should exchange their bonds, with four years' accrued interest, for seven per cent. preferred stock, and that the common stockholders should stand, as they then were, subsequent in interest to the creditors of the Company. Under the contract the Trustees were called upon to execute the following trusts: I. To receive and hold said mortgage coupons of each class, and issue scrip therefor. II. To receive and hold such fourth and fifth mortgage bonds, in case of foreclosure, and exchange them as herein provided. III. To receive and hold such unsecured bonds and coupons, and exchange them for such preferred stock, and issue receipts therefor. IV. To receive and hold such shares as the capital stock of the New York and Erie Railroad Company, for the purpose above named, and issue receipts therefor. V. To cause proper agreements to be drawn in order to carry out the purposes of this agreement, and they or either of them, as the attorney in fact of the subscribers hereto, to sign the same. VI. In case a sale of the road under foreclosure is necessary to carry out this agreement, to buy the same in on our account, assessing us as hereinafter provided, said Trustees being under no liability to furnish money for that purpose. VII. After said railroad passes out of the hands of the Receiver, to receive the net earnings thereof from the new management, and apply them to the payment of, Ist, such of the present floating debt of said New York and Erie Railroad Company, not exceeding $320,000 principal sum, interest to be added to date of payment, as shall be contained in a schedule thereof to be furnished to the said Trustees by the Board of Directors, and for which fourth mortgage bonds are pledged as collateral; 2d, to the expenditures upon the Long Dock property, estimated to amount to $500,000; 3d, to the liquidation of said delayed mortgage coupons, in the order of their priority, which shall terminate said trust. VIII. To retain from said net earnings, as a compensation for their own services, a sum to be fixed by the Board of Directors. The story of the result of the plan for caring for the affairs of the Company under the Receiver and Trustees is interestingly told in "A Statement of the Operation of the New York and Erie Railroad, Under the Receivership," from which the following extracts are taken. The statement was made by the Trustees to the stockholders in surrendering the property to the new Company in 1862, and is a valuable chapter in Erie history: 66 'When we entered upon this trust we found the road in the hands of a Receiver, with one coupon matured and another about to mature upon the first mortgage; with the principal of the second mortgage matured, and one coupon also due upon the same; with one coupon matured upon the third mortgage; with two coupons matured upon the fourth mortgage; with one coupon matured and one about to mature upon the fifth mortgage; with several suits pending upon the sinking fund bonds, on which they were claimed or established to be matured; with $750,000 of liabilites for labor and supplies, and taxes in arrear, charged as a preference claim upon net earnings, by order of the Supreme Court; and with a floating debt estimated at $320,000, for which fourth mortgage bonds were pledged to the amount of $2,300,000; or, to state it in a tabular form, the liabilities of the Company then matured, or soon to mature, were: Two coupons, first mortgage. $210,000 140,000 210,000 once a week, for ten weeks next before the annual election of Directors; and also, that no floating debt should be created, except for the ordinary supplies, materials and expenses of operating the road, and for the payment of our bid, unless authorized by a vote of three-fourths of the Board of Directors, at a meeting called for that purpose. We also, with the assent of your Directors, levied an assessment of two and one-half per cent. upon the par value of both classes of the new stock, and caused the offices to be opened for the collection of assessments and the issue of certificates. 66 'While this was going on, we devoted ourselves to the adjustment of the many outstanding claims against the Company, which were entitled to share in the new organization, and we succeeded in adjusting every claim presented to us. As the result of our labors, the whole amount of the unsecured and judgment debts of the New York and Erie Railroad Company is $8,542,184, of which amount certificates for preferred stock, and fractional certificates for such stock, and Trustees' certificates have been issued to the amount of $8,423,675.50, leaving still outstanding unsecured claims to the amount of $118,508.50. This latter sum is entirely in the form of unsecured bonds and matured coupons on the same; and as it is small in amount, we advise that authority be obtained from the Legislature of New York to admit it to participate in the new organization, so that it may be said that no one has suffered by the proceedings which have been taken. "Of the total capital stock of the New York and Erie Railroad Company, there have been already surrendered for certificates of common stock in the Erie Railway Company, or for Trustees' certificates not yet redeemed, 112,565 shares, of the par value of $100 each, leaving still outstanding 2,935 shares. The holders of these shares should, we think, still be allowed to exchange them for common stock in the Erie Railway Company, on the same terms as the other stockholders. "In collecting assessments, we authorized Mr. Otis and Mr. Evans to receive the outstanding fourth and fifth mortgage coupons as cash. By doing so the operations of the trust were greatly facilitated. We have to report to you that we have issued assessment receipts for $462,402.50, on which has been received: In fourth and fifth mortgage coupons. In cash..... Making a total of.. $214,375 00 248,027 50 $462,402 