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Un des symboles suivants apparaftra sur la dernlAre image de cheque microfiche, seion Ie cas: Ie symbols — ^ signifie "A SUIVRE", Ie symbols y signifie "FIN". Maps, plates, charts, etc., may be filmed at different reduction ratios. Those too large to be entirely included in one exposure are filmed beginning in the upper left hand corner, left to right and top to bottom, as many frames as required. The following diagrams illustrate the method: Les cartes, planches, tableaux, etc., peuvent Atre fiimte k des taux de reduction diff^rents. Lorsque Ie document est trop grand pour Atre reproduit en un seul ciichA, il est film6 A partir de I'angle supArieur gauche, de gauche it droite, et de haut en bes, en prenent Ie nombre d'images nAcessaire. Les diagrammes suivants illustrent la mAthode. 1 2 3 1 2 3 4 5 6 / STATEMENT BY MESSRS. ASHUBST, SON, AND MORRIS, AS TO THE COURSE INTENDED TO BE PURSUED IN ASSERTING THE RIGHTS OF THE FIKSI PREFERENCE BONDHOIDERS II OF THE GRAND TRUNK RAILWAY OF CANADA, TO A FIRST CHARGE ON THE ROAD AND PROPERTY OF THE COMPANY; 4 INCLUDING THE KOLLING STOCK. ■ '■IM '.Ml 11 ^s LONDON: PETTER AND GALPIN, LA BELLE SAUVAGE YARD, LUDGATE HILL, E.G. 1860. mm A* CHI /US P{m.l iriftWA, emu I LONDON PRTTRK AND OALPCf, LA. BKLLB 9A.UVA0E YARD, LCDRATE HILL, E.C. i GRAND TRUNK RAEWAY COMPANY OF CANADA. Having, on behalf of a First Preference Bondholder, sent out instructions to Canada, to have proceedings taken there for the purpose of having the rights of the First Preference Bond- holders settled and determined, we deem it right, for the information of the First Preference Bondholders, to state the course which has been and is intended to be pursued. In the first place, we laid before eminent Equity Counsel (Sir Hugh Cairns, Q.C., Mr. Amphlett, Q.C., and Mr. Westlake) a case, accompanied by all the Canadian Acts relating to the Company, to advise as to the rights and remedies of the First Preference Bondholders, and the following is a copy of their opinion thereon : — " 1. We are of opinion that by the terms of their Bonds and of the Canadian Statutes, the First Preferential Bondholders of the Grand Trunk Railway Company of Canada possess an hypothec, mortgage, charge or lien, of the same nature, covering the same kinds of property, and ranking in the same order of priority, with that which the Province had previous to the Act of 1856, st. 19 and 20 Vic, cap. Ill ; iind that such charge extends to the Rolling Stock and Plant of tlie Company as well as to the road and works, and is a first charge thereon. " 2. Wo are of opinion that the said First Preferential Bond- holders are entitled, in case of any danger to their security, to have Receivers appointed, or such other means employed, J as by the laws of the respective jurisdictions through which the Railway passes may bo provided for protecting and making available the property included in their charge ; and, assuming that there is an evident prospect of the revenue of the Company proving insufficient to pay the Intei'est becoming due on their bonds, and that judgments to large amounts have been obtained against the Company in Upper Canada, we consider that an application to the Court of Chancery in Upper Canada for a Receiver, and an Injunction to restrain the judgment creditors from issuing execution, would be successful." This opinion, in effect, amounts to this : that the First Preferential Bondholders are in the position of First Mort- gagees on all the property of the Company, including the Rolling Stock, and that, consequently, no judgment against the Company can be enforced, except subject to the Bondholders' prior claims. We are happy to say that this view of the construction of the Acts has been confirmed by a competent legal opinion in Canada. With reference to the various points suggested by the Report of the Committee just issued, as affecting the rights of the First Preference Bondholders, we may say that all those questions, and many others not suggested by the Report, were carefully considered and deliberated on by Counsel before giving their opinion already set out. As to the Leased Lines, we may mention that the liability for the rent is limited to the ordinary power of distress by landlords on the property included in the lease. There is no ■ 6 charge for such rent on the property of the Grand Trunk proper ; the whole, therefore, of the Grand Tnink line, and the property belonging to it, which haa cost over fourteen millions sterling, constitute the security on which, as advised by Counsel, the First Preference Bondholders have a fiiat charge. Having taken the opinion, and sent' out instnictions to our agents in Canada to commence proceedings in accordance there- with, we then addressed to Messrs. Swift, Wagstaflf and Co., the Solicitors to the Company, a letter, of which the following is a copy: — 6, Old Jewry, London, E.C. 5th December, 18G0. Messrs. Swift, Wagstapf & Co., 32, Great George Strcot, Westminster. Dear Sirs, GBAND TBUNK RAILWAY COMPANY. Referring to our interview with you yesterday, we now, as then arranged, put into writing the course which our client is advised and intends to pursue. Our client is a First Preference Bondholder, and is advised that the First Preference Bondholders have a first charge on the Railway and the rolling stock. The judgment creditors, as we