway and the property connected therewith are held and operated under statutes of the state of Illinois and ordinances of the city of Chicago, subject to the obligation that adequate street railway transportation and service shall at all times be furnished thereby to the public, and that the rights of all of the parties to this cause and of those claiming by, through or under them, respectively, are held subject to such obligation;

And it further appearing to the court that the present condition of the said lines of street railway and their equipment and the property connected therewith is not such as to enable adequate street railway transportation and service to be rendered to the public by means of the said street railways, or any part thereof, and that unless such adequate street railway transportation and service is promptly and continuously rendered, the right to maintain and operate the said lines of street railway will be terminated to the great loss and injury of all of the parties to this cause and of all those who claim by, through, or under them, or any of them;

And it further appearing to the court that, in order to enable the said lines of street railways and property to be so maintained and operated as to furnish adequate street railway transportation and service to the public, it will be necessary to reconstruct, re-equip, and rehabilitate the said lines, and in general to comply with the provisions of the ordinance of the city of Chicago passed on February 11, 1907, to the Chicago Railways Company, in respect thereto;

And it further appearing to the court that it is impossible to procure the necessary means to enable the said street railway system to furnish adequate street railway transportation and service to the public, except by procuring a loan of sufficient funds to pay the cost of necessary construction, reconstruction, equipment, re-equipment, extensions, and additions, and that such moneys can only be obtained by means of a loan secured by a lien superior to the liens of all and every the existing mortgages on said system of street railways, or any part thereof, and to all and every the liens now existing upon the said system of street railways, or any part thereof, in favor of any party to any of the above-entitled suits, or those claiming by, through or under any such party;

And it further appearing that there have been deposited with the Chicago Title & Trust Company, as trustee, under the provisions of said ordinance and of exhibit d thereto attached, the following numbers of shares of the capital stock of the following companies, respectively, to wit:

North Chicago City Railway Company . . . 1,773 shares

Chicago West Division Railway Company . . . 4,409 shares

West Chicago Street Railroad Company . . . 80,087.50 shares

North Chicago Street Railroad Company . . . 49,568.20 shares

Chicago Union Traction Company, preferred . . . 109,158 shares

Chicago Union Traction Company, common . . . 158,244 shares

Following these findings the vital provisions of the order are in paragraphs, 1, 3, 4, 5, and 7 thereof, reading as follows:

This order and all rights taken thereunder are without prejudice to the statutory lien reserved in car trust agreements under the orders of August 3, 1904, and January 8 and 30, 1907.

1. The receivers heretofore appointed in this cause shall forthwith execute and deliver unto Chicago Railways Company, in form to be approved by this court, a lease of all of the lines of street railway operated by the receivers of Chicago Union Traction Company on February 1, 1907, with all the plant and equipment at said last-mentioned date or at the present time in use on or in connection with the said lines of street railway, whereby the Chicago Railways Company shall be vested with the lawful possession of all of said lines of street railway together with all the said plant and equipment, to have and to hold the same from the day of the date hereof until the 2d day of February, 1927, unless and until prior to said date said lines of street railway, plant, and equipment shall be sold pursuant to decrees of this court, or final decrees in said causes are entered without sale, and in case of such sale until delivery of possession thereof to the purchaser thereof pursuant to a decree or decrees of this court confirming such sale, upon the terms, covenants, and stipulations to be contained in said lease as hereinafter provided. And it is further ordered, adjudged and decreed that upon the delivery to and acceptance of said lines of railway and plant and equipment by said Chicago Railways Company, the said Chicago Railways Company shall be and is hereby authorized, empowered, and directed to comply with each and every of the provisions of the said ordinance of the city of Chicago passed February 11, 1907, with respect to the operation, maintenance, extensions, reconstruction, re-equipment, and improvement of said railways, holding the receivers appointed in each of the above-entitled causes harmless from any liability arising therefrom, and to do and perform all the things required of said railways company by said ordinance, including the making from the receipts of the demised property all the deposits and payments required by the provisions of the said ordinance, in consideration of which, among other things, said railways company shall be entitled to collect and receive the tolls and income of the demised property; and said Chicago Railways Company is hereby further empowered to transfer to the city or its licensee the lawful possession of said street railways and property as provided in said ordinance, together with all the rights and powers of the said Chicago Railways Company in or connected with said street railways in property in accordance with the provisions of the said ordinance in that behalf. And the receivers heretofore appointed in each of the above-entitled suits are hereby ordered to surrender and deliver to the Chicago Railways company immediately upon the execution of the said lease the possession of all of the said lines of street railway, plant and equipment embraced in the said lease, whereupon said company shall be vested with the lawful possession of all the lines of street railway operated by the receivers of the Chicago Union Traction Company, on February 1, 1907, with all the plant and equipment in use on or in connection with said lines at the time of said acceptance, with power and authority to comply with the provisions of said ordinance with respect to the operation, maintenance, extension, reconstruction, re-equipment, and...