New York Elevated Railroad Co. agt. Manhattan Railway Co. ment of the principal and interest of the first mortgage bonds of the New York and Metropolitan Companies," as provided in said agreement, "and the payment of cash rental and guaranteed dividend as provided in the lease," also agreed “to issue and deliver to the New York and Metropolitan Compa nies its two bonds, each for six millions five hundred thousand dollars, payable on demand, one to John A. Cowing, as trustee for the stockholders of the New York Company, and the other to John Baird, as trustee for the stockholders of the Metropolitan Company, with authority to the trustees respectively to use the same, if they see fit, in payment for stock of the Manhattan Company at par." Under the clause just stated, the bonds provided for were executed, which were exchanged for stock in the Manhattan Railway Company, whereby the New York and Metropolitan Companies, or their stockholders, became the owners of the entire capital stock of the Manhattan Company, then amounting to $13,000,000. It was further agreed that "whenever, in any fiscal year, the Manhattan Company shall elect to declare a dividend of more than ten per cent, on its capital stock," the said Manhattan Company "shall pay to the New York and Metropolitan Companies a sum sufficient to enable them to pay as large a dividend in excess of ten per cent on the stock of the New York Company and Metropolitan Company as shall be declared on the stock of the Manhattan Company." The leases, as has been before stated, bear the same date. with the tri-parte agreement-May 20, 1879 - and were both in the same form and upon the same terms. That from the New York Company contained recitals as follows: That both it and the Metropolitan owned lines of elevated railway in the city of New York, part finished and other portions in process of construction, which on account of their crossing each other at various points could not be run with dispatch. and safety to the public under two different managements, and that the system of roads, both for the public convenience New York Elevated Railroad Co. agt. Manhattan Railway Co. and safety, should be placed under one management; that the Manhattan Company was " by law authorized to construct and operate elevated railroads in the city of New York, whether owned or leased by it," and was willing to accept and take leases from the New York Company and the Metropolitan Company of their respective railways and properties, which said companies had agreed to execute; and that the Manhat tan Company had agreed to pay the principal and interest due and to grow due upon $8,500,000 of first mortgage bonds of the New York Company, and also the principal and interest upon any further and additional bonds which the New York Company might issue at the request of the Manhattan Company "for the purposes of constructing and equipping extensions of the line of the New York Company," and a dividend of ten per cent upon the " par value of six millions five hundred thousand dollars" of the capital stock of the said New York Company. After the recitals, which in substance have been given, the lease proceeds to say: "Now, therefore, this indenture witnesseth, that the New York Company, for and in consideration of the rents, covenants and agreements hereinafter mentioned, reserved and contained on the part and behalf of the Manhattan Company to be paid, kept and performed, hath granted, demised and leased, and by these presents doth demise, grant and lease unto the Manhattan Company all and singular the railroad or railway now owned, operated or constructed by it in the city of New York, as above described, and all and singular the unfinished portions thereof now under construction, together with all its franchises, rights and privileges relating thereto, or to the construction and operation of its entire railway as authorized, subject to the said mortgage and to the terms and conditions under which said franchises are held by the company, with all and singular the right, title, estate and interest which the New York Company has in any real estate in the city of New York heretofore acquired by it, or which it may hereafter acquire under contracts already made New York Elevated Railroad Co. agt. Manhattan Railway Co. therefor, being all and singular the entire property and estate of said New York Company, excepting such of its franchises, rights and privileges as are or may be necessary to preserve its corporate existence or organization, and its interest in the covenants and conditions of this indenture; "To have and to hold the said railways, premises and appurtenances unto the Manhattan Company and its successors for the term of nine hundred and ninety-nine years from the date of organization of the Manhattan Company, to wit, November first, eighteen hundred and seventy-five, or so long as it shall continue to exist as a corporation and be capable of exercising all the functions herein stipulated on its behalf, the Manhattan Company and its successors yielding and paying therefor unto the New York Company, its successors and assigns yearly, in each and every year during the term hereby granted, the yearly rent of ten thousand dollars, payable semi-annually on the first days of January and July, during the said term, the first payment