cnmnrr co. ¤. Anxsusss cam. R. co. 49
W ments. The construction of the 48 miles of road seems- to have ab-
sorbed the proceeds of the $720,000 first-mortgage bonds of the
company, and of state aid and state levee bonds, and county and mu-
nicipal subscriptions, amounting in the aggregate to some $2,000,000.
The company was hopelessly insolvent. No interest was paid on its
first-mortgage bonds,and on the twentieth day of September, 1876, the
trustee hled a bill in the United States district court at Helena, then in
l the western district, to foreclose the mortgage. The bill alleged that the
holders of one-third in amount of the bonds had requested the trustee to
foreclose. A receiver was appointed, upon whose application Judge
PARKER authorized the issue of receiver’s certificates to the amount
of $7 5,000, to make necessary repairs and improvements on the road.
Between the date of this order and the next term of the court, Helena
was transferred to this district, and the judge of this district rescinded
the order authorizing the receiver to issue certificates. The rescind- .
ing order was not made because the road did not stand in need of re- `A
pairs. It wasnotoriously true_that its condition was such as to make
it dangerous. to life and property torun cars over it; ties were rotten,
iron worn out, rolling stock in bad condition, bridges insecure, cul-
verts washed out, and the road-bed in many places too low, resulting
in overflows of the track and stoppage of trains. No repairs nor
betterments had been put upon the road since it had been built.
It seems to be settled that a court of equity has the power in this
class of cases to authorize its receiver to issue certificates of indebt- _
edness, and make them a first lien upon the road, for the purpose of
raising funds to make necessary repairs and improvements. Wallace ·
v. Loomis, 97 U. S. 146, 162; S. C. 2 Woods, 506, under title, Stanton
v. Alabama J: C'. R. Co.
But it is a power to be sparingly exercised. It is liable to great
abuse, and while it is usually resorted to under the pretext that it
will enhance the security of the bondholders; it not unfrequently re-
sults in taking from them the security they already have, and appro-
priating it to pay debts contracted by the court. The history of
Wallace v. Loomis, supra, furnishes an instructive lesson on this
subject. ` -
This court has uniformly refused to arm its receivers with such a _
dangerous power. When the road cannot be kept running without-
its exercise, except to a very limited extent, the safe and sound
practice is to discharge the receiver or stop running the road, and
speed the foreclosure. ‘
v.15,no.1—4 , A