IMAGE EVALUATION TEST TARGET (MT-3) yj 1.0 I.I 11.25 3 US. hm 1.8 U 11.6 Sciences Corporation ^ :n>^ V ^J^S> \\ ^" ■•.III?. j,>..,,-f ~i..^y-.j.-_ ...,, NOBTIERK RAILWAT OF CANiDA. ITS :> ¥ it THE BARBIE SWitCE" ".fr^Hi'i REPLY BY THE DIRECTORS 'i^'C X "BRIEF STATEMENT" CiRCULATtel> IN TsiE LEGISLATURE. TORONTO 1862. 7. ■/ IN EEPLY TO •«A BRIEF STATEMENT RELATIVE TO THE BARRIE SWITCH." A pamphlet entitled " The Barrie Switch," having been circulated in the legislature, professing to give the history and correspondence connected with that question, but omit- ing some of the most important transactions and documentary records relating to it : the directors of the Northern Rail- way feel it their duty to submit a more perfect and accu- rate narrative of the whole matter : observmg, that throughout this vexatious controversy, they have been guided alone by a desire to fulfil the duties attaching to their position as trustees, under, and responsible to, the law. The construction of the Northern Railway was commenced in 1850, and the company was entitled to government assist- ance in the form of guarantee. The inhabitants of the town of Barrio had been amongst the most active originators of the railway, and we find their in- terests protected by the 1st clause in the original charter, which directs that the railway shall be constructed from Toronto " to some place on the southerly shore of lake Huron, and touching at the town of Barrio, or at some point or place on the shore of lake Simcoe, and in as direct a line as may be convenient." The present ^^ Barrie station" is on the water's edge of lake Simcoe, and within seventy-fivo yards of the town of Barrio, and therefore complies with the stipulations of the act above cpoted. Before any surveys or explorations had been made, it was proposed to carry the railway to Penetanguishine, the only possible route to which would have been tluougli tho heart of the town of Barrie. Subsequently, however, Collingwood was adopted by tho railway coramissioners as the northern terminus, and it thus became unnecessary to pass through the town of Barrie. By the Guarantee Act, 14 & 15 Vic, ch. 73, sec. 18, it was enacted that "No railway company shall be entitled to the benefit of the said guarantee, until tho said board (of railway commissioners) shall have examined and approved of the line selected," * * * " and the line and mode of con- struction so approved, shall not be altered or deviated from, on pain of forfeiting the right of the company to the said guarantee." Under those powers the I'ailway commissioners themselves determined the location of the line in the neigh- bourhood of Barrie, and they, not the directors, fixed the line and station where they are. Finding that the line was to be carried to Collingwood instead of to Penetanguishene, the inhabitants of Barrie commenced an agitation for the construction of a branch line which should have its terminus in the heart of the town. The engineers of the company, unanimously, and at all times, represented to the directors that such a branch would bo utterly valueless both to the town and to the company, but their opinions were rejected, and the directors (of whom Mr. Angus Morrison was one) yielding to a continued and per- sistent pressure, at lengh agreed to construct the branch, conditionally however upon the approval of the railway com- missioners being first obtained ; and also upon the town of Barrie providing all necessary lands free of cost to the company. At the very time, however, that the directors thus con- ditionally assented to a branch line, the capital of the com- pany and the provincial guarantee were fully pledged and exhausted, and there were no funds from which the cost of its construction could be met ; the scheme had not then {and has never yet) been approved by the railway commissioners : the right of way and lands have never yet been provided by i le, it was the only ) heart of d by tho id it thus rrie. By i, it was ;d to the »f railway id of the of con- ted from, the said nissioners he neigh- fixed the llingwood )f Barrie a branch the town, nd at all ich would pany, but ehom Mr. and per- 3 branch, [way com- e town of St to the thus con- the com- iged and 16 cost of hen (and issioners : ►vided by 8 the town of Barrie: and on the only occasion that the subject was brought to the notice of the shareholders, a resolution was adopted declaring that "it was inexpedient to construct any branch line at present," and that no such work was to be undertaken without the express sanction of the stock- holders, which has never since been given. Yet the directors (of whom Mr. Angus Morrison was one) proceeded to advertise for tenders for the construction of the branch, and on the 28th of Juno, 185G, the cominittco appointed for the purpose (and of which Mr. Angus Morrison was a member) recommended the acceptance^of Mr. Albert McGaffey's tender. It has been alleged that a contract was entered into >vith that person, but no record authorising it is to be fo-md on the directors' minutes ; no instrument of that character has ever been seen by the company's officers; and at the date that it is declared to have been made the company's means were utterly exhausted, and it was in fact bankrupt. As far as reliance may bo placed on rumour, (for the amount of McGaffey's accepted tender is no where men- tioned in the books of the company !) McGaffoy was to receive £6000 in bonds for the work, but as the issue of such bonds would have been illegal and fraudulent, and as McGaffey's status was not such as could provide credit, the works were not proceeded with. No further steps of any sort were taken in the matter for nearly a year, when in reply to enquiries from the council of Barrie, the directors, on the 27th of March, 1856, announced that " the financial position of the company pre- cluded the possibility of proceeding with the work, or of designating a time when it could be entered upon." Although the town of Barrie had authorised the issue of municipal loan fund debentures to the amount of £3000, for the purpose of providing the right of way under the condition before referred to, the lands had not been secured, nor had the moneys been disbursed at that time. In the pamphlet to which reference has been made, it is stated that the town of Barrie " raised the sum of .£3000 " and duly procured the land and water frontage and right of 4 " way required by the company, and the conveyance from " the proprietors thereof was accepted by the company ns *' being complete in every respect for the purposes of the said "road." The directors challenge the truth of this statement — they positively and unhesitatingly deny that the right of way required for the branch had ever been secured : they assert that (with two or at most three unimportant exceptions) no lands whatever have been purchased from, and no convey- ances made by, the original owners, with whom the titles still rest ; but on the contrary that the X3000 above named has been applied, not to the purchase of this right of way, but (as testified to on oath by the treasurer of the Barrie cor- poration) to the erection of a toivn hall and market place in Barrie, by which act as well as by the withdrawal of certain sums lodged in the Court of Chancery for land purchase, it was understood and conceded at the time, that the scheme of constructing the branch line had been mutually aban- doned. If the directors arc right in this statement (and they chal- lenge a disproof of it) then it is clear that as the town of Barrie has failed in the performance of the condition prece- dent upon which alone the company undertook to construct the branch, it will be difficult to establish any cause of dam- age against the company. From the date above-named, (27th March, 1856) to the 6th December, 1859, no further steps seem to have been taken towards promoting the construction of the branch, but (so far as any record in the possession of the company is concerned) there seems to have been, for the space of nearly four years, a tacit abandonment of the scheme. During that period the financial difficulties by which (from 1853-54) the company had been embarrassed, con- tinued to increase ; the line fell into utter dilapidation, and was declared by the government inspector of railways, to be unsafe for public use ; the wages of the employees were largely in arrear ; the revenues were unequal to the working expenses ; and the continued operation of the road became impossible in the absence of legislative measures of relief. ing 6 ance from mpany ns >f the said ent — they ht of way ley assert ptions) no convey- titles still amed has ■way, but larrio cor- t i-)lace in of certain irchase, it 10 scheme illy aban- they chal- e town of :on prcce- construct e of dam- 56) to the lave been 3 branch, company 1 space of ime. by which 3sed, con- ition, and ilways, to yees were ) working d became of relief. To effect such relief the act 22 