Brookfield v. The New Brunswick and Canada Railway and Land Company, and others

for three thousand five hundred and seventeen pounds eighteen shillings and two pence, and a memorial thereof registered, and that fieri facias executions were issued on their several judgments to the sheriffs of York and Charlotte, against the goods and chattels, lands and tenements of The New Brunswick and Canada Railway and Land Company on the 24th August, 1863, under which executions the said sheriffs had levied upon the lands and advertised them for sale. These answers also set out the memorandum of association of The New Brunswick and Canada Railway and Land Company, and the several articles of the association, and alleged that the transfer was made by The Saint Andrews and Quebec Railroad Company "in consideration of and upon the terms and conditions set out, "specified and embraced within the proper tenor, effect, construction, "true intent and meaning of the said several Acts" (the Acts of Assembly and the Acts of Parliament 20 and 21 Vict., c. 154), the said agreement, memorandum and articles of association, and not othewise: That such transfer was made for the consideration, objects and intention expressed in the said several acts, articles or agreement, memorandum and articles of association, and not for the purpose of creating any specific lien or charge upon the property and effects then held by The Saint Andrew's and Quebec Railroad Company, and the Class A Company, or upon any lands or property to be by them thereafter acquired, or to enable any of their creditors to compel the immediate sale of any of the said property, or to enable any of the Class A shareholders to prevent the New Brunswick and Canada Railway and Land Company from selling, or disposing of, or raising money by sale or charge upon any of the said lands so transferred, or to be thereafter acquired by them, and by such means completing the said railway, and thus procuring the benefits, and carrying out the intentions contemplated by the said acts, and the said agreement, memorandum and articles of association, except so far as the eleventh or twelfth sections of the said articles of association may have created any such charge, but such transfer was made with the intention that the defendants, The New Brunswick and Canada Railway and Land Company, should, for the purpose of carrying out the several objects of the said acts, agreement, memorandum and articles of association, have the sole right to, and management and disposal of, the whole of the said property.

The answer of the New Brunswick and Canada Railway and Land Company (filed 28th of december, 1867) also admitted most of the facts stated in the bill. It alleged that various grants of land were made to this company under the agreement of transfer, as alleged in the bill; but that the whole of the lands so granted to them had been seized under execution, and sold, except forty-two

Brookfield v. The New Brunswick and Canada Railway and Land Company, and others. thousand six hundred and seventy acres, to which Class A company were entitled, the sale of which, they were informed, was suspended by the filing of the plaintiff's bill; but that all the right and interest of The New Brunswick and Canada Railway and Land Company therein was sold by the sheriff in the month of May preceding, and that the company had then no real estate whatever, except the road and the stations. That the company was insolvent, and their affairs were in the hands of official liquidators; and that the railroad, and the control and management thereof, and the receipt of the tolls, etc., were in the hands of a Receiver appointed by the Court of Equity. That they were advised that the plaintiff Brookfield had not under the agreement of transfer, or the Act of Assembly, any charge upon the lands, etc., granted to them as representing The Saint Andrews and Quebec Railway Company; but that as to the forty-two thousand six hundred and seventy acres which Class A Company were entitled to have conveyed to them, they admitted that Brookfield had a right to such lands when they should be conveyed to Class A Company, and also to the twenty thousand six hundred and thirty acres reserved to Class A by the agreement of transfer. That they were advised, and submitted that the effect of The New Brunswick and Canada Railway and Land Company Act, 1857, was to transfer to and vest in the company the undertaking, lands, rights, and expectancies of The Saint Andrews and Quebec Railway Company, and of Class A Company, absolutely and unconditionally, except the twenty thousand six hundred and thirty acres reserved to Class A by the agreement. That they were willing, on payment of the costs of the proceedings, to allot and convey to Class A Company, or as the Court should direct, the forty-two thousand six hundred and seventy acres of land to which Class A Company was entitled. That at the time of the transfer, the finances of The Saint Andrews and Quebec Railroad Company, and at the date of the issue of the mortgage-bonds those of the Transferee Company, were entirely exhausted, and the undertaking could not have been completed without the monies advanced by the mortgage bondholders, which monies were advanced on the faith of the absolute transfer made by the said Act of Parliament; and they submitted that, as against the mortgage bond-holders, it would be inequitable to charge the lands, etc., of the company (other than the forty-two thousand six hundred and seventy acres to be conveyed to Class A) with the claim of the plaintiff Brookfield. That Brookfield was not a creditor of The New Brunswick and Canada Railway and Land Company, and had no privity with, or judgment against them, nor any lien upon, or claim against their property.

The case was heard, partly on bill and answer, and partly on

Brookfield v. The New Brunswick and Canada Railway and Land Company, and others.

certain facts admitted by the solicitors, reserving the right to object to the relevancy of such facts to the questions in the cause.

The facts agreed to be admitted were the following:

1st. The agreement of association as set out in the answers of the Saint Stephen's Bank and John J. Robinson.

2nd. The articles of association as set out in the said answer. 3rd. The additional articles of association as set out.

4th. The ninth paragraph of the said answers, except the statement that there was no residue of the lands, of which matter the plaintiff has no knowledge, and as to the matters stated to be in the agreement, they refer to the copy of the agreement as set out in the Act of Parliament.

5th. That the moneys rsceived from the Saint Stephen's Bank, and from John J. Robinson, went to increase the undertaking as alleged in the answers.

6th. That some of the mortgage bonds were in blank, the particular instances to be matter of inquiry, if necessary.

7th. That the defendants, the Saint Stephen's Bank and John J. Robinson, obtained their judgments, and duly recorded the memorials as alleged in the answers.

8th. That the money was obtained from the Saint Stephen's Bank, and from John J. Robinson, upon the representation contained in their answers.

