CHAPTER 282
DEPARTMENT OF PUBLIC UTILITY CONTROL:
RAILROAD AND RAILWAY BONDS AND MORTGAGES

Table of Contents

Sec. 16-216. Issuance of bonds.
Sec. 16-217. Securing of bonds by mortgage.
Sec. 16-218. Property subsequently acquired covered by mortgage; foreclosure.
Sec. 16-219. Surrender of road to mortgage trustee.
Sec. 16-220. Liability of trustee limited.
Sec. 16-221. Inventory.
Sec. 16-222. Accounts. Trustee may complete foreclosure.
Sec. 16-223. Court may remove trustee and appoint successor.
Sec. 16-224. Prior encumbrancers not affected.
Sec. 16-225. Trustee to have same powers as company.
Sec. 16-226. Administration expenses.
Sec. 16-227. Purchasers under foreclosure may reorganize corporation. Certificate.

      Sec. 16-216. Issuance of bonds. Each railroad company may borrow money and give its bonds therefor, signed by its president and countersigned by its treasurer, and may dispose thereof as authorized by its stockholders. Any bonds issued by virtue of the general authority conferred by this section shall, before being issued, be registered in the office of the Comptroller, and a certificate of such registration shall appear on each bond so issued. The Comptroller shall cancel any bonds so registered which are brought to him for cancellation and enter a memorandum of such cancellation in his register. No such company, by virtue of the general authority conferred by this section, shall issue any bonds of a lesser denomination than one hundred dollars or have bonds, issued under such authority and without other authority from the General Assembly, outstanding at any one time to a greater amount than one-half the sum which its president, treasurer and an engineer approved by the Department of Public Utility Control certify under oath has been actually expended upon its railroad, and any false swearing in the matter shall be deemed false statement under section 53a-157b. The Comptroller shall not permit the bonds of any railroad company, issued under authority of this section, registered in his office and uncancelled, to exceed the amount limited in this section.

      (1949 Rev., S. 5627; 1971, P.A. 871, S. 91; P.A. 75-486, S. 1, 69; P.A. 77-614, S. 162, 610; P.A. 80-482, S. 98, 348; P.A. 85-246, S. 13.)

      History: 1971 act made false swearing a violation of provisions re false statement rather than perjury; P.A. 75-486 replaced public utilities commission with public utilities control authority; P.A. 77-614 replaced authority with division of public utility control within the department of business regulation, effective January 1, 1979; P.A. 80-482 made division of public utility control an independent department and deleted reference to abolished department of business regulation; P.A. 85-246 deleted references to street railway companies.

      Action does not lie on interest warrant annexed to bond, but not containing promise. 26 C. 120. Measure of damages for nonpayment of principal of bonds held to be interest at rate fixed by contract. 29 C. 268.

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      Sec. 16-217. Securing of bonds by mortgage. Any railroad company may secure its lawfully issued bonds by a mortgage of its property, or any part thereof, by deed executed by its president, under the corporate seal, to the Treasurer of the state and his successors in office, or other trustee, in trust for the holders of such bonds. Such mortgage shall be recorded in the office of the Secretary of the State and need not be recorded in the records of towns within which the property so mortgaged is situated.

      (1949 Rev., S. 5628; P.A. 85-246, S. 14.)

      History: P.A. 85-246 deleted reference to street railway companies.

      Mortgage of franchise sustained. 23 C. 435. General railroad mortgage held to cover office furniture; 46 C. 129; to cover property acquired after date of mortgage; Id., 156; not to cover lands outside of layout, subsequently acquired and not needed by company; but to cover lands purchased with company's funds, though title was in names of officers. 50 C. 150. Priorities as between supply and other unsecured creditors and mortgage bond holders. 76 C. 17; 101 C. 13; 108 C. 217. Effect of failure to record. 89 C. 59. Rights of bondholder after foreclosure and under reorganization agreement. 90 C. 34.

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      Sec. 16-218. Property subsequently acquired covered by mortgage; foreclosure. When any railroad company has mortgaged, or mortgages, its railroad, pursuant to law, to secure its bonds, and has included or includes in such mortgage all or any part of its rolling stock, locomotives, cars and other personal property, and of its property, whether real or personal, thereafter to be acquired by it for use upon such railroad, such mortgage shall be deemed valid and effectual as respects all the property therein included as aforesaid and may be foreclosed in the same manner as ordinary mortgages of real estate; and the record thereof in the office of the Secretary of the State shall be sufficient record and notice to protect the title under the mortgage, although such company remains in possession of the mortgaged property.

      (1949 Rev., S. 5629; P.A. 85-246, S. 15.)

      History: P.A. 85-246 deleted references to street railway companies.

      Held that railroad mortgage could only be foreclosed by state treasurer. 50 C. 159.

      Cited. 28 CS 459.


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      Sec. 16-219. Surrender of road to mortgage trustee. When any such company has mortgaged its property or any part thereof to any person, in trust, for the security of its creditors, or any class of them, and has made default in the payment of principal or interest due such creditors, any such creditor may bring his complaint to the superior court, for any judicial district in which such railroad or any part thereof is located, setting forth such fact and claiming that such trustee may be placed in possession of such property, for the benefit of such creditors. Such complaint shall be heard and determined at the first session of the court to which it is returnable, unless continued for reasonable cause; and, if the allegations therein are found true, such court shall decree that such company and its president and directors, under a suitable penalty, shall surrender such mortgaged property to the trustee, for the benefit of such creditors.

