Case Name: The Equitable Trust Company of New York, Trustee, Defendant in Error, vs. The Chicago, Peoria and St. Louis Railroad Company et al.-(Edward J. Brundage, Attorney General, Plaintiff in Error.)
Court: Illinois Supreme Court
Jurisdiction: Illinois
Decision Date: 1924-10-28
Citations: 314 Ill. 96
Docket Number: No. 15797
Parties: The Equitable Trust Company of New York, Trustee, Defendant in Error, vs. The Chicago, Peoria and St. Louis Railroad Company et al.—(Edward J. Brundage, Attorney General, Plaintiff in Error.)
Judges: 
Reporter: Illinois Reports
Volume: 314
Pages: 96–106

Head Matter:
(No. 15797.
Decree affirmed.)
The Equitable Trust Company of New York, Trustee, Defendant in Error, vs. The Chicago, Peoria and St. Louis Railroad Company et al.—(Edward J. Brundage, Attorney General, Plaintiff in Error.)
Opinion filed October 28, 1924.
1. Railroads — decree for foreclosure sale does not affect public interest in operation of road. A decree of sale in a foreclosure proceeding for the bonded indebtedness of a railroad company does not affect the public interest in the operation of the road even though it is to be sold in parcels, and the Attorney General has no standing in such suit as against the right of the complainant, as the question of the operation of the road is no part of the issue in foreclosure and can only be made an issue by proper proceeding against the purchaser or purchasers.
2. Same — purchaser of railroad takes it subject to public interest in its continued operation. Purchasers of a railroad, whether it is sold in entirety or in parcels to different purchasers, take it affected with the same public interest in its continued operation as existed when it was in the hands of the former owner, and should the purchaser or purchasers cease operation or begin or threaten to dismantle the road, the Attorney General has the same right to proceed against said purchasers in behalf of the public as he had against the former owner.
3. Same — owner cannot be compelled to operate a railroad at a loss. The owner of a railroad cannot be compelled, for the benefit of the public, to continue operation of the railroad at a loss, as such compulsion would amount to taking private property for public benefit without compensation.
4. Mortgages — sales zvill be so conducted as to prevent injustice. In the foreclosure of mortgages the court will control sales under its decrees so that no injustice will be done to either party to the proceeding.
Stone, Parmer and Heard, JJ., dissenting.
■ Writ of Error to the Circuit Court of Sangamon county; the Hon. Elbert S. Smith, Judge, presiding.
Edward J. Brundage, Attorney General, Albert D. Rodenberg, George C. Dixon, James B. Searcy, and Edward B. Hayes, for plaintiff in error.
Murray, Prentice & Aldrich, and Winston, Strawn & Shaw, (Silas H. Strawn, I. Howard Lehman, and Walter H. Jacobs, of counsel,) for defendant in error the Equitable Trust Company.
Henry A. Converse, and Philip Barton Warren, for the receivers of the Chicago, Peoria and St. Louis Railroad Company.

Opinion:
Mr. Justice Dunn
delivered the opinion of the court:
The circuit court of Sangamon county on June 21, 1923, rendered a decree of foreclosure in the case of the Equitable Trust Company of New York against the Chicago, Peoria and St. Louis Railroad Company and others, finding that there was due on the bonds secured by the mortgage in which the complainant was trustee, which was the first mortgage lien on the property of the railroad company, $2,522,678.07, on the bonds secured by the refunding mortgage, which was a subsequent lien, $2,884,510.95, and that $295,000 of receiver's certificates were outstanding. In default of payment of the amount due on the first mortgage it was decreed that all the railways and property of the railroad company be sold by the special master appointed in the cause, and that in making such sale he should first offer the right, title and interest of the railroad company in one parcel of the property known as parcel 12, consisting of certain equipment included in a conditional sale agreement, and should then offer certain real estate known as parcel 12», at an upset price for each parcel; that he should then offer for sale as one parcel, as an entirety, all of the other property, noting the highest bid for such property as an entirety, and that he should then offer for sale in separate parcels all the property except parcels 12 and 12a in certain fixed parcels and certain combinations of parcels of the property, except parcels 12 and 12a, noting the highest bid for each offer, the bids producing the largest return to be accepted. The number of parcels in which the prop erty, except parcels 12 and 12a, could be sold was eighteen. On July 11 the Attorney General, on behalf of the People, filed a motion for leave to file an intervening petition to modify the decree. The intervening petition was not then presented, but on September 18, 1923, at the hearing of the motion, it was presented and the motion was denied. The Attorney General prayed an appeal, which was also denied, and he has sued out a writ of error.
