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REPORTED fEOM NOTES TAKEH 15 COtJW BT RICHARD SNELLING, BTrDEST-AT-LAW. TORONTO : ROWSELL t ELLIS. PRINTEBS, KINO STREET. 1861. idM«MiHfc- 5-i^i i-i w PREFACE. HERRICK .. THE GRAND TRUNK RAILWAY CO . It is not pretended that the report of the arguments on the hearing of this cause is a fuU report: it has not been n,ade from short hand notes. No short hand reporter was present • but, as I have been actively engaged in the interest of the Preference Bondholders of the Grand Trunk Railway Company of Canada, ever since they asserted their rights, and have also been acting for Mr. Morrison and others, in th. enforcing of those rights, I felt that the preference Bondholders would at least feel an interest in the perusal ot a report (however meagre) of the arguments in, and the judgments pronounced upon, a case which so materially affected the great issues now at stake between the Preference Bondholders on the one hand, and the Company, the Judg- ment Creditors of the company and the other classes inter- ested on the other ; hence the following pages. RICHARD SNELLING. Toronto, 19th June, 1861. til 11! i <l>^' I •4- :-1 i t I TORONTO, C. W.,. MONDAY, ITth tune, 1861. m turunt HEKBICK ... THE GRAND TRUNK RAILWAY CO. ThU caose came on for hearing on Bill and Answer, before J onoraUeMr. Vice-Chanocnor E.T.K and Ao ilonor- J'fowl t lar Jar i" 0.e cLd TrunU RaiW and Jl otnei tne , „ „,j JefcnJants horemafter Company of ''»*;;^\2uer».) against Ae Grand Trunk named who are »"Y'3" _i'i,;il„„„raMe .lohn Ross, T'l ^°Si«kti rtnno TaeluS Thoma, E. Camp- rriV Zorabl -Tame^ Fcrrier, The Honorable Geo. Swlrd, Ja- Beatty, Thomas Gibbs R,dou.. Wdham r, T 1,1 The Honorable John HiUyard Cameron. XlnLM^. C, and Mr. A,a^ (/,«*., appeared "^rll^ltt.'^lw and Mr. M.n BeU (of Belle- vilta) apP-red for .he Company and the Director, an Mr Ts Stron„ and Mr. Hdward Blake appeared for Mr. cJ^J^Ao was made a party defendant, as be.ng a pre- ferenr- bondholder of the Company. , . , ,, , Te^laintiff, Mr. Hcrrick, is a shareholder m the brand IWk Raibva; Company of Canada, and claimed to be Sedl al/thepoLs -d privilege, ot"^ a .h^^^^^^^ having f^^.^r. shares in the undertaking, and th« «^J^J^/^ th-s sSit is best evidenced by referring to the prayer of his bill, which is as follows : , , , .u- w^r. let That it may bo declared by this Hon- orable Court, that under the circumstances here nbefore mentioned, the weekly and other eSgs of the said road should be applied Ster the payment of the ordinary and current Expenses of managing, maintaining and work- STe said Roadrin^and towards the purchase an^d accjuisition of such rolling stock, plant. r 6 stores, and other 1??^ - ^^ T.^. ciuisitc for the ^^J''. '^Xtowards the pay- aVid Railway, and in f^^ J . ^^^bt of the „,ent and di«<=barge of the «o^^ ^^j ^.f^re said Company, in Fcfe^7^^^, preferential any payment m rtspec ^^^^^^^^ .onds _-f-7\t fuSd debt of the said any P'' „nd accounts taken. ^^^^i, f^i.. ,J.^.\. length on the prov ■». of « ^^^^ ^__^^__^^^ „_^ »*" '' ." ^: r/. ix ■ w^»^ ^^f^'" "" '"T .f* iM.Jta ..«. ««*" !:;tZara«eeActofW49) ,-„„rtW referre to --f f^' * ^ largely referred to m Mr. GALT «'''7\'fXi„., „ the Graud Trunk, and .11 the subsequent act relat n ^„„,y,„d in refer- ,,g„cd that it «->- 'T^X ;:po,> the court that par- eaco to the plamt.ft s «'."'='"; .^ ri,ions. Referrmg .ieular attention AouUl be f^T^^^^^ , „t the interest to the 1st section, he argued bat the P y ^^^ ^^^ guaranteed b, the Provmoe should b ^^^^^^ ^^^^ ae tolls and profits of the C™?''"'' ^^^ ^„,ui„„, of this „s laid upon the ««— ^j^^^t Jst on sums guaranteed act, the fund out of ** *;f,;;, ,„d profits" of the «s to be paid, i<as out of the ^^ ^^^ „ j,,„. Company, and to =«""*!'' XJgKrmsotthis section, perty" of the Company in the follomng te -r-- g )n S3 lis ed ;be ro- on. I J i * uThat the Province shall have the first hypothec, rnort^agc. and lien, upon the road tolls and property of the Company. Jor an, sum paid or guaranteed by the Provmce. An argument was also raised upor. the prov.s.ons enacted hv section 2 of this act : That the Government provided for itl f a security by re-iuiring that railway companies recen- T^S7^rLl should render half-yearly accounts to the Inspector General, attested on oath. Mr GVLT then referred to the 14 & lo Vie, ch. .o, (18ol,) .An Act to. nakc provision for the --'''f /^ " ;' '^2 Trunk line of Railwaj,, throughout the rvhoh' la,.,th,.f the Prnvince " Bv this Statute the Provincial guarantee was :r:s-to,w«./;.