Kennedy v. St. Paul & P. R., 14 F. Cas. 321

Kennedy v. St. Paul & P. R.

14 F. Cas. 321 | U.S. Circuit Court for the District of Minnesota | 1873

DILLON, Circuit Judge.

I am of opinion, ■upon the facts shown by the pleadings, exhibits, and affidavits, that the plaintiffs are entitled to a receiver as respects the St Paul & Pacific Company, but not as respects the other defendants. The application has been earnestly pressed as against the First Division Company on the ground of the diversion of the loan for the benefit of that company. But it appears that the road of this company is mortgaged probably to its full value to bous. fide holders of bonds who had no notice of the equity set up by the plaintiffs. The contingency of the plaintiffs establishing- an equitable lien upon the road of the First Division Company, as against its mortgage bondholders, is so improbable as to render it quite clear that the application for a receiver should, to this extent, be denied. But as against the St. Paul Company, it is manifest that unless a receiver is appointed no further work will be done upon the extension lines, and that the land grant, which is the only security of any considerable value which the plaintiffs and other bondholders have for their large advances, will lapse ' and be wholly lost. In order to save this land grant the road must be completed by December 3, ensuing; and it seems to me that the exigencies of the case are such as, under the circumstances, to warrant the court, upon the application of the parties chiefly interested, to appoint a receiver and to clothe him with the powers desired.

An order may be drawn up accordingly. Receiver appointed.

