, 1863-02-20
RAILROAD FARM MORTGAGE SUIT,
OPINION OF JUDGE DRuMmoND.

OPINION OF JUDGE pRuMmoND
UNITED STATES C1Rou1T Coua7, NoRrnrns
DISTRICT or 1LI1so1s-Ecforr Hon. 1non,u.
D'7t'a"'o'd-Elian E. Barney and Caleb Par.
Acf IS. Thomas Deeds; action Of ejectmcnt
upon mortgage. This suit, recently deter.
mined In favor Of the plaintiffs, Is one Of the
many now pending In the courts Of this State
ana Wisconsin, involving the validity Of what
Is Known Us Railroad Farm Mortgages. These
mortgages, to the value Of many hundred
thousand dollars, were given to Railroad
Companies, by farmers principally, nlong the
line Of the proposed routes in Illinois and
Wisconsin, In the years 1854, IS and Sc, to
secure the payment Of subscription for stock
to aid in the construction Of the roads. The
mortgages were generally payable in five and
SIX years, with rates Of Interest from seven to
ten per cent annually which interest the COM
pany agreed with the mortgngors to pay to
the holders instead Of dividends to the holders
OF the stock issued for the mortgage, until
the mortgages shon1d be paid, which agree
ment contained an assignment in blank, and
was executed by the company and attached to
tie mortgage and note, and in that way used
III payment for materials-cass locomotives.
and for construction as the company desired
from time to time, with the understanding
and agreement with the mortgagors that the
mortgages might be 30 used, and for that par-
Pose, ir fact the securities we're taken by the
company in payment for stock to be used by
the company In the manner they were used,
| and to be sold for cash in the market, If me-
cc*sary to raise money to aid IN constructing
| the roads.
When the mortgages were given all the par
ties interested supposed and believed that the
enterprise would be beneficial, and to the far
mer more than any other, rs bis farm would
be increased in value BY giving him.a close
market for his produce.
The roads we're built, equipped and in rood
condition and running order, but no dividends
we're paid to the mortgage stock holders or
cash stock holders, consequently the mortga-
thereof, intcrposc as defense fraud In obtain
Ing the mortgages.
In some counties associations were formed
by the nurtgagor6, making one common cause
to defend the collection Of the mortgages, re-
solving to fight to the bitter end, and in sew
cral counties, the most able counsel were en-
p1oyed to defend the rights Of the morteacors
and to institute suits to set aside the mort
cages upon the plea of fraud, and fraudulent
representations Of the agents of the Compa-
nies- in obtaining the mortgages. In some
counties in this State as well US in Wisconsin
large numbers Of suits were Instituted in
equity to set aside the mortgages rs against
tile Company, and when known the holders
thereof also, which suits are still pending in
the several counties.
This suit and several others were commenc.
ed ln this Court, being the first ejectmcnt
suits upon these mortgages to recover the
property conveyed by the mortgage and as
signed by the railroad companies to the hold
ers. The questions involved in suits Of this
kind at first were considered doubtful, and
said by some that ejectmcnt could not be sns-
tanned upon mortgage conveyance, even af.
ter condition broken; but SO far as that aues.
ton is concerned, there can be no doubt. at
this time, that such action can be maintained
successfully, and the lands described in the
mortgages can be recovered in this action bT
the assfsnees Of the mortgages, il the debt
and mortgage security are properly conyc red,
under seal by the railroad company.
This suit Was upon a mortgage given in
March, 1856. BY Jcrueha Gray to the Kacfne s;
mississippi Railroad Company, upon a yalua-
hundred dollars, with ten per cent. Interest.
payable annually. This mortgage and
others were used by. the company in
payment to the plaintiffs, who were
car builders at Dayton, Ohio, for rolling stock
upon the road. The assignment Of the mort
gage in form was bond with interest cou-
pons attached, promising, on the part of tie
Company, to pay tho interest upon that sum
| to the holder Of the note and mortgage. and
assigning all the rights of the COMPANY to the
| plaintiffs in the note and mortgage to secure
the payment Of the Company's bond, and The
interest thereon, with power Of Attorney ILL.,
clnded, authorizing tie holder to take any
Il n
the debt or property conveyed to secure tile
payment thereof This assignment the Com
pany executed under seal III the usual way to
convey lands. ~
The defendant had purchased the farm of
Gray after the mortgage was given and r..
