Cleveland morning leader. [volume] (Cleveland [Ohio]) 1854-1865, 1860-04-05

ment Of these questions apply 10 every nonnteFest
paying road in Ohio. We publish the decision 10
full below as Il ls Of interest to every sockholder
292, Geo. S. Coe o. The Columbus, Piqua and
Indiana Railroad Company ct. al.
29S. The Columbus, Piqua aud Indiana Rail-
road Company o. George S. Coe.
Error to the Court Of Common Pleas Of Frank
lin county.
GHOTsoN, j.
l. Certain persons, their associates, successors
and assigns, were created 4 body cooperate, with
succession, with power 10 sue and be sued, plead
and be impleaded, defend aud be defended, con-
tract and DO contracted with, acquire and convey,
at pleasure, oil such real and personal estate as
may be necessary and convenient to carry into
effect the obj jectS Of the Incorporation The cor
poration was authorised to construct and maintain
a railroad between certain teTmini and to demand
aud receive for the transportation Of persons and
property, a compensation not exceeding certain
specified rates. Il was also authorized TO appro-
pirate, by proceedings under general law regu-
atiug such proceedings, land necessary for its
railroad track, the property ofindividuAls,
Held-lst That under these general powers
the corporation had no power to ALLEVIATE the fran>
ehiss to be corporation, or the franchise to con-
struet and maintain a railroad, and receive com
pensatiOn for the transportation Of persons and
property nor any interest in real estate acquired
and held solely and exclusively for the purpose Of
the exercise of such franchise. I'd. That after the
railroad had been constructed and prepared for
use, things requisite for that USE such as lOcomo-
tives, and the like, not affixed to the land be
ing acquired by the corporation, are to be regard
cd as personal property, subject TO alienation and
liable for debt. Sd. That the corporation could
not make q mortgage Of any property, such as the
above described, to be subsequently, acquired, go
as TO give 1t validity, in other manner, or to a
greater extent than an individual owner Of per-
sonal property.
II. The corporation held grant of power to
borrow money not exceeding its capital stock at
a rate Of interest not exceeding seven per cent,
and to execute bonds therefor, and to secure the
payment thereof, by pledge Of the property aud
income Of the company. And subsequent grant
Of like power, and the authority to pledge was
expressed to be "by mortgage or otherwise, the
entire road, fixtures and equipments, with all the
appurtenances, income and resources thereof
Heidi. That under the power thus granted for
the special purpose Of Borrowing money, the com
pany could not mortgage the franchise to bo a
corporation appertaining TO tho individual mem
bers of the corporation, but could mortgage the
franchise of the corporation to maintain the rail-
road and receive compensation for the transpOrtaS
ton Of psrsons and property, and could mortgage
property connected with the railroad and the use
Of its franchise, whether real or personal, to be
subsequently acquired. 3. That the power which
the company had, to institute Judicial proceed
ing to appropriate private property was not trans~
fsrable, and that the mortgage Of the company
could give no right to the exercise Of such 8
power which the provisions of the general law on
the subject did not authorize.
}. That the execution Of q mortgage by the
company, under such special power, could give no
exemption Of its personal property from liability
which might be otherwise created by it's own act
or judicial proceeding, that the execution Of .
like mortgage upon personal property by an indi :
vidual, would not create.
Ill The company issued bonds, and executed
mortgages to secure their payment under its spec
ial power. Tbs bonds were made payable ten
years after their date with interest at the rate of
seven per cent, payable semi-annually. They were
negotiated by the company at discount, and a
part Of them were exchanged for non rails Held
Il. That it was proper exercise Of the power,
to make the interest on the bonds payable semi.
annually. 2. That the act Of March Sd, 1881,
which authorized the directors of the company to
sell or negotiate the bonds issued by said company
at such rates as they might think proper, and
which provided that the bonds so sold should be as
valid in every respect as if sold at their par value
applied both 10 the bonds and the seen ity given
foe their payment; and, therefore, the sale OF the
bonds at q discount did not render invalid the
mortgages g. That the company having receiV-
cd authority to sell the bonds ct less than their par
value, there could be no ground for prohibiting an
!