Vic, ch. 89, was passed, and on the llth May, 1859, an order of council gave prac- tical application to that law. Tho object and provisions of the said act may bo stated as follows : The government being itself unprepared to make further provincial investments in tho line, agreed that on condition of the raising of sufficient new capital, the then first lien of tho province should recede into the third rank for security, allowing (in consideration of the increased investment of private capital) a priority for security and interest to the first and second classes of bonds. The act further provided that £50,000 of the new issue of first preference bonds should be appropriated to the liquidation of the then exist- ing debts of the company ; that all debts and claims should be proved before the 31st of December, 1859 ; and that on that date the said amount of bonds (or their proceeds) should be divided pro rata amongst the proved creditors, in full and final settlement and extinction of every liability of the company. It is quite clear that in the absence of such provisions no new capital could have been raised with which to restore the railway, for unless the debts of the company had been so defined, limited and liquidated, the new investment would have been utterly insecure. Yet all reference to the provisions of this act seem to have been studiously omitted from the pamphlet under revision. So far as the information of the directors extends, they have no knowledge that any claim for the construction of the Barrio branch was made or recognised during the pas- sage of the measure ; nor was any demand for damages for its non-construction submitted within the period limited by the act. On the contrary they have the written testimony of Mr. Angus Morrison himself that no such claims were recognised, for in his published letter of the 6th December, 1859, (eight months after the passage of the act,) in reviving his claim for the construction of the branch he says : " If I ha'', been disposed to clog the relief bill, or the order of council, ^vith a condition that the company's agreement to 6 huild the branch should he carried out, moat assuredly such would have been the case; but delibvinq that such a con- DITION WOULD HAVE HAD THE EFFECT OP DELAYING AN IMMEDIATE SETTLEMENT WITH THE ENGLISH BONDHOLDERS I WITHDREW THE APPLICATION WHICH WAS IN THE HANDS OF THE Government at the time." Thus, on Mr. Morrison's own statement, there is no escape from the conclusion, either that the claim for the branch was then abandoned in order to secure the passage of the hill, the raising of the new capi- tal, and the restoration of the road; or, the claim was omit- ^ffrom the act with the deliberate object of misleading the bondholders to make new investments for the suppressed pur- pose of the branch. Whilst the directors reje :t the latter inference, as unworthy of the writer of the letter, they cannot refrain from observ- ing that if a compulsory construction of the branch would have been fatal (as it undoubtedly would) to the objects of the bill. It would illustrate a most grave breach of faith now to enforce such a condition upon those who, relying npon the plain interpretation of the act, have invested ^£250 000 sterling under the security it affords. ' Thus, the act made no provision whatever for the con- struction of the branch, and inasmuch as no claim for com- pensation for its non-construction was made, or proved within the period allotted by the law, the directors, under advice of counsel, subsequently declined to entertain the question in regard to which they had no legal power, and no fund^ which could legally be so applied. In consequence of such refusal, appeal was made during the session of 1860, for such an amendment to the act of 1859, as would enforce the payment of the claim; but the bill was subsequently withdrawn under an agreement to refer the dispute to the arbitration of Mr. Thomas Gait fi (See Appendix A.) ' ^' Of the reference to that gentleman, and of his award no mention is made in the pamphlet recently circulated by Mr Morrison ; the directors however think it only necessary to state that the effect of that award was to declare that « it would be contrary to the provisions of the legislature, and a brea( money! alleged The would ; the clai Mucl 1860, T of 186 compan measun arbltrat fare, an ceived limited whole ifi of a cea tration 1 the onlj consent and it w finally \ Thed tions of Harrisoi lished hi Thep but the \ upon wh omitted. In tha " Tha " memor " made, " referre " that th " Barrie, -' sisting, " lien the luredlj Buoh SUCH A CON- ELAYINO AN NDIIOLDSHS, lU HANDS OF . Morrison's isioD) either ud in order e new capi- m was omit- ileadinff the re%Bed pur- s unworthy om observ- inch would objects of f faith now ying npon ^250,000 r the con- » for com- ved within der advice question, no funds ide during the act of ; but the it to refer alt, Q. C. ward, no d by Mr. Jesaary to that "it ture, and a breach of trust on the part of the directors to expend any moneys in fulfilment of any such obligation" as that alleged by the town of Barrie. (See Appendix B.) The directors had a right to expect that such a judgment would relieve them from any further coercion in regard to the claim. Much to their surprise, however, the bill withdrawn in 1860, was re-introduced by Mr. Morrison during the session of 1861, to which renewed opposition was offered by the company, resulting as before in the withdrawal of the measure, and the rc-submission of the whole case to arbitration ; for the directors, weary of parliamentary war- fare, and of the disturbing influence of a local hostility, con- ceived it to the interest of the company to succumb to a limited exaction, however unjust, rather than to involve the whole issue of the bonds (£534,000 sterling) in the discredit of a ceaseless and mischievous agitation. The previous arbi- tration having resulted in the legal acquitanceof the company, the only terms for peace now open to the directors were to consent to a reference apart from and independent of the law, and it was upon an agreement to that effect that the case finally went to the Hon. Mr. Harrison. ^ The directors gave exact and faithful effect to the condi- tions of that agreement, and the case was duly heard by Mr. Harrison, who on the 31st of January, 1862, made and pub- lished his award. The pamphlet referred to professes to publish that award, but the whole preamble (containing the important paragraphs upon which the subsequent proceedings were based) has been omitted. In that preamble Mr. Harrison thus expresses himself: " That reference being had to the agreement in the said " memorandum of agreement by which this award is to be " made, as though the several acts of parliament therein " referred to had not been passed, I award, adjudge and find, " that the said claim of the said corporation of the town of " Barrie, to have the said agreement performed, is still sub- " iisting, and if not performed, their right to compensation in " lieu thereof ought to be awarded." ( i ii! ii 8 The directors, in accordance with their universal practice, submitted the award to their counsel, who, in conjunction with the Hon. J. H. Cameron, Q. C, advised that, in their opinion, the award was defective, as beinr- indefinite in its language, and seeming to afford the company an option either to construct the branch, or to pay ^5,000 damages for its non-construction ; and accordingly, that the judgment of the Court of Queen's Bench ought to be obtained in regard to it. ^ The award was subsequently sustained by the court, which, however, gave no judgment as to the legality of the reference, a question not raised or argued before it. Immediately, thereupon, notice was served upon the directors by certain bondholders, ("Dunn and others,") acting independently, and without the cognizance of the company, not to make any payments to the Town of Barric, pending proceedings in Chancery, instituted by them against the company, in protection of their individual vested rights ; and upon the special ground that the directors had improperly and illegally consented to a reference ignoring the law by which those rights had been secured and were protected. No one need be surprised that these bondholders should adopt any course protective of their personal interests • for it is certain that (the ^50,000 appropriated for liquidating the debts of the company having been disbursed as directed by the act) any moneys now paid to the town of Barrie must represent a deduction of like amount from the interest payable on their bonds. For these proceedings in Chancery however the directors arc wholly irresponsible; and they have taken no part in them, excepting, by their counsel, submitting themselves silently to the judgment of the court; the effect of which judgment has been the issue of an injunction restraining the company from paying and the town of Barrie from receivin«v