corded, and had taken possession of the same
The counsel for the defendant interposed a
defense to the action as follows:
IL ~: iint fhc assignment Of the mortgage was
assign the land to the plaintiffs, and was but a
simple assignment OF the mortgage M a chose In
acton i WHICH did not transfer the legal estate.
fIaudulent representations Of the company through
it.s ficcr: aud agents, from Jerusha Gray, tic
Sd. That the assignee Of a naortsasc security.
although h. might be an innocent holder for yalns
took the estatc subject to NIL tile equities existing
between the original parties.
1t was claimed by the counsel for the plain
'iff, hat the assignment of the debt and the
mortgage given TO secure the payment of the
same by The Company to the plaintiffs, did
| convey the estate In fec the same, as conveyed
BY thc mortgage to the Company; that The
trantdtT 1s Of tue MORTGAGE was transfer ofth
| estate, the security, the lands, and not mere
chose in action; that thu term mortgage had
| higher Specification, and included the estate
! granted in the property conveyed; that the
| iards being described therein, it was not uc-
cessa5y tor repeat the description in the assign
The words used in the assignment Of tho
mortgage were equivalent to the use of the
words, "TAe mortgage aud the estate there
By cs'.lycycd.o
It was also claimed by the counsel for the
plaintiffs thut tile question Of fraud could not
bc considered in IN action Of cjcctmcnt as
against 4 third party holding for value with
out notice, and that such holder was protected
In case there had been fraud OIL tile part OF
tue company In obtaining the mortgage from
Gray.
These questions arising in many o:l,cr suits
| for the same purpose where large amounts
were involved, were fully and at great length,
| presented Oh the part Of the defense by J. IL
| knowlton, who seemed to lave consulted
many authorities, both English and A.ncri'
| can.
The opinion Of the Court is as follows:
OPINION OF JrDaE pRrNAoND.
I do moi think that evidence tending to show
or fraudulent representations, made by the officers
Or aSents Of thu Railroad Company, Is competent
IN this case. 1t is rot claimed BY defendant
counsel that they ran in sny manner connect thcse
| plaintiffs with the fraudulent acts or representa-
1ioEs OF the officers Of the Company, OF fhat thc5
have cridenge showing that theee plaintiffs had
note an.l mortgage that tley were obtained by tht
Company rn'airy, or through fa1sc represents
items Of the officers Of thu Company. It appcars
from the deposition OF Mr. Alien, that
the plaintiffs received them IN plymeni
for, cars furnished the Rai1roal Company
and If thciplatntif1s are innocent holders for ya1
nahle consideration paid by them ,and there is nc
evidence to the contrary their rights cannot be At
made by The railroad company, and OF which the,
had no knowledge at tile time they received then
from the rompnny tpon thc question ofthe sntH
eisnes Or ne sssi$nmen! Of ;lls mortgage to con
In CONTROVERSY. there may te sonic doubt
The assignment Of this not. and mortgage ia ex
ccutcd aE the President and Secretary Of Tho rail-
1oad company and Is attested tT their corporate
zeal. By this Instrument which Is attached to tlt
note and mortgage. the railroad company "easigi
and trautfer this note and n,nrtgage to the plain
tis. Rasncy anu Parker. ''or to the holder hereof.
There is also power Of attorney IN said assisn
on certain conditions. ITO proceed aud forcclos,
said mortgage, or take such other legal remedy Of
said note and mortgage against said mon;agor o.
o4peden o ssa rs sa seem
It Is confenccd By defendants counsel that this
assignment IL simply an equitable assignment b
the mortsase and that the legal estate Of the rail
pase 10 the plaintiffs by thls assignment So a. to
enable the plaintiffs to maintain thls action tl,at
ths words "assign ard transfer this mortgage
gage; that to convey the legal estate Of the mon
gaSec ~ the prcmiscs. words should be uscd re
fcrring directly TO the premiecs as Tor instance,
aha t5sns:eE this mortgage, together with