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 |tt ike Jwpni0t (Il0ttrt, ^ , 
 
 MONTREAL. 
 
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 ii 
 
 ALFRED MORRISON, 
 
 Petitioner. 
 
 THE GRAND TRUNK RAILWAY 
 COMPANY OF CANADA, 
 
 Defendants. 
 
 BEPOBT OF AROUMENTS HEABO AT Ik^Cix'TiUiAL, BEFORE 
 
 MB. JUSTICE MONK, 
 
 ON THE 28rd, 24tb, AND 26th OGTODEB, 1861. 
 
 »■!: 
 
 REPORTED BY JAMES KIRBY, B. A., 
 
 iTVDI 
 
 -^ TORalTTO: 
 
 HEf^Y BOWSELL. LAW FUBLISHEB. 
 
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 Editorial Note.— The case of " Morrison v. The Grand 
 Trunk Railway Company of Canada," as reported in the 
 following pages, is a suit instituted in the ProTince of Lower 
 Canada, to determine three questions : — 
 
 1. Whether the preference bondholders of the Grand 
 Trunk Railway Company are entitled to a charge, hypothec 
 mortgage, and lien of the same nature and extent as that 
 which this Province formerly had. 
 
 2. Whether this charge, hypothec mortgage, and lien 
 extended to the rolling stock and plant, and that conse- 
 quently the charge hypothec, mortgage, and lien, created 
 in favour of the first preferential bondholders by the Act of 
 1856, also comprises the same property. 
 
 3. Whether the preferei -ial bondholders are entitled to 
 have a Sequettre, or Receiver and Manager, of the railway, 
 appointed, by whom the said railway may be worked and 
 managed. 
 
 A proceeding having for its object the determination of 
 the same questions is already commenced, and is now pend- 
 ing in the Court of Chancery in Upper Canada, and will in a 
 few days be brought on for hearing. 
 
 The cause as reported in the following pages came on for 
 hearing in Lower Canada, at Montreal, before Mr. Justice 
 Monk, on the 23rd, 24th, and 25th of October, 1861. The 
 plaintiff, in the interest of the first preferential bondholders, 
 was represented by the following counsel, the Hon. L. T. 
 Drummond, \3. C, the Hon. A. A. Dorion, Q. C, and Mr. 
 A. Robertson. 
 
 The company were represented by Mr. J. W. Ritchie, and 
 Mr. PominviUe. 
 
iv. 
 
 Mr. Strong, of the Equity Bar of Upper Canada, 
 Mr. William Pare, of London, England, as agent for 
 preference bondholders, and Mr. Snolling, from the oflSco of 
 the plaintiff's Upper Canadiftn solicitors, were also present 
 watching the cas^ on the part of the preference bondholders. 
 Mr. Alexander McDonald, of the Equity Bar of Upper 
 Canada, was likewise present, watching the case on the 
 part of the company. 
 
 The respective arguments of each coimsel engaged in the 
 ease have been submitted to them respectively for revision, 
 and have been revised by them. 
 
 iJoRONTO, 2nd November, 1861. 
 
Sn m fttFftlw mm, S«0tttwal, 
 
 BEFORE MR. JUSTICE MONK. 
 
 ALFRED MORRISON, 
 
 Petitioner. 
 
 THE GRAND TRUNK RAILWAY COMPANY 
 
 OF CANADA, 
 
 Defendatitt. 
 
 , Sfported by JAMES KIRBY, B.A., Sludmt-at-Law. 
 
 FIRST DAY. 
 
 23iiD October, 1861. 
 
 Mr. A. Robertson opened the case for the Plaintiff, and 
 stated in effect that tlie petition was filed by a preferential 
 bondholder, of which the conclusions were to the effect : — 
 
 1. That it be declared that as such bondholder, the r • 'i- 
 tioner was entitled to a first hypothec^ mortgage, and ((i«v^ 
 upon the railway, tolls, and rolling stock of the Company, 
 and to have the road worked and the tolls -and profits ap- 
 plied to the payment of interest on the preferential bonds 
 and other debts of the company, according to their legal rank 
 and priority. 
 
 2. For the recovery of £636 sterling, interest due in Janu- 
 ary last, upon bonds for ^610,600 held by the plaintitf. 
 
 8. That it be declared that by reason of the Provineial 
 Statutes cited, and the nature of the rolling stock as immeu-' 
 hies par destination, such stock could not be sold by the Sheriff 
 nor could the road itself. 
 
 4. ^iiat a wcyitcStru or rGceivCf uc rjuiaod hj whom tUA 
 railway should be worked and the tolls and revennes received^ 
 
6 
 
 and tho net proceedfl, after deduction of working exponaeB, 
 returned into court for distribution, under the order of tho 
 court, to the various creditors according to their rank and 
 priority. • 
 
 6. For such other relief as might be necessary. 
 
 The petitioner set forth : — 
 
 Tho Provincial Statutes under which the government guar- 
 antee was given ;— the statutes incorporating the roads form- 
 ing part of the Grand Trunk Company ;~the agreement of 
 union between the various companies which was fied and 
 admitted ;— the statute ratifying the union ;— the issuing of 
 
 £2,000,000ofbond8undertheactofl856;— that the plaintiflf 
 is owner and holder of ^£10,600 of such prelerential bonds, 
 transferable by delivery, on which arrears of interest had 
 accrued; that the security of the preferential bondholders 
 rested mainly on the efficient working of the road and the ap- 
 plication of the tolls and revenues to the payment of interest 
 on such bonds; that this security would be greatly impaired by 
 the sale of the road and of rolling stock, plant, &c., which 
 were immeubleapar destination; that the rights of the plaintiff 
 would be destroyed if he were force<l to file oppositions afin 
 de comerver on the proceeds of any sale by the sheriff; that 
 the interest on all the preferential bonds was over due; that 
 the company was in embarrassed circumstances and largely 
 indebted, and large judgments obtained against them ; and 
 that the revenues, tolls and profits of the road, instead of 
 being applied to the payment of the interest due to the pre- 
 ferential creditors, were applied to pay common and unprivi- 
 leged creditors ; and that under the present management the 
 preferential creditors were exposed to the danger of losing 
 their security. 
 
 The plea was a "general issue." 
 
 Mr. Robertson then referred to the various statutes set up- 
 in the declaration, namely :■— The statute of 1849, 12 Vic, ch. 
 29, which provided for a "guarantee of interest on loans to be 
 raised by any company for the construction of a line of railway 
 not less than 75 miles in length, within this province;" and 
 enacted "that the payment of interest guaranteed by the 
 province shall be the f rst charge upon the tolls and profits of 
 
tho company ;" and also, "that tho province shall have the 
 first hypothec mortgage and lien upon the road, tolls, and 
 property of the company for any sura paid or guaranteed 
 by the province, excepting always the hypothec mortgage or 
 lien of holders of bonds, or other securities on which interest 
 18 guaranteed by the province, for the interest so guaranteed, 
 and the principal on which it shall dccrue." 
 
 The Railway Clauses Consolidation Act, of 1851, sections 
 7 and 9. 
 
 The statute of 1851, 14 and 15 Vic, chap. 73, providing 
 for a Main Trunk Line of railway throughout the whole pro- 
 vince, and providing that the guarantee might be extended 
 to the "payment of the principal of the sum guaranteed 
 as well as the payment of the interest thereon," and that 
 
 for the prmcipal 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, (of 1849) is given for sums paid or guaranteed 
 by the province, and subject to tho same provisions " 
 
 The Act of 1852, 16 Vic, ch. 37, incorporating the Grand 
 Irunk Company, and providing (section 28) that the govern- 
 ment guarantee should not be given to the Grand Trunk to 
 an extent exceeding £3,000 per mile, and that £40,000 stg 
 per mile might bo advanced so soon as it was ascertained by 
 an engineer of the government " that £100,000 stg. has been 
 actually and with due regard to economy, expended on the 
 said railway by the said con.. ,y, in work or materials de- 
 hvered on the ground, or both conjointly, and whenever it shall 
 be ascertained in like manner that another sum of £100- 
 000 stg. has been so expended as aforesaid, then the guar 
 
 'ATln** *^' P'r'"'" "^"^ ^' g^"^'^ ^°^ *°o'her sum of 
 ^40,000 stg., and so on totiea quoHea, until such guarantee 
 shall have been given to the whole extent hereby before lim- 
 ited ; provided always that such guarantee shall, except in so 
 far as otherwise provided by this section, be subject to all the 
 provisions of the act first cited in this section, as amended by 
 that secondly cited therein, and may, under the provisions 
 of the twenty-second section of the act last mentioned, be 
 given by issuing and delivering to the said company provin- 
 
oial debentures for the amount to be guaranteed in exchange 
 for the bonds of the company, to which bonds all the provi- 
 sions of the said section, and of the said acts shall apply." 
 