any moneys under the award of Mr. Harrison. ^ As all mention of this injunction, and of the judgment of Vice-chancellor Spragge, has been omitted from the pamphlot circulated in the legislature by Mr. Morrison, the directors L invite a ment. I The^ * declares untenab the mor branch, of " a I cognizai Morriso pose of Barrie,) " to say " it is si "myju( The c > " The p " injunc " from p " pality " way sa " ings oi " receivi " and fr( " way or " to, or ( " ing the Yet, r( risen (aci viz., on t " all cost " the tow "line," 1 " notice c lish such " local pi So cxt contempt was immi whose opi 2 rersal practice, in conjunction that, in their [definite in its ny an option ,000 damages the judgment ined in regard ) court, which, the reference, 'cd upon the md others,") izance of the wn of Barric, 3d by them ividual vested directors had nee ignoring ed and were )lders should nterests : for >r liquidating d as directed ' Barrie must the interest the directors I no part in ; themselves "ect of which straining the om receivinir judgment of ;hc pamphlot the directors invite a careful perusal of the latter most important docu- ment. (See Appendix C.) The Vice-Chancellor, after reviewing the whole case, there declares that the claim of the town of Barrie is illegal and untenable, and that were the directors to appropriate any of the moneys of the company either to the construction of the branch, or to the payment of the award, they would be guilty of "a plain breach of trust," of which the court would take cognizance ; and, (referring to the bills introduced by Mr. Morrison during the sessions of 1861 and '62, for the pur- pose of establishing and enforcing the claim of the town of Barrie,) the Vice-Chancellor significantly adds, "I have only " to say, that if the bills had become law, the passing of which " it is suggested were stayed by the agreement to arbitrate, " my judgment wouM have been the same as it is." The conclusion of the judgment is in the following words : "The plaintiffs" (Dunn and others) "are entitled to an " injunction restraining the railway company and its directors " from paying the amount of the award in favour of the munici- pality of the town of Barrie, or any part thereof ; or in any way satisfying the claim of the municipality out of the earn- ings of the railway ; and restraining the municipality from " receiving such payment or satisfaction out of such earnings, " and from enforcing such payment by levying upon the rail- " way or any rolling stock thereof, or anything else necessary " to, or ordinarily used in, the working, repairing, or manag- "ing the same." Yet, regardless of such judgment and injunction, Mr. Mor- rison (acting as " solicitor for the town of Barrie,") has since viz., on the 30th December last, urged the directors to " pay " all costs of suits, disbursements and liabilities incurred by " the town of Barrie ; and to build and construct the branch " line," threatening in the event of their refusal to " give " notice of the bill " (now before the legislature) and to pub- lish such notice "in the London Times, England, and the " local papers forthwith." So extraordinary a demand, indicating as it did an entire contempt for the orders and powers of the Court of Chancery, was immediately referred by the directors to their counsel,' whose opinion was given as follows : a a <( ii' lii : i a«. If 10 Toronto, Feb'y. 7tli, 1863. on'J}^^ *° acknowledge the receipt of your letter of the J7th January containing a reference of the correspondence which has taken place between the board of directors and Mr. Angus Morrison, respecting the Barrie switch, and requiring my opinion as to the proposals of Mr. Morrison, and the power of the directors (in view of the existing iniunction m Chancery) to comply with them, assuming (which has not yet been discussed) that such proposals were otherwise open to acceptance.'' In reply I beg to state that in my opinion the earnings of the company have been specifically appropri- ated by the Legislature, and that the directors have no power to apply them in any other manner than that pointed out by the act of parliament. If the company are possessed of any other means than those arising from " the earnings" they might if they thought it for tne interest of the com- pany so to do, enter into an arrangement for the construction of the proposed switch ; but if they are not, they cannot enter into any arrangement, without, in my opinion, violat- ing the provisions of the act, and subjecting themselves to an application to the court of Chancery at the suit of the bondholders. It is true that on referring to the injunction issued by the court of Chancery (a copy of which I this day received from Mr Boulton) I find that it points only to the payment of Mr. Harrison's award, but I entertain no doubt that it would be extended to the appropriation of any of the earnings of the company in contravention of the terms of the act, and I ani of opinion that the construction of the switch proposed by Mr. Morrison would be such a contravention. Sincerely yours, THOMAS GALT. The directors having thereupon declined to accede to the demands of Mr. Morrison, his threat has been fulfilled by the extensive advertisement of the following notice ; NOTICE Is hereby given, that the town of Barrie, judgment credit- ors, bond and stockholders of the Northern Railway of Canada, will make application at the next session of the legislature for certain amendments to the charters of the said comnany, as follows : 1. To prevent the presidents, directors, managers, and oflicers, owning or running steamboats in connection with the railway. Thei as it is but the observe facts do .creditor there ar the proc Such The dir features, rity, whi excessivi by obser amend, 1 the wisd volving i has, by 1 of one 1 county c ^cbts, ar ■use and < tial effici y. 7th, 1863. ur letter of the correspondence f directors and ie switch, and . Morrison, and 3ting injunction (which has not otherwise open i in my opinion ically appropri- actors have no in that pointed Y are possessed ' the earnings" it of the com- be construction t, they cannot )pinion, violat- themselves to he suit of the the injunction lich I this day its only to the 'tain no doubt of any of the terms of the of the switch itravention. LS GALT. accede to the ilfilled by the gmcnt credit- i Railway of ssion of the Ts of the said nagers, and nection with 11 2. To increase the number of the Canadian directors, so that the government lien of $3,000,000, "the people's money," may be, in common with other interests, fairly i represented at the board meetings. 3. To explain the meaning of the 2nd section of the act passed m 1859, entitled an act relating to the said railway; and the 4th section of the Executive Council order, passed under the authority of said act. 4. To remove doubts, if any, as to liability of the com- pany to pay out of the earnings of the road a judgment debt of £5,000, justly due the town of Burrie, or in lieu thereof, to compel the company to build a branch line into the town of Barrie, in accordance with the plans adopted under board, dated 27th January, 1853. MORRISON & SAMPSON, Toronto, 20th January, 1863. Solicitors. The animus and intention of the above notice, calculated as it is to depress the credit of the company, are self-evident; but the directors would fail in their duty did they omit to observe that even the title of it involves statements which the facts do not warrant; for, happily, there are no "judgment , creditors" of the company in Barrie or elsewhere, nor are there any "bondholders " in that town who have authorized the proceedings of Messrs. Morrison and Sampson. ^ Such is a brief and accurate narrative of the whole case. The directors abstain from any general discussion of its features, lest they might be betrayed into expressions of seve- rity, which from the first it has been their study, even under excessive provocation, to avoid. They content themselves by observing that the act of 1859, which it is now sought to amend, has fulfilled all its objects, and has entirely justified the wisdom of the legislature in passing it ; for without in- volving the province in the contribution of a single dollar, it ' has, by the security it afforded to a new capital of upwards of one million dollars (and expended almost wholly in the county of Simcoe) enabled the company to liquidate all its jilcbts, and to restore the railway (previously unsafe for public 'me and ordered to close its traffic) to a condition of substan« tial efficiency second to nunc upon the continent : whilst it t i 12 has so promoted the development of its trade, that without any the slightest increase in its tariff, the railway, which be- fore was worked at a loss, now contributes annually, by the payment of interest on the first bonds, to the revenues of the province. Such results would seem to imply not only successful legis- lation, but faithful management ; and apart from considera- tions of public faith and vested rights should suffice to indi- cate that any revision of the act of parliament under which they have been achieved would be as inexpedient as unneces- sary, and would be fraught with danger to every interest connected with the railway. By order of the board, J. BEVERLEY ROBINSON, President. FRED. CUMBERLAND, ^^P' if' Managing Director. Toronto, Gth April, 1863. If i APPENDIX A. To Thomas Galt, Esq, Q. C.