EQUITABLE ESTOPPEL

IF YOUR HONORS PLEASE,-I appear in this case for the Vermont and Canada Railroad Company. Their legal position is, in my judgment, the same with that of the first mortgage bondholders, for whom I appeared when this subject was formerly before you. The interests and relations of both are harmonious, and the only difference between them is that in the succession of the securities the Vermont and Canada is prior and the first mortgage is subsequent.

The case is infinitely perplexed and voluminous in its details; but it is not, in my apprehension, upon a study of those details that it is to be determined. If I have not misunderstood it, and I have tried not to misunderstand it, its ultimate disposition will depend upon the decision of two or three plain questions that seem to me to underlie the whole business. It is only upon those points that I shall have occasion to detain

[The forensic arguments of Mr. Phelps were always extemporaneous. Delivered for their immediate effect upon the jury or the court, they usually left no record save in the memory of interested auditors. On one occasion, however, a stenographic report was made, which was afterwards written out and printed, and is here reproduced in a condensed form. The case was one known as the Vermont Central litigation, which came before the Supreme Court of Vermont on what was then supposed to be a final hearing, at its General Term in October, 1879.]

the Court. And I shall ask your honors' attention to the consideration of what it is precisely that the Court is now called on to do, in whose behalf they are invited to do it, and upon what precise legal ground, if any, can the relief that is sought for be found to rest.

To understand exactly what is now claimed, an outline of the history of the transaction out of which it arises, brief enough to present it all in one view, is necessary.

Originally the old Vermont Central Railroad Company owned and occupied its road, which it had built. The Vermont and Canada owned its road, which it had built. It had leased that road to the Central Company by a lease, which is printed in this record, and which has engaged the attention of the Court till its provisions have become very familiar, the result of which was to give the Central the perpetual right to occupy the Canada so long, and so long only, as they paid the rent; and under that contract, and as lessees, the Central went into possession. Then upon default in the payment of the interest upon the Central's first mortgage, by which that mortgage became absolute at law, the Central Company in 1854 surrendered the possession of their road to the trustees of the first mortgage, who came into possession of the Central and Canada roads under a deed of surrender and under the provisions of the mortgage deed itself. Then sprang up a litigation between the Canada and the Central, which was a genuine litigation, founded on the claim of the Canada that there was an arrear of rent due them which was in dispute, and for which they claimed the remedy given in their lease. The result of the serious litigation on that subject was the decree of this

Court, of 1861, which established the validity of the lease in all respects, fixed the amount of rent that was then in arrear, and made a decree for its payment. Pending that litigation, the Chancellor had appointed the three trustees receivers, in order that they should hold the income of the road subject to the order of the Court until the cause ended; and when the cause was ended the Court directed that the property remain in the hands of the receivers, who were ordered to apply its income to the payment of the decree which the Court had made. For three years these trustees and receivers went on in pursuance of that decree, and discharged its provisions as well as they could.

Then various of these parties got together in 1864 and entered into an arrangement which is called the compromise decree. I suppose it was called so because it was not a decree and because there was nothing whatever to compromise. Because it will be borne in mind. that at that time there was no dispute between these parties. There was no litigation. There was nothing to make any litigation out of. All the litigation there had been was terminated, and these gentlemen were in possession of the road to carry out the explicit decree of the Court, in respect to which no question ever

arose.

They have been called by many names - trustees, managers, receivers, agents, officers. It is enough for my purpose that they were fiduciaries. That is a title which covers by its definition all it is necessary to include. They went on under that arrangement after the date of this so-called compromise decree for fifteen years, without proposing at any time to close this trust or to withdraw from it; on the contrary, re

sisting, and successfully resisting, every effort that anybody was sagacious enough to devise to turn them out or to interfere with them in any way.

Now they come into court in 1879 and say: "The result of our fifteen years' administration is this: since 1872, seven years ago, we have paid no man a dollar upon the old original securities which we were put in there to protect and provide for. But since 1864, when this second edition of our trust started out, we have put upon that property, or have incurred in its administration, a debt of about six millions of dollars, evidenced by all the variety and forms of credit that can be imposed upon human credulity Six millions of dollars' indebtedness is the result of our fifteen years' stewardship, in the last seven of which we have not paid a shilling to anybody that was interested in any of these securities. And now we ask that the Court put us finally and forever in possession of the entire property of our trust, and likewise the entire property of the Vermont and Canada Railroad Company, to be held until the administration, which in fifteen years has resulted only in the accumulation of six millions of debt, shall pay it off."

That is the exact proposition which is now made before the Court. You are called upon, on such a report as that of the stewardship of these gentlemen, to say: "Well done, good and faithful servants, enter you into a perpetual inheritance; we present you with the entire property of the trust; it is yours. Go without day.'

And thereupon these fiduciaries, not only in spite of courts of justice, but by the aid of courts of justice, walk off, the proprietors of the entire trust-estate,