Page:Federal Reporter, 1st Series, Volume 5.djvu/860

 848 FKDEBAIi BEFOBTER. �Company would have been of little or no value ; that the loan was effected for the purpose of giving value to the bonds and to the mortgages in suit ; that the bondholders, by meana of said loan, gave to the securities held by them their prin- cipal if not their entire value; and that by reason of the promises the petitioner bas a lien superior to the rights and equities of the bondholders, and that his claim to be re-im- bursed the amount advanced in taking up the note is a prior lien upon the raiiroad and other property of the railway Com- pany. �It is further alleged that the trustee in the mortgages fore- closed in this action, and ail the bondholders and stockhold- ers of the railway company, had knowledge of the facts set forth in the petition as they occurred, and especially of the fàcts and ciroumstances relative to the loan and the payment thereof by petitioner for the company, and that ail of said transactions took place with their fuU knowledge and consent. �There is also a general allegation that the present action to foreclose the first and second mortgages upon the road ia a collusive one, and is prosecuted in fact for the benefit and under the management of those bondholders who hold and (Control a majority of the stock of the company, and for the pùrpose of avoiding payment of petitioner's claim. �The prayer of the petition is that an order may be entered establishing and allowing, as against the bondholders, the alleged right and claim of the petitioner to the sum of $293,- 038.11, with interest, and direeting the receiver to pay the same oat of the earnings of the road, or, if such earnings shall not be sufficient for that purpose, then that petitioner's demand may be paid out of the proceeds of the sale of the mortgaged property before payment of any part of such pro- ceeds to the holders of bonds. The main points of the argument advanced in support of the petition are that the moneys borrowed from the iron and coal company were used by the railway company to complete its unflnished road; that the loan was effected and the expenditure made at the request and under the direction of the bondholders, and that the new construction thereby accomplished gave ����