-Jn the matter of reference between the mnnicipality of Barrie and the Northern Railway Company of Canada. The municipality of Barrie claims compensation from the railway company to the amount of .£11909 3s., for an alleged breach of engagement on the part of the railway company to construct a branch line from the present Barrie station to Mr. McWatt's wharf. On consideration of the statement of the claim as presented by Messrs. Morrison & Sampson, the undersigned on behalf of the said railway company begs leave to submit : 1. That the act 22 Vic, ch. 89, and the order of the Governor in Council founded thereon, and dated 11th of 13 le, that without Iway, which be- anually, by the revenues of the uccessful legis- Tom considera- suflSce to indi- it under which ent as unneccs- every interest BINSON, President. LND, ing Director. '■ of reference the Northern i-ion from the for an alleged ray company, rie station to as presented led on behalf it: 3rder of the ted 11th of May, 1859, is a bar to any such claim against the company. I 2. That if the directors of the late company entered into I the alleged engagement it was without the knowledge, consent I or authority of the shareholders, without the sanction of the I railway commissioners, in excess of their legal powers, and is accordingly void. 3. That even if such engagement were made under suffi- cient powers, and were otherwise binding upon this company, it was conditional in its nature, and has been voided by >, breach and non-performance on the part of the municipality. 1. The transactions relied upon by plaintiffs as cause of damage, occurred between the end of January, 1853, and March, 1856. Subsequently to that period (viz., in 1859) and consequent upon the bankruptcy of the company and the dilapidation and unsafety of its works, an act of Par- liament (22 Vic, ch. 89) was passed, by which "the railway with all the appurtenances and appliances thereof, whether consisting of real or personal property, its rolling stock and plant, and all the corporate rights and privileges of the company, were transferred to and vested in the Crown." By the same act power was given to the Governor in Council to sell the said properties and franchises, or if the same were not sold to revest them in the company or in its bondholders, or in both, conditionally, however, upon such parties undertaking to raise new capital and to do certain other things therein recited. Thereupon the said properties and franchises being then absolutely vested in the Crown, the Governor in Council by an order dated 11th May, 1859, did conditionally revest . the said properties and franchises in a new company cora- ; posed of both the shareholders and bondholders of that whose properties had been previously seized by the Crown. And that order (which has since been embodied in full in an act 23 Vic.) provided and required amongst other things that a new issue of first preferential bonds, not exceeding in the whole .£250,000 sterling, should be made ; and that of that issue bonds to the amount of £50,000 sterling, should be withheld from sale until 31st of ft fl 14 working cpensos thereof, bo c riot toT"^ ^ """"'" several classes of securit 0,,? r ""''" "^ "■» . ranks. "'' "'"'"^"'S '<> their respective Now tho wurds of the order and nf ♦!,» . ment are specific, to the effect TJi , '"^'"l""'^ «°«e'- £50,000 sterling should hfr ?''' '" "•" ™'»'°' of ■ 'h»^ to raise now capital, tho new ss„rw„ , , T ""P'^^'Wc and tho creditors would 1 ^ Id no ■ I '"° "•" "° ™'''°' of note, that in view of ihZT . "^''ef : and it ,s worthy in ordo; to give?;!";: T ^ iirthr'""""' ""' sterling.; "'''''* ''"^""^^"S ^o nearly £120,000 It is clear then that if; was one nf ih- v *o act and order to void all othoTcllsrn'Zr S" engager) Barrie t the kno the com] issione engagem upon unl I shal] and I w it my du founded, could be interest a cither be deliv- my or sold for t the balance of creditors of the ital supervisioQ and its appur- J provided that ing the annual 5 credit of the heir respective sequent enact- the amount of benefit of the should be de- ') in final and d that limita- within which 'ice; because h a bankrupt indisputable ous provision of new capi- 'S as against lly forfeited been sped- ities of the 1 impossible id no value, it is worthy itation, and ;overnment postponed ■ £120,000 >urposes of e provided :ibr by the issue of £50,000, to be distributed on the 31st fDecember, 1859, to the then "present creditors"; and as ^the claim of the present municipality of Barrie was not made until long subsequent to that date, it must, on that ground be excluded from participation in tiio benefits of that issue. ' And inasmuch as the revenues of the company are specifi- cally appropriated to other purposes than the liquidation of liabilities accrued prior to the date of the said act and order It IS equally clear that the claim of the municipality of Barrie cannot be established or legally paid as a charge upon them. I submit therefore that if the plaintiffs ever had any claim for damage (which I deny) it has been voided by the act and order above recited. ; Should the arbitrator adjudge otherwise I respectfully request him to denote from what funds of the company such a claim can be legally paid, having regard to the facts that m pursuance with the provisions of the act in that behalf the distribution of the £50,000 allotted to the creditors of the company has already been made, and that the whole balance of the capital has, in further compliance with the law, been hypothecated under contract for the purposes of repair and restoration of works, and that the revenues of the company stand pledged by law to payment of interest on the capital raised for the purposes of the act, and other classes of secu- rity from which such revenues cannot legally be diverted. 2. I submit that if the directors entered into the alleged engagement to construct a branch railway into the town of Barrie they did so in excess of their legal powers, without the knowledge, assent, or authority of the shareholders of the company, and without tlie sanction of the railway com- missioners required bylaw; and accordingly that such an engagement is void, and the claim of the municipality there- upon untenable. "^ I shall not presume to discuss an objection so purely le^ral ,and I will venture to say so palpably just. But I think .It my d^ty ^ urge the protection of the law against claims ;^ounded, as I believe this to be, upon a breach of it. Nothing scould be more dangerous, nothing more disastrous to the interest and credit of railway property, than that unlimited I h IB I' i 16 power, (and >,,,cl, „, „,i, a.m altributos) should bo granted to or o.vorc,»c,I by a board of directors ; and tl,i« ,xiom i, •strongly illustrated by the faet that wi.en'the „ 1 "d o„2 .nent first oa,no to tl,e knowledge of the shareboldo 3 "fX ompany ,„ general meeting (am,o„,n it Uad alreJleZ vouM h non-performance of coniition, and „,,ando„n,Z on tr.o part of tha ,nunici,alUy) „n unanimous stock" "e « earned strongly condemnatory of tI,o proposed branoh and „,str„ct,ng the then directors not to enga'go i„ thi, „r ay other extension of the con.pany's lino wlh°ou .1 pre uous^eonsent and authority of the proprietors in gonll Nor can the iminicipality plead ignorance of those require- nents of he la.v .vhich limit the powers of .lirectors fo t ■as from te first been guided b/ the same hiTaut'ht tv bywhomth. claim is promoted, an authorit; th t u s legislative experience to legal practice. I submit, therefore, that if in enterincr infn .1 inent relied upon as the basis of th^ Urn tldfT" exceeded their legal powers, the munic:pat; ea ot^^ ^^^^^^^^ any damages against the company ""Ot itcovei under sufficient legal powers, -^Z Zl^^l fZ- actcr, and has been voided by breach and '„„n „ <• on the part of the munieipalify "™-P«f»™ance The plaintiffs aver that a resolution nf i\.