^ '^^ ^^ r ^t a;r;5'v;:r : .nW and the 2-2nd section of this act (14 .^ lo Vic.) was rjliei, reterrcl to an,l rc.le,. upon, h U ^ fo,.o„s : XXII And be it enacted, That the said .ruarantee may, as regards those Companies ?;hose Railways will form part ot the said Main Trunk Line, and upon such conditions as the Governor in Council shall think ht. be extended to the payment of the principal of the sura guaranteed as well as to the pay- ment of the interest thereon, provided the bonds guaranteed are made payable at peri- ods previously approved by the Governor m Council, or in his discretion Provincial deben- tures for the amount to be guaranteed, or any part thereof, may be delivered to the Company in exchange for their bonds for like sums, and the principal and interest whereof shall be made payable at like pe^ riods, or at such others as may be agreed upon ; and for the principal and interest of such bonds the Province shall have the same priority of hypothec, mortgage, and lien, upon the Railway tolls and property of the Company, as by the said Act is given for sums paid or guaranteed by the Province, and subject to the same provisions, and the said guarantee maybe given either at once tor ?he whole sum to bo raised by the Company, or from time to time, and by portions as the same shall be required for carrying on the m\ I p- i the rxovcrnor •" ^"^,'^,'; ,,uh the interests ot expcVicnt, ami co"^'^^^" ,„amtcnance of the the Province, and the luc ^.i^antages, puliic credit, to gr n the J^^.^^ ^^^ or any of tUcm to he ., he may, Huron llailroa.l V n o'^J^ to Companies vrhose ,jnder tiiis snction, grant i r^^^.^ ^^ ^, Railways form part -^J''^^-^^,,^ also that Line of K->^^^y.;„^on ^v^hich the benefit ol one of the c«J^* ^^1"' ""itcd to any Company this section «ba\l be gramc ^^^^^ ^^ shall be that no h^law^ ^^^^^^ ^^^^^^ ^^ imposing to"Hj^ ^JfSe or effect unt^l Comp--"^yv'^lVGovernor in Council; and approved by l^^J^l^^^ remain in force for that no such by-la^v «^^ ^^^ ,smg more than three y^^?^^' ^^y be subject "hereof, «« \^?'^\«^,t,S. by the^aid Gover- to the periodica rev son. y^ ^^^^^^^^^^ ^^^ nor in Council, ^^'J^^^^,, (^f any) of the ^:'eS effect to this proviso. , 1 that the only difference between this Mr. G..LT contended, that tn ^^^^_^^ ^^.arantee ja. and the former act -J ^^,fj interest, and that everything extended to principal as vre else remained the same. ^_^^ ^^^,,, the mortgage or HisHonorMr V-^;^: V fpndcd to the principal- , nuestion hen extenacu lu i ^^^^^^ ._^j^,i tiio oniy i Mr. GALT.-^esmy ord, o ^^^ ^^ ^^^, ,. other 'wto'^r'TS every ki.i.l "l"* r„f„rUrgoJny Railway. L 9 H -1 shouia like you to re ad the I 3 IS as ng ov ion les- the vord via- and ssels, vUich niak- Honor Mr. V. C. Estex. B i» Sl 20th sections. Mr Galt read those sections, ^vhieh are as follows : \I\ And he it nxacted that any Company tL:^^cr::oi:iml^d">^.-^'vid^ d.e same into sections of not less that fifty miles each and heing, as nearly .. the total W h of he Railway and other ..vcumstan- fa l AcVand of this Act -c complied ..th as regards any such section, the guarantee ot be Province may bo given lor the sum rc uuired to complete such section, ^^hlch sum sC not he applied to any other purpose and the Company shall keep and render Lpara accounts ^f receipt and eNpenditure f^each such section, and ;* -ny/^^J ;;. .,vnpnditurc he common to two or more sec i: r'hrsame shall he fairly apportioned among them in such accounts .o the batis faction of the said Board. XX And he it enacted, That the said gu^r^r;tef shall not he gWen f l-J W j« !nv Railway or Section untd the sa d Board sSu have r^eported to the Governor in Coun- il thattho land for the -Ijole Radway o S ction has been acciuired and paid for ; th^ a part of the work thereon ^\-^ .b;;.^. ^J^,. pleted to their satisfaction, and that the tan Ss^of the part so completed ^-^^-^-^^^ fair cost of the land and of all '^atenals then procured by and fh^ P^'^P^^f ^ ^J.,^. Comnanv (and not merely the sum the Com pan/maVhave actually 'expended upon he same) would not be less than the cost of the part rlmaining to be done, according to an Lt?mate made upon tenders received and B ■' H 1 ■ k 10 approved by tUeCorapn^-^^^^^^ B^ard as fair ami ea^J«; ; ^, g^ant- tbe guarantee of tl^ ^^ ^^ ^^ ^^,^ ed for the ^^VthT^ork according to suca remaining part of the jv ^^ ^^^ ^ ^y estimate ; and ^^^^^^^^ ,„a report to the of the said BoauUo 0^^^^^^^^ ^^^^ ^^ ^o ^ Governor all such m ^y to ensure the such things as may f?l''^^.