understand, dippute that the First Preference Bondholders have any lien or cii.' rge on the rolling stock ; hence arises an important question, which, look- ing at the large interests involved, can only, we presume, be settled by a legal decision. Our client's desire is to have this question, and any other which may arise as to the rights of the First Preference Bond- holders, settled ; for it is clear that, until the rights are ascer- tained, no useful negotiations can be entered upon. It seems to us to be to the interest of the present judgment creditors to have the rights ascertained as speedily as possible, seeing that, by accumulation of interest alone, the floating debt will increaso at the mto of ov«r £400,000 a-ycar, and it must, we think, bo assumed that, if there bo iiny advantages in the position of judgment creditors (although we don't admit that there is), then, so soon as those advantages })cconic generally known, all creditors whose debts are due will obtain judgments therefor. This would include the ordinary Bond creditors whose Bonds become due in 18G2. Again, if it should be held that the judgment creditora are entitled to seize the rolling stock, then it would be to the interest of the judgment creditors and First Preference Bond- holders to come to some arrangement, as, in that case, they could, between them, protect the property and keep the road open, and it would be their mutual interests to do so. If, however, on the other hand, it should be held, in accord- ance with the advice which our client has received, that the lien of the First Preference Bondholder extends to the roMing stock, then, again, no advantage can possibly accrue to the present judgment creditors, or, indeed, to any of the parties interested in the Railway, by having that decision postponed. The greatest danger to which, as it seems to us, this concern is exposed, is to leave the diffei'ent classes interested in doubt as to their rights, because, in such a state of things, some parties are almost sure to take hasty action, so as to secure, if possible, some personal benefit to themselves ; whereas, if the rights of all parties were settled, the px'operty could be protected, and arrangements made for developing the resources of the Line for the benefit of all parties interested. If you agree in the views which we urge as to the desir- ability of a speedy settlement of the rights of the parties, then we shall be willing to confer with you as to the best mode in which the questions which arise can be settled. There can be no difficulty about the facts ; the questions which arise are questions on the construction of the Acts of Parliament, and they can easily be put in a form for decision. (-)iir client has no desire to interfere with the management of i the Road, i>eiuliiig tho decision of tlio legal questions ; his desire would bo to act in concert with Messrs. (Jlyn and Baring to protoct tlio property, and in this wo could, porliaps, bo of essential service to them, in case of attack by outsiders ; seeing that our client would have a right to apply to tho Courts in Canada for tho ai)pointraent of a Receiver, whereas your clients, under their jndgnionta, could only protect the property from attack by others by seizing it themselves under executions — u proceeding which we know would, in Canada, lead to an enormous expense in sherifTs poundage, Ac, to say nothing of tho damage which such a seizure would do to what wo may call tho character and position, or, to use a trading term, the good- will of the conceni ; whereas the appointment of an ad interim Receiver would protect the property without in any way inter- fering with the management or stopping the traffic for an hour. If, as you assured us yesterday, Messrs. Glyn and Baring, the principal judgment creditors, have no intention, at present, of enforcing their judgment, it would, we suggest, be desirable that they should instruct their agent in Canada to act in concert with our agent to protect the property, and so prevent any unnecessary conflict between our respective agents. Our in- structions, which we have already sent out to our agent (and which we shall be happy to show you, if desired), are to take no hostile step, except in the event of judgment creditors seizing, or threatening to seize, the property, and then we have instructed him to apply for an Injunction and a Receiver. We have told him to act as far as he could in concert with the English judgment creditors in order to protect the property. Ujion the main question, namely, the settlement of the legal rights, can you suggest any mode for having them adjudicated upon in this country 1 A colonial decision would probably be appealed from to the Privy Council, and thus involve delay. If not, our idea is that Messrs. Glyn and Baring should agree with our client to have the questions which arise put in the simplest possible form for speedy decision in Canada. This must, we think, be done through the Court of Chancery there. The form of the suit would, wo upj)rehend, bo a Bill filed by our client, as representing himself and other First IVoferciitial Hondholder«, against the Com[)any and tlio judgment creditors ; and if, in s\ich suit, it should be necesHary to pray for some relief, as, for instance, the appointment of a Receiver, our client, if successful, could have no other object than to name a Receiver who would avoid