^\. i i m January. U,, (.arked A;1::11\ tt^Z:' tors then intended to build the main lino thron.,h ,! T branch line for tiro'rwif omau":™ ""^ '" '"^ ''°™ » The premiss and the deduction are equally false Tl,„ and under the direction of the Go^^:..! ^^ ^as a ||iot o |nrould live ci lof en^ ("that a main i£10,5' fommi declare yany i But ycsolut their ] mnditi rigid Oj the con, By a pality 1 steps in .by the : never b Agai jug the declare( ditions i the boai the act, complct legal or stood th the sam( It was by-law T money r pliancc i On5tl (in answi bo secur( active m 3 ihould be granted iiul tliis axiom is alicgcd engage- u-eholders of this had already been nd abandonment imous stock vote n-oposed branch, ngage in this or without the pro- ctors in general ^f those requirc- directors, for it high authority ritj that unites ito tlio engage- n the directors cannot recover an engagement Y the directors al in its char- n-performancc hoard adopted that the direc- irough to the 1 with the view ;hc suggestion to laj down a y false. The i to establish lino, and that ' of Kempen- 5ubsequentlj, Collingwood 17 r^was adopted as the northern terminus, and it then became ^|iot only unnecessary to go into Burrie, but such a location po\M have involved a useless extension of length by exces- sive curvature, a profligate waste of money, and an example •of engmcering wilfully and ridiculously bad. It was then that an effort was made to induce the directors to carry the main line into the town of Barrio at an extra cost of ^10,542, but this the directors declined to do, the railway foramissioners having refused their sanction and bavin- declared that no government aid would be given to the comt jpany if such a line were adopted. But the directors, acting under local pressure, did, by that resolution of 27th January, and as I submit in excess of tlieir powers, agree to the construction of a branch line mnditionally upon the municipality of Barrie providing all right of way, terminus, arid borrowing land, free of cost to .the company. By a subsequent resolution, (8th April, 1853,) the munici- pality was informed, that before the company could take any Bteps m the matter, the branch lino must first be sanctioned ,by the railway commissioners, and which, to this day has never been obtained. ' ^ Again, on the 28th July, 1853, the municipality still urg- mg the company to proceed with the branch, the directors declared, by resolution, that upon none other than the con- ditions already named would the company act, adding that the board would "render every facility under the powers of the act, and which may be given consistent with a full and complete indemnity to the company from all costs and charges lega or otherwise, in regard to the matter, it being under! thelme '' '"^^'^^*'"'' ''^'''^ '^^"^^ ''' prepared to meet It was not, however, until the 27th March, 1854, that the by-law was passed, enabling the municipality to raise the money requisite to the purchase of the right of way, in com- pliance with the conditions. ^ On 5th October, 1854, the municipality was again reminded (m answer to renewed appeals) that the right of way must be secured, and the deeds delivered to the secretary,\efore active measures could be taken. ^' o ' 11 18 On tho 18th January, IH^C, a,„l nn n cheapen tl,or,V|,t of w,v , "7''"' "^ '"'""'I Imo, woaH J'l'vs, and thereunon to ml ^f ' ''' '''""^ ""^^^ bj- Petent to ostiMate tho ylll 7r " ^^''^ ^^'"S ^"«o^' ^0 inaufficient for the pu . Js" f -"u^''^^^ ^'''' -'S^'^ decline,, the proposition ^ tytLM^^'' '''' ^'"''^ original condition. ^ icsolution reUerated the J-egal difficulties, in rcfrard tn fn,.«-i i having then bcon d acovc^d 11 ,t •""■^,."'"'" '""''»• solicitor of the comMnv ll ■»™'«'Pality, and the under its e.-stinHow fa ZJ """'■'"' '"' "P'"'™ «'« '^0 h.„e,. „„, iTu:- iSt7";Zu:'h;i,™"rr' "se of the company's name in i r "^ ^"^''^^ ^^'c for -ch an aInen'dLnt aV ho ,7^:1" l^ """--' '■.a. a,, Lt?:fi\h:,t:t:^"::^„tT'°"'°° V"<" "»"-'• ty the municipality." ^ otherwise, should be met tbe°:„'n-:ipam/„a::;ffii ''''- ?f "■™ "- -^^^ f-» owners of U,o IZ'rZtj I ■"" T '''■°'» ""> P"™'« should net ho oenst r 'o'nT' ',''" """"'' ""^ rooeired sundry deouments from ,1 ■ ''"^' "«= '«'"'' i»S to he bond', (see fZmZmtTr'''-J' ""'"'"■ valuation and pureha e of the r'.h „ ^ Tf"^ ^"^ ""' tration. ^ht of way, by future arbi- On the 19th Mav IRi-,-; .i '- passed, andTt'he 2^; 117;'"'^"' '° ""^ "'-'- tiff's exhibit E) were issued ^^^^.'"■"'™™'^ (^^^ Pl«u- «tr»etienofthebanehli,e I", "^ T'"''' '"' "'»<=»- the tenders were r "erred tl a ™ "" '^'' ^™«' ^855, President, Mr iriTM • ™'"'""""'' ("""Posed of the »eoepted Ihat „fr ' [I'm'^I ''"■• ^™™-°''.) -ho Sue to the tntcrc On deposi on ace for arl On after t part ol on the amoun of the Up I oompiu right ol for whi Shor 1855-1! the £3( erectioi summer the tow: True, for the , (not mu depositc a matte] certain 1 made in conditio! propriet( It is i( tion hy t\ dix D.) i; pality AVf would nu declined \ dition : a ''.'■■,■' Vj-.- ' 19 > suggestions of the iland lino, would Ic the concession, nuicipah'typrujcil c raised under by- 'lity from further oard being incom- Iiat ^8000 might way, very wisely )n reiterated the Such acceptance, conditional as it was, ,was never reported to the board, and no contract has ever b«en authdr«ed pr •ntered into witii said McGaftey. ' ' ■^' On tho 10th July, 185.3, the municipality remitted .for deposit in ti>e Court of Chancery, the sum of I^DTH.r.O, being' on account of disputed right of way not included in the bond lor arbitration. On the 30th August, 1855, (little more than five weeks 'GK?i ifcaau^'a ti-y upon lands, 'Pality, and the his opinion that hi not construct ho allowed the 1 to parliament the necessary ^solution, (12th 'od and agreed » should be met s received from •m the private he branch line '^y, the board ^'Jity, purport- >viding for the ^ future arbi- the charter 'ts (see plain- for the con- June, 1855, posed of the imond,) who onallt/ upon vqrks. rftei the depos.t,) the municipality „pplio,l f„r a return of p»rt of the money, ami subsequently for tl,o remainder ; and on the 0th Apnl, IS,-",.?, and two subsequent dates, the „h„le .mount was returned, and the eompany holds the acquittance 01 tho municipality for the siime. Up to that time, an.I to the present day, as far as this ooiiipaiiy ,s informed, and as the bill of ehiim proves, the Bght of way has only been secured and paid upin one lot, for which the sum of ^275 has been disbursed. 18- 'iR.'^'wr''"'"'''''. ''?"■"' (""""=ly.i» "'0 winter of til £4nn ' "r'^'f '"y of ^'-''-i" proposed to divert the £.000 raised for the purposes of right of way, to the erection of a town hall and market; and accordingly in the unimer of 18„a, the handsome building which n"'ador„^ the town of Barrie, was completed with that money. fo. the £JO0O bus appropriated, bonds of the municipality (not municipal loan fund bonds, as were the others,) were .leposited in exchange. But however that may be, (amUt s a matter with which the company has nothing t„do") cer am that to this moment no further progi^ss ha been made ,n providing the right of way in oompnaneo wTth lie condi leiis aforenamed, than the one payment ef ^75 „ le proprietor of one lot in tho proposed location. ion 1,1/ arlulratw,, (such as plaintiff's exhibit H., see annen- dix D.) IS a fuiaiment of the condition by which 'the mle . pa ly was to fronde all ri.jU of „a,j lefore the co,npany 2>M move .n the construction. The company had alfeal atticn. and If the company proceeded (under the question- Ill;, :'! 20 able protection of a bond of arbitration^ fn «... . fun.,. iss„„ „A„„„3 .StXZ : oX°' '"' money with wbiVb if „•.,. ■ . Z"^™ "'cn 'lone, and 03 tht otber'aL b f ;:"" "^ -""r' "» ^-«t •„ to f-.. ,va3 30 diveno'd r:?:;:,,:.!;^^':"::'""' """ ='"^:reS:::^-b:sf^^ pany. Indeed it w.3 not It t" JuT'TsCo" T :li.-ec.or,«3conden,„edidep , ;;th!:r"'b°n''' Jn general meetin.^ .n fl,nf ., ^"'"';^'^" ^7 the shareholders thc^ancb ^^Z^^TZ ^'^r-™' "' abandonment by tbe eompany ""'""''"" "> "= From thia it would apneai t^.Ttl, "f.".""""' ™s made, satisfied with the eou.eTcV t by J";? !"( T" ^""^ a serviceable town hall inat,..^ „f , ^^ "'' '™''™' -w eapital of the .^"jil "^^ ■'""" ■""'■ '^' for rolievin, the town o'f tb'e eorff t'hat strnotrr "'""'"'^ fulfilment of 2 „ ffe! °;°'"'"'°" '^°'' ''S'" »f «? i» ne ;;-> charged acainst tim „^ "Jterest thereon, cannot ^l-edireLsStUTK^^^^^^ a" costs and charges leiai or .ll "^""^^"^^^^^^^^ to provide for purpose. ^ ^ '' ^^^^^''^^^^ "^^'essary to the full Tot to ontor upon pofl. why Imd they that not, what sccuritj' »o deficiency, cspc- •0 of the people for 10 necessary. h and " the deeds I hy the directors iind for a claim for done, and as the ne, was dcvot 'd to ^0 time when tiiat 3 had never repu- te admitted that pality alone was 1 been cxliaustod) against the com- h]y, 18G0, when gagcmcnt of the the shareholders abandonment of precedent to its erted and when I, the municipal- 5 compensation, Jiaim was made, 'ality was quite '^7 bad secured ^'Ih;Ti, until -he "i opportunity ture. uch as a mere t of way is no items for the icreon, cannot I'esolutions of to provide for iry to the full n With reference to the items for interest paid on deben- tures issued by the government X800 Os. Od. mnd interest now duo thereon 480 Oa". Od* it may bo sufficient to observe that the municipalitv has ♦expended the amount to its own benefit, and that the'inter- est represents a debt upon the Barrio town hall for which this company is in no way responsible. Thr la,st item in the account, viz., tho liability of the municipality for tho right of way which has not been bought (XWOO Os. Od.) if it is of no other value, at least suffices to prove that tho right of way has not been yet secured or its value determined, and accordingly that by their own shew iny the engagement on tho part of tho municipality not having been fulfilled, any claim whatever for damages for tho non-construction of tho branch by tho company is utterly Untenable. *^ The resolutions of tho directors referred to herein arc to te found recorded in the minute book of tho board already (under notice from the plaintiffs) produced before the arbi- trator : and the undersigned is prepared to establish by evidence the case as no presented if required so to do. Whilst the company will accord to the judgment of tho arbitrator the most respectful consideration and fullest defer- ence, it is the duty of the undersigned, in protection of the interests entrusted to him, to urge that this reference has not been made on tho part of tho company with a view to compromising tho claim of the municipality, but for the pur- pose of ascertaining its legal validity. FRED. CUMBERLAND, Managing Director, Northern Railway of Canada. Toronto, January 30th, 1861. 