Protection of Rolling Stock and Piant. 487 c. 127. The term "Court of Chancery" or Court" means the 30 & 31 VICT. Court of Chancery in England or Ireland, as the case requires : The term "Gazette" means, with respect to England, the London Gazette, and with respect to Ireland, the Dublin Gazette, (a) The term "company" in the Companies Clauses Consolida- "Company." tion Act, 1845, means simply the company constituted by the special act. See ante, pp. 3 and 316. (b) As to what proceedings are within the meaning of this act, "Action." see the notes to ss. 4, 5, and 7, post. Scotch Act, (c) The word "decree," as used in the Railway Companies (Scot- "Decree," in land) Act, 1867, (30 & 31 Vict. c. 126,) includes decree of Court, (whether in absence or in foro contradictorio,) and decree of registration, (whether on deeds containing a clause of registration, or on registered protests of promissory notes or bills of exchange.) PROTECTION OF ROLLING-STOCK AND PLANT. * 1 property of com IV. The engines, tenders, carriages, trucks, machinery, Restriction on tools, fittings, materials, and effects, constituting the roll- against personal ing-stock and plant used or provided by a company for the pany. purposes of the traffic on their railway, or of their stations or workshops, shall not, after their railway or any part thereof is open for public traffic, be liable to be taken in execution at law or in equity at any time after the passing of this act, and before the first day of September 1868 (a), where the judgment on which execution issues is recovered in an action on a contract entered into after the passing of this act, or in an action not on a contract commenced after the passing of this act +; but the person who has recovered any such judgment may obtain the appointment of a receiver (b), and, if necessary, of a manager of the undertaking of the company, on application by petition (c), in a summary way, to the Court of Chancery in England or in Ireland, according to the situation of the railway of the company; and all money received by such receiver or manager shall, after due provision for the working expenses of the railway and other proper outgoings in respect of the undertaking, be applied and distributed * Or diligence against movable property of a Scotch company, under Railway Companies (Scotland) Act, 1867, s. 4. Or on a protested promissory note or bill of Exchange, or a deed containing a clause of registration registered after the passing of the Scotch Act, (s. 4.) c. 127. 30 & 31 VICT. under the direction of the Court in payment of the debts of the company and otherwise according to the rights and priorities of the persons for the time being interested therein; and on payment of the amount due to every such judgment-creditor as aforesaid, the Court may, if it think fit, discharge such receiver, or such receiver and manager. Extension of pro tection until 1st September 1870. Receivers. Manager. Form of order on petition under this section. Determination of questions respecting executions. (a) By the Railway Companies Act, 1868, (31 & 32 Vict. c. 79,) it is enacted that s. 4 of the Railway Companies Act, 1867, and the Railway Companies (Scotland) Act, 1867, shall be read and have effect as if the 1st day of September 1870 were therein mentioned, instead of the 1st day of September 1868. (b) With respect to the office and duties of receivers, see ante, p. 53, et seq. (c) Independently of the power under this act to appoint a manager, the Court of Chancery has no jurisdiction to give to any person powers of management, which can only be exercised by the company under their act of Parliament. See the cases cited on this subject, ante, p. 54. Under this section Sir G. M. Giffard, V.-C., made an order on petition directing the appointment of the secretary of the company manager of the undertaking, and receiver of the tolls, rents, calls, and arrears of calls, and all other moneys due or to become due to or receivable by the company, from or in respect of the railway and undertaking; An affidavit proving the written contract on which the petition was founded to be produced to the registrar; Usual directions to invest balances and accumulate dividends; Inquiry as to what was due to the petitioners for principal, interest, and costs upon their judgment debt; Inquiry whether there were any other, and what, debts of the company, and whether the same, or any, and which of them, were incumbrances on the said undertaking or the tolls arising therefrom, or any or what parts thereof respectively; And how the said incumbrances respectively were created, and what were the rights and priorities of the persons for the time being interested therein. Adjourn further consideration. Liberty to petitioners and all other persons interested to apply: (In re Stafford & Uttoxeter Railway Co., ex parte Harrison, 3 W. N. 113.) (d) As to petitions and orders under this section