The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-07-06
UNITED STATES SUPREME COURT
Now York Capital and Western Railroads.
The Stock Of the Latter rs seeuri,y-Re.
demptf0n and Public Confidence.

NOW Hork CupitAl and Western Railroads.
The Stock Of the Latter rs securi,y-Re-
demptfon and Public Confidence.
Francis Vose, Appellant Us. Greene @. Bronson,
James s. Soatser and Shepherd Knapp, Trustees, el
aL-Appeal from tn Circuit Court for the District OF
Wisconsin. This action is against prominent citizens
OF New York, alive and deceased, and the issues
involved grew out Of the complicated AFFAIRS OF the
La Crosse and Milwaukee Railroad Company re-
Gently, in conjunction with the Milwaukee and Min
nesOta Railroad Company, so much before this court
in one form and another.
Mr.. Justice Davis delivered the opinion OF the
court:-The question presented by this record is Of
easy solution; but In order to understand what
1t Is, it is necessary TO make a short re-
cital OF facts on which the bill ia predicated.
In December, 1865, the La Crosse and Milwaukee
Railroad Company, to secure ten millions Of dollars in
bonds, to be issued by them, executed mortgage to
Bronson, Soutter Knapp, as trustees for the bond
holders. This mortgage was amended in 1853 so as
to limit the issue to four millions. That amount was
issued and became lien on the road In conse-
gnence OF the failure OF the company to provide for
the payment Of the interest the trustees in 1852 in
stituted proceedings in the federal Court for the
District OF Wisconsin to forecOse the mortgage,
After the decree but before the SALE Francis vOse,
the appellant, filed this bill. He bases his claim for
relief on the ground that the La Crosse Company
violated their agreement with the firm Of which he
was member, and to whose rights he had sue
ceeueu, IOr the purchase OF rarOau made De-
fore the execution OF the mortgage but In the i'm
mediate contemplation OF it, and he says that he has
right to come in and share the proceeds OF the sale
was made in bonds at the rate Of eighty cents the
dollar stipulated; but 1t is claimed the agreement
went further and provides against an over issue
an under sale OF bonds, and If the company
should sell during certain fixed period
paid in bonds at the minimum price of sale by the
railroad company V0se complains that the railroad
company did sell bonds OF the same issue within the
a n nrin OF xph inh hIG firm
took the bonds, the effect Of which pro tdntO to
pay them but half the stipulated price for their iron;
bonds and did not receive enough to pay rhem they
entitled to share in the disposition Of the proceeds
them; and, as portion Of the bonds actually issued
were by the final decree In the foreclosure suit cut
down on account OF their having been sold at dis
count, there is left an unapproprated lien In the
mortgage, which should be applied IN liquidation Of
his claim. The insolvency Of the La Crosse Company
is alleged, and notice Of the contract and Its breach
to all the parties in the principal cause The bill
dismissed by the Circuit Court, and this appeal Is
suit against the La Crosse and Milwaukee Railroad
Company for breach OF their contract the interpre
taton OF 1t wound have been proper subject of in
quiry; but the decision OF this does not depend
the disposition of that question. The appellant places
his claim for relief on his right TO have outsand
ing equity with the La Crosse Company adjusted in
the foreclosure suit and his demand attached to The
foot of the mortgage. To do this there must be q
power somewhere , to enlarge the mortgage and
for their duty s to see that the security held by
them for their ceStu que trusts is enforced according
to the terms of the deed They could neither enlarge
nor consent to its enlargement. The Court could not
do 10, nor the La Crosse Company, as it had cove
nanted with the trustees in behalf of the bond
holders that II would only issue four millions OF dol
lars Ia bonds. The rights OF the bOndholders
liked by the terms OF the mortgage. The value OF
the bonds as an investment depended In great |
measure on the number to be issued and doubtless
each purchaser, before he bought, had informa- |
ton OF the character OF the security on which |
ne relied. The property might he very |
well safe security for four millions OF dol
ars, and very unsafe for any additional amount.
rhe doctrine cOntended for would utterly destroy
he marketable value of all corporate securities.
NO prudent man would ever buy bond In the |
market II the provisions made for its ultimate re-
lemption could be altered without his consent. But !
The face OF the bonds, equity Will step in and allow
me appellant 70 apply the vacuum OF principle Sc
cured Dy inc mortgage to lquidate his claim The |
answer to this IL that 1t does not concern the appel
amt whether the Court riglitfully or otherwise re-
duced q portion Of the bonds. The bondholders |
whose bonds thus reduced are the only parties
In interest who could have any just course OF COM
did not feel aggrieved no other person has any right
to complain. The security Of the mortgage extended
to four millions OF the bonds only, and whatever
amount the Court should ascertain was due on thoSa
four millions the amount secured and 10 more.
II VOse had been made party DEFENDANT to the |
foreclosure suit the decree would have been the |
same. But he was not necessary party to that |
acted for him as well as the others.
IL would he mpracticable TO make the bonfholdng |
parties In suit to foreclOse railroad mortgage,
and there is rule in equity which requires TO be
done.
The decree of the Circuit Court is affirmed.