22 I : I I i i APPENDIX B. AWARD OF TIIOS. GALT, ESQ., Q. C, In the matter of the rinim r.f *i, A reference having I.ecn made to mo in the fi.II„„- term,, en the matter, in diapu.e between the 3 aM partL:;"^ Quebec, IWi May, I860. After a consultation in referennn fn +].« i -n the House of AasemW, he^r ^ „' er'^i t: mutually agreed on behalf of the eorporation of Barr e and the Nor hern Railway Company of Canada, .0 re"er alt matters m d.spute between the parties in rela ion to th con strnction or compensation of the Barrio switch .„ ,1 • ? Of Thomas Gait, Es,., Q. C, with T^ ,^^^^^^^^^^ to an adjustment, but without prejudice to the rig its or uItT mate action of either of the parties. ^ (Signed) A. MORRISON, For Municipality of Barrie. (Signed) FRED. CUMBERLAND, Managing Director, N. R. 0. Having carefully read and considered the agreements and papers submmed for my perusal and opinion, 1 1 ve a Cd at the following conclusion ; "'ive arrived The negotiations between parties on the subject matter nf this reference appear to have commenced in the ye r 853 one thousand eight hundred and fifty-three when . ^ f ^ tion of the board of directors was pa ed on , the town 01 Bame, a branch line, as su^ccsted bv .L • nocr, ehan be laid down for thes^vico ofClw^ andZ Q.C., mlity of Barrie <^ny, for tie con- iny into the town in the following > said parties : ^%, 1860. bill now before rsigned, it was 1 of Barrie and a? to refer all ition to the con- 1, to the opinion their guidance 3 rights or ulti- y of Barrie. ND, r, N. R. C. jreements and have arrived ect matter of 3 year (1853) len a resolu' tbo twenty^ •ruvided suit- vith right of ce of cost ia by the engi- mj and that ^^ 28 the chief engineer be instructed to survey the locality, and report wha will be reciuired for the service of the road at vinat point. i ^; *J^e twenty-seventh day of March, one thousand ei.ht- liundred and fifty-four (1854) a by-law was passed b/the munieipality to raise the sum of three thousand pounds, to be applied to the purchase of the right of way. , On the thirtieth day of January, one thousand eight hun- dred and fifty-five, plans of location of proposed switch were frepared by the company. ! ^n tlie t^velfth day of February, one thousand eight hun- dred and fifty-five, Mr. Gamble, as legal adviser of the com- pany, reported that in his opinion the existing powers of the company were not sufficient to enable them to compel dis- »ntient landowners to submit their claims to arbitration, and that further legislation was necessary. t On th^ nineteenth day of May, one thousand eight hun- 4red and fifty-five, an act was passed granting the requisite power to the company. ^ ' Previously to the passing of the last-mentioned act, the lunicipahty procured an agreement to submit to arbitration to be executed by nearly all the owners of the right of way required. ° •' It appears from the other papers submitted to me that both parties were acting in good faith to one another, and that the non-construction of the switch arose from the inability of the company to procure the necessary funds ; the resources of the company having become exhausted and its aff^airs in a desperate condition. On the fourth day of May, one thousand eight hundred and fifty-mne, an act entitled "An act relating to the Nor- thern lailway Company of Canada," was passed, whereby the railway, w.tli all its rights and appurtenances, wei.; .vested in the Crown for tlie purposes therein mentioned. . On the eleventh day of May, one thousand eight hundred and fifty-nine, an order in council was passed respecting the snn, company, which was subsequently ratified by statute passed nineteenth day of May, one thousand eight hundred and sixty, by the provisions of which, amongst other things, n 24 the railway, ifc rights and appurtenances were re ve^f.^ ' ' the company, on the conditions therein mon f 'T f /"^ the twelfth section, it is enacted TllT 'T ' ""'^ ^^ ^^i^ions herehy reJon^nendet 1 tt e^tll'^:,^ railway shall be distributed as follows ;- ^ ^' First.— In the payment of workinrr ,.««„• • aging the said railway ^' ''P'"'"° ^'^'^ «»»»- rifti,.-!,. p.,,„o„ oft*: r::: """* ""•''"^'• >Iuo to tl,o provinco ° ''"''""' "^ '"'omt granted, and on tho an-o„s of .1. Pno^'y lio.chj on tl.o pvcsont bonded eb^ofU. °'' ''"'"™'' ""-l "i"' tho .econd preferential bond/ and ''""' "" '" "'" "»'« «' ^^Seven.„.-I„ dividends on'.besba..e capita, of .,0 eon,. I am of opinion that the effect of the l«.„ 1 . Btatutes is to -eatc a company, ,;„' 10"? """f'™"' '.ame name is essentially a , ew oneTn l' ,7 ° "'"'" "'" the company must be appliecLT' o^d , " ""'•"'"S' "' It nmst be borne in mind I'V ,? ' ""' ''•'''^■ "' tl.o seventh clause Zltll Wa " ?""" "'™''<"""' company, and that any obi SI f 1 n "'"""'•'^ "'° "" --•ogards the munieip^ality f .owl":;'; ""f""^ «'"» validity, ,vhie|, I stroLly doub . M / ""' '^ "^ "") against their .nterest, titer fl'^n^f^f;", ""'^ "' charges are satisfied, it wonld 1.. . ''" ^'^° ''^^'^'' «<■ t..o legislature a^;!;: , f^^rr :,:''° "-r- directors of the nre^nnf .. *"° P'"^»"t of the -^'-ntofanyfCrS:-::;^^^ ' Du; Toronto, Gth Ap,;], 1861. ^'HOMAS GALT. At opini( eided town ( ©ompi consist prefer in reh statute It is ofaiim i aad I p^int n the cas Dtunici] tion be the pla give th issued 1 tions a^ The! pany, c the first to the ( for tho appropi act din ,to be a railway ligations der the prefercr charge I 'J « Bs were re-vested in ' mentioned, and hy subject to the con- ■e earnings of the •4 25 APPENDIX C. I'epairing and man- ^dijment oftlu^Cormofamrceryddloera by the Hon. Mr. Vtec-Ohancellor 8pragge. Dunn, et al., v. Barrie and the Northern Railway Company. s and from the daj bonds. 5 and from the day second preference I'antod. the provincial lien 1 pounds sterling, arrears of interest uch portion of the 'le priority hcrebj t accrued and due ■ up to the date of pital of the com- 3 last mentioned 'loiigli under the t the earnings of 'jovc stated, apital mentioned 'ormerlj the old company either '^'^"•Je, if of anj' enforced only as 'til all the other 5 the provisions the part of the I any money in ipany. fAS GALT. At the close of the argument yesterday, I intimated my opmion that the true and only question necessary to be de- cided upon this application was, whether the claim of the town of Barne can be proved against the Northern Railvvav fJompany or its payment be enforced against this company consistently with the rights of the plaintiffs as first or second preterence bondholders, under the statutes of 1859 and 1860 m relation to the railway, and I desired to examine the statutes carefully before giving my decision. ^It is contended on behalf of the town of Barrie that their otoira IS of a nature covered by clause 8 of the act of 1859 and I think that for the purposes of their application that I^mt may be assumed in their favour. Assuming this to bo the case, and that a liability as between the company and the municipality exists now, and existed before 1859, the ques- tion becomes one of priority between the municipality and the plaintiffs, the plaintiffs' position being that the statutes give them precedence, in respect of bonds held by them issued under the statute, over those having debts or obliga- tions against the company. The statutes authorised the issue of bonds by the com pany, called respectively first and second preference bonds" the first to the extent of X250,000 sterling. Of these, bonds to the extent of £50,000 were directed to be approbated for the payment of the then creditors of the company • this appropriation was made by an Order in Council unct the act directing the proceeds of the first preference bonds ,to be applied, first, in the repair and improvement of the railway and stock, and for tho payment of the debts and ob- ligations of the company. The Order in Council, which un- der the statutes has the force of law, provided as to the first -reference bonds, that such bonds when issued be the first eharge both as to security and interest on the said railway Hi! (^ n \\'f 26 Second preference bonds were authorised to be issued to the amount of the then bond or debenture debt, .