of five thousand dollars to be made on the first day of July, eighteen hundred and seventy-nine, and keeping and performing all and singular the covenants and agreements hereinafter set forth, to be by the Manhattan Company kept and performed." The granting and habendum clauses have been given in full, as the relief asked for depends largely upon their language. The lease also contains covenants and stipulations to the effect following: The Manhattan Company obligated itself to pay the principal and interest of the New York Company's first mortgage bonds as they matured; to pay each and every year to the New York Company, beginning with the first day of October, 1869, "six hundred and fifty thousand dollars, free of all taxes, in equal quarter-yearly payments of one hundred and sixty-two thousand five hundred dollars each, on the first days of January, April, July and October in each year, the first of such payments to be made on the first day of January, eighteen hundred and eighty;" to make out and furnish to New York Elevated Railroad Co. agt. Manhattan Railway Co. the New York Company "all reports and statements which the latter shall or may be by law required to make or file;" to run and operate all the roads of the New York Company at its own expense, keeping the same in thorough repair, and doing all that was necessary to be done, or which the New York Company was obligated to do, to keep and maintain the structures and business, and to extend the latter as the growth thereof might require; to pay "all taxes, assessments, duties, imposts, dues and charges whatsoever, which shall become payable by, or be levied, assessed or unpaid during the said term by any lawful authority upon the New York Company, or upon the demised railways, premises, or any part thereof, or the business, earnings or income of the same;" to return to the New York Company at the expiration of their lease all tools, implements, machinery, &c., then on hand which were required, to be at least equal in value and quantity to those received by it; to indemnify the New York Company not only against all expenses of operating the road but against all claims and suits for damages of every kind; if the Manhattan Company failed or omitted to pay in full the cash rental or the guaranteed dividends as they became due, or neglected to perform its covenants or any of them, and such default continued for ninety days, the New York Company was authorized to resume possession of its railroad and property; the companies mutually covenanted to execute any further writings needed to carry out the agreement; the Manhattan Company was not to assign the lease or sublet without the written consent of the New York Company, but the Manhattan Company could renew its corporate existence, which it agreed to do, for the whole term of the lease before the expiration of its present life; to establish a sinking fund for the payment of the first mortgage bonds of the New York Company, and to notify the New York Company at any time within six months and not less than three months before the maturing to renew or extend the time of payment of all bonds not extinguished from the sinking fund, the mode and manner of accomplish New York Elevated Railroad Co. agt. Manhattan Railway Co. ing which was specified; and lastly the New York Company makes the Manhattan Company "its agent and attorney to do in its name any and all things necessary to be done for the complete execution of this indenture." The New York Elevated Railroad Company asks for the surrender to it of its railroads and structures upon the following grounds: First. That the lease has expired by its express terms, it being stipulated in the habendum clause that the holding was not to continue absolutely for 999 years, but it was likewise to terminate and end by the failure of the Manhattan "to exist as a corporation," and also by its becoming incapable "of exercising all the functions" specified in said lease on its part to be observed and kept. The termination is claimed to have been reached: 1st. By the appointment of the temporary receivers; and 2d. By the actual insolvency of the corporation. Second. By the failure of the Manhattan Company to pay the taxes levied and imposed. Third. By reason of its not performing certain other stipulations and agreements in the lease; and fourth. By supplemental petition presented since the argument upon the original application, the grounds of which have just been stated, the restoration of the property is sought for the reason that the Manhattan Railway Company is now in default ninety days upon its payments, and that the petitioner is consequently entitled to a surrender of the property. Before discussing the questions presented it is proper to state that when the lease was made the individuals who largely controlled the New York Elevated Railroad Company were the same persons who controlled the Manhattan Company. The ability of the Manhattan Company to fulfill the obligations imposed by the lease depended, as was well known by the lessors, upon its success in business. It had no capital, as has been before stated, except the leases. Its stock$13,000,000-had been all transferred to the New York and Metropolitan Companies in payment for such leases. That stock has largely been placed upon the market and sold, and |