^ X,.- and of this faithful f "ution of 1 e s^^^ ^^ ,^, Commis- Act, and any duty as gg ^^.^^ ^^^ i,aU sioners of ^uWic AVorks by ^^.^ ^^^^^_ hereafter be performed oy , . 18 Vic eh. T4, (1855,) "^n Mr Galt then referred to 1» > -j^ ^^^^^ y,,,„fc ^,^V ,.an.n. «^f ^^^^^ sections 2 . ^^ as Kaitoa^/ Company of Ganaa ^ ^o^^«^^ •• 11. The sums advanced as a I-an ^^\^^r this Act shall be a first «^^^^^^^^ of the lien, in favour of the ^ro>v ^^ ^^^^^\q 'Cvinoial C^vern-^^^^^^ amalgamated Grand ir ^^^^ ^,^^^ da, and upon ail ^he ^ - ^^^^ ^giong- pr^perty forming Pf^ J^^J, the said Com- ?„g or bereaf er to belo g^ ^^ ^^ ^^^. ^ ^ pany, and sball he pay ^^^ ^^^^g of Lceeding ^w^.^^,/' thereon at six per cent, this Act, tbc^^y^'f itvabie by the said Com- per annum bemg P^^^f ^^^j J province, half- pany to the ^[0^^?,''\ g the Governor m yeaJly, at such V'^^^f' Jed that nothing Council shall appoint, Irovide^ j^dice the Tn tbis section co^^^-ed sh^ ^^^ ^, security of tbe ^^^^^Lnd Company upon the British Am^^^ccm ; ^^^^^^.^ ,,,a the former St- l^awren ^^ i^nds sold or to any creditor for the p ^^^^^ ^ j, to the said Company, or o ^^ ^^ .^^^^^^ ^^^ Company having a pnvuefe preffcvetce and privilege, I mi -*. m e .1" u a, Id ik de m tne iCCt 1 11 *n the same incidents as to redemption and otheAiso as the charge, hypothec, and hen m 7^^^ % ti.p Crown for claims arising out ot reP'onS^- ftip Provincial Guarantee under any formei Act or Aclsauthorising such Cxuarantee or advance. M r ALT contended that as the said charge, hypothec, and Mr. GALTcontena ^^^ ^^^^ preference Hen -/r^-^fJ^^Sr'subject to the .ame incidents as and privilege, ^-^^^^^^ ^^^^ ^ .^c charge, hypothec, and to redemption -^ «f J^^^;^ f,, ^,,^, arising out of the Provincial g^^J^^^f ' „ ^^^^ ^r.Galt, " what are profits ? p„rte.lm • j"'.;^,„;,,„ ompanyforraiU, stations anrt debts mcmr >1 by a ^nU y P J' ^^^^ ^^^^^ ^^^^ ^^^^ the like, and ** '^ * ';;^^„„a, f„™ . first charge upon roS::e:r.':?^^^^^^^^^^^ they liave a preference. i{,»,«i/, The judgment as rcnJcred m t » .mt by ^^^ M. B.,™as =»»-"™,"Vr,ad "Tbls suit is instituted learned Master of the II* sat. T ^^ ^^ ,y„„,pan,, to determine v,hat constitutes toe p .^^ ._^ and how they ought '» »-;.;£tenr ontenipiated by its STXrUi^I^beeii p'assod enabling the co.pany^o oh- .J more money by ^^^^X^^^ "•''*' ">= The first question B ^l';'"™;''''""/^^, ,hat debts out ot defendants arc ""';"»'' '"J ^""Vm"' the shareholders. I Gia h^fcro thcv divide tnem .iniuuj, mv the profits ^ ^^ y y ^f ^,^, ,,,„p,,y are first payable, It is clear that all tlie ueois r r,,„,ied d'^bts. for :^rrre;:Srra,^:;rrey by mortgage, ' i^ ii I 12 . 1 • i.i,«:r Arts for the purpose of under the P0«» -%'^^i;:,*r „t can»OW. such . deM completing the,r l.ne Th 'W ^^^^^^ ^^^ ^^^g,, « that it can be pa>d off on of the P ^^^^^ ^^.^^^ ^^,^ are divided. But on '!« "*«%;,„ L .Hrectors or .he been incurred, and »'""'""- for rails for completing company, either to .team ^^ne , ^^^^ ^^^^_^ ^^.^^ nations, or the f''';"„;"iod the necessary fund., these time, had the defendants POS-CS ^^^^^^, ^^^^^. „e,o many deduct,ons from the proh ^^^^ ^^^^ .^ tained till the »holc are paul. ^^^. j,^^„ „,. ,,g„ment as to the propnety "f *«; ' ;„ ,„, ,^,. It is cJred. With that I l';-' ""'^"^ .Vtrustees of the rail- „ot instituted to ma cO-c-^;*_^ trust for the iue „ay company, ImMi! <■" '"""' ^ j„„fl,led to them, piormaneeand ««""-; .t^^t^hich would be al- rbr::tsr^--"^^ i„ payment of the ■'-^^^f^^fZZ you contend that this His Honor Mr V. C- EsIl^• ^ ,„j jo :':r::^^t;irt'r:oSgtheroad,Ldfor.ho „„r contention k«tev.-A bond to complete the .i'rt^::l"--itW«— tointhis^ud. -jL^..._Ho';P.se:otmy.^^^^ lordship to section 3, of the ac oi , .^^ ^^ 111, and particularly, my I'^rJ, to .0 Vic., thich Jill t^ow read to your lordships .