£243,739 14s. Gd., stg., .and a further sum of jG50,000, stg.,— the lat- ter on account of a debt ot the Province, and to be held by the Receiver-General. As to the former, the words of the Order in Council, " and to which priority is hereby given," this, however may mean in this connection only priority over the bonds for £50,000 sterling. The application of the earnings of the railway are, so far as material, directed to be as follows: First,— To the payment of the expenses of working, repairing and managing the said railway. Second,— In payment of the interest as and from the day of the date thereof, on the first preference bonds. Third,— In payment of the interest as and from the day of the date thereof, on so much of the second preference bonds as are entitled to priority hereby granted. Then follows the payment of interest on other sums in their order. The last purpose to which the earnings of the railway arc made ap- plicable is the dividends on the share capital of the company. No provision is made for payment out of the earnings of the road of debts or obligations or of interest thereupon, except those of classes specified, to which the one in question does not belong. It is manifest from the appropriation of the first prefer- ence bonds to the extent of £50,000, stg., that it was in- tended to deal justly with those having debts and obligations against the company, (other than the holders of bonds or de- bentures.) And it is evident from the appropriation of a particular sum, as well as from the appropriation of the earnings in dividends on the share capital of the com- pany, it was supposed that the appropriation would be suffi- cient to discharge those debts and obligations. How the amount was arrived at does not appear beyond this, that Mr. Cumberland, who was then vice-president of the company says in his evidence that an estimate was prepared by the company of its liabilities. By the word railway as used in the clause giving the first preference bonds a first charge, and as used in the clause ap- propriating the earnings of the railway, I considered the lerd ii i&e app pers dbasers tlon an( Statute : being w cessary dl^tot ms con c^e it, p»ovisio coinpan; bondhol be, Avhci B9eh a c] tbn claii texest 01 It ap] wbich tc further J tbo roa(] craing i this clai earnings specified t^ com] breach o 1 areally piesent, ^st so • But i should I awarded not pled f 3«hl!:fnr:;:trtL\^™,r,»rrs^^^^^ :-*--eenta.„^.dar~at^^^^^^^ If the effect of tlic award made upon that ,„1,„- • to make this town of Barrio a eredita wkl n •" u """'' the bondholders upon the railway aid i ^ "f '"' '» ■mission and award would nroneX .'"'"«'' ""= «»''- « question between SriZL'" T""""' ""' " and at the most a subscc,ue„t „ „1 !„ e T^r'"''"'^' of course, be adjudiealed upon at Zi,' \.^ "'""""' incumbrance. I have o„l/.o say h t 2"^,,° '? """ law, the passing of which ft is Zll'i ^'' ''" ?°"°»° airrecmcnttoirhih-,', -„ • Si'CStcd was stayed bv the a^it is, f» iV rSe'd XTrr'""" ''"^ "«' -- y ueciared what I have assumed, that the 't to prevent iuppose fuel Jed, may be within the d are appli- he payment tion of the 1 in prefer- r a court of h the same herewith it '■ company, lany. and every ilway, and they like, expressly to all in- »d others, levy upon lid be to bing the )mpany ; ed to me on were ights to ■he sub- , but it mpany, cannot, prior become hy the e same at the 29 same company was continued as existed before the act of 1859. Mr. Eccles concluded that the provision in the act giving the preference bondholders a right to vote in the same proportions as shareholders made them members of the company. I incline against this contention ; but if it were correct it is immaterial unless they being members of the company would affect his right to file this bill. I am clear that it would not. In my judgment, the plaintiffs are entitled to an injunc- tion restraining the railway company and its directors from paying the amount of the award in favour of the municipality of the town of Barrie or any part thereof, or in any other way satisfying the claim of the municipality out of the earn- ings of the railway; and restraining the municipality from receiving such payment or satisfaction out of sucli earnings, and for enforcing such payment by levying upon the rail- way, or any other rolling stock thereof, or any thing else necessary to or ordinarily used in the working, repairing, or managing of the same. APPENDIX D. Cop^ of Bond for Arhitratmi relied upon as conveyance and title to Right of Way. Know all men by these presents, that we George Lount of the town of Barrie, in the county of Simcoo, Esquire, John McWatt, John Strathy, Henry Baldwin Hopkins, Henry Eraser, James Brewer, llobert Simpson, Edward Marks, William Graham, Sidney Moorchouse Sanford, Amos Arksey, Thomas Summersctt, David Movion, John Ross, James Dun- lop, Charles Partridge, William Maine, Walter Raikes, by Archibald Pass, his attorney, respectively of Barrie aforesaid, are held and firmly bound unto the municipality of the town of Barrio, and to their certain attoriioy, successors and as. signs in the penal sum of ten thousand pounds of laAvful money of Canada. For which payment well and truly to be 30 made wc bind ourselves and each of us, our and each of our heirs, executors, administrators, and assigns and every of them firmly by these presents sealed with our seals, and dated tlie fifth day of February, in the year of our Lord one thousand eight hundred and fifty-five. Whereas the said municipality of the town of Barrie with the view of benefit to the said town of Barrie did contract and agree to and with the Ontario, Simcoe, and Huron Union Railroad Company, that if the said company would agree to extend their line from the present station in the township of Innisfil to McWatt's wharf, situate in the town of Barrie, they the said municipality would purchase at their expense for the said railroad company the right of way therefor. And whereas the said municipality of the town of Barrio did, in and by a certain by-law made and passed on the day of March, A.D., 1854, according to the provisions and requirements of the IG Vic, ch. 21, raise the sum of three thousand pounds for the purpose of purchasing the right of way aforesaid. And whereas the company being about to commence the said extension of their said line into the town of Barrie, have called upon the said municipality to procure such right of way as aforesaid. And whereas, at the request of the said municipality, the several parties above bounden, have respectively, by certain deeds in writing, bearing even date with this obligation, agreed to sell, and convey unto the said company such quantity of land and right of way over and through their respective parcels or blocks of land as may be required for the said company, in accordance with the plan adopted by the said company on the twenty-fifth day of January, A. D. 1855, which said plan is marked A, and signed by the reeve of the said municipality and the chief engineer of the said company, and annexed to these presents. And whereas the said municipality are desirous to agree with the several above bounden parties, touching the com- pensation to be paid to each of them respectively by the said municipality, for such portion of the said respective parcels 8aid c( said ra the sai sustain any pre And tively, a refer th Edward town of value of for the 1 sustainec in respc( arising f] therefor, of difier of Barrii the same, Now tl above boi their heir and shall and arbit; and Robe John Ale; several ab any sum c either of t land and i them, or e road, or tl of the sa payment U of such sui the requesi the said C good and si I 31 parcel,, of la„,I ,.„,] .igU of ,vay rcxpcctivoly „.»ig„o,, ,o ,!,„ a.cl .u.h.oad, a,„, „„,o,. .ort,, and for any iZ^^ Z 1.0 »a,d several alove l„.,„.Ion panic, may respt.ivdv Bustam m respcet of .ucl, railroad or works arlilS any proeeedings of the said eompany i„ respL fof And whereas the several ahovo bo„„den parti pc„ V y and the sa.d ,„„„ieipality have ,„u,„'ally ag e Sto refer the same respeetively to the arbitration and aw. 