 The oct of 1852, 16 Vic. ch. 8'.>, permitting the union of 
 companies forming part of the Main Trunk Line, under an 
 agreement such as is mentioned in the act. This statute 
 contains the following clause, (section 6) : " Provided always 
 that the rights of the province, or of Her Majesty on behalf 
 of this province, under any guarantee given to any such 
 company or otherwsse, or of any person or party having any 
 special hypothec or privileged claim upon the lands, build- 
 ings, tolls or other property of either of such companies, or 
 upon any part thereof, shall not be impaired by such pur- 
 chase, and the company shall keep separate accounts with 
 respect to each railway, so as to ascertain the property or 
 moneys upon any such hypothec or privilege shall attach." 
 
 The act of 1854, 18 Vic. ch. 33, amending the acts relat- 
 ing to the Grand Trunk Company, and ratifying the agree- 
 ment made between that company and the various companies 
 forming part of the Main Trunk Line. This act (sect. '20) 
 enacts, that inasmuch as it would be more convenient that 
 instead of the particular charges on the several railways in 
 respect of bonds, "one general charge should be created upon 
 the Grand Trunk Railway of Canada, to the extent of the 
 whole amount of the debentures of the province, issued or to be 
 issued : be it therefore enacted, that the Crown shall, on behalf 
 of the provincial government, have in respect to the debentures 
 issued, or to be issued, as aforesaid, a charge, hypothec or lien 
 upon the whole Grand Trunk Railway of Canada, in the same 
 manner and with the same preference and privilege, and to 
 the same extent and with the same incidents as to redemp- 
 tion or otherwise, as, but for such amalgamation the provin- 
 cial government would have had upon the separate railways 
 or undertakings, in respect of which, by the said several acts 
 respectively, such debentures were to be issued ; and it shall 
 not be necessary for the said company to make, or keep sepa- 
 rate accounts with respect to each undertaking forming part 
 
 Ol liUC sdiu TJIiaiiu ^luiin. Xtidii tTcljr . 
 
 The act of 1855, 18 Vic, ch. 174, " for granting additional 
 
6 
 
 aid by loan to the Grand Trunk Railway Company," autlio- 
 rising the issue of provincial debentures to the extent of 
 £900,000 sterling. By this statute it is enacted, section 2 : 
 " the sums advanced us a loan, under this act, shall bo a 
 first charge hypothec and lien in favour of the Crown on 
 behalf of tho provincial government, and upon the whole 
 amalgamated Grand Trunk llailwny of Canada, and upon all 
 the railway, works, and property, forming part thereof, or row 
 belonging or hereafter to belong to tho said cora,)any, and 
 shall be payable at a period not exceeding twenty years from 
 the passing of this act, the interest thereon at six per cent, 
 per annum being payable by the said company to the Crown, 
 for this province, half yearly, at such times as tho gover- 
 nor in council shall appoint :" and by sec. 3 it is pro- 
 vided " the said charge, hypothec and lien, in favour 
 of the Crown, shall have tho same preference and privi- 
 lege, and shall be subject to the same incidents, as to 
 redemption and otherwise, as the charge, hypothec and 
 lien in favour of the Crown, for claims arising out of the 
 provincial guarantee, or advances in place of the provincial 
 guarantee, under any former act or acts authorising such 
 guarantee or advance." 
 
 The act of 1856, 19 & 20 Vic, ch. Ill, to grant additional 
 aid to the company, which enacts, section 1 : " The said 
 company shall bo authorised to issue preferential bonds to 
 the extent of two millions of pounds sterling. The holders of 
 Buch bonds to have priority of claim therefor over the pre- 
 sent first lien of the province." This act provides that the 
 proceeds of the bonds shall be expended on the portion of 
 the roads mentioned, and on the Victoria Bridge to the ex- 
 tent mentioned in the act. 
 
 The act of 1857, 20 Vic, ch. 11, which enacts, (sect. 4,) 
 that on condition that the company should complete their 
 road and supply the railway with sufficient plant, " and so 
 long as they maintain and work the same regulaHy, the pro- 
 vince foregoes all interest on its claim against the company 
 until the earnings and profits of the company, including those 
 of the Atlantic and St. Lawrence Railroad Company, shall 
 be sufficient to defray the following charges: 1. Ail ex- 
 
10 
 
 penses of managing, working and maintaining the works nnd 
 plant of the company. 2. The rent of the Atlantic and St. 
 Lawrence Railway, and all interest on the bonds of the com- 
 pany, exclusive of those held by the province. 3. A dividend 
 of six per cent, on the paid up share capital of the company, 
 m each year in which the surplus earnings shall admit of 
 the same." 
 
 The act of 1858, 22 Vic, ch. 52, amends the acts relating 
 to the Grand Trunk Company, and provides for the increase 
 of its capital, by preferential bonds, which should be deemed 
 preferential bonds under the act of 1856, or by other bonds 
 not preferential or by mortgage, or by the issue of new 
 shares. "Provided always (sect. 3) that nothing herein or 
 hereinafter contained shall in any way alter, affect, postpone 
 or prejudice the claim of the province upon the said under- 
 taking, or the obligations of the company towards the pro- 
 vince, as settled by the provisions of the several acts now in 
 force relating to the said company." 
 It was contended : — 
 
 That under these statutes the province had preserved 
 its priority of claim for the guarantee. That the words 
 used were applicable to the law in force in both sections 
 of the province, and were intended to give the security 
 known in the French law by the term hypotheque, which was 
 applicable to immoveable as ''gage'' to moveable property. 
 The term « mortgage," unknown in French law, was put 
 into the French version of the original act of 1849, without 
 being translated, and was applicable to Upper Canada, im- 
 porting in some sense a conveyance, with peculiar rights 
 known to the English law. The words "^e'ew," in the French 
 version, and ''privileges" was used to convey the security 
 known in the English law by that term, and although under the 
 French system lien was not perhaps adequately rendered by 
 privilege, but partook also of a right known to our law as a 
 droit de retention, yet the meaning of the legislature could 
 not be misunderstood. By these words, and by the terms 
 "charge," "priority of claim," "preferential bonds," 
 the province intended to obtain all the security it could, 
 over the road and plant of the company, in case of being 
 called upon to pay the holders of the bonds. 
 
11 
 
 That under the statutes the hypotheque and lien extended 
 over the plant and rolling stock of the company. This 
 seemed plain from the words in the original act of 1849, 
 giving a hypotheque mortgage and lien over the "road, tolls 
 and property of the company." To construe property so to 
 mean only immoveables or the road-bed and permanent works, 
 was to restrict its signification both in a common and legal 
 sense. In addition to this, by the act of 1851, 14 & 15 
 Vic, ch. 73, the mortgage, hypothec and lien was de- 
 clared to be "upon the railway tolls and property of the 
 company," and by the same statute (section 21) it was en- 
 acted "that the word railway in ^'^''s act shall include all 
 viaducts, bridges, station houses, repots and other works, 
 machinery, engines, vessels, carriages and things of every 
 kind which may bo necessary or convenient to the making 
 or using of any railway." 
 
 This definition was explicit and general in its terms, and 
 might fairly be held to be a recognition by the legislature, 
 of Its intention that the security should attach to viaducts 
 bridges, carriages, &c., as part of the property of the 
 company. 
 
 The statutes provided for the advance by the government 
 of the £ iO,000 sterling, so soon as the company had ex- 
 pended £100,000, " in work or materials delivered on the 
 ground." (See 16 Vic, chap. 37, sec 28.) In the act 
 of 1854, 18 Vic, ch. 33, sec 20, the £100,000 was to 
 be shewn as expended in work done or materials delivered 
 on the ground, « or rolling stock provided since the 1st of 
 July, 1853." As these materials and rolling stock were 
 delivered and furnished, they became subject to the rights 
 of the government, and formed part of its security. 
 
 That by the act of 1852, providing for the union of 
 the various companies, individual creditors were recognised 
 as having privileged rights on the moveable property of the 
 several companies before their union. (See 16 Vic, ch. 
 39, sec 6.) « Provided always, that the rights of the'pro- 
 vmce, or of Her Majesty on behalf of thi§ province, under 
 any guarantee given to any such company, or otherwise or 
 of any person, or party having any special hypothec, or privi- 
 
12 
 
 leged claira upon the lands, buildings, tolls, or other property 
 of either of such companies, or upon any part thereof, shall 
 not be impaired by such purchases, and the company shall 
 keep separate accounts with respect to each railway, so as to 
 ascertain the property or moneys upon any such hypothec, or 
 privilege shall attach." 
 
 That if such rights existed in favour of individuals, not 
 only on the lands and buildings, but on the " tolls and other 
 property'' of the several companies it might be inferred that 
 the government had, or might have had, rights equally 
 extended. This inference was legal and reasonable. 
 
