Page:Federal Reporter, 1st Series, Volume 7.djvu/399

 TAYLOB V. PHILADBLPHIA & BEADING B. 00. 387 �This was a hearing upon two motions, — one for a prelimi- nary injunction on a bill filed by stockholders of a railroad to restrain the company, which was then in the hands of re- ceivers, from issuing certain "deferred bonds" and from executing a certain mortgage upon its road; and the other for the rescission of an order made in the suit in which the receivers had been appointed, and authorizing the issue of the said "deferred bonds." The facts appearing by the bill, petition, and affidavits were as follows : �The Philadelphia & Reading Railroad Company is a corporation char- tered by the legislature of Pennsylvania. Its charter gave it a general power to mortgage its property, and a supplement thereto provided as follows : �" That the president and managers of the Philadelphia & Reading Rail- road Company may * # # aecure such issues of bonds as they may deem advisabie to make, bearing such rate of interest, with or withont provision for the paymeat of taxes on the said bonds, and payable at such times as the president and managers may provide, either in United States money or sterling, by mortgagiiig, from time to time, the vfhole or any part of its railroads, real and personal estate, and corporate rights and franchises, acquired or to be aoquired, and may dispose of the said bonds at such price and in such manner as they may determine ; and any such mortgage may, at the option of the said president and directors, be made to secure bonds to be subsequently issued, as well as those issued prier to or contemporaneously with the date of the said instrument." �From time to time after its organization the company negotiated loaus of money, to secure which it executed successive mortgages upon its road. It also accumulated a large floating debt. In 1880 it became unable to meet its obligations, and on May 24, 1880, upon the suit of mortgage cred- itors, receivers of the corporation and of all its property, privileges, franchises, and powers, were appointed by the United States circuit court for the eastern district of Pennsylvania. At the same time the court appointed two special masters in the cause. On November 16, 1880, the railroad company and its receivers joined in a petition to tha court, set- ting fortli that the following proposition had been made by responsible parties for securing a contribution equal to $15 for each share of stock for the purpose of paying ofE the floating debt, viz. : �" The company is to issue 686,000 obligations of a par or nominal value of $50, to be known as deferred income bonds, on which interest only is to be payable, and that out of the annual surplus profits of the company remaining after the payment of a 6 per cent, dividend on the common stock. These remaining surplus profits are to be first applied to the pay- ment of a yearly interest, not exceeding 6 per cent, on the deferred in- come bonds, and after each class has had 6 per. cent., the deferred income bonds are to rank for further dividends pari passu with the common stock. The right of the latfer to this participation in the surplus profits of the company is to take etiect as of December 1, 1880. �" The deferred income bonds are to be issued at 30 per cent, of their par value, or $15 per bond, payable in instalments, as follows : Three dollars on subscription, four dollars one month thereafter, four dollars ��� �