- IV On condition and provided that the said Company by. means of t e Mcrer|^^a 18 for such purposes, complete their Railway frnmXiere-du-Loup to St.atford, and thence A? t;.; Brid-e and the other works, under- Victona ^"^°'' „g^ent3 mentioned in the ::STct" ? S -T supply the said RaU- tt\th sufficient plant, rollmg stock and way vith sumcier p efficiently, vvithni Stsr;-:::;e:liedinthcsaidActot- 185G or within such extension thereof as i. ierei'nafter stated, and so long as tuey mam- S and work the same regularly, the Pro- roe foegoes all interest on its claim • f i^Kn rmrnanv until the earnings and :foTtf f tlt.To-^any, including those of fl Atlantic and St 'La.rencc Railroad Coin- Znv shall be sufficient to defray the follow- pany,bnauu a u exnenscs of managing, cksive of those held by the Province :-3 A t dend of six per cent, on the paid up sW capital of the Company, in each year in ^vlnch the u plus earnings shall admit of the same: tnd then in each year in which there shall be a surplus over the above-named charge, such surplus shall be applied to the payment of the interest on the Province Loan ace u ng Z such year : The bonds and share capita herein mentioned shall be held to include and cons St of all loans and paid up capital ^vlllch the Com- any have raised or may hereafter rlcb^'^ujid^ under the authority o any Act of the Provincial Legislature passed or to be passed, for any purpose authorized by any such Act. Y„„r l«r«ip» will rem.uk, continued M (Jalt, that the Pro "ine foresee, »11 interest on it» elaltn ng«.n»t tl,e eon,- ,„fi the "ennin-s »n,l profits" of the cotnpany shall Tsuffie 1 . .i::^t;r„tl,inp-, a„M- f -Pe-e, o maw* g, working, and maintaining the works and plant ot the company are to be paid. _^ 14 V r F.TEN.^A^^ expenses must be HiB Honor ^l^-\-f;.fJe" Government postponed Its previously deducte.^ ';^ZTnn^ess the Government -de Uen • it seems to imply ^1^^^ ^^^^.^^ ^^^.^est, but ' ;m, thev wero entitled understand tL. c/aU, -«* «t:t ,e. „,c .e.er your .o,*Mp. « Mr. Galt.— iiit' 11 J ^^ _ 22 Vic, ch. 53, sees. - • .^^^^^^^ ^^ the Grand 'r^^^^^^^p S Stock of the s^iid da, to increase tbe C. p^al ^^^^^^.^^^ .^ Company, by svich sum J^^ ^^^ Thousand Turn 'of ^Tv-o H"- ^;t;^^equisite for con- Pounds storlvng, •V'^-^y ^^ ^^.^^^, i.ereby au- structing the ^^'f^^^^„ them to carry this thorised, or for e"^?^^^^^^ increase may be Aet into cftect ; am ^«c^ f„, ew stock made eithr • ^y ^»^P ,f the Company, by the then Shareholders .^,,g, or in o^v the admiBsion of no v^ ,^^^.^.^„,,i both^vays; an>Uhe»l^r ^ ^^^^^^, Stock shall be ;;^f .;\;'stock of the said the shares of the ^^'';^.^^^^, of the Act Company, and al 1\« P^^^.^y shall app^ incorporating the said v. j ^. ^^^ ^^^^^,,. lo such a<^f ^«f ^^^ f^t'tbereof, in so far a. bers therefor or boUierh express mt T^ot be ;"-Xeror" «h^^^ ^^ .'r'''' provisions ^^^^^^^^V to raise the said sum for the said I>»^^^ ^/^^.of the Capital Stock partly by such '^'''ll,',,.M, and partly by r,f the Company as atore , ^^^.^tures L and for that purpose to ^^^^ Tthe said ^'^''C^co^oZ^n^^ the said visions of Vh«/;i;as to the Bebe^tures Company sh^^\ ''^PYboritV thereof: And it •„sued under f- aujo^ y^^^^^ ^^ ,ther ,ball be lawful tor the u ^^^^^^^^^ ^b- Railway Company, on b; ^^^^^ .aditional .cribe for and ^JoW f \^f (.^^.^ Trunk RaU- I f \ ^ 1 15 named Company, appointing one Buch peraou ?o?evevy hundred shares held by such other Oomoanv and one for any broken number f Tw i'so held less than a hundred ; and it i ? ko be laXl for the Directors of such t^rt::::io lend -p -;^t tt Trunk Railway <^ ^"^P'^^y /f, ^^ -^'i' ^1 or interest m « A^tiwRuch last-mentioneu S:tnf anaTorJKt, Branch 1U»- for conveniently connocHng *'. ,''.'".7''? °. inch other Com'pany ^''^ tne sa.-l bridge, e f enabling .fb o.ber Company Mj'^ „;i \t^o\f of the provisions ot tins aci, ^lu^ ttrasele'ca'pital Stock of -eh other Oomnanv by such sum as may be necessary to Say ti cost of any such >v'ork or to payany^sumvhich shall become payable b such Company under the provisions of thi. \c and such increase may be made either hv Subscription for new Stock by the then Shareholders of such Company, or by admis- fon of new subscribers, or in both ways, or i shall be lawful for the Directors of such Comp nv .0 raise such sum partly by su^^ addition;..! Stock and partly by loan, and fm that purpose to issue Debentures of such romp^ny • and to all such Branch Railways SthJrUrks to be constructed undei- this Secuon by any Company othei tluin^ tl c Grand Trunk Railway Coinpany of Canad ^nA to all shares of the additional Stock of 'ueli Company authorized by tins Section, Tnd to theLliribers for and holders thereo and to all Debentures to be issued hy suJ. Companv, and other the things to be done by or ™n behalf of the said Company under this Section, the provisions of the Act nicorpon. ting such Company, as amended by any subsequent Act, shall apply m so far as thev may not be inconsistent with this Act. V The Guarantee of this Province shall not be extended to any Loan or Debenture to ~\\ I- 1 \r r 16 • inmler the authority of this be raisea or issue. J^^ ^ ^^-^^^ or any Act or in respect «J'^^ ^^-^^ ^ct ; and work to be constructea ^^^.