see Part II. of the General Order of the 24th of January, 1868, post, p. 511. V. If in any case where property of a company has been taken in execution a question arises whether or not it is liable to be so taken notwithstanding this act (a), the same may be heard and determined on an application by either party by summons (b) in a summary way to the court out of which the execution issued, of if the court is one of the superior courts of law, then to a judge of any one of those courts, and such determination shall be final 30 & 31 VICT. and binding. act. C. 127. (a) See the cases in the notes to s. 7, (post,) with respect to the Execution notjurisdiction of the Court to cause execution to issue, notwithstand-withstanding ing the provisions for the protection of companies from execution. (b) See Part II. s. 32, of the General Order of 24th January, 1868, Summons under as to summonses under this section, post, p. this section. ARRANGEMENTS. filing of scheme VI. Where a company are unable to meet their engage- Preparation and ments with their creditors, the directors may prepare (a) a of arrangement. scheme of arrangement between the company and their creditors, (with or without provisions for settling and defining any rights of shareholders of the company as among themselves, and for raising, if necessary, additional share and loan capital, or either of them,) and may file the same in the Court of Chancery in England or in Ireland, according to the situation of the principal office of the company, with a declaration in writing under the common seal of the company, to the effect that the company are unable to meet their engagements with their creditors, and with an affidavit of the truth of such declaration made by the chairman of the board of directors and by the other directors, or the major part in number of them, to the best of their respective judgment and belief. (a) As to the preparation and filing of the scheme, copies of the General order as scheme, notice of filing, certificate of filing, &c., &c., see Part I. of to schemes. the General Order under this act, dated 24th January 1866, post, p. 505. Vice-Chancellor Sir W. P. Wood, in giving judgment in Re Cam- Binding nature brian Railways Co.'s Scheme, (L. R. 3 Ch. 278, p. 282, n,) observes of scheme. that s. 6 includes both inside and outside creditors, but gives no power to the company by their scheme to deal with priorities or rights of creditors, which must be taken as they are, whatever their legal rights may be. VII. After the filing of the scheme, the Court may, on stay of actions. the application of the company on summons or motion in a summary way, restrain any action against the company on such terms as the Court thinks fit (a). (a) A motion was made under this section to restrain proceedings Proceedings by by landowners against the company, after the filing of a scheme unpaid vendors. under the act. The scheme provided that certain mortgages should not be paid off until the 1st of January 1873; that the company should be at liberty to raise money on mortgage; that they should c. 127. 30 & 31 VICT. complete all contracts with landowners, and settle all other debts, by granting rentcharges, mortgages, or debenture stock; that all actions, &c., should be stayed; and that no actions or suits should be instituted against the company, except for the nonperformance of the scheme. A great number of actions and suits, by simple contract creditors, landowners, and debenture-holders were pending, and summonses to stay them were adjourned into court, and heard before Sir W. P. Wood, V.-C., who decided that, having regard to s. 9, it was desirable that in future any actions or suits, by simple contract creditors and debenture-holders, in which there was any question to try, should be proceeded with, but that those in which the company admitted that they had no defence, should be stayed, the company giving judgment, to be dealt with as the court should direct: (Re Cambrian Railways Co.'s Scheme, L. R. 3 Ch. 278, 280, n; and see minutes of order, p. 291, n.) Jurisdictlon to ings by creditors and landowners. Lord Cairns, L. J., observed, when the case came before him on restrain proceed-appeal, that the hearing of a motion to stay proceedings was not the proper time for deciding what would be the effect of a scheme under the act, as against outside creditors-that is, general creditors-or against unpaid landowners. The persons against whom it was to have effect were those who belong to a class, the majority of whom had power to assent, and the outside creditors and landowners had not such power. But if, while the scheme was maturing, and the requisite assents were being obtained, the company and its property were being torn asunder and destroyed by litigation and executions, the remedy proposed by the scheme would come too late. An interim power must, therefore, be given to the court to stay