APPEAL from the Circuit Court of the United States for the Northern District of Illinois.
The Chicago, Danville, and Vincennes Railroad Company, an Illinois corporation, on the 10th of March, 1869, executed a mortgage to William R. Fosdick and James D. Fish, trustees, to secure an issue of $2,500,000 of bonds. This mortgage covered all the franchises, issues, and profits of the company, and all the property it then owned or possessed, or might thereafter acquire, either in law or equity. Provision was made to the effect that, in case of default in the payment of interest on the bonds continuing for six months, the trustees in the mortgage, on demand of the holders of at least one-half the bonds then outstanding and unpaid, might take possession of all the mortgaged property, together with all the books, records, papers, accounts, and money of the company, and enter into the management and control thereof, paying all the expenses of taking, holding, managing, and operating the property from the income and profits thereof, or, if the property should be sold, from the sale thereof. The property might be sold as an entirety, and the proceeds, after deducting the expenses of sale, applied to the payment of the interest and principal of the bonds.
On the 12th of March, 1872, a second mortgage was executed to the same trustees, to secure a further issue of bonds to the amount of $1,500,000.
On the 1st of February, 1873, after both these mortgages were executed, the railroad company and Michael Schall entered into a contract in writing, a copy of which is as follows:--
'NEW YORK, Feb 1, 1873.
'Sold this day for account of Mr. Michael Schall, of York, Penn.,
'To the Chicago, Danville, and Vincennes Railroad Co.
'Office 38 Pine Street, New York:
'Two hundred (200) eight-wheel gondola coal-cars, as per specifications and agreement made by J. E. Young, and herewith attached.
'Price, delivered on the track at Pittsburg, at adpot of P. C. & St. L. R. R., seven hundred dollars per car. Cars to remain the property of Michael Schall until paid for.
'Delivery to commence, and cars to be taken, on or before March 1, and at least twenty-five (25) cars in each week thereafter until all are delivered, the seller having the option of increasing the number of cars to be delivered per week, if desired.
'Settlement to be made on delivery of each twenty-five (25) cars or more, at the opinion of sellers, with the notes of the Chicago, Danville, and Vincennes Railroad Company, payable in the city of New York, and adding interest at the rate of ten per cent per annum. The first notes are to be drawn at sixty days from date of delivery, and for twenty (20) dollars on each car, and the balance for a like amount and payable monthly thereafter.
'Cars to be lettered and numbered as per directions of Mr. Young.
'Invoice and shipping receipts to be sent to the railroad company's office, No 38 Pine Street, New York.
'It is understood the sellers shall not be responsible for the acts of Providence, strikes of workmen, or other causes beyond their control, which may retard and delay the manufacturing and delivery of the said cars as above stated.
'Shipping receipts to be evidence of delivery.
'(Signed) MICHAEL SCHALL.
'I hereby accept the above proposition for the R. R. Co.
'(Signed) J. E. YOUNG, Gen. Manager.'
Under this contract two hundred and twenty-five cars were delivered into the possession of the railroad company by Schall, numbered from 0141 to 0365, both inclusive, and lettered, 'This car is the property of Michael Schall, York, Pa.' Notes were executed by the company, according to agreement, for the price of the cars as they were delivered. Of these notes $44,323.43 have been paid by the company, and $110,334.04 are outstanding. The cars were used by the company in the usual course of business.