^ ^^ ^^^ neither the pnr. ege . n p ^^^.^^^ ^^ ^^ ^lajesty on behalf o t ^^^^^ ^ ^^ of -ihe Guarantee o tb^ 1 ^^ ^^^^^ to be .^ranted to he ^ ^^^^^ ^^^^^ y Company of panada, or ^ ^^^^^ ^^ mort- Company, or any Scn«[? J^jVprunk Railway .ac-e^iven by the f ^'^^^^^^^ ^ther Railway CoVa^y «f ^.'^""'^r; SssTn^- of this Act, Company, ^efore the passm ^^ ^^ .ball extend \« f^^^^ under°the authority ^vork constructed so ely ^^^^ ofits to be of this Act, or to the toi ^„^ ^he acrived therefrom, but tne .^ ^^ shares held by '^^j/ ^^structbg the said ^^^f '' :;^" ^bf s^^-ately hypothecated bridge, may >o l" ^ ^be claim of Her mortgaged or pledged, an ^^^ Maiesty on ^^half ot th s ^ ^^ ^fore- Ji general ^^JP^f ^ .^y " jf^af hypothec said, shall rank after any F ^y^^ ,^,a mortgage or pledge t^ be g ^^^. bridge or jork o. an^ borrowed for the Sr --u^Vf -^ ^"'^^ C/Sch work as aforesaid. Mr.O..-I^eferyonrl.d^wi^^«---^ sections. The Conjpany -y -^^l J ^^^ ,,, transferred please-,. I -"^-^^^'^Xw^ers, and all the Province uny right to the preference b nd ^^^^^^^^ .^ .^^^ ^^^ ,_ bal done in the matter of p.ej^a ^^^^ . ^ ^^^ ^,,^„ ,, ^ The Province has ^-^'I'-T ;;^'^^^,u have it." But, my ords vou, preference ^«"^^;^f; ' '^.^ to which I have referred ;hen reference is made < ^ 1^ f^ opriationof the earnings ,our lordships as to tj-- J^ J ,,,ae by the Legisla- •__^vhen regard is had to h d ^^,^^^^^^ by those de- ,,e-I say it was ^^^T^^^^,^,, and maintaining 1 I i n? 17 come, and have left no fund whatever for the payment of creditors. I refer your Lordships to the case of Rits-ell v. The East Anglian Railway Company, reported in Rail- way Cases, 541. Mr. Galt proceeded to comment there- upon. His Honor Mr V. C. Spragge— Mr. Gait, do youundei- stand that floating debt means every unsecured debt ? Mr, Galt — Yes, my lord : I presume it is so. His Honor Mr. V. C. Esten— Mr. Galt, as I understand your argument, there are three classes of debt which you contend should be paid before the interest is paid on the pre- ference bonds. 1st. The debts for constructing the line, which were in- curred before the act authorising the issue of the preference bonds had passed. 2nd. The expenses of managing, working, and maintain- ing, in arrear, and also incurred before the said act had passed: and .3rd. Similar debts incurred, and to be incurred, since the said act has passed. Mr. Galt— That is our contention, my lord. His Honor Mr. V. C. Spragge— What are the costs of construction ? when the rails arc down ? or when the road com- mences running 't Mr. Galt— I cannot say my lord what may be said to be the costs of construction ; nor does it much matter, as the ^ debts for construction arc almost all poid. I suppose if a bridge break down, the company would be bound to repair it, and the costs for doing so would be a proper charge to be paid as expenses of managing, working, and maintaining. His Honor Mr. V. C. Esten.— I really don't know what the legislature may have meant to say— I do know what it has said. Mr. Adam Crooks next addressed the court on the part of the plaintiff, and called the attention of their lordships par- ticularly to the frame of the suit. He referred to 23 Beavan, •212, .^-Drewry's Equity Pleader 57, and contended that the bill was properly framed, and that the plaintiff ^^M't a share- holder, had a right to the relief sought by the bill. 'Mv. c r f^ I m 18 the atlention ot tneir .^^^Jcvs r.glits >Nert i rr.nd Trunk preference bonan ^^^ ^iguc f.Venonthe "profits ^^ ,'e^erence bondholders ture of a Len o between pre.erti ^ .Knt there was no dificrente railway mortgage > 1 reference shareholders. That . . ^^^ ^^^ ^^g^.^ videdfor thcp^y :.„,s intended bonds. ,, c ESTEK.-I suppo^^c it vr. 1T\3 H'^nor Mr. N • ^' ^ . and clear of dcDt, au ^ r.. V should start tree . trouble would His Honour V.€... ..feyour ,T ^d he appeared for the dircc earnings ot He ^-^^^! f/,„,idered vere ^inau ^^^^'^^^^^^.^i^g, strictly in ^"^^'"? and hey desired to dispense thosean ^^^^^^^^ rt-HhL - oa;a— ^^^ relief .hen tvere entitled to come to ^^^'l ^^^ing trustees for the • ^'"'''"fJect starting point, and ..encc ^^ ^^^ i 19 holder \3 to the prefcrcnco bondholder who is a party r McDonald conter^dcd that the docroo to be pronounced . th . suit .ould certainly bind hi.. If the <locree should he that the defendant Cameron is to ho paid, then he (Mi. rameron) ^vould, no doubt, be strenuous iu his contcntjon to ™or U a decree ; but if on the other han.