 That if the lien of the province were admitted, the prefer- 
 ential rank claimed for tlie bond-holders could not be 
 denied. The act of 1856 expressly says — " The holders of 
 such bonds to have a priority of claim therefor over the 
 present first lien of the province^" 
 
 That the acts of 1857 and 1858 did not interfere "with this 
 priority. 
 
 Reference was then made to English oases to shew the 
 powers of the Court of Chancery in England; the powers 
 and duties of receivers when named, and the rights and 
 remedies of creditors holding mortgages or equitable liens : 
 1 Maddock, Chan. Prac. p. 134 ; 2 Muddock, pp. 233, 284, 
 237 ; 35 Law and Equity Rep. 37 ; Carron Iron Com- 
 pany V. McLaren ; Ames v. Trustees of the Birkenhead 
 Docks; 1 Jurist N. S. p. 529; Tatham v. Parker, Jurist 
 1855, p. 992 ; Frlpp v. Chard Railway Co., 17 Jurist p. 
 888; Pardoe v. Price, 13 Mees. and Welsby p. 284 ; 1 
 Shelford, Railways Am. Ed. p. 822 ; Jortin v. S. E. Rail- 
 way Co., 1 Jurist N. S. p. 432, and 4 Jurist N. S., *>. 467; 
 Angel and Ames on Corporations, p. 703 ; Potts v. War- 
 wick and Bir. Canal Co., 1 Kay p. 142 ; South Yorkshire R. 
 Co. V. Great Northern Co. ; 19 Eng. Law & Eq. Rep., p. 
 519; Russell v. East Anglian Railway, 14 Jurist, p, 
 967 and p. 1033, and 6 Eng. Law & Ei[. Rep., p. 137; 
 Corry v. Londonderry & Enniskillen Railway Co., 7 Jurist 
 K S., p. 508. 
 
 It was conceded that these English case were not authority 
 in Lower Canada, nor were the English statutes by any 
 
13 
 
 means so extensive in their terms as the Canadia.i statutes. 
 
 By the English acts only tolls and profits are usually 
 allowed to be mortgaged. — Railway Clauses Acts of 1845 ; 
 Redfield on Railways, p. 572, .073. In the case of 
 Rassell v. The East Anglian Railway Company, the ap- 
 pointment of a receiver with powers over the rolling stock 
 was evidently too extensive, and it would not be contend- 
 ed here that the statutes referred to in that case were 
 analogous to the Canadian statutes so far as respects the 
 plant of the road. In that case also the court was by no 
 means satisfied that the appointment had been obtained in 
 good faith. 
 
 As to Corry's case, it was a case between shareholders, 
 and was not at all applicable to this case. 
 
 The following Canadian cases were referred to. — Simpson 
 V. Ottawa and Prescott Railway Company ; Brantford v. 
 Grand River Navigation Company ; Herrick v. Grand Trunk 
 Company. Herrick's case was decided in June, 1861, and 
 iras brought by a shareholder who sought to have the 
 earnings of the road applied, after payment of working 
 expenses towards the purchase of rolling stock and payment 
 of the floating debt of the compary, before any payment 
 was made towards the interest on the preferential bonds. 
 The bill was dismissed, and the judgment of V. C. Uaten 
 went strongly to support the prayer of the present? plaintiff, 
 as appeared from the judgment, which was as follows:— 
 
 " It appears to us that the situation of the preference 
 bondholders is clear. Their position and their rights have 
 been well defined by the acts. His Lordship then referred 
 to and quoted from 12 Vic, ch. 29, which gave the Crown 
 the lien for interest — 18 Vic, ch. 174, which extended that 
 lien to principal as well as interest. — 19 & 20 Vic, ch. Ill, 
 which authorised the issue of the preference bonds, to the 
 extent of two millions of pounds sterling, the holders of 
 such bonds to have priority of claim therefor over the pres- 
 ent first lien of the province. As bondholders merely they 
 have no lien, but by this ersctment their lien (for they get 
 the lien which the govern ncnt already possessed) attachea to 
 the vjhole property of the company present and future, for 
 principal as well as interest." 
 
 t'-f 
 
14 
 
 " The rights of the preference bondholders thus creited 
 are not impaired by any subsequent enactments; and in 
 my view the act 22 Vic, ch. 52, rather confirms those 
 rights. 
 
 " Now, the object of this suit is to restrain the directors 
 from paying the interest now due and unpaid on the prefer- 
 ence bonds. Apart from the acts of parliament, this court 
 has no power to interfere. This court must decide the ques- 
 tions which are rais' 1 upon these pleadings according to the 
 several acts of parliament which bear upon the subject; and 
 if we refer to those acts, as we have done, we find it clearly 
 expressed that the preference bondholders are in the posi- 
 tion of preferred creditors, having a lien upon the road and 
 all the works and property of the railway. Then again, on 
 looking at those parts of the acts which have been cited as 
 describing the order of distribution of the earnings of the 
 road, we do not find that in those acts the rights of the bond- 
 holders are in anywise impaired. There is no doubt in my 
 mind but that the bondholders can institute a suit to restrain 
 the directors from applying the earnings of the road in any 
 other way than in the order appointed by the acts. This 
 case is to be distinguished from Corry v. Londonderry and 
 Enniskillen Railway Company." 
 
 As to tbo American decisions, it was contended they would 
 be found to sustain the pretentions of the plaintiff, and might 
 be referred to as shewing the opinions held there in anala- 
 gous cases. They were to be found in Redfield's Book on 
 Railways, acknowledged in America as the best treatise on the 
 subject. The author in the edition of 1858, page 690, states 
 that in a case where the statute authorised the directors to 
 make a mortgage of the existing property of the company, and 
 Its corporate rights and franchises, and of the railway itself or 
 the entire undertaking, that the trustees under such a mort- 
 gage would hold subsequently acquired property as an incident 
 to the franchise mortgaged, and as an accession to the subiect 
 of the mortgage. 
 
 ^ " So in a recent case before the Supreme Court, N. Y., The 
 i^armer's Loan and Trust Compftny and the attaching credi- 
 tors of the Fleesburg Railway, 10 American Railway Times 
 
16 
 
 No. 10, 20, Law Reports 678, it was deci(1ed on argument 
 and elaborate examination, that the rolling stock of a rail- 
 way such as cars, tenders and locomotives, is accessory to 
 real estate, and passes by deed as a fixture or necessary in- 
 cident; that railway mortgages including the rolling stock, 
 need not be filed as chattel mortgages, and that bondholders 
 under a mortgage not so filed, are entitled to the rolling 
 stock as against judgment creditors." Strong, J., said, 
 " The property of a railway company consists mainly of the 
 road-bed, the rails upon it, depot erections, the rolling stock, 
 and the franchise, to hold and use them. The road-bed, the 
 rails fastened to it, and the buildings at the depot are clearly 
 real property. That the locomotives, and passenger, bag- 
 gage, and freight cars, are a part, and a necessary part, of the 
 entire establishment, there can be no doubt ; for they are so 
 permanently and so inseparably connected with the more 
 substantial realty as to become, constructively, fixtures. 
 Railways being a modern invention, and of a novel charac- 
 ter we have no decisions on this question, and those relating 
 to and governing old and familiar subjects do not absolutely 
 control us, although we must necessarily resort to them as 
 guides." 
 
 In Williamson, Trustee v. New Albany and Salem Rail- 
 way, U. S. Circuit Court, October 26th, 1857, 9 American 
 Railway Times, where a bill was filed founded on the non- 
 payment of an instalment of interest and the embarrassed 
 state of the company, it is established, " That when property 
 is purchased and placed upon the road, no lien being taken 
 by the seller, it becomes subject of the mortgage lien on the 
 road, so that it is not liable to an execution except under the 
 mortgage ; and existing liens on the road, under the mort- 
 gage, can only be admitted by a court of equity. 
 
 In Ludlow V. Hard, in the Superior Court, Cincinnati, 
 Ohio, where a mortgage similar to that referred to was made. 
 Storey, Justice, said, " Whatever is added to the original 
 structure becomes a part of it, and cannot be severed from it, 
 and if the security of the mortcraffo is to continue to be of 
 any value during the period that may transpire before the 
 bonds become due, it must depend upon the implied covenant 
 
16 
 
 of the company to keep it in running order, if they can earn 
 the necessary sums to keep it in running order ; and, if they 
 can earn the necessary sums, to discharge the accruing inter- 
 est and eventually indemnify creditors for the principal debt. 
 By the transfer to the plain tiflF we must hold, then, that a per- 
 manent right to all additions made to the railway subsequent 
 to the date of the deed was vested." 
 
 Mr. Redfield, although he does not seem disposed to go so 
 far as to declare the rolling stock of a railway a fixture, 
 says, " As between the mortgagor and mortgagee, and all 
 subsequent incumbrancers having knowledge of the prior 
 claim, there is no diflSculty in allowing the rolling stock of a 
 railwfty to constitute part of the mortgage of the road, and 
 that to include the renewal of stock from time to time and 
 even additions (see note page 590.) In this case such notice 
 in a public statute was a notice to all classes of creditors. 
 
