was situated on the 18th day of May, 1900, and 73 such record appears in Liber 9 of General Mortgages, page 235.

The Morton Trust Company accepted the trusts created by said mortgage and entered upon the performance of such trusts.

A copy of such mortgage is hereto attached marked Exhibit "A," and is filed herewith, and your orator prays leave to refer to the same as if it were fully set forth in this bill of complaint.

FIFTH.-The said mortgage further provided that the Trustee therein named should forthwith, upon the demand of The Third Avenue Railroad Company, deliver to it, or upon its order, $35,000,000 face value of said bonds, the proceeds of such bonds, so far as need be, to be applied as provided in said mortgage to the payment of the floating debt of the Railroad Company and to the payment or acquisition by the Railroad Company of the floating debt of the Controlled Companies hereinabove and in said mortgage referred to, and simultaneously with the delivery of the said $35,000,000 of bonds by the Trustee to said The Third Avenue Railroad Company, the said company agreed to pay to the Trustee an amount equal to the floating debt of the Railroad Company and its aforesaid Controlled Companies, and thereupon the Trustee was authorized and directed to apply the funds so deposited to the payment of the uncontested claims against The Third Avenue Railroad Company and to the purchase or payment of the uncontested claims against the Controlled Companies; and it was further provided that the written order of The Third Avenue Railroad Company to the Trustee for the application of the funds in its possession to the payment or purchase of the above mentioned claims should be full protection. It was further provided that such of the

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76 proceeds of the sale of the said $35,000,000 bonds.

as were not applied to the payment or acquisition of said floating debt should be applied by The Third Avenue Railroad Company in improvements, additions to, or in extensions of the property of its ailroad or of the Controlled Companies aforesaid, or to the purchase or construction of other property which should be and become subject to the liens of the mortgage. It was further provided that $13,443,000 face value of said bonds should be reserved to be executed from time to time, and to be certified by the Trustee, when and as called for by the Railroad Company, against the deposit 77 with the Trustee, as security for the bonds issued

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and to be issued thereunder, of said existing outstanding bonds and other funded obligations of the Railroad Company and of said Controlled Companies, such bonds to be so issued under said mortgage against such deposit of existing bonds and funded obligations at the rate of $1,000 face value of said bonds secured thereby for every one thousand dollars face value of such existing bonds or funded obligations so deposited. The remainder of said bonds, to wit, $1,557,000, were not to be issued until the Third Avenue Railroad Company should certify in writing to the Trustee that the entire proceeds of the said $35,000,000 of said bonds have been expended or have been set aside for the payment of the floating debt of the Railroad Company or the acquisition or payment of the floating debt of the Controlled Companies or that such remainder of said bonds were required for deposit with a Trustee in accordance with, and subject to, the provisions of the contract of lease between The Third Avenue Railroad Company and the Metropolitan Street Railway Company, dated April 13, 1900, and when the said The Third Avenue Railroad Company should have so certified, the remain

ing bonds were authorized to be from time to time 79 authenticated by the President and delivered to The Third Avenue Railroad Company, to be applied to improvements upon, additions to, or extensions of its property, which improvements, additions, extensions, street railroads and other property were expressly covenanted to be made subject to the lien of the above described mortgage, or should be expended upon additions to or extensions of or improvements upon the property of the aforesaid Controlled Companies.

All of such provisions are more particularly set forth in paragraphs 1, 2 and 3, subdivisions of Article II of the above-mentioned mortgage, Exhibit "A" of this bill of complaint.

The Third Avenue Railroad Company duly made and executed bonds of the issue described in said mortgage of the aggregate par value, as your orator is informed and believes, of Thirty-seven million five hundred and sixty thousand dollars ($37,560,000), all of which bonds were duly certified by the Morton Trust Company as Trustee in all respects as provided in said mortgage, and all of said bonds, as your orator is informed and believes, were duly issued by The Third Avenue Railroad Company for a valuable consideration and in accordance with the provisions of said mortgage and as your orator is informed and be lieves, were so issued with the knowledge, consent and approval of the Metropolitan Street Railway Company. All of said bonds are, as your orator is informed and believes, now outstanding in the hands of divers persons and corporations who are now the owners and holders thereof for value, and your orator is advised and avers that said bonds so issued as aforesaid are now in all respects valid outstanding obligations of the defendant, The

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SIXTH.-Your orator further says that it is informed and believes that at or about the time of the execution of the said mortgage, the defendant Metropolitan Street Railway Company was negotiating with the defendant, The Third Avenue Railroad Company, for a lease of all the abovedescribed property, including the transfer and sale to it of all the above-described stocks and bonds, which lease was to be for the period of nine hundred and ninety-nine (999) years, and as an in83 ducement and consideration for the granting of such lease, said Metropolitan Street Railway Company, in accordance with resolutions duly adopted by its Directors and its stockholders in accordance with the laws and statutes of the State of New York, and for the purpose of securing the aforesaid lease and the grant of the aforesaid personal property, subject, however, to the lien of the aforesaid mortgage, and for the purpose of inducing various individuals and corporations to purchase the aforesaid bonds, and for the purpose of having such funds applied to the payment of various debts, obligations and liens then due and owing by The Third Avenue Railroad Company, agreed with the said The Third Avenue Railroad Company and with all persons then or who should thereafter become the holders of said bonds to be secured by said mortgage, that it, the said Metropolitan Street Railway Company would, upon default in payment by The Third Avenue Railroad Company of either the interest or principal or both of any of said bonds, pay such principal or interest or both of each such bond so in default, and guaranteed to each person and future holder of such bonds, or any of

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them, the prompt payment of the principal and interest thereon, which promise was expressly declared to be unconditional and not dependent upon any act of The Third Avenue Railroad Company and not liable to be affected by any default on the part of The Third Avenue Railroad Company, and thereupon, from time to time thereafter as each of said bonds were issued, said Metropolitan Street Railway Company in writing endorsed on each of such bonds and duly guaranteed payment of the principal and interest of each of such bonds according to the tenor thereof, and, as your orator is informed and believes, said bonds were sold to and purchased by the present holders thereof in reliance upon said guarantee of said Metropolitan Street Railway Company, as well as upon the promise of payment of The Third Avenue Railroad Company and the security of the mortgaged property hereinabove described. Said agreement of guaranty is hereto attached and marked Exhibit B and is filed herewith and your orator begs leave to refer to the same as if it were fully set forth in the bill of complaint.

SEVENTH.-Your orator further says that it is informed and believes that immediately after the execution and delivery of the aforesaid mortgage, Exhibit "A," that The Third Avenue Railroad Company entered into a certain Indenture of Lease bearing date the 13th day of April in the year 1900, which was executed on the 17th day of May, 1900, and duly filed and recorded on the nineteenth day of May, 1900, and by said lease The Third Avenue Railroad Company did grant, lease and demise to the defendant, the Metropolitan Street Railway Company, all the railroads of The Third Avenue Railroad Company hereinabove mentioned or that might be thereafter ac

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