“And the said receiver is hereby authorized and directed forthwith to take possession of all and singular the aforesaid property, and to proceed without delay to construct and complete the unconstructed portions of said railroads. and to put those portions thereof already constructed, or partly constructed, in good order to be operated as a railroad, and tó do the same, if practicable, by or before the 3d day of December next. “And he is further authorized and directed to do and perform all acts and things necessary to be done and performed to vest and secure in said railroad company the title to all lands granted or intended to be granted by any acts of congress or of the legislature of the state of Minnesota to the said railroad company. And for such purpose the said receiver is hereby authorized and directed to borrow, on the terms as to time of payment and rates of interest set forth in the following form of debenture, a sum of money not exceeding 55.000,000 as shall be necessary' to complete and equip said railroads, so as to secure said lands as herein directed, and to issue to the person or persons advancing said sum or sums of money his debentures or certificates. with coupons or interest warrants attached. signed by him, expressing the amounts so advanced, and the terms upon which the same shall be advanced, which debentures or certificates shall be in the form following:— “ -. St. Paul, Minnesota, -, 1873. “ ‘Five years after date, unless sooner paid, for value received, 1 promise to pay to -, or his assigns, the sum of-dollars in gold, with interest thereon at the rate of ten per centum per annum, payable in gold semi-annually on the first days of July and January of each year at the city of New York. “ ‘This obligation is issued under and by virtue of certain provisions of an order of the circuit court of the United States for the district of Minnesota, dated on the-day of-, 1873, a copy of which is indorsed hereon, and is part of the loan thereby authorized to be made by me as receiver of the St. Paul & Pacific Railroad Company, amounting, in all, to the sum of 85,000,000. “ ‘The said loan, or so much thereof as may be required to complete the construction of the St. Paul & Pacific Railroad, and shall be borrowed by me for that purpose under the authority aforesaid, is made and constituted, as provided in the order of the court, a first lien upon all the property of every nature and description of the said railroad company; and the earnings of said railroad, after deducting the operating expenses and the expenses of the receivership, are pledged for the payment of the principal and interest of this obligation, according to the tenor thereof. “ ‘Failure to pay interest for six months will make principal due at option of holder. “ ‘-, Receiver.’ “(Interest coupons annexed.) “Until further order of the court, said debentures shall not be sold for less than par in the currency of the United States, and before any shall be sold the receiver must be satisfied that he can sell or place sufficient thereof to complete and equip the said road or some one or more of the uneonstrueted intervals in the line thereof. “And it is hereby further ordered, adjudged, and decreed that such debentures or certificates shall be, and they are hereby, adjudged to be a lien for the principal and interest thereof, upon all the lands, premises, and property herein-before mentioned, prior to all other liens or claims thereon whatsoever. And the defendant, the St. Paul & Pacific Railroad Company, is hereby ordered, adjudged, and decreed to pay the principal and the interest mentioned in such debentures or certificates at the times and according to the terms thereof, and in case of failure of said company to pay the interest or principal of such debentures or certificates according to the terms thereof, any holder, or any number of holders, of such debentures or certificates may institute and prosecute a suit in his or their name or names on behalf of himself or themselves, and all others, the holders of said debentures or certificates, to enforce the lien and compel payment thereof. “And the said receiver is authorized to purchase all necessary material, to employ all necessary agents and servants, and to make all contracts necessary for the purposes aforesaid. And the defendants, and each of them-, having in their, his, or its possession, or under their, his, or its control any of the property herein-before mentioned, are hereby ordered forthwith, upon the demand of said receiver, to deliver the same into the possession of said receiver. And the said defendants, and each of them, and their, his, or its officers, agents, attorneys, and servants, are hereby strictly enjoined and commanded absolutely to refrain from interfering with the said lands, premises, and property, or any part thereof, and from in any manner interfering with the said receiver in the performance, by him. of the acts which he is hereby directed to perform. This injunction shall' not be construed to prohibit the officers of the St. Paul & Pacific Railroad Company from taking any steps necessary to secure to said company titles to lands granted to it. nor to prevent the Northern Pacific Railroad Company asserting before the departments at Washington, or in any court, its right to any 'lands granted to it. “And it is further ordered that said receiver, before entering upon the duties of his office, take and file -with the clerk an oath to faithfully perform the duties thereof, and also file with the clerk a bond, with two or more sureties, to be approved by the judge of the district court of the United States for the district of Minnesota, in the sum of one hundred thousand dollars ($100.000). conditioned for the faithful performance of such duties. “That said receiver deposit all moneys coming into his hands in the registry of the court at St. Paul, and said money shall be paid out under the rules of the court. That said receiver, after assuming the duties of his office, make and file with the clerk on the first day of each month a full statement of the business of his office during the preceding month. The main object of this order is to ensure the completion of the said roads by the 3d day of December next, and the receiver is instructed so to act, under the limitations aforesaid, as to see that this object shall be accomplished, and to proceed at once and with expedition. “All contracts for construction, or purchase of iron, to be approved by the court, or by one of the judges thereof. It is the intention of the foregoing order, that if the said $5.000.000, or so much thereof as may be required fully to complete said extension lines, shall be furnished to or borrowed by the receiver to give to the holders of the said receiver's debentures a first lien upon the said road, road-bed, franchises, and lands, and each and every part thereof, and the income and earnings of the said road, as specified in the above order. If, however, the receiver shall borrow upon the said debentures herein authorized, money sufficient to complete only some one or more of the uneon-strueted intervals in the line of said road, it is the intention of said order to give to the holders of the said debentures a first lien, upon the road and road-bed so completed, and the franchises of the company pertaining thereto, and all the lands to which the said company may be entitled or may acquire by virtue of the completion of the said part or parts of said road. “And if any of the money so borrowed by the said receiver on the said debentures shall be used for finishing or putting in order any part of said road now ironed, the same to the extent thus used shall be a first lien on the part or parts of said road upon which it is used. All other matters are continued until the first Monday in September next. “Given under my hand August 1. 1S73. ' “.Tohn F. Dillon. Circuit Judge.” On the first day of September, upon a further hearing, the foregoing order was modified as follows: “The original order, appointing Jesse P. Far-iey receiver herein, having been made on the first day of August. 1S73. and dated of that date, and the matters continued in and by said order coming on again before me at my chambers at Davenport. Iowa, on the first day of September, A. D. 1S73. and having heard Geo. Jj. Otis, of counsel for said complainant, and Horace Bigelow, Esq. of counsel for the First Division of the St. Paul & Pacific Railroad Company, George L. Becker, and others, defendants herein; and, on motion of Mr. Otis, of complainant’s counsel, it is hereby further ordered. that the aforesaid order appointing a receiver herein, as. aforesaid, be. and the same is hereby, modified as follows, viz:— “1st. Until further order of the court, said debentures shall not be sold for less than par in the currency of the United States, and before any shall be sold the receiver must be satisfied that he can sell or place sufficient thereof to complete and equip the said road, or some one or more of the unconstructed intervals in the line thereof, or such portions of one or more of such unconstructed intervals as he may deem practicable. “2d. In case the whole interval between a point at or near Melrose and a point about twelve miles south of Glyndon shall be so constructed and equipped, and the portion of the road belonging to said St. Vincent extension, which is now ironed, shall be completed by the 3d day of December. 1873, then the expense of so constructing, completing, and equipping the same shall be a first lien upon the line of the said St. Vincent extension, its road, lands, land grants, franchises, and property, from St. Cdoud to the end of the present construction at a point about ninety-two miles north of Glyndon. “3d. In case the whole of the Brainerd extension, so-called, to-wit: the line between Watab and Brainerd. shall be so constructed and equipped by the 3d day of December. 1873, then the expense of so constructing and equipping the same shall be a first lien upon the whole of said extension line, its road, land, land grants, franchises, and property. “4th. All the expense of completing and equipping the portions of said extension lines already ironed, except in the case provided for in subdivision two, shall be a first lien upon the portions so completed and equipped. “5th. The expense of all construction of any portion of said lines, or either of them, other than construction upon some interval to be fully completed, as aforesaid, shall be a first lien upon that portion of the road so constructed, and upon all the land, land grants, franchises, and property of such constructed portion or portions. “6th. The bond of said receiver may be approved by either the judge of the said district court or by the judge of this court. “7th. All further and other matters are continued until the first Monday of October next. “John F. Dillon. Circuit Judge. “Dated September 1, 1873.” [See Case No. 7,707.]