^ the deevee hould be that the debts of the company must be first paid, then without doubt, Mr. Cameron ^v.ll bo bound. His lienor Mr. V. C. Esr...-Mr. Cameron .a holder ;::r;:^1;^:^Hch those resident in England may ^'"\S^D^A--I think not, my Lord, if the principle of r presentation is applicable, the other part.es resukn n Ensland must be bound by any decree ma<le against Mr. ^'nilllonor Mr. V. C. EsTEN.-This court will not make •i decree which can be upset next week. rMcDoNALD-The company, and its Directors, des.re that [he decision to be pronounced in this smt shouhl be final Mr. McDoNALD then referred to the act of 18o* , -0 Vic ■ ch. 11, and reading section 4, he contended that the true construction of that section was that all the earnmgs of the company should go to pay debts \n the first instance. Ill Honor Mr! V. C. EsTEX.-As I have before observed, Mr McDonald, the Legislature supposed, and we may take it 'intended, that the road started clear of all debt and. if this Tad been a fact, the construction of thi. act, 20 Vic ch. 11, sec. 4, is easy enough, and there being no sinking fund pro- vided, it seems to me as if the preference bonds were in fact nernetuul annuities. ^ Mr MrDoN ALD.-But again, my lords, I do not know taat 1 need trouble your lordships with further reference to those acts which have been so fre(iuently mentioned in the course Is argument. I think we get over all diffici: ty by refer- ing to an act which was passed lust session, and I beg your lordships to refer to the same. Mr. STRONO.-If that act is referred to, I must consider I ii so „be.b« I can rewin my h™?^ ^^^ .^^ .„,, it U not ,e. L referred to. . , , . ..ggion are printed, and are in court. >>e» ,o sav upon it. .,j„ . hear ^bat you have to^JJ "P a last session, ^ Mr. McDonald road f^^"^^^" J ,,aK«.8 CV.«oZt<iatton Act." The 8th section he leiie p ^^^ ^ ^''- VIII. The in^'^^tropertracquired or leased „v vent, of any re^l PJ^Pe^y l^^,g,,ry to the by any vai^^v-y ««^7;5Vailway ,„dthe price efccientAVorkingofsucar 3 ^operty ov „r purchase money ot anj y^^^ ^^^ ^^ „ftl.erail«y. ^ j„,,„„ovy act, H«H«ao.-Mr.V.C.EsTES.-I»thata and does it apply ? ^ ^^^„ i^ able to shew your Mr. McDoN*!-"--^ tWDK f lordships to the lortups that it does apply ; an I «ror , ^ ^ "t^i^g-" The case I have cited gives the defim- tion, and I contend -P'^^ ^^.^^^^^ meaning of the act. ^locomotive" is a thmg ^f^^'^r^^,, heing made to this Mr. GALT objected to -^ "^ ,,, ,ppiy, and he did statute. He considered tha^^^i^^ ^ not ..ish that ^^^^^^^^n^^^ Mr. McDonald <=7^f ^^^^^^^^^^ Directors in this hti- ence to the position of the^Comjan.^^.^^^ ^^ ^^ ^^^^.^^^,^ gation, and reviewed ^^^ P „,. ^y.^ case. rswespei?' 4 i- a lis id er- iti- ed, Lon, SI JOHK HILLYARD Camerox, vrho IS made a party defendant in irinterest of the preference bondholders. My learned Wend Mr B ake, is with .e in the «an,e interest. 1 need n recapitulate the various statutes -^-^'^ ^^^^^ ^^T JZ nuen ly in the course of this argument, brought before the rntio'u of your lordships. My learned fnend, Mr. Gal, :reZus cd all that I need say on the question of extr .cts from the statutes. To my mind, my lords the quesUon .s one of constructio.-tho construction ot ^ho oth sect on o T Zf '-y-^ Vi.' ch. 52. I take the practical -luestion toi ;tr rd;hl^''eonsideration to bo, whether the dU.ctors have a right to pay any debts othor than mere curnt cx- nrsesl^orking expenses. These, I submit, must be m . Td ;i^ and what are working expenses ? They are easdy ZscM. I understand working expenses to comprise t . to employees, wood and oil, necessary to work the hue Wsof rollingstock, and the maintainanceof thopovmanont :rAndhowcanitbeotherwise,theactsclearlyprovid^^ he Company are to pay their debts, and indicate the und to be employed for that purpose. The Company by hen lets have nower to raise capital by eontrilution and b^ loan Ld reading the acts by the light of an ordinary --er^a understanding, the interpretation is clea. Take the case ot a partnership, which I submit is a proper illustration bup- pose that the profits thereof are mortgaged, profits to le hereafter made, can the mortgagors, the P-tner., use the capital of the partnership for purposes foreign o their trade? Certainly not , the capital cannot be so used. And low refer to 20 Vic, ch. 11, sec. 4, and the torce of my illus- tration is apparent Mr Strong weat on to observe that the share capital was Um'ued but that there was no restriction to the loan capital; and the section last referred to, went to shew clearly, how the income of the Railway was to be applied, after deducting ^vorking expenses. Mr. Strong then ably illustrated the case of the preference bondaolders in the view of " convenience, and reviewed the case of Itussell v. East Anglian Railway, shewing in what manner that case was inapphcable. He also reviewed the case of Corry v. The Londonderry and Enms- J \ pointed out to the court that kitten Railway ^^''"'i^'','!''' .