actions on proper terms, and executions must be made dependent on the leave of the court. His lordship observed further, that "there was every reason why outside creditors of all kinds, including landowners, though not bound by the scheme, should be included in the 7th section. The words are as large as possible; and, as I understand, the Vice-Chancellor was of opinion that, if the 23d section had not been in the act, the court would have had jurisdiction to restrain the proceedings of a landowner under s. 7; it was, as the order states, on the construction of the 23d section that he decided against the jurisdiction." Lord Cairns then proceeded to show that the words in the 23d section, "nor shall anything hereinbefore contained affect any claim for land taken, &c.," apply only to the 23d section itself, and not to all the preceding clauses of the act; that in a proper case there was jurisdiction to restrain proceedings of the unpaid vendor of land under s. 7; and that an unpaid vendor would be obliged, under s. 9, to obtain leave of the court before issuing process. This jurisdiction would not, however, be exercised unless the scheme made reasonable provisions for the payment of the general creditors and unpaid landowners. His lordship therefore affirmed the decision of the court below, not upon the construction of the 23d section, but for the reasons stated above: (Ibid.) Proceedings by Upon an application by an unpaid vendor for leave to proceed unpaid vendor. With his suit for specific performance, Sir R. Malins, V.-C., granted such leave, and the company having been in possession for nine years, refused to impose any terms: (Symes v. Cambrian Railway 30 & 31 VICT. Co., 3 W. N. 284.) c. 127. V.-C. Giffard, however, in another case, expressly followed the Proceedings by Cambrian Railways case, and upon an application by the company, unpaid vendor. (who had filed a scheme,) to stay proceedings in a suit by an unpaid vendor, for specific performance, refused to make any order, except on the terms of the company agreeing to an immediate lease to the plaintiff, who was not to enforce payment for three months from the date of the order, liberty to apply being granted: (Robertson v. Wrexham, Mold, and Connah's Quay Railway Co., 17 W. R. 137; and see Re Bristol and North Somerset Railway Co., L. R. 6 Eq. 448; and the notes to s. 18, post.) actions passed. Upon a motion on behalf of a railway company who had filed a Terms on which scheme of arrangement, and duly advertised it, to restrain execution upon a scire facias against two shareholders in respect of unpaid calls, it was held that unpaid capital of a company was property of the company, within this section, whether the calls were made or not, and that the court would, therefore, grant an injunction accordingly: (In re Devon and Somerset Railway Co., L. R. 6 Eq. 610; 17 W. R. 133.) taxation of costs. By rule 14 of the General Order of the 24th January 1868, under Proceedings in this act, 66 no order, under s. 7 of the said act, for restraining an action against the company, by reason of a scheme having been filed, shall be made, except on an undertaking by the company to be amenable in such damages (if any) as the court, or the judge in chambers, may think fit to award, in the event of the plaintiff being ultimately held entitled to proceed with such action; and on such further terms (if any) as the court or judge may think reasonable." (b) An order for reinvestment and payment of costs by the railway company having been made before the taxation of the costs was completed, a special act, (30 & 31 Vict. c. ccix.,) was passed containing a provision, (s. 4,) that no actions, suits, executions, attachments, or other proceedings against the company should be continued or commenced during the period of ten years, (therein denominated the "suspense period,") unless with the sanction of the court, and on such terms as the court should think fit: Provided that the costs of any actions, &c., against the company, or affecting the property thereof, which should be discontinued in pursuance of this clause, should be in the discretion of the court, &c., if allowed, should be added to the debt. Sir R. Malins, V.-C., held that the court certainly had power to make an order for payment of the costs of reinvestment, notwithstanding the act, considering that such costs were to be treated as part of the original purchase-money of the land. But, on appeal, the Lords Justices reversed this decision, with costs, on the ground that the section above referred to, giving the court power to allow process to issue, was intended as a provision to guard against negligence or malfeasance on the part of the directors, and not as a power to be exercised at the instance of a single shareholder, who was in the same position as other creditors: (In re London, Chatham, and Dover Railway Co., ex parte Watts's Charity, 3 W. N. 75, 110.) |