Of such exchange, or the intention to make it, did
not invalidate the bonds or the mortgages
w. The company executed three mortgages mp
or lis property and acome, the property in pos
session and 10 be acquired. Two Of these mort
cages were properly executed and recorded, but
the second in order Of time executed in the city Of
New York and acknowledged before an Ohio Com
missioner in that State, had but one witness. The
third or subsequent mortgage was expressly made
subject 10 ths first and second, Held, that wheth
er the second mortgage be regarded as creating a
legal or equitable clam it was entitled to priority
over the third.
V. A creditor having been permitted to levy an
exec ution upon part Of the personal property,
i including portion acquired subsequently to the
date of both the second and third mortgages. but
this levy having been made after the action was
brought and while the property was in the hands
Of a receiver appointed in the case Held, that as
against equitable claim o. the second mortgage
the creditor was not entitled to spreference
| vi. The consideration Of the debt for which the
creditor recovered Judgment was for moneys ad-
vancsd in payment Otinterest for the company and
taxes assessed against the company, and tor rights
OF way paid (Or by the creditor. Held, that such
consideration Ofthe debt due from tbepcOmpany,
created no equitable claim upon the property con-
geyed by the mortgages.
VII. The mortgages executed by the company
were to trustees for the benefit Of the hold
ers OF the bonds, They provided for the
bonds and contained a defeasancs. The instru
ments also purportel to give to the trustee
thoritY to sell the property, upon conditions at
place and in 4 mode prescribed The action was
brought to obtain and relief asked was, sale un-
der the order Of the court Held, /. That the par
ties were entitled to such sale. 2. That the prop
erty must be sold according TO the rules govern
ing sales OF real estate, and must, therefore, b'
appraised, g. That the railroad, with its fixtures
constituting an entire tract Of real estate, indivis
BILE for the purpose OF the sale, together win IN
franchise connected Herewith, should be sold il
like manner as an entire tract lying in two or NOR
counties, and the proceedings incidental to th'
sale should be had in the county in which the &C
tIoa was brought 1. That the personal property
should be sold as personal property, but might b'
sold with such precautiO as 10 prevent sacritic
and 10 prOluc the highest price, which tn
| court, in its discretion, might order B. That tn
mortgages must be regarded as proceeding on tha
part OF the instrument which operates as mort
gage and.not under the power 70 sell, and there
fore the court would not be authorized in this &C
ton, 10 charge, upon the proceeds realized by I
sale an allowance for the trouble Of such mort
pages, or the fees of their counsel G. That tn
J mortgages represented the bOHdhOldeTs and tn
latter were neither necessary nor proper parties &
the action, and that any question as 10 the amoun
for which the security would be available, must b
made with the mortgage, by an issue in the ac
ton. 7. That the mortgages. ss between then
and the company, would be authorized to recelv
the proceeds OF the sale, but the company WOul
have the right to require that, upon, or before
payment Of the proportion payable upon an
bond, it should be produced, and, if paid in iul
Cancelled, or if paid in part such payment TO b
: credited. 8. That any question as TO the part
entitled to receive the money on bOndi or as
the proportion payable on any bond lost or d.
stroyed, or questions which may arise between th
mortgages and any bondholder, need not be an
ticipated by any order to be made in the actio
between the present parties utshouid be dispose
Of when they arise IN another sction' or IN SUP
Elementary proceeding. g. That an order Tequil
z II log the bUndhOlders TO prove their claims an
1 state the amount paid for the bonds was erroneou
Z villa party owning lands entered into o
} agreement with the company by which it was a
| lowed to enter on the lands and construct q
track Of the road ltwas to pay for the use Of Il
Z land uBou an estimate to be made bY persons 81