'f town „f Iiarr,e, Esquires, to aseertaiu what if ,nv i, , ' tor the light of way, as aforesaid, or of tlie damages if anv sustained by the several above bounden parties efpeedve y' m respeet of any sueh railroad or other worhs tlieie „^; arising from any proeeedings of the said eompany in 1^1 therefor, with power to the above named arbiLtL, i, a "o Now the condition of this obligation is such ibnt if ,i above bounden parties, and each o'f them, tl h 1 " Ich ^ their hers, executors, administrators, and every of them d! and sha 1 well and truly abide by and fulQl thc'lwa Ti^r and Robert Ross, and the decision, if requisite, of the said John Alexander, as such umpire as aforesaid and of tic several above bounden parties respectively in the event of either of then,, as the value of the said respective portions of and and right of way, or of the said damages, f any by thciu, or cither of them sustained in respect o1 the said'^iU load or the works thereof, or arising out of any pr, eccdings of the said eompany „, respect thereof, do and shall on paymciit to them, or either erf them, by thj said municipalit" he request of the ^i municipality, execute and deliver to Inod , i"""' ^"«c«c and Huron Railroad Company a good and sufficient deed of confirmation of the said land and 32 right of way, (ur of such portionthcro of as may by the said company, on behalf of the municipality, be rogaviled and taken for the purposes aforesaid,) together with a release to the said company and to the said municipality from all claims or demands in respeot of the award and decision or value thereof, or of any damages sustained or to bo sus- tained in respect of the said railroad extension, or of the works thereof, or arising out of any proceedings of the said company in -cspect thereof, then the above obligation to be void or else to be and remain in full force and virtue. Pro- vided always, and it is hereby declared, that nothing herein contained shall render each of the several above boundon parties liable, otherwise than for his own individual acts, neglect or default, and that no greater sum shall be re- covered under this bond or covenant against the several parties thereto, than as follows, that is to say : Against George Lount, in the whole £250 Against John McWatt, " 250 Against James R. Gowan, " 250 Against John Strathy, " 250 Against Henry Hopkins, " 250 Against Henry Eraser, " 250 And against each other of the several above bounden parties, the said sum of two hundred and fifty pounds. Signed, sealed and delivered in the presence of (Signed,) (Signed,) D. MORROW, GEORGE LOUNT. witness to JNO. ROSS' Signature. JOHN McNATII. GEORGE LANE J- 1^- GOWAN. witness to the Signatures of JOHN STRATllY, GEO LOUNT H. B. HOPKINS. JNO.' McNATII, JNO. STRATHY. HENRY FRASEK. H B. HOPKINS, HENRY ERASER. JAMES lUlEWEll. JAMES BREWER, ROBT. SIMPSON. ROBERT SIMPSON. EDWARD MARKS. EDWARD MARKS. WILLIAM GRAHAM, S. M. SANFORD. WILLIAM GRAHAM. VMOS ARKSEY, TIIOS. SUM.NUniSETT. S. M. SANFORD. D WID MORROW, JAS. UUNLOP. AMOS ARKSEY. cilS. PARTRIDGE, WM. MANN. THOS. SUMMEIISETT. WALTER EAIKES, by liis Attorney. DAVID MORROW. .INO. ROSS. JAMES DUNLOP. CHARLES PARTRIDGE. WILLIAM MANN. WALTER RAIKES, by a pass. Lettc ing dire That bondhol liarrie, ject of t applicati pany's c Exti The b( n. Came Barrie, f( suit, and cation to relating t Prcsenl ris, T. Ga cron, M.r Canada, a of attorne^ • case of I having rei had betwe( " the Barr Q. C, ther " I beg " January, " which hai " Mr. Angi " requiring "and the ] " injunction 5 the said rtlcd and •clcasc to from all 3cision or D bo sus- or of the f the said tion to be no. Pro- [12 herein bounden liial acts, 11 be re- e several :250 250 250 250 250 250 n parties, 38 AITENDIX E. )N. i. AM. SETT. Extract from JUard 3Ilnutcs, January 2ht, ms application to parliament fen ■!! 7™ of an intended pany's charters " """^"''ment to tl,o com- RIDGE. S, by a pass. cation to the iSatnl in ""^ ^"r™- "f ™ »PPli- 'o.a.in,totho;^r;^«X;rr' '" ''" -'^ ri, T^GaU O r' ^"'"•''■■'"". ^--Vs M^ttt, T. D. Har- ris, 1 Gait, Q. C., Standing Counsel The Hon T tt n cron M P p^t, l r^ , ^uuocj, j.ue iion. J. H. Cam- of attorney ) for th,.m;.i ,' ?'' * "''"S "»'''=>■ P<>«i' case of D^iin t rf'LHe °Th" ''°""'°""' '" '"° havins referred nf 1 ,i . l '"' '°»°''g">g 'Urector had Wtweor Mr. 4 £ n^d tho^rT""'- ""° '^°°""' " the Barrio ^M'^^ T ^ directors in relation to OP r ' '"'"'^ *^^ ^Pi"^on of counsel T Gait ^' C, thereon, as follows;— ' '» " I beg to acknowledge the receipt of your letter of 27th "January, containing a reference of iL V f " which hiq t-,1.^^ 1 V^^^'^"*'^ 0* the correspondence " r Anl tr • ^'*''''" *^' ^^^^'^ «f ^^reitors and "renuiri^^^^^^^^^ '^^^'^^^"S 'the Barrie Switch,' and requ ring my opinion as to the proposals of Mr. Morrison injunction in Chancery) to comply with them, assuming ^1 34 " (wliich has not yet been (.liscusscd) that such propoHiisl " were otherwise open to acceptance." In reply, I beg to state that in my opinion the earnings of tho company have been specifically appropriated by the le<:islatinc, and that the directors have no power to apply thtMu in any other manner than that pointed out by tho act of parliament. If the company are possessed of any other moans than those arising from "the earnings," they might, if they thought it for tho interest of the company so to do, enter into an arrangement for tho construction of the proposed switch, but if they arc not, they cannot enter into any arrangement without, in my opinion, violating the provisions of the act, and subjecting themselves to an application to tho Court of Chancery, at the suit of tho bondholders. It is true, that on referring to tho injunction issued by the Court of Chancery, (a copy of which I this day received from Mr. Boulton,) I find that it points only to the payment of Mr. Harrison's award ; but I entertain no doubt that it would bo extended to the appropriation of any of tho earnings of the company, in contravention of tho terms of the act, and I am of opinion that the construction of the switch proposed by Mr. Morrison would be such a contravention. Sincerely yours, (Signed,) THOMAS GALT. The board explained that in view of the correspondence, opinion, and parliamentary notice referred to, they con- ceived it their duty to consult the bondholders (plaintiffs in the case) as to the course now to be taken in the interest of the proprietary at large ; they submitted that in view of the injunction they were powerless to effect any compromise or adjustment with the town of Barrie; that they had sug- gested to Mr. Morrison that it was with itie plaintiffs, and not the company, with whom a settlement must be sought ; that they Avould not oppose any compromise or adjustment that the plaintiffs, in their own interest as bondholders, might agree to and effect, but that in the event of no such adjustment being possible, it seemed to be their duty to oppose the proposed legislation which was aimed at the organ the nc res tori Afti plainti their r ings in would fere wi parliaii securiti the act oppose had a ri that opj thereup* That legislatii laws affc Extract That i 1859 has affairs of way has, complete performs ; agement ] munity an That th posed app] the laws al believing t company, { to every in This me( proposasl I beg to any have and that iny otlicr nont. If lan tlioso hought it into an lI switch, ingoment ■ the act, Court of 3, that on ;!hancery, oulton,) I larrison's extended company, )f opinion Morrison 3}ALT. pondence, they con- (plaintiffs e interest in view of mpromise ■ had sug- itiffs, and e sought ; Jjustment idholders, f no such r duty to d at the 85 parhament wouhl distuih bv t'*: vn.f r, , ''''" "o ^oar that opposolho lc.si,,ati„„ to 1,0 m'i^^ltZZV'''''-''''' I'aJ » right to expect tl,o nLZ, I ^ Momson, and ...at opptition. no tis:vr:;rrt '" thereupon, ordered ° wuimiawn, it was la™ affecting .hi. co^pan,, a/Lw^taMiS™'™' " '"° &tract >„ .„•« „y tk: Annual General Meeting February IWi, 18G3 ^^^ezmg, way has, under the provisions nf fJ,.f .1 ^'^'^' con,p.c.oefficic„c,:„a™:„i,:dit'.:rit"''"f,,'" perfo,™. all it, functions as a public wo k a at..," ^ agement possesses tho confidenco "J™, "'"'^ "'""ts man- munity and the public at L"gt ™""""'°'"' '^"■»- That this .neeti.ig views with unmeasured i-e-i-et ■> n,.o posed appLeation to parliament for the purp s o° alt' ri I' the laws affeet,„g this railway and protecting its Lcur to bohevng that any disturbance of U,e or.a!izatioT Tf I' company as now established, would result d^Ct^l , to every interest connected with it. "•i„<=ously This meeting, however, approves of tho efforts made by 36 the directors from time to time to adjust the difficulties relating to the Barrio branch, and would not object to such an alteration in the law, as would authorise the construction of the switch on the original condition, viz : that the title to the right of way and station lands, &c., should first be com- pleted and transferred to the company by the town of Barrie. That petitions from the propriety consistent with this reso- lution be accordingly prepared, signed, and transmitted to both branches of the legislature, praying them to refuse their sanction to any other interfpi'encc by further legislation, or in any way to disturb the securities and adjustment estab- lished by the Act of 1859.