 As to the French law on the subject of moveables being 
 considered as immoveables by accession, or by destination, it 
 would be treated by Counsel who were to follow, as well 
 as the question as to the powers of the court to grant the 
 remedy sought for by the plaintiff. 
 
 As to the jurisdiction and powers of the court he, Mr. Rob- 
 erhon, referred to the consolidated statutes of I wer Canada, 
 page 668, " The said Superior Court has full power and juris- 
 diction, and is competent to hearand determine all plaints, suits, 
 and demands of what nature soever, which might have been 
 heard and determined in the courts of FrevStS, Justice Roy ale, 
 Intendant, or Superior Conaeil, under the government of the 
 province, prior to the year 1759, touching rights, remedies, 
 and actions of a civil nature, and which are not specially 
 provided for by the laws and ordinances of Lower Canada, 
 made since the said year 1759, and the said Superior Court 
 is competent to award and grant all such remedy as may be 
 necessary for effectuating and carrying into execution the 
 judgments thereof made in the premises aforesaid, s^nd which 
 to law and justice appertain. But nothing in this act shall 
 extend to grant to the said Superior Court any powers of a 
 legislative nature possessed by any court prior to the con- 
 quest." 34 Geo. III., ch. 6, sec. 8. 
 
17 
 
 By the ed. of April, 1663, the Superior Council [Conaeil 
 Superieur) of Quebec was created, and was to be composed 
 of the governor, the bishop of Petrea, or first ecclesiastic in 
 Canada, and five councillors chosen by them annually, and 
 of the attorney-general. It is therein declared : — 
 
 " Avons dn outr« audit conseil souverain, donne et attri- 
 bue, donnons et attribuons le pouvoir de connaitre de toutes 
 les causes civiles et criminelles pour juger souverainment et 
 6n dernier ressort selon les loix et ordonances de notre 
 Royaume, et y proc6der autant qu'il le pourra en la forme 
 et mani6re qu' il se pratique et se garde dans le ressort de 
 notre parlement de Paris.'' 
 
 Also to regulate the expenditure of public moneys, the 
 trade in pelleteries, and all matters of police, with power to 
 name judges, clerks, notaries, bailiffs, and other officers as 
 they might judge fit. 1 Edit, and Ord., p. 38. 
 
 By the edict o? May, 1667, the Court of PrSvote of 
 Quebec as established '* pour comnaitre en premier instance 
 de toutes mati^rs tant civiles que criminelles," with an 
 appeal to the Superior Council. 
 
 He submitted that the court here had not only the powers 
 of a court of law, but of a court of equity also. The powers 
 of the courts in England as to the writs of mandamua quo 
 warranto^ and prohibition, and scire fanaa had been recog- 
 nised by the statute of 1849, 12 Vic, ch. 41, and simple 
 modes of procedure provided for giving effect to them, but in 
 reality all these powers were inherent in the court, and had 
 constaitly been exercised long before that statute. 
 
 It was true that by the course of practice in our courts in 
 ordinary cases, hypothecary creditors must look after their 
 own interest, and bid up the property hypothecated at 
 sheriff's sale, and afterwards file their opposition d Jin 
 de conserver on the moneys when returned into court. 
 So with creditors having a privilege on moveables as the 
 landlord tor rent, his former right to stop the sale by 
 opposition having been converted into an opposition d fin 
 de conserver. A creancier Chirographaire may sell tl'.e im- 
 moveables, property of his debtor, no matter how many 
 hypothecs might attach to it, and the sheriff's sale purged 
 
18 
 
 all hypotheques. Since the recent statute, 23 Vic, ch. 69, 
 (Consolidated Statutes L. C. page 338,) opposition a fin de 
 conserver need not be filed inasmuch as the sheriff obtains 
 from the registrar a certificate of all hypothecs for ten 
 years previous to the sale, and returns it into court with the 
 moneys, so that the debts as well the rank of the hypothet^ary 
 creditors may be determined on by the court. Thus any 
 creditor who obtained a judgment might bring the debtor's 
 property to sale. If an immoveable could not be sold in 
 parts, a creditor for ten pounds might bring to sale property 
 worth thousands. If we have only the ordinary remedy by 
 sheriff's sale, the preferential creditors must stand by and 
 see their security taken from them by judgment creditors 
 having no pretence to a privilege or lien ; or must buy off 
 the judgment creditors ; in fact pay all the floating debt of 
 the company. This could not have been contemplated by 
 the statutes, which in giving a "privilege" must be held as 
 impliedly giving a remedy to render such "privilege " effec- 
 tual. 
 
 The remedy by sheriff's sale, it was submitted, could not 
 reasonably be applied to railroads, even if railroads could 
 be sold by the sheriff, for it was evident that purchasers 
 {adjudieiture) could not be found for large undertakings, 
 especially for such a road as the "Grand Trunk.'' The 
 interests of all classes of creditors would be sacrificed. The 
 company would practically be dissolved, and public and 
 private interests destroyed, and the just expectations of 
 creditors in this country, and at home, founded on the 
 good faith of the province frustrated. 
 
 Mr. DuKiON commented at length, first, on the question of 
 lien or priority, and on the various clauses of the statutes as 
 shewing the rights of the province, and the priority of the 
 plaintiff's claim as of the preferential bondholders. Second, 
 as to the extent of the plaintiff's lien and as to what property 
 was subject to it. On this point, he submitted that all the 
 rolling stock was by the French law considered immeublea 
 par destination^ and were subject to the lien of the plaintiff. 
 Moveables became immeubles either by " incorporation or by 
 destination." So, water-pipes in a house were given as an ex- 
 
19 
 
 ample of immobilisation by incorporation nnd by destination. 
 
 Pothicr, Traitfe do la Communautt", Nos. GO & 61, 1 
 Teulet, Comtnontairc sur lo Cotle, p. 124. " Le pressoir est 
 rfeputo immeuble, quoique les pieces qui le composent peu- 
 vent facilemcnt se disassemblies ; il est acce89oire de I'her- 
 itnge k I'exploitation du quel il sert, et la destination est mar- 
 qu6e. C'est toujours le in^me principe qui d(5cide.*' 
 
 1 Bourjon, Ed. 1770, p. 90.— So " Ustensils d'Hotcl mis 
 pour perpetuer la demcure." Coutume de Paris, art 90. 
 "Fish in a pond," art. 91. 
 
 In 8th Loire p. 54, the rule is laid down as follows : — 
 " Pour determiner si un objet doit etre ou non consideree 
 comrae immeuble, il faut rechercher sa destination." 
 
 By modern legislation, horses employed in a mine or out 
 of the mines if for hauling up the mineral, are immeublef 
 par destination. " Cependant on pourrait distinguer et ne 
 declarer immeubles que les betes de somme necessaires d 
 I'activite' de la mine, ce qui ne comprendrait pas celles 
 employees d voiturer le mineral do la fosse, au lieu de la 
 vente." 
 
 " La condition pour que ces objcts soient immobiliers, est 
 qu 'ils servent a I'exploitation." 
 
 1. Pierret L'Allier, Traitd sur les mines, p. 173, 174. 
 Immeubles par destination include " tout ce qui est directe- 
 ment attache au service de I'exploitation.'' Same p. 429. 
 But it must be a "service exclusif," p. 431. 
 
 The reason given for considering horses, instruments and 
 utensils used in mines as immoveables, and for not permitting 
 them to be seized under execution, is that the sale Avould stop 
 the work. " Arreterait tout a coup I'exploitation et caase- 
 rait des pertes irrdparables." 
 
 2. Delbecque, Legislation des Mines, p. 428. 
 
 Mr. Dorion contended that this reason was luost applicable 
 to the whole of the rolling stock of a railway company ; that 
 both in France and in the United States, the rolling stock 
 had been considered as part of the railway, and he cited on 
 this point, Dalloz, Recueil-Porio "le, year 1851, part 3, p. 
 49; 2 Troplong, Priv. & Hyp. i>o. 339; Kedfielu on Kail- 
 ways, p. 691, 
 
20 
 
 _ The third point Mr. Dorion urged was, that the road was 
 inalienable, that the ordinary remedy which creditors had 
 against the estate of their debtors could not ensure to the 
 plaintiff who .eas entitled to another remedy at the hands of 
 the court, and he referred to Ferraud-Geraud, Legislation 
 des Chemins de fer, Nos. 13, 14, 17 & 21 ; Rcdfield on 
 Railways, p. 57.>, 589, 590 & 591; Dalloz, Rccueil-P(3rio- 
 dique, 1851, part 8, p. 49&50; Dalloz, Recueil-Periodique, 
 1851, part 5, p. 78, No. 8 ; case of the Chemin do fer de 
 occaux. 
 