      (1949 Rev., S. 5630; P.A. 78-280, S. 2, 127.)

      History: P.A. 78-280 replaced "county" with "judicial district".

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      Sec. 16-220. Liability of trustee limited. When any such trustee has taken possession of any property pursuant to the provisions of section 16-219, or pursuant to any authority contained in the mortgage or deed of trust, he shall take charge of and operate such railroad or railroad property for the benefit of the creditors for whom such trust was created, and shall not be personally liable for any injury arising from the operation of such road, unless resulting from his wilful mismanagement, or for any contracts made by him as such trustee; but all such property shall be liable for the acts and proceedings of such trustee, in the execution of his trust, to the extent of the interest of the creditors for whose benefit he acts, and any proceeding for the purpose of making such property liable shall be brought against such trustee, describing him as such.

      (1949 Rev., S. 5631.)

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      Sec. 16-221. Inventory. The trustee, upon taking possession of such property, shall make, under oath, an inventory of all property which comes into his possession and lodge it for record in the office of the Secretary of the State; and, if any other property afterward is discovered by him, he shall make and lodge a like inventory.

      (1949 Rev., S. 5632.)

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      Sec. 16-222. Accounts. Trustee may complete foreclosure. The trustee, while operating such road, shall file quarterly, in the office of the Secretary of the State, an account of all moneys received or disbursed by him in the course of his agency; and may proceed at his discretion, in the superior court for any judicial district in which such railroad or any part thereof is located, to foreclose against such company and all subsequent encumbrancers, for the benefit of the bondholders or other creditors for whom he acts; and such court may limit the time for the redemption of the mortgaged property, as in ordinary foreclosure proceedings.

      (1949 Rev., S. 5633; P.A. 78-280, S. 2, 127.)

      History: P.A. 78-280 replaced "county" with "judicial district".

      Trustee represents all bondholders, and they need not be given personal notice of judicial proceedings. 53 C. 349.

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      Sec. 16-223. Court may remove trustee and appoint successor. If such trustee neglects or unnecessarily delays to perform his duties, any creditor represented by such trustee may apply to the superior court for any judicial district in which such railroad or any part thereof is located, for such trustee's removal. Such application shall be privileged in the order of its trial, and, if the allegations therein set forth are found true, such court may remove such trustee from his office and appoint another in his stead.

      (1949 Rev., S. 5634; P.A. 78-280, S. 2, 127.)

      History: P.A. 78-280 replaced "county" with "judicial district".

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      Sec. 16-224. Prior encumbrancers not affected. Nothing in sections 16-219 to 16-223, inclusive, shall affect any mortgage, trust or lien upon the property foreclosed, which was created prior to the mortgage, trust or lien, under which such trustee may act; but the trustees for all such prior encumbrancers may proceed, by foreclosure or otherwise, notwithstanding any act or proceedings by subsequent encumbrancers or their trustees.

      (1949 Rev., S. 5635.)

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      Sec. 16-225. Trustee to have same powers as company. When any such railroad is in the possession of a trustee, he shall have the same rights, powers and privileges as are conferred upon railroad companies; and all expenses and damages incurred in good faith by such trustee in possession, to improve the lines of the railroad so in his charge, shall be reimbursed to him from the earnings of such railroad while he has the possession thereof.

      (1949 Rev., S. 5636.)

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      Sec. 16-226. Administration expenses. The expenses of operating such railroad or other property, including repairs and all other reasonable expenses of the trustee, and any damages incurred for any injury sustained during the time of his execution of such trust, and all claims secured by any prior mortgages or encumbrances which have become payable before or during said time, and also a reasonable compensation to be allowed to the trustee by the Superior Court, shall be deducted from the earnings of the road, before any part of such earnings is paid to the creditors.

      (1949 Rev., S. 5637.)

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      Sec. 16-227. Purchasers under foreclosure may reorganize corporation. Certificate. Whenever the property and franchises of any railroad company have been sold pursuant to a judgment or decree of a court of competent jurisdiction, in a suit for the enforcement of foreclosure of a mortgage on such railroad, the purchaser or purchasers at such sale, or his or their grantees and their associates and successors, if they desire to continue the operation of such railroad, shall, upon filing in the office of the Secretary of the State the certificate herein provided for, be a corporation by the name designated in such certificate, with power to hold, use, maintain and operate such railroad, with all the powers enjoyed by railroad companies under the laws of this state. Such certificate shall be signed, sealed and acknowledged by the persons who have acquired such property and franchises, or a majority of them, and shall set forth: (1) The name of the corporation; (2) the names of such persons, not less than twenty-five in number, as have associated themselves together for the organization of such corporation, and the names of the persons who compose the first board of directors; (3) the amount of capital stock and the number of shares into which the same is divided; (4) the owners of such shares at the date of filing such certificate. The amount of such capital stock shall not exceed the total value of the railroad together with its franchises, which value shall be determined by the Department of Public Utility Control. The first board of directors shall adopt bylaws relating to the management of the affairs of the corporation, which bylaws may be amended by the stockholders.

      (1949 Rev., S. 5638; P.A. 75-486, S. 1, 69; P.A. 77-614, S. 162, 610; P.A. 80-482, S. 99, 348.)

      History: P.A. 75-486 replaced public utilities commission with public utilities control authority; P.A. 77-614 replaced public utilities control authority with division of public utility control within the department of business regulation, effective January 1, 1979; P.A. 80-482 made division an independent department and deleted reference to abolished department of business regulation.

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