Park v. New York, L.E. & W.R. Co.
| Decision Date | 26 September 1893 |
| Parties | PARK v. NEW YORK, L. E. & W. R. CO. |
| Court | U.S. District Court — Southern District of New York |
Chas E. Whitehead, for petitioner.
Jennings & Russell, for respondent
The defendant corporation, owning and operating an extensive system of connecting railroads, made a contract with the corporation petitioner in April, 1883, by which it leased from the petitioner its main line of railroad, extending from Salamanca, N. Y., to Dayton, Ohio, various branches of said road, and the leasehold estates of the petitioner in a number of roads operated as part of its system. Defendant entered into possession of the property under the lease, and for several years operated it, so far as appears, in accordance with all its terms and covenants. As rental or compensation for the use of the property, the defendant agreed and covenanted to pay 32 per cent. of its gross earnings. An increase of percentage was provided for under certain contingencies, the details of which are not material to the present discussion. It was further provided in the lease that a breach by the defendant of any of the covenants and agreements contained therein should be cause of forfeiture at the option of the petitioner; that, in the event of such forfeiture, petitioner might enter into possession of the property,--its rights to recover all rent in arrear not to be affected by such forfeiture; and that all damages sustained by petitioner by reason of such forfeiture should be recoverable against the defendant.
It appearing that the defendant was without money to pay its maturing indebtedness, or any immediate hope of raising it that its property was liable to seizure upon attachments and other process in a multiplicity of suits brought in many different courts, under circumstances which would lead to wasteful strife and contention as to the priorities of rival creditors, and would paralyze the operation of the road, and prevent it from continuing, until the final marshaling of its assets and adjustment of conflicting interests, to discharge its duties as a public carrier of passengers freight, and mails, thereby earning money which the interest of all creditors alike required it to do,--this court, on July 25, 1893, appointed receivers of the defendant. They promptly entered into possession of all the property it owned and held, including petitioner's roads. At the time the receivers thus entered into possession, the Erie Company was in arrears in payment of rent already due to the amount of more than $300,000, for the whole or part of which it had accepted drafts payable in the fall. Since the receivers entered into possession, they have paid the petitioner, for the use of the property, out of the assets of the receivership, $331,439.83, which is a little more than the net earnings of that property for the same period. This sum, however, is considerably less than the amount stipulated in the lease, which calls for the payment of $240,000 on August 15th, and $100,000 on the 1st days of August and September, respectively. The rental stipulated in the lease is largely in excess of the net earnings from the leased property, the affidavits showing that the Erie Company lost, in the operation of the roads of petitioner under the lease, $425,888.39 for the fiscal year ending September 30, 1892, and, for the first 10 months of the present fiscal year, $275,681.06.
Upon this state of facts, and upon a verified petition and supplemental petition showing the essential importance to petitioner of prompt and full payment of the sums stipulated by the lease, to enable it to discharge its own obligations to its bondholders, and to the subordinate roads of its system which itself leases, the New York, Pennsylvania & Ohio Railroad prays:
'That the court would declare and order that the receivers perform all the obligations of the said lease; that the covenants and provisions of the said lease, during the time...
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