is desirable and that the price is fair and reasonable. However, there is a dispute between the Trustees and certain indenture trustees with respect to the proper disposition of the proceeds of the settlement. The Trustees contend that the proceeds should be made available for general operating purposes, while the indenture trustees contend that the proceeds should be held subject to the liens of their respective mortgages, and should be deposited in escrow pursuant to the provisions of Order No. 619 herein.
The mortgages represented by the various indenture trustees became liens as of December 31, 1968. At that time, operations over the line in question had been suspended and the tracks had been physically removed, but MBTA was under an obligation to restore, as outlined above. The indenture trustees argue that the present release transaction is equivalent to a sale by the Trustees of an interest in property which was subject to the liens of their mortgages, since the payment is in reality a payment for the termination of the easement. The Trustees, on the other hand, point out that the mortgages became liens only upon an easement which was terminable in the event of abandonment of service, hence the lien value was nominal at best; and that if the Trustees were to reject the proposed settlement and insist upon reconstruction of the spur track (a clearly permissible alternative) the lien value would not be substantially enhanced. Accordingly, they argue, it is unrealistic to view the $250,000 payment as compensation for terminating the easement, or as the sale price of any interest which was subject to the lien of the mortgages.
While the matter is not free from doubt, I have concluded that the indenture trustees are more nearly correct in their assertions. The railroad has been compensated for its loss of revenue, including whatever claim the Trustees may properly have had for liquidated damages. Thus, it is difficult to treat the payment presently proposed as in substitution for operating revenues. And while I agree with the Trustees' argument that this transaction should not be regarded as the sale of the easement, or as compensation for termination of the easement, I believe it is nevertheless subject to the liens of the mortgages.
The mortgages became liens upon whatever interest the railroad had in the property in question as of December 31, 1968. MBTA's covenant to restore the easement was, as of that date, a covenant running with the land, and constituted an interest in the real estate. By virtue of the present transaction, the Trustees are disposing of this interest in the property for a valuable consideration. The lien should attach to these proceeds.
I recognize that the sum of $250,000 probably exceeds the actual value of the Trustees' interest in the property at the time the mortgages became liens. But fluctuations in value of liened property do not have the legal effect of discharging liens, either in whole or in part. In the absence of any record basis for allocating any part of the consideration to anything other than relinquishment of an interest in the real estate (i.e., the covenant to rebuild), the entire sum must be regarded as subject to the liens upon the interests now being terminated.
ORDER NO. 682
And now, this 1st day of May, 1972, upon consideration of the Petition of the Trustees Seeking Approval to Enter into a Settlement Agreement with the Massachusetts Bay Transportation Authority, and after hearing duly noticed, it is ordered that:
1. The Trustees are authorized to execute and carry out the settlement agreement with the Massachusetts Bay Transportation Authority referred to in that Petition (Document No. 2862).
2. The $250,000 proceeds from the settlement shall be deposited pursuant to Order No. 619 in these proceedings.