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TITLE SEVENTEEN.

(CONTINUED.)

RECEIVERS OF CORPORATIONS.

CHAPTER CLXXIII. ,

RECEIVERS OF RAILROADS.

SECTION
7202. Appointing receivers of railroad

companies which fail to op

erate their roads. 7203. Building or completing a rail

road. 7204. Performing contracts of corpo

ration.
7205. Court will carry out the con-

struction placed by different
railroad companies upon

their
own contracts.
7206. Payment of rental under

trust” leases. 7207. Applications or misapplications

of this principle. 7208. Character of such contracts de

termined by the local law.

SECTION
7209. Vendor or lessor desiring to pre-

serve a lien must comply with

local law. 7210. Lien of such leases good as

against subsequent mortga

gees. 7211. Status of rents where the leg

sor has resumed possession. 7212. Whether authorize receiver to

make new car-trust leases. 7213. Purchasing rolling-stock. 7214. How keep accounts in cases of

the receivership of a railway

having separate divisions. 7215. Powers of receiver appointed by

the State,

car

8 7202. Appointing Receivers of Railroad Companies Which Fail to Operate their Roads. — A statute of New Jersey provided that if any railroad company should fail to run its trains on any part of its road for ten days, the Chancellor might appoint a receiver. A later statute of the same State provided that any railroad company whose road was constructed at any seaside resort, not exceeding four miles in length, should be exempt from the provisions of this statute. It was held by Vice-Chancellor Bird, that this latter act was unconstitutional, because it was within the provision of the constitution of New Jersey, that the legislature shall not pass any private, special or local law, “granting to any corporation, association, or individual, any exclusive privilege, immunity, or franchise whatever.”? He also held that it did not

· N. J. Rev., p. 943, & 160.

• Const. N. J., art. 4, 97.

apply to roads which had been built previous to its passage, and he ordered that unless the defendant railroad company, which was such a road as described in the amendatory statute, commence to operate its trains for both freight and passengers within five days from the service of a copy of his order, a receiver would be appointed;' but this decision, which was plainly untenable on both grounds, was reversed on appeal."

7203. Building or completing a Railroad. We have already seen that, although some of the courts have gone quite extensively into railroad building and railroad operating, there is a consensus of judicial opinion to the effect that a court of equity ought not to undertake, by the arm of a receiver, to complete or build a railroad, except where there is an irresistible necessity for it to do so;8 and circumstances which will justify such a stretch of power have been considered." Unforeseen complications have arisen from such an exercise of power, especially in one case where the order of the court appointing the receiver was reversed. The order was a consent order, so-called, but certain of the bondholders objected, and, on appeal to the Supreme Court, the order was pronounced unauthorized. But, in the mean time, the receiver had caused an extension of the road to be constructed under the order, though at a cost exceeding the amount named in the order, which amount the order authorized the receiver to pay out of the surplus income, the extension to stand pledged for such payment. It was held that the receiver, in building the extension, acted only as agent of the consenting bondholders, but that the extension became subject to an equitable lien, superior to existing liens, in favor of those who furnished the money to build it, and that they were entitled to such ratable proportion of the proceeds of the sale as the value of the extension bore to the

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* Re Delaware Bay &c. R. Co., 11 Atl. Rep. 261; 8. c. 9 Cent. Rep. 489. • Delaware Bay &c. R. Co. v. Mark- Ante, $ 7177; Kennedy v. St. ley, 45 N. J. Eq. 139; 4. C. 16 Atl. Paul &c. R. Co., 5 Dill, (U. S.) 519. Rep. 436.

Ante, $ 7178.

value of the entire road, considered only with reference to the purchase-money of the whole.'

8 7204. Performing Contract of Corporation. As the receiver represents the bondholders and others having liens on the property, there is no principle of equity which will oblige him to perform the unexecuted contracts of the corporation. But he cannot insist on the performance of such con. tracts by the other contracting party, without performing on his own part according to the terms of the contract. For instance, if he elects to retain the possession of property which has been leased to the corporation, he must pay rent according to the lease.'

$ 7205. Court will Carry out the Construction Placed by Different Railroad Companies upon their Own Contracts. A court, holding and operating a railroad by means of its receiver, will, in giving effect to contracts entered into by the company, apply, in doubtful cases, the interpretation upon which the parties themselves have acted,'— the principle being that where contracts are executory, the practical construction adopted by the parties thereto and by their successors during a period of years, is entitled to great, if not controlling, influence, in determining its proper interpretation.” When, therefore, a contract between two railway companies operating a joint line, did not expressly provide how cars should be obtained or supplied for the use of the continuous line, the fact that one company had, for several years after the contract was entered into, paid the other for the use of its cars, was considered as the construction placed upon the contract by the parties, such as the court, bolding one of the lines by its receiver, ought to enforce on an intervening petition by the owner of the other line.

' Hand v. Savannah &c. R. Co., 17 • Central Trust Co. v. Wabash &c. 8. C. 219.

R. Co., 34 Fed. Rep. 254. Central Trust Co. v. Wabash &c. • Topliff v. Topliff, 122 U. S. 121; R. Co., 32 Fed. Rep. 586.

Chicago v. Sheldon, 9 Wall. (U.S.) · Ante, 6 6998.

50, 54.
• Central Trust Co. v. Wabash &c. R. Co., 34 Fed. Rep. 254.

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