 " Attendu que par leur nature de voio publique les chemins 
 de fer ne sent point susceptibles de propriety prive'e. Qu'il 
 est impossible, en effet, d'admettro qu'une telle voie cr6o 
 pour I'utiliti? de tons, puisse etr6 soumise aux modifications 
 partielles ou totales que subit la propri6td privefe, modifica- 
 tions qui resultent de ventes, donations, expropriations, &c. 
 Que la destruction de la moindre parcelle d'un chemin de 
 fer dotruirait la totality de la voio, ce qui serait de la plus 
 6vidente oppcsition avec la creation merae du chemin," &o. 
 
 It is so with canals : 
 
 "Attendu que ces sortes d'etablissements 6tant places 
 dans le domaine public sent naturelleraent inalienables et 
 misprescriptible, tant que la destination du fonds n'a pas 
 ete l^galement changee." 
 
 3. Prudhomrae Domaine Public, pp. 146, 147. 
 
 4. As to the appointment of a aegueetre, which was deman- 
 ded by ihe plaintiff, the old French law did not specify the 
 cases where such an officer should be appointed. It was left 
 to the discretion of the judge. 
 
 Ordinance of 1667, Tit. 19, Art. 1. 
 
 The modern Code, Art. 19dl, specified three classes of 
 cases in which a aequestre might be appointed, but the opinion 
 of the best commentators was, that even the code did not 
 restrict the appointment to these esses. 
 
 3. Delvincourt, p. 436, No. 4. 
 
 L'Article 1961, n'est pas restrictif ; la cour pent ordonnee 
 le 86questre chaque fois qu'il le juge convenable pour la 
 surete des parties ou la decision deia cause. 
 
 The rules laid down in the code about the aequeatre do not 
 
n 
 
 deviate from those followed before the code, as shewn by the 
 discussion of the code in 15 Locid, p. I'JS, where it is said :— 
 
 " Dans une matiere ou les principes sent poses depuit 
 longtems, il s'agit non de credr des r6gles, mais de les 
 recueillir." 
 
 And at p. 141, Favard says, "Vbos n*avez remarqud 
 aucune disposition nouvelle, les lois anciennes sur la matiere 
 Bont Texpression do la morale publique." 
 
 Under the application of these rules numerous cases of 
 the appointment of a aequestre were to be found boih before 
 and since the code. Troplong, " D\i depot et du sequestre," 
 No. 267. Dalloz, Rccueil Periodique, 1834, part 2, p. 101, 
 where a nequeatre Avas appointed to the seizure of real and 
 personal estate and only maintained in appeal, as to the real 
 estate and the mcubles par destination. 
 
 9. Duparc Poullnin, p.p. 160, 164. Dalloz Recueil 
 Periodique, 1849, part 4, p. 47. Order, placing a railroad 
 from Paris to Sceaux under a sequestre. Dalloz Recueil, 
 Periodique, 1852, part 1, page 272. Judgment, shewing 
 the effect of the appointment of a sequestre to the railroad 
 from Marseilles to Avignon, with regard to the possession 
 of the company. 1 Teulet, p. 620, No. 26.—" Le sequestre 
 judiciaire d'un immeuble peut 6tre nomme sur la demande 
 des creanciers inscrits, surtout lorsquel' immeuble se trouvo 
 entre les mains d'un tiers, a titre d'antichrese. En ce caa 
 les creanciers ont le droit de acclamer le sequestre soit pour 
 la conservation de leur gage soit pour que les revenus soient 
 percus dans leur int^r^t." J. Pal. Bourgos 8 Mars, 1822. 
 6 DoUoz, Jurisprudence du Royaume. Vo. Depot, and 
 Sequestre, p. 78. 
 
 Mr. Dorion then cited the several cases in which sequestret 
 had been appointed by the courts in the district of Montreal. 
 The first was that of Des Rivieres v. Ayer, No. 1206, judg- 
 ment of 6th April, 1825, and 20th Feb., 1826. In this 
 case a sequestre was appointed to take possession of a land 
 claimed by a petitory action, so that no waste should be com- 
 mitted pending the action by the defendant, who was never- 
 theless maintained in the possession of a mill erected ou the 
 property. Fabre dit Montfenant v. Chevalier. Judgment 
 
82 
 
 rendered in May, i845. Whoro . ' tho suggestion of ex. 
 
 perts named i^ the case, a tequestre was appointed with 
 special power to ieHfe th« property of which the lefcndant 
 had only the usufruct, and to hand over a portion of the 
 proceeds to the phiintiff in deduction of her claim, and the 
 remainder to tho deCendant for his support. 
 
 Mr. Borion next cited Hart v. Molson, 27th May, 1851, 
 where a acquestre was named to receive an estate given up 
 by executors, and to sell the property and carry out the pro- 
 visions of tho will. IIo continued;— The power of the 
 court to grant the remedy sought for by the plaintiff was 
 indisputable. The Super or Court had all the judicial 
 powers of the old French courts, namely, of the Conseil 
 Saperieur of Quebec. It was bound to render such judg- 
 
 pents etween tho parties as would meet the justice and 
 equity . .' the case ; it was not bound to any particular form 
 of ren dy as could bo seen by a passage from Argon, which 
 he cited. 
 
 In tho case before the court, ho submitted that from the 
 nature, extent and situation of the property of tho defen- 
 dants, as from tho various public and private interests con- 
 nected with it, the renx'dy sought for should be granted. 
 The ordinary remedy of selling the property at sheriff's sale 
 could not bo applied ; if it were, it would result in the utter 
 ruin of all intere:>i;s concerned. The appointment of a 
 Sflqueatre, the powers and duties of whom would be similar 
 to those of a receiver in England, was the only adequate 
 remedy which could be applied. It would protect the rights 
 of all parties, secure the proceeds of the road to the creditors 
 entitled to them, and carry out the intention of the legisla- 
 ture. 
 
 S./'*>NT) DAY. 
 
 Mr. Ritchie for the d<'.'il;'iu. 'us urged ti. j following points: 
 1. That the plaintiff was not in a position to claim the 
 remedy sought for. He should have shewn that the excep- 
 tion referred to in the act 1849, section 1, did not apply. 
 That act provided that " the province shall have the first 
 
83 
 
 hypothec, mortgage and lien, upon the road tolls and pro- 
 perty of tho compiiny, fur any sum p-iid or guaranteed by 
 the province, excepting always the hyputhoc mortgage or 
 lien of holders of bonds or other securities, on which interest 
 is guaranteed by the province for the principal so guaran- 
 teed, and the principal on which it shall accrue." Again by 
 the act of 1856, it was a condition that the £2,000,000 ster- 
 ling of bonds should bo applied in proportions, settled by 
 that act, to the Victoria Bridge, ami the different portions of 
 the "Grand Trunk" road detailed in the statute. lie con- 
 tended that it fell upon tho plaintiff to shew that this condi- 
 tion had been complied with : that tho plaintiff should have 
 proved that the road had been completed and the moneys ap- 
 plied to the road in the proportions indicated, but he had not 
 done so. So with tho act of 1857, the province was to forego 
 interest on certain conditions, as to the completion of tho 
 work and the supply of suflBciont plant to work the road effi- 
 ciently. 
 
 Mr. Justice Monh. — To have done this would have in- 
 volved a vast amount of evidence, and in fact it is scarcely 
 possible that the plaintiff could have given it. 
 
 Mr. Dorion. — These things had all to be done by the de- 
 fendants, who were also ihe parties issuing the bonds — that 
 the very fact of their having issued, must be taken as proof 
 that all necessary acts had been performed — at any rate the 
 defendants could not take advantage of their own wrong. 
 
 Mr. Justice Monk. — What is the plea? 
 
 Mr. Dorion. — The general issue. 
 
 That the provincial government, and the various classes of 
 creditors, sliould have been brought into the cause ; their 
 respective rights could then have been discussed, and settled 
 by the court, whereas in this proceeding their rights might 
 be interfered with without their being heard. 
 
 That the second preferential bondholders were on an equal 
 footing with the first preferential bondholders under the 
 statute of 1S58, which enacts and provides (section 3) for the 
 increase of the company's capital and enacts that '* the fur- 
 ther capital, so authorised, may be raised by preferential 
 bonds, which shall be deemed to be preferential bonds, within 
 
24 
 
 the meaning of the said recited act of the 19 & 20 Vic, ch. 
 Ill, and of the act 20 Vic, ch. 11, and such bonds, together 
 with the preferential bonds already issued under the authority 
 of said acts, shall be entitled to the privileges conferred on 
 preferential bonds by the said acts." 
 