In May, 1866, an injunction was granted to restrain the sheriffs of the Counties of York and Charlotte from selling any of the lands under the executions in their hands; and whatever sales have taken place since that, (as alleged in one of the answers) have been by consent, and will not affect the decision of the case.

In considering the questions that have arisen here, it will be necessary to refer to several of the Acts of Assembly of this Province, and to the Acts of Parliament which have been passed, relative to The Saint Andrews and Quebec Railway. The first Act, 6 Wm. 4, c. 31, to incorporate The Saint Andrews and Quebec Railroad Company, authorized the company, when a certain number of shares of the capital stock should be subscribed for, to make a line of railroad from Saint Andrews in this Province to the boundary line of Lower Canada; to purchase such real or movable property as might be necessary for making and maintaining the road; and to hold and possess the land over which the railroad was to pass. This Act was amended from time to time; and in 1848 the Act 11 Vict., was passed, reciting in Sect. 4, that the company had set apart four

cap. 48,

Brookfield v. The New Brunswick and Canada Railway and Land Company, and others.

thousand shares of their capital stock for shareholders in the United Kingdom, and were desirous of creating a distinction between these shares and the other shares of the company, and of yielding certain privileges and advantages to the shareholders in the United Kingdom. The Act, then, authorizes The Saint Andrews and Quebec Railroad Company to set apart four thousand shares of the capital stock for shareholders in the United Kingdom, to be designated as Class A shares; the other shares in the company to be designated as Class B. By Sect. 5, the company was authorized to transfer and assign to the holders of Class A shares, "the whole or any part of "any guarantee of interest, grant of money or lands, or other benefit, profit or advantage which now hath been or hereafter may be "granted, conceded or allowed to the said company by Act of Assem"bly, or otherwise howsoever." By Act 13 Vic., cap. 1, the Class A shareholders are authorized to choose directors from among themselves, to be distinguished as "the directors for Class A shareholders," who may agree with the directors of the company as to the conduct and management of the affairs of the company, (sections 7 and 8). By section 10, the directors of the company are authorized to grant to Class A shareholders, not only the whole or any part of any guarantee of interest, grant of money or lands, or other benefit, profit or advantage, already or thereafter to be granted, conceded and allowed to the company by Act of Assembly or otherwise, but also such preferential interest or dividend, and such preferential, exclusive or other profits, privileges and advantages, and on such terms and conditions as the directors of the company think proper. By section 11, the directors of the company are authorized to charge the present and future lands, goods and other property and effects, tolls, income and profits of the company, with the payment or other satisfaction of the Class A shareholders, of such interest or dividend, profits, privileges and advantages. By Act of Parliament (Imperial) 13 & 14 Vict., cap. 106, the Class A shareholders were incorporated by the name of "The Class A shareholders of The Saint Andrews and Quebec Railroad Company Act, 1850," for the purpose of holding shares in the Company, &c., and of accepting such grants, transfers, and assurances of land, timber, money, guarantees of dividends and interest, and other property and effects, as might from time to time be made by the company to such shareholders, and of selling, conveying, mortgaging, or otherwise dealing with and disposing of the stock and other property. By section 32, the company and the directors of Class A shareholders were authorized to enter into any contracts for or with reference to any of the purposes of that Act. On the 29th of April, 1852, a contract was made between John Brookfield, James Sykes and George W. King of the first part, The

Brookfield v. The New Brunswick and Canada Railway and Land Company, and others.

Saint Andrews and Quebec Railroad Company of the second part, and the Class A shareholders of the third part, for the construction of the railroad from Saint Andrews to Woodstock. This contract was confirmed by Act of Assembly 17 Vict., c. 42. The Act 19 Vict., c. 19, which extends the time for completion of the railway, declares in the recital, that the directors of the company have charged the lands, property, tolls, income and profits of the company in favor of the Class A shareholders, according to the powers given by the Act 11 Vict., c. 48. The Act 19 Vict., c. 70, authorizes The Saint Andrews and Quebec Railroad Company, with the concurrence of Class A Company, to agree with any company which may be authorized to accept the same and to complete the railroad to Woodstock, for a transfer of the undertaking of The Saint Andrews and Quebec Railroad Company, and the control and management thereof, and all the lands, etc., and the present and future profits and expectancies of The Saint Andrews and Quebec Railroad Company, on such terms and conditions as the three companies might agree upon.

Under the authority of this Act, an agreement dated the 20th September, 1856, was made between The Saint Andrews and Quebec Railroad Company, the Class A Company, and The New Brunswick and Canada Railway and Land Company, as set out in the tenth and eleventh paragraphs of the bill. This agreement was approved of by the Governor in Council on the 24th October, 1856, as required by the eighth section of the Act. By Act of Imperial Parliament 20 and 21 Vict., c. 154, (passed 17th August, 1857), reciting the incorporation of The Saint Andrews and Quebec Railroad Company; the division of the capital into Classes A and B; the separate incorporation of the Class A shareholders; that Class A had paid up the whole of the subscriptions, eighty thousand pounds, but Class B had only paid up a small portion; the authority of the company and Class A shareholders to agree with any company for the completion of the road to Woodstock; that certain persons thererein named, and others, had united themselves into a company under the Joint Stock Companies Act 1856, by the name of "The New Brunswick and Canada Railway and Land Company (limited)" for the purpose of accepting a transfer of the undertaking of The Saint Andrews and Quebec Railroad Company, and of purchasing all the lands, property, rights and expectancies of the said company, and the lands, etc., of the Class A shareholders, and for the purpose of carrying the said undertaking into execution, and for the other purposes relating to the same undertaking mentioned in the memorandum of association of the said New Brunswick and Canada Railway and Land Company (limited); and, that in furtherance of these objects, by the agreement of the 20th September, 1856, (which was