conflict with the Company, whose management, in fact, would bo that of the Company under another name. If, however, the powers of tho Canadian Court should admit of our obtaining a binding declaration of right, without praying any relief, that is what our client would most desire, so long as all parties act amicably together. We have taken two opinions in the matter : one from Mr. Geo. Sweet, the conveyancer, who had before him an abstract of the Acts ; and another, the joint opinion of Sir Hugh Cairns, Q.C., Mr. Amphlott, Q.C., and Mr. Westlake, all of the Equity Bar, who have had before them, and have carefully considered coj)ies of all the Acts relating to the Grand Trunk Railway. We shall be happy, if you desire it, to show you the cases and opinions, in order that you may see we are not acting in the matter without due deliberation. We address you in tlie character of Solicitors to the Com- pany, with the understanding that you will communicate what we have written to Messrs. Glyn and Baring. We are. Dear Sirs, yours truly, AsHURST, Son, and Morris. The object of our client, in taking the proceedings referred to, is sufficiently set forth in our letter to Messrs. Swift, Wagstaff & Co., and we are happy to say that Messrs. Baring and Glyn, the judgment creditors on this side, have, as sug- gested by us, sent out instructions to their agents in Canada to act in concert with our agents there, in taking steps to pro- tect the property, in case of attack l>y judgment creditors in raniida. By th(5so mean« thoro is little douht that tlio road will ho kopt npnn, and tho principal danger which was at one time appivhciKhid, viz., having tho property torn to pieces by rival cliiiinantfl, will be avoided. The i)rincipal question which will have to be decided, if the legal proceedings go on, will be l)otween tho jndgment credi- tors and the First Preference Bondholders, whether tho secu- rity of the latter includes the rolling stock. It has been suggested that the Government intend to come forward with some measure of relief, which may provide for the claims of the judgment creditors ; and we have been applied to to suspend proceedings until after the meeting of the Canadian Parliament, in February, to see whether any such measure will be introduced. Of course, if, by these or any other means, the judgments are satisfied so as to remove the danger of seizure to which the property of the Company included in the First Preference Bondholders' security is now exposed, and the interest of the First Preference Bondholders is regularly met as it becomes due, the further prosecution of the proceedings will be un- necessary ; but so long as the judgments remain, we do not feel at liberty to delay in obtaining a decision of the legal rights of the First Preference Bondholders ; and while, there- fore, avoiding anything like a hostile prosecution of the pro- ceedings, and also any application for a Receiver, unless it become necessary so to do, we feel bound to press on the pro- ceedings to a decision. If the proceedings should go so far as to have the rights of the Fii-st Preference Bondholders decided by the Courts, it will then, in all probability, result in the appointment of a Receiver, whose duty it will be, out of the earnings, to pay the various claims, according to their legal priorities : if it should end in this, we don't think the First Preference Bondholders need look on such a result with apprehension. Many of the leading Railways in America are at this moment worked by Receivers. 10 It is of great importance, in order to have an influence over future legislation in Canada aflecting the Company, that the First Preference Bondholders should all pull together. Next to obtain- ing a legal decision on their rights, it is important to watch care- fully any measure which may be introduced into the Canadian Parliament relating to the Company, in order to see that the same does not prejudicially affect the claims of the First Preference Bondholders. It is of course out of the question to suppose for a moment that the Government of Canada could designedly introduce any measure to affect vested rights. Canadian credit stands too high for any fear of that kind j but when we mention that the rights of the First Preference Bondholders rest upon an Act of 1856, under which the Bonds are issued — ^whereas the principal doubts and difficulties which have been suggested as affecting their claims, arise under the subsequent Acts of 1857 and 1858 — we think we have made out a case for watchfulness on the part of the First Pi'eference Bondholders. This, is another reason why the proceedings we have begun should not be delayed; for, so long as the rights of the First Preference Bondholders are pending for decision before the Courts, the Legislature must wait such decision before passing any measures aflfecting such rights. Several large and influential First Preference Bondholders have already concurred in the proceedings we have taken, but it will be important to be able to show how many of the First Preference Bondholders do concur therein j therefore we shall be glad if each First Preference Bondholder who so concurs will send us a note, stating the number and particulars of the Bonds he holds, and we undei-take that his so doing shall not involve him in any liability for the expenses. ASHURST, SON, AND MORRIS. 6, Old Jeiwy, London, E.G.