 That the plaintiff had not produced the bonds which he 
 claimed to hold, and had not shewn that he was a bondholder. 
 The coupons might belong to any one not a bondholder ; 
 although he at the same time contended that the coupons 
 were not legally transferred by delivery without delivery of 
 the bonds. On this point he referred to the act of 1854, ch. 
 83, sect. 19, "any party entitled to any debenture of this 
 province, issued to the company, or to any bond or debenture 
 of the company on which the whole amount shall have been 
 faid up, may transfer his right and interest in any such bond 
 or debenture, and in the principal and interest moneys secured 
 thereby, to any other person by the delivery of such bond or 
 debenture with the coupons or interest warrants attached 
 thereto, without the necessity of a deed or instrument in writ- 
 ing for the purpose of effecting such transfer." 
 
 That the interest of the plaintiff was too small to enable 
 him to obtain the remedy sought for. He was a creditor 
 only for a half year's interest. It appeared from the 
 petition that the company was indebted to the extent of 
 millions of pounds sterling. How could he hope to control 
 or interfere with such vast or large interests as were in- 
 volved ? 
 
 That the court had no power to appoint a sequestre or 
 receiver in a case like this. 
 
 The cases known to the law where a sequentre could be 
 appointed were, where there was litigation between parties 
 as to some object, and their rights as to possession were 
 easily balanced. In these cases the court would appoint a 
 sequestre, but only during the pendency of the suit. The 
 remedy sought by the phiintiff was entirely unknown to the 
 old idw. No case had been cited of a sequestre being 
 sppointed to a corporation under the old French law, 
 although numerous trading as well as religious corporations, 
 were then in existence. The modern code of France even 
 
95 
 
 if it could support the pretensions, — which he did not 
 admit, — of the plaintiff, was not applicable to this case. 
 
 The case cited by Mr. Borion, in which the plaintiff had 
 been allowed by the court to take a piece of land at a 
 valuation in deduction of his claim, and without sale by an 
 officer of the court, was not applicable, and might be classed 
 amongst the ordinary remedies of the court. Mr. Ritchie 
 then cited the following authorities : Ordonance of 1667, Tit. 
 19, vol. 1 of Ed. and Ord. p. 153, this contains the text of 
 the whole law upon the subject. The commentators specified 
 the different cases in which the sequestre is named. He 
 can be appointed either '^ d'office" or upon the request of 
 the parties. " On I'ordonne d'office principalement dans les 
 mati^res de complainte, soit civile, soit benificiale, lorsque 
 les parties n'ont pas un droit plus apparent I'une que 
 I'autre." Upon the request of the parties, "lorsqu'il y 
 a plusieurs prfetendans droit ^ la propriete d'une chose, 
 sans que I'un ni I'antre ait la possession annale en sa favour." 
 Guyot's Rep. Vo. sequestre. 
 
 That the object of the appointment of a sequestre was 
 to place the possession of property which is in dispute 
 between two litigants, in the hands of a third party, 
 pending the contestation. 1 Jousse sur I'Ord. 1667, 
 Tit. 19, Articles 2, 8, 21 ; Pothier Proc. Civile, ch. 3, 
 Art. 2, Des Seqtiestres, sec. 1, 2, 4, 5. Ancien Denisait, 
 Yo\. Sequestre, Ancien Merlin, Vol. Sequestre, Ancien Guyot, 
 Vol. Sequestre, Ferriere Diet, de droit. Vol. Sequestre. 2 
 Pigeau, Liv. 2, part I, Tit 2, ch. 4 ; 2 Pigeau Liv. 2, part 
 II., Tit 1, ch. 1 ; 2 Pigean, Liv. 2, part III., Tit 2, ch. 2. 
 The sequestre was only named in cases of disputed possession 
 or proprietorship, or in possessory or petitory actions where 
 there was danger of the party in possession dissipating or 
 injuring the property ; never in respect of property merely 
 hypothecated (the remedy in such case being now a con- 
 trainte par corps — See Consol. Stat. L. C, p. 466, ch. 47,) 
 nor in respect of property of corporations, the possession in 
 such case being in tue ordinary cmcefs oi tus eorporation. 
 
 In order to strengthen their case the counsel for the plain- 
 tiff had raised a great many difficulties as to the inaliena- 
 
26 
 
 bility of railways. Now by the Railway Clauses Consolidation 
 Act, 14 & 15 Vic, ch. 51, sec. 9, under the heading " powers," 
 it was enacted that railway corporations should have power 
 " to purchase, hold, and take of any corporation or person, 
 any land or other property necessary for the construction, 
 maintenance, accommodation, and use of the railway, and 
 also to alienate, sell, or dispose of the same." The com- 
 pany, therefore, as he contended, might sell the road, and the 
 argument for a receiver founded on the inalienability of the 
 railroad fell to the ground. Besides the rights of a bailleur 
 dufonds were reserved, and one of these rights was to sell 
 the property hypothecated, and it would be but a mockery 
 for the province to provide for the issue of bonds, and to 
 take away the remedy by sale from a creditor. 
 
 As to the " rolling stock" being immeublespar destination, 
 any one who had listened to Mr. t>orion'8 argument might 
 consider it conclusive ; he, Mr. Ritchie, would not admit that 
 it was absolutely conclusive, but if his pretensions, as to the 
 appointment of a sequestre were equally well made out, he 
 would think that the rights of the company were in con- 
 siderable danger. But if these pretensions were made out, 
 he would fall back to the point that the mortgage of the 
 preferential bondholders was only upon the "tolls and 
 profits" of the company. The interest of the act of 1859, 
 was, as he contended, a charge only upon the tolls and pro- 
 fits, and this view was confirmed by reference to the statute 
 of 1857, by which the province conditionally postponed its 
 claim for interest "until the earnings and profits of the 
 company should be suflScient to defray"— first, working 
 expens3S, then the rent of the Atlantic Railroad Company, 
 and all interest on the compai\y's bonds therein mentioned ; 
 and also by the statute of 1858, which provides for the 
 application of the company's " earnings" after deduction of 
 working expenses— first, towards the payment of the interest 
 of the preferential bonds. 
 
 In the next place, he contended, the court could not with- 
 draw the road from the management and control of the 
 directors appointed by the legislature. Their powers were 
 defined by the Railway Clauses Consolidation Act, sec. 16, 
 (sub-sec. 22,) and must be respected by the court. 
 
27 
 
 Again, the railway ran through four or five different 
 jurisdictions, and it would bo impossible practically for a 
 receiver named by this court to manage it. There would be 
 a conflict of authority, and the road would soon come to a 
 stop. Nor was there any machinery by which the courts in 
 Lower Canada could see that the receiver got proper instruc- 
 tions. In Upper Canada, the Court of Chancery was sup- 
 posed to be in session daily, but here the judges could not 
 act out of term, and in the long vacation exigencies might 
 arise on which the instructions of the judges might be 
 absolutely necessary. Wages must be paid, and broken 
 bridges repaired. How could judges in vacation give direc- 
 tions on such matters which required dispatch ? A person 
 appointed to receive the funds would be merely a cashier, 
 and would have none of the powers of a sequestre as known 
 to our law. 
 
 Mr. Justice Monk. — There is hardly any conceivable posi- 
 tion in which the Grand Trunk may be placed, unattended 
 by difficulties, but I apprehend the court can give such direc- 
 tions as to enable a receiver to properly perform his duties* 
 supposing the court comes to the conclusion that it has the 
 power of appointment. 
 
 The legislature had appointed a particular remedy ap- 
 plicable to a case, which the plaintiflF had not shewn to 
 be bis. By the act 16 Vic, ch. 41, amending the act incor- 
 porating the " Toronto and Guelph Railway," it is enacted, 
 sec. 4, " that if the Canada Company shall neglect for sixty 
 days after notice in writing by the holder of any such se- 
 curity, to enter into possession of the said railway, or ap- 
 point a receiver of the rates and tolls, and other profits of 
 the said railway and works, under and by virtue of the 
 aforesaid mortgage, then in such case the holder of such 
 security (without prejudice to his right to sue for the in- 
 terest or principal so in arrear, in any of the Superior 
 Courts of Law or Equity,) may, if his debt amounts to 
 the sum of j£5000, " require the appointment of a receiver 
 by an application to the Court of Chancery, at Toronto, 
 &c." The road referred to in this act formed part of the 
 " Grand Trunk Railway," but the plaintiff was not a creditor 
 
28 
 
 to the extent named, and had not brought himself within 
 the remedy contemplated by law. 
 
 The petition complained of the misapplication of tolls to 
 what was not working expenses. This was not proved, nor 
 could H well be proved since the statute of last session, 24 Vic. 
 ch. 17, sec. 8, enacted that " the interest of the purchase 
 money or rent of any real property acquired or leased by any 
 railway company, and necessary to the efficient working of 
 such railway ; and the price or purchase money of any real 
 property or thing without which the railway could not be 
 efficiently worked, shall be considered to be part of the 
 expenses of working such railway, and shall be paid as such 
 out of the earnings of the railway." 
 