^"Ln of profits =i« ?'«««'<'^'* '^^^'■ fat case .as .s to ^^^^Z^!:. creditor. And here holder., ^vhile th.9 ca.c >^as as ^^^.^^^ ^, ,^,, ease of a again he rcferrca ^y -yj^;^ ^.,i,i,„ of profits between p!vtnership-av«u.ng t^'-^^ "^ ^^^^^ ,j ^or.^ -. Londonderry ^as sustainable, hut ur},m„ betvs-een f/u.« and tJas case. ^^^^.^^^ ^^.g^,,„,„t tha Mr. STRONG also urged, in a ..y ^^^^^^^^ ,^,, Act ol th Act of 1858 (22 V^<;^ ^h -0 J^ ^^ ^^,,3 ,, .ere 1857, (20 Vic, ch. ^]^_X';^,,, of application of carn^ not any condmons l^^U ^ ^^.^^ ^^^.^^r, and that ,ng. after payment of ^vo k"i ^^^^^ ^^ ^ ,„ent ol the fir«t payment thereafter ^vas ^^.^ ^^ct gave fjerest to the Pve^eren. on^^^^^^^^^^^ ^^^^^^^^^^^ ^^^, ,,^, ,,e ,hem a title even as agam t J^ .^^ ^^^^^^_ lien of the Province absolute l^c ^^ ^^.^ ^^^,^ ,„d as to deiendants uy i^t- ^«'''^"^^' '^- ELAKE followed on the part of Mr. CaM- Mr. Edwaud Blakl 1 bondholders. ERON in the interest of he piete ^^ ^^^^ ^.^.^^.^^ ";l B.AK. P--^t"b n hi Vrs o^^ both, extending to or that of the Ff J^"J! cTmpa,v, u.. ^'xecution creditors everything owned by the Compar. , ^ .^^^^^^^^ ^^ ^^^.^^ parties, ana u\^^ not arise in fact. practicably a first lien, The lien of the ^ondhold s va p ^^ ^^^^^^ ^^ ^^^ not on the profit., but - j ^ ^•,:;^ ...^led independently of the Act 01 iooo) I" ■ • 1 payu,ent ot interest o'J™='Ptu,ature «•.=, that the Co,n- •' ihc cfeav "'«"»»» tnteJ^P 'he ro.l by means ot the ,.„y Aould consuuct '»* ?1 Jj„ t,,e various acts, and Aere «s no i"'™'- ^ ^L.^eLn, except l,y n,e.ns of to contrpctors or otners these borrowing powers. 23 n 1 1 ..tur'a fnntcntion would be to give The r«ul. of the P -»'*„; "^ ,,,,„, of securities by ..he Company power to l«lp»ne ^^^ ^^^^ ^^^ ,„„,-,fest .h.t -''- ; ;» :;;X;t:We to the expense, all the earnings except vh.it ^^erc hi of xnanugomeut and ^^^^^'^^^ ,,,,,,,, ercditors and This va. really . -^^ ; ^^^^ ^^^,, ^^cessary parties to the bondholders, and the former v ^^^_^^^^ the litigation, as A^ere also the -'^^^ ''^'^ ^^^^j f,,,i to If the act of last ^^-^^^^^^^^^^J the pre- sent execution creditors, aMuc ii nu ■„g ,„ »as in favor <•' *« >;»;; '^^^^^^^^^^^^ ,,,i„uff hetag a ho^iii^ u. .a th. .; p;/;— rr :: «. '; ra"" ;=.e:To tt t:.lt the r,aV.Uie, .- lordships to refer to IJnle, on Partnership, pp. 4iJ, .T., ''L. Tkomas GALXrose to reply, but i--^^' ^ \°^^ Mr STUO.G and Mr. Blake had not referred to .he Rail.a> Clauses Consolidation Amendment Act The CouuT stated tl.nt they ^^-"^•\ '^^^,;' ^ J// .j.ed Stronu's and Mr. Blaki^-. views upon the 8th clause, '^^'rs:rtia,.hat he consiaetea the Act a,e„e,.a. 1.7 that the Act »as piospcctive, alKl M n-t a^plj 7„!rDroperty-and as to the interpretation to be given ^Zt:7Z,,r .be »oras of the act tvere, " real pro- ..,J m f'1 ti' : I :;;t;! s [\ 24 well as '-property, ana tne or real thing-" ^^Knvatin'^ this opinion. Mr. B...B follow , --~ „,a L did not vely Mr. Galt conunucd 1 rep 5,^^ ^^ ^r. McDonald, aud at all upon the stat^it passed last session. __^ ^^^ ^^^ ^hink that statute His Honor Mr. V- ^•/''V; J .T^Donald seeks to give it. ,iU bear the intevp^;otaUon Mx^^ ^ __^j^^^ ^^^ .^ , g.^.^al His Honor Mr. V. C' ^^'^^^^ ^runk Railway. .,et; it does not refer to tl. Gr -^^^^^ ,^.^^,^ ,j,.. g.^oK. Mr. GALT, «o"^^^"^^:'X^^^^^ ouite an easy thing for ,„d Mr. BLAKE may think that it w .^ ^^^ ^^^^ ^^^^^, the Company to ^--^^^raf money was required, and it sary to announce the f^^^tt he (^r- G^^') «°"^^ "''"'' Jd he at once P-^ ' t:, '^laken ; it was one thing them that they -<^l^^^^Jl, .mother to get the money to have the P«--;- «^^^ ;X' arguments of Mr. Strong and Mr. GALT said t^;;^J^;;f ,,,eeded, four millions stev- Legislature never intend^^^^^^^^^^ ^^^ ^^^^ ,, i , a 1,ecn presented, ^^f .^^ [;7;;^ ,, ,,^ainfor about a quarter gentlemen ^-^^f^^'^^ ^.