50 The sums in cash, as received, were deposited in the United States Trust Company, by order of the Supreme Court of the State of New York. "Before paying our bid, we secured orders from the Supreme Court directing the Receiver to pay the October (1861) coupons on the fourth mortgage, and the December (1861) coupons on the fifth mortgage, thus relieving us from the necessity of providing for the payment of those coupons from the assessments, and also carrying out the spirit of the contract. The road has now, as contemplated by the contract, resumed the regular payment of its current accruing mortgage interest. "At the time of the payment of the bid, we were the holders of fourth and fifth mortgage coupons to the aggregate amount of $704,042, which had been surrendered under the contract. The outstanding amounts on the fourth mortgage were $80,570, and the outstanding amounts upon the fifth mortgage were $24,885.50. These amounts we paid in cash to the Referee (Hon. Samuel A. Foote), and he is now distributing them to the holders of the mortgage coupons entitled to receive them. By a resolution of your Board of Directors, passed in May last, the holders of the Trustees' certificates for mortgage coupons are entitled to receive interest on such coupons from the 1st day of May, 1861. "We have distributed the balance of the cash received from the assessments among the holders of the Trustees' certificates for the fourth mortgage coupons of April and October, 1859, paying interest on their coupons for that time, and that the Receiver, under orders of the Supreme Court, has contributed from the net earnings of the road the balance necessary to complete the entire payment of those coupons and interest. In handing over the property to you, and terminating our trust so far as you are concerned, we have therefore to report, as the existing liabilities under the trust, the following, 66 Total. 66 66 $126,700 00 125,335 00 125,125 00 19,197 50 27,877 50 39,357 50 39,637 50 39,602 50 155,425 00 306,977 50 .$1,005,235 00 'As Trustees for the holders of the mortgage liabilities, we advise that your Company pursue such a policy as will ensure the speedy retirement of those obligations. It is but an act of justice to those mortgage creditors who have made valuable concessions to you for your benefit. "In surrendering to you your property, we give you much more than existed when the trust was created. Then your road was without a proper terminus at New York. The old Company had invested, directly and indirectly, nearly $2,000,000 in the Long Dock property, which was intended to be the permanent terminus of your line, at deep water, opposite the City of New York; but the work was far from being finished; there was no apparent means for completing it so as to make it available; the contractors had failed, and the ignorant workmen had struck, and, in a riot, had interfered with the passage of your trains to Jersey City. Now the expensive tunnel on the Long Dock property is completed; your ferries are regularly established, with connections in the lower part of New York superior to those of any other ferry; your passenger traffic is removed from Jersey City to your own ferries; and your freight traffic is transferred from Piermont to your own docks opposite the City of New York. Those docks, when completed, will be ample for any probable future traffic of the road, and will afford terminal facilities for railway traffic unequalled in the world, so far as our observation goes. You receive this property through us from the hands of those who have had the financial charge of it for the past two years and a half, with no liability in the form of a floating debt against it. "We also transfer to you a perpetual lease of sixty miles of railway from Hornellsville, on your line, to Attica, within thirty miles of Buffalo. Perceiving an opportunity to secure this property for the Erie Railway Company, on terms favorable beyond precedent in the history of railways, we made the purchase, with the assent of the Executive Committee. In order to carry out our contracts with the sellers (which were assumed by the Erie Railway Company), and to put the road in repair (for which a large amount was necessary), a bonded debt of $200,000, having thirty years to run, was created by the Erie Railway Company, and secured by a mortgage of the road purchased. A Company, made up from your Directors, was organized under the General Railroad Act, to receive this property from us. We conveyed it to them, and they have leased it to you in perpetuity. Thus, without the payment of commissions, or of any intervening profit, you have acquired, with the creation of a moderate debt, sixty miles of new railway, in perfect order, with gradients as favorable as any on the main line, and bringing you within thirty miles of Buffalo." This condition of the affairs of the Company was led up to by the sale of the property of the old Company, which was ordered at the suit of " James Brown and J. C. Bancroft Davis, Trustees, and another plaintiff, against the New York and Erie Railroad Company and Joseph Walker, Uriah J. Smith, and William T. Hooker, Trustees, defendants," under the fifth mortgage, final judgment having been entered in the Supreme Court of New York, June 9, 1860, and in the Supreme Court of Pennsylvania, September 15, 1860. The sale took place at public auction on the date mentioned by the Trustees, at the Merchants' Exchange, New York, through A. J. Bleecker, auctioneer. It included all 'the real and personal property, rights, and franchises directed by the said judgments to be sold," and that included pretty much everything in the possession of the New York and Erie Railroad ComThe sale was closed at the nominal sum of $220,000, being the accrued interest on the fifth mortgage, over and above the whole of the mortgage 66 pany. |