 Mr. Justice Monk.— I suppose, Mr. Ritchie, the first and 
 second preference bondholderr concurred in that ? 
 
 Mr. Mitchie.—Why, they may he supposed to have done 
 so, since my two learned friends, (Messieurs. Drummond and 
 Dorion) were at the time members of the legislature. 
 
 Mr. J)rummond.—T}ie fact is, that clause was stealthily 
 thrust into the bill in the Upper House, and in so singular a 
 manner, as to have called forth a petition to the Queen to 
 disallow the act. 
 
 Mr. Ritchie.— Thia act gave the largest power as to the 
 application of the revenues and tolls, and the argument 
 founded upon improper expenditure in working expenses 
 fell to the ground. 
 
 In the course of Mr. Mitchie's argument, Mr. Justice 
 Monk enquired whether the defendant's best answer to the 
 action would not have been to pay the interest claimed, some 
 £iiOO, to which Mr. Ritchie replied, undoubtedly it would 
 but unfortunately the directors were not in a position to do it 
 consistently with the responsibility they were under to work 
 the road. 
 
 Mr. Pominville, for the defendants, followed, and confined 
 his remarks to that part of the case which related to the 
 power of the court to name a aequestre, and to a review of 
 the authorities on that point cited by the counsel on both 
 sides. Ho also cited Troplong " tiequestre;' p. 202, 210 ; 
 3 Tracharioe, p. 119 ; Guyot vol. " Sequeatre^" p. 244*. 
 
29 
 
 V 
 
 THIRD DAY. 
 
 October 25Tn, 1861. 
 J)rummond,Q. C, in reply, admitted that the petition was 
 a novel one in its application to railway property, but there 
 was nothing novel in its principle ; and contended that the 
 law of Lower Canada was not founded upon precedent but 
 on principles which might be expanded to meet every ad- 
 vance of society, and every new species of property. Dupin 
 had stated, " That in the new French code there was no 
 casus omissus." So the Lower Canadian courts had the 
 amplest power in the application of the general principles of 
 the civil law, so as to give remedies in every conceivable 
 case. This was too often overlooked. English proceedings 
 had been introduced into the province at a very early period, 
 naturally enough by the gentlemen of the profession who 
 were best acquainted with the English system, and thus the 
 French remedies had been overlooked. He recollected mak- 
 ing an application to a judge for affixing of the seal of the 
 court scelle, and was then told there was no such remedy, 
 but, on consultation, the judges had granted the remedy, and 
 in an hour property of great value in a hotel of indiiferent 
 repute, was placed under seal, although left by a stranger 
 who had died suddenly without friends or relatives, or even 
 creditors in the province. The sequestre was well known to 
 our law, and the 19th title of the ordinance of 1667 was in 
 full force, being registered at Quebec, 23rd October, 1679, 
 with only a single addition, in these terms : " Sur le dit 
 titre (19), que les amendes seront reglees par les juges, a 
 cause de la pauvrete des habitans du pays." That, even if 
 it were not, this would be a case for appointing one ex neces- 
 sitate to save the large interests involved, — to preserve the 
 security of all classes of creditors, and to ward off the de- 
 struction of the property. The court could grant the remedy 
 not as a legislator but under the plainest principles of our 
 
 law. 
 
 He contended that the court had all the powers of a court 
 of law and of a court of equity, and that every day the exer- 
 cise of such equitable jurisdiction became more and more 
 
30 
 
 evident and beneficial ; so that in his opinion the equity and 
 not the strictly legal jurisdiction of the courts should be exer- 
 cised. 
 
 _ He then commented on the statutes concerning the pro- 
 vincial lien, and contended that language had been exhausted 
 m creating it ; that the rights of the preferential bondholders 
 were before and over those of the province, and over-rid- 
 ing them. What preferential creditors were, every body 
 knew. Here they had advanced money to complete the un- 
 dertaking; they were like the builder of a house who had a 
 special privilege to the extent of the plus value added to the 
 soil, even before a previous hypothecary creditor; that they 
 had a hypotheque on the soil, and on every part of the under- 
 taking, including all plant androllingstock. When these bonds 
 were being taken up, the company cried them up; they were 
 said to be as good as the Bank of England— to be protected 
 by the government guarantee, and to have a first lien over 
 every thing; now the company repudiate every thing, and 
 insist that preference and priority mean nothing ; that pre- 
 ferential bondholders are in a worse position than common 
 creditors having only a right to be paid out of the tolls and 
 profits of an undertaking so deeply embarrassed that any 
 judgment creditor on a debt of yesterday might practically 
 ruin their security, or force them to make terms by buying up 
 their judgments. Such a construction of the statutes, he 
 contended, could never be entertained by any court of 
 justice. 
 
 He did not think theobjections raised by the defence entitled 
 to very much consideration, but would allude to them aeria- 
 tint. The plaintiff, it was said, could not claim the remedy 
 on account of the exception in the Act of 1849, sec. 1, and 
 because he had not proved compliance with the conditions 
 (so called) as to the completion of the road. What an argu- 
 ment for the company to make ! " You, a creditor, must 
 shew that we, the company, complied with the law ; that we 
 expended the proceeds of the bonds as we were directed by 
 the statute, and that the moneys which came into our chest 
 from yours, were not misapplied or diverted by us before you 
 can hi ye any remedy or even a valid debt. We, by our 
 
 V 
 
i ' 
 
 31 
 
 plea deoy every thing, and you must prove every thing." As 
 to the exception in the Act of 1849, it meant this : The pro- 
 vince will not insist on priority over bonds which the pro- 
 vince had guaranteed, but would rank rateably, being bound 
 to pay the moneys guaranteed, which, if paid directly to the 
 bondholder, would dimimish the liability of the province 
 pro tanto. 
 
 Next, as to the necessity of calling in the government 
 and all the various classes of creditors into this action, it 
 was entirely contrary to our mode of procedure. The 
 rights of no creditor could be sacrificed. Any one could 
 come and dispute even the plaintiff's debt and shew he had 
 a superior right, and the court would at once apply the 
 remedy. The judgment here would be legally conclusive 
 against defendants ; it was res inter alios to all the world 
 besides, and if any other creditor or party interested came 
 and complained of the appointment of a receiver, or of his 
 acts, or omissions of duty, when appointed, the court would 
 listen to him. A decision, however, on the main points as to 
 the existence of priority, and as to the extent of the lien, 
 would be most valuable, and would no doubt guide the 
 various classes of creditors. It would settle the law for 
 Lower Canada so far as a judgment in this court could 
 settle it. 
 
 It was said the bondholders under the act of 1858, have 
 onl^ the same rights and privileges as those under the act of 
 1856. Even if this were true, what does it make out for 
 the defendants ? It would simply be putting a second class 
 creditor up into the first class. It would not lessen the 
 legal remedies of a first class bondholder, although it might 
 diminish hip receipts, if the fund were found insuflScient to 
 pay all. 
 
 Next came the objection as to the coupons. The plaintiff 
 was told by the company, " you hold coupons— you say you 
 hold the bonds. But you may be a holder of coupons with- 
 out being a bondholder. You should have produced and 
 filed the bonds as well as the coupons, and then you would 
 have proved that you held the coupons legally, which we 
 deny, as we deny every thing." The best way to destroy 
 
32 
 
 an argument of this kind was to recur to what was further 
 contended for by the defendants, namely, that the statute 
 enacted that the bonds and the coupons could only bo trans 
 ferred together, and to the fact that the coupons formed part 
 of the debentures. But it was scarcely necessary to dwell 
 on a point like this. He would, however, refer to the inter- 
 rogatories on f aits et artichs. Tiie company, when asked 
 on mterregatories whether the .£2,000,000 of preferential 
 bonds were issued under the act of 1856? answered yes ' 
 "Were these debentures issued and duly signed on behalf of 
 the company with numbers corresponding with those on the 
 coupons produced in this case ?" Yes ! "Are you not indebted 
 to the plamtifiF m the interest due in January 1861 ?" Yes ' 
 " Is plaintiff not the holder of the debentures ?" No ' They 
 will not admit that they are ignorant of this, althoui.h they 
 say they admit they treated with him, " on the supposftion he 
 was the holder of them." The court will no doubt adopt 
 that " supposition" also, and will hold that there is sufficient 
 proof that the plaintiff was and is the real holder of them 
 and also that the company might well have answered on 
 oath with a httle less precaution, without materially iniurinff 
 their cause. ^ j 5 
 