^g.t the court could then give of an hour, and that tuey ^ judgment. * .^^^^.g^ ^nd return- Theiv Lordships fetn d - htto ^^^ .^^^^^^^_ log into court. His Honor Mr. V.^. JUDGMENT. ^r V C E-TEN said, after the best con- His Honor Mr. V. C E^te ,, ^^ ^^ ^^^ ^^ .ideration .e have been dd in so ^ ^^^^^ ^^^^ ^^..^^.^ ., tbis case, we have come ^o^^;^^^^^ ^^ ^^ ,^^,, the situation *i I 25 „V,cU gave tU ^^'Z^^VZ^X^^^^ est-li) i. -0 V.C., c". , y ,,,,,„„ ,„Mto LorJ- ,he r'<^f«''"^''r%j;;' to issue Prefc,e„.i»l Bon.ls ,hip, authon.ed th« Company ^^_^_^j. ^^^ ,„ tUe «'»' »t '" 7'"™; ;V,oli,v of claim therefor holders of such bomls lo 1 ave PJ - B„„ai,old. .„r the present first lien ot *» J-v- ; *» ^ ^^^j^ ers merely, .hey have "l^^^'^J Zer..c.i alrea.lv lieu (for they get the hen ^1»* ^; ^, ,,,, Company, possessed) attaches ';*^.:^;':, ^U L I>>'eres.. fre^rJ »J>'f ;; f ' f ™ X Bondholders thus created The nghts of *; ^;*;™ t ,„actme„ts, and in my „e not 7--^7/X st ather confirms those rights. v,ew the Act 2- y.c, cu , ^^^^._^ j,^^ j,.^.^^,^^. Now the object of this siit is j^^_ from paying the -f "' "^tt of M lent, this Court ence Bonds, ^Pf^^^^j! '^ Court must decide the ha, no P»7 '» 'f ';j,;a „pou these pleadings, ac- ouesbons which are raised P ^^.,^.^,, ,,^,, rding to the 7« AcU P.^ ^^ ^^ ^^^ ^^^^^ the subject; and it wc reter p^jr^BESCB BoNii- tC ALIE^VPo' THE BOAT, A^ ALL THB WOKKS AKL c«,i thit in those Acts tne ngn.s ui t find that m t,uu ^^ ^ ^^^^ Directors from applying the '-'""fyf ^V^ *'" ^ :~-L;Lri^:d^r^^^ / 26 r t>,P Gran.1 Trunk Railway Cotn- Preference Bondholders of the (.ran panv «vc in that V^^^.^^ ^ave been able to gn'o to ' From the best con-*^'^- -"^^ ^,^ ^^, „ust be d.stu.sed, the case, >ve have concluded th and>vith cost- , ,. .^tted that he had not His Honor Mv. V "■- t'lZ con^^^^-^^onheiore render- heen able to give th.s case mo e c .^ ^^^ ^^^^ ^h,, ing judgment, ^l-e w^ ^ ;^, ,, ,Ue Bill.) He .as Lordship then read ;^;^;;'i^.,,eh of trust to apply the of opinion that U -o-^'J^^;;^ ^^ ,^, Acts. He -as m earn'.g^ in any ->y ""^"^ ";,Xtai;.ing and working, an. aoubt as to the expenses oj^^^ ;^^^ ..titled to any whether the T- orence b ndho ^^^^^ thing more than the 'pft--^^^^^,^.„,^^^ I2,l9,20,&22\.c ^^hould^^^^^^^ 1 ^^^ these points, ship, however, ^^--'^ to - ^^^^^^^^ ,1 effect of the numer- ./hehadnotsufficien y^^^^^^^^^^^^^ ^^^ ^^, ^^^^""1" ous statutes which had been f^^n^oncierrv, ^c., look more fully i.to the ca- « /^J^ ^,^ ,,,i,i,, eome to atany rate his leaning- by his learned brothel 1^^TKN,. that the bill be dismissecl. ^^^^^^^^^ ^^^^^.^^^^,^^, ,^^, ^he suit His Honor Mr. V- ;- ^vas not properly constituted. A NOTE. • r,v,ws Mv. (ialt waited upon Since tb foregoing -'^^sC as the Judgment of the ^eandhanu.. me ^ ^ fj "/i,,,, ., by Mr. Crooks, Court, which he ^f ^^^ \'^^,^ ,,a ..vee^l to by the Junior Counsel foi ^b /^* ' in^,nmc\i as it was the Court. This course -^^^^^^ ,,, the plaintiff to , ,sed intention ^' ^^J^ .a at once. The case take the case to the ^^^^{^ ,,,,,, ,he fall. I Uave ,vm not however be heaidnpr'^^ ^^ ^,, by Mv. concluded to print the J-^^^' ; ,,, ,ecord, as above Gait, referring at the same time to. y given. U.S. 3T HERRICK "• GRAND TRUNK RAILWAY. JUDGMENT OF THE COURT, AS DEAVra VV BV PLAINTIFF'S COUNSEL. 0„ .he ITth June, 18G1, the case »as -'ff^J'^'^^ Mr. V . v^. x^ «= p ^j I bondholders had a be di™-«f ; '"7" ' ,^ ;':/;*"t the company under W 't^'^t 2 U ,"at the right, thus erea.ed ha,. , Wn toatol b, the aubsequent enaetment, ; that >t wa. Tf /The toy of the Direotor. to apply the surplus fits tie roaVin and towards payment of the interest earnings ui t'^^ i,^„,]„ TTis Lordshir distinguished due upon the F*"""' ^ "^l' JZ^Zh. Londonderry # the present case from *" « ^""f J y ,5. 508, which S:^; ri.ht/~ere - ^-^-^^ dtL't thi :!;:r;f"a:se:;::ies"e— by the present par. '1,'; v'^ci'sPBAOOE .as inclined to think that the rights JIL Preferential Bondholders were statutory only and It takiL the place of the Government Loan, the mter s on ft^e Bond, was only payable out of profits, as provide, rrtylta. 12 Vic, eh 29, and that therefore the pr,.e,pa I'vJisld by Corrys case would reomre ^^PJ™- debts incurred for the maintenance and workmg 01 tne Sway before that of the interest on the P-f^«B - Bonds, but with the view of enabling the parties to ebtam the benefit of » judgment from the Court of Appe«l. '- «uhl concur i.ro /«.»,« with the opm.on pronounced by Mr. ^ . 0. ESTEN. •7^ H 1