The bonds involved in this suit represent money advanced to the railroad company, and the object of the suit was to secure payment to the bondholders of the indebtedness, the validity or amount of which was not questioned. The parties to the suit are the trustees in the mortgages, (who represent the bondholders,) the railroad company, and the receivers of the railroad company who were appointed on a previous bill to foreclose the refunding mortgage, whose receivership was extended to this suit and who are in possession of the property. All persons who were either necessary or proper parties to the foreclosure suit were made parties. None of them has sued out a writ of' error or made any objection to the decree, or, so far as appears, could make any valid objection. The right of the Attorney General to intervene is based upon the interest of the State in the continued operation of the railroad and the assumption that the effect of the decree and a sale under it will necessarily be the discontinuance of the operation of trains and the dismantling of the road. There is no doubt about the interest of the State in the continued operation of the railroad, but the decree does not in any way affect that interest. The proceeding was an ordinary bill in chancery for the foreclosure of a mortgage on the property of a railroad company. There was no question about the existence or amount of the debt, the extent of the lien or the complainant's right to the usual relief of a decree for the sale of the mortgaged property, and such a decree was entered. There was no issue in which the State was concerned. It was not a party, and neither the complainant nor the defendants could make it a party. The court did not adjudicate upon the question of the abandonment or dismantling of the road or the cessation of its operation. The property of the railroad company is affected with a public interest, but that interest is not affected by the decree. "The foreclosure was not a proceeding in rem and could confer no rights except those existing in the mortgagor. A purchaser at the sale would acquire all such rights as the mortgagor had to stop operations, whatever words were used in the decree, and, whatever the words, would get no more." (Bullock v. State of Florida, 254 U. S. 513.) If the road and all the property is sold as an entirety the purchaser will take it affected with the same public interest as the present owner. If this property is sold in separate parcels, the purchaser or purchasers, one or several, will take it affected with the same public interest. Should the purchaser or purchasers then cease operation or begin or threaten to dismantle the road or abandon operation, the Attorney General would have the same right then against the purchaser or purchasers as he has now against the present owner. His remedy by mandamus or injunction, if he has any such remedy against the present company, would be equally available against the purchaser. That the franchise of the corporation is indivisible and upon a sale in parcels would not attach to the separate parcels is not a valid objection. Whether the property is sold in its entirety or not, it will not be operated by reason of the franchise of the present owner. Without regard to that franchise the purchaser may organize a corporation under the general law for that purpose, and if the sale is in parcels a corporation may be organized for the operation of any part. In the foreclosure of mortgages it is the rule that the court will control sales under its decrees so that no injustice will be done to either party. Ordinarily a sale by parcels where the property is divisible is the proper mode, and it is not unusual, according to the circumstances of the case, to provide for an offering both by parcels and in entirety, with a view to the most beneficial result to the parties. Whether the parties can by stipulation in the mortgage control the discretion of the court as to the method of sale is of no importance here, for the reason that if there were any such stipulation the parties to the mortgage have waived it and are not complaining of the decree. It cannot be said that any injury to the public interest will result from a sale in any method provided by the decree. It is not within the issues of a foreclosure suit to determine whether the purchaser under the decree shall operate the road or not, and no such issue was determined. The Attorney General has no standing in such a suit. The complainant in the foreclosure suit has an undisputed right to recover the money due on the bonds by the sale of the mortgaged property and to have the sale made in such way as will produce the most money to apply on the debt. The constitution provides that it cannot be deprived of its property by denying it this right without compensation in order that the public interest in the continued operation of the railroad may be preserved. No one can be required to continue such operation at a loss for the public good. Such compulsion would amount to taking private property for the public benefit without compensation. Brooks-Scanlon Co. v. Railroad Com. 251 U. S. 396.
The public interest represented by the Attorney General was not affected by the decree and he had no right to intervene.
• The decree was right, and it is affirmed.
Decree affirmed.