 But, it was objected, the plaintiff's debt was too small, only 
 half a year's interest ! The plaintiff, no doubt, thought it was 
 quite large enough, and likely to become too large. There 
 was the interest due last July, and another half year's inter- 
 est would accrue in January; and there was the principal of 
 the debentures too, " on the supposition " that the plaintiff 
 was the holder of them. It was true these sums were small 
 compared with the whole indebtedness of the company, but not 
 so small as to induce the court to refuse the remedy applied 
 for ; if that remedy should be found to be warranted by law 
 and likely to be beneficial to all parties. The object of the 
 plaintiff was to prevent the sacrifice of the road, and expressly 
 of the rolhng stock, upon which he claimed a lien. To pre 
 serve the road was the true interest of all the preferential 
 creditors, and indeedof all classes of creditors, who can only 
 be paid xrom the working of the road with efficiency They 
 wished to keep the rolling stock on the line, and did not 
 
 . I 4 
 
 
88 
 
 ^,1^ 
 
 wish to sell the road, if they could. The argument of the 
 opposite counsel seemed to him scarcely to suit the position 
 of the company or the duties of the directors. They said, 
 and counsel in this court have repeated, " you can sell the 
 road ; you have the usual recourse through the sheriflF and by 
 opposition a fin de conaerver ; therefore there shall be no 
 receiver." In France the railway company of Sceaux came 
 and said, we are unable to run the road, we are losing at 
 the rate of 10,000 franca a month, give us assistance or name 
 a sequeatre, and a aequeatre was named. Here the company 
 adopted a different view, but perhaps not so wise a course. 
 It was for the court to determine whether it would adopt this 
 remedy of selling the road by the sheriff, which he thought 
 was even worse than the disease, or provide for the interest of 
 all classes of creditors by affording them means of ascertaining 
 and controlling the management and expences of the com- 
 pany by a sequestre, under the direction of the court. The 
 aequestre-vraa really for the benefit of all parties, shareholders 
 and creditors alike. 
 
 It was urged that there was no evidence of the company 
 being in embarrassed circumstances, and en deconfiture. The 
 court would find in the record the depositions of Mr. Elliott, 
 the company's secretary and treasurer, and of Mr. Hardman, 
 their auditor, where they verify and refer to the elaborate 
 statements to be found under their signatures in the recent 
 report of the Government Commissioners, a copy of which is 
 filed in the case. The bad position of the company, as to 
 its finances, would be but too apparent from these statements. 
 In addition to this the company examined on f aits et articles 
 admit that the interest on the bonds had fallen into arrear ; 
 that there were no funds in the hands of their London bank- 
 ers to pay the interest due in January last, and that they 
 were unable to pay their debts from the earnings of the road; 
 and when asked by the interrogatories what was the amount 
 of their liabilities, say that they amount to £2,196,600, apart 
 from the judgments referred to in the interrogatories. 
 
 These judgments are those of Messrs. Baring & Co., and 
 Glyn k Co., obtained in this court, copies of which were 
 filed with the petition. In addition to this, a copy of judg- 
 6 
 
34 
 
 eo that the company owes ' 
 
 Per company's statement ,, lofi ^nn 
 
 J'ldgmcnt, Baring & Co 'oof'.22 
 
 Judgment, Glyn & Co i!i"!.'.'."!!.'.'.'"!.','.' 407 051 
 
 "tK? J°^?T"'' «"''''«'' i» "■« court since"^^'""'"^^ 
 the fihng of this petition, be added ..! 340,176 
 
 We have a debt of. . . "nT 
 
 ^63,350,208 
 
 The sixteenth interrogatory is in the following terms: 
 
 ^n.».r. " The answer to this interrogatory appears to de 
 pend upon a conclusion of law, which would ha^rbXmed 
 
 tTel. mT-'"', '"" "'"'=•' ""8'"> '" '-. ••« held suS 
 to establish msolvency, and the question is one they are 
 therefore unable to answer." ^ 
 
 He was sorry that the directors, before they put such an 
 answer upon record, had not taken the advice of colel as 
 
 m^h then have been able to answer with more franknesT 
 
 Wm,-!;! 'V Vr"''^'"^ '" 'J"^'"™ """J been put to 
 
 Perhaps there was, and he would leave it to the court. Ho 
 S ", f ?«««« '^oM be named, if it were only to re- 
 lieve the directors from their sad state of perplexity ; Imd vl 
 when they applied to parliament for aidfwhen th^e^ got an 
 advance last winter from the government, they seemed to be 
 
 „ch "efr " " *' Y "l"^"'""' "''«■> -' ""-es them 
 such embarrassment. r;i.„, the company was admitted to be 
 embarrassed, but no«, it is a legal question ! and small objec! 
 tions are r«sed which he thought might better have been 
 omitted altogether, although the raising'them could be of no 
 kind of real advantage to the company. 
 
 hJfL^rr'i *'" <«"°""""«'l "Pon 'he pretension that 
 by the statute relating to the Guelph company, there must 
 boa debt of £5,000 before a receiver could be appointed, "rd 
 
 '\t 
 
 i 
 
35 
 
 if 
 
 i 
 
 submitted that that vtm a special remedy given to a special 
 creditor under that act, and was not at all applicable to 
 the Grand Trunk Railway Co., as the court must see on re- 
 ference to the statute. 
 
 Reference was then made by Mr. Drummond to the act of 
 last session as to what was to be taken to be working expenses. 
 The circumstances under which this clause was put into the 
 act were but too well known, but he would not allude to them. 
 The clause stood on the statute book, and must be construed 
 like the other clauses in the act. He submitted to the court 
 that the clause was not retro-active — that it ought not to be 
 so construed as to secure impunity for the directors of the 
 company in expenditure made for foreign lines of road, or for 
 hotels, stations, docks, or other expenditures but working 
 expenses. It was not unlikely that the directors supposed 
 the clause would be what might be called a " whitewashing 
 clause." If they did, it would furnish the strongest argu- 
 ment possible for the intervention of this court, and the 
 appointment of a sequestre. For it would be an attempt to 
 alter the position of creditors by ex-post facto legislation, 
 and to ward off the responsibility which attached to all 
 directors in case it were found that they had gone beyond 
 the law. 
 
 He further contended that there was ample proof in the re- 
 cord that the rights of the preferential bondholders were in 
 peril. There were judgments filed in this record obtained first 
 in Upper Canada and next in this court. What was to prevent 
 a seizure of the rolling stock and the interruption of traffic? 
 and if that were done in one district, it might be done in 
 every district, and the preferential bondholders would have 
 to file oppositions to each execution, and debate their rights 
 at unnecessary cost. 
 
 Another objection was urged for the defence, that the 
 road being an entire work, and running through various 
 jurisdictions, his Honour could not effectually secure its 
 being properly worked by a sequestrator. It was said " your 
 jurisdiction extends only to the district of Montreal." On 
 this latter point he differed from the counsel for the defence. 
 The court was not a court for the district of Montreal, but 
 for Lower Canada. Writs run from one end of the province 
 
36 
 
 to the other. A judtje from Montreal -taay sit in Qtgp6, ot 
 any other part of the lower province; »tt still it is said 
 there is the difficulty as to the road being ^pittly in Upper 
 Canada. Shall the Court of Chancery in Upper Canada 
 appoint a receivvr, and the Superior Court here & sequeitre f 
 What if there should be conflict ? These were most serious 
 questions. The legislature had not settled them, but if 
 preferential creditors had a clear right to a receiver or 
 sequeatre, the courts were bound to find a remedy. Would 
 not comity lead to co-operation "between the two courts? 
 Was a conference between them impossille ? Might not the 
 same party -^b named by consent of the litigants of the 
 company? Might not the company drop all their small 
 objections, and^-come forward ^and acquiesce in a remedy 
 which would protect. the company from the creditors whose 
 suits were pending in this cdtirt, and from the many others 
 who might institute proceedings ? However this might be 
 the court at all events could take the first step, and there 
 might not occur so much difficulty as to prevent a receiver 
 or receivers from being as useful and efficient in Lower 
 Canada as elsewhere. 
 
 Mr. J)rummond concluded by saying: I would lastly 
 urge upon your honor the propriety of giving judgment on 
 as eariy a day as possible. We all know that very impor- 
 tant interests are at stake. Your honor must see that 
 whatever your decision may be, the case will be taken to the 
 appeal court by one parly or the other. This case is not 
 only attracting the attention of tho whole province, but of 
 th6 leading capitalists in England as well ; and I think it 
 would be well to enter upon a new era, as it were, in our jur- 
 isprudence, that we muy know what our rights are, and how 
 the principles of the law will be carried out by the courts. It 
 should not be said that we have made progress enough 
 No, there are many things which remain to be done, and if 
 we have reached our present position as a colony, it has been 
 more through the capital and the influence of the leading 
 men of England than of ourselves, and we should not allow 
 these men to be baulked and Hpn^vo/i «p t^-'- r-v^-*- ^- = ' 
 a paltry defence as that raised in this action. 
 
 Mr. Justice Monk intimated that he would be prepared to 
 give judgment on the 1st day of next term, Nov. 18th. 
 
 %