Case Name: George S. Coe v. The Knox County Bank of Mount Vernon, The Central Ohio Railroad Company et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1859-12
Citations: 10 Ohio St. 412
Docket Number: 
Parties: George S. Coe v. The Knox County Bank of Mount Vernon, The Central Ohio Railroad Company et al.
Judges: Brinkerhoee, C. J., and Scott, Sutlife, and Peck, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 10
Pages: 333–337

Head Matter:
George S. Coe v. The Knox County Bank of Mount Vernon, The Central Ohio Railroad Company et al.
A. railroad corporation executed a mortgage for money borrowed upon its road and equipments. The loan was for a long period, but the interest was to be paid semi-annually. The corporation had, by the terms of the mortgage, the possession and use of the road until default in payment of interest. There had been no default, and a creditor recovered judgment and levied an execution upon a part of the equipments of the road. The mortgagee filed a petition to-obtain a perpetual injunction, upon the ground that the use and possession of the road were indispensable to enable the corporation to raise money wherewith to pay the interest as it became due. Held, that such an averment did not show a sufficient ground for an injunction.
Reserved in the district court of Muskingum county.
The petition in this case was filed to enjoin the sale of certain property of the Central Ohio Railroad Company, a defendant, 'levied on by the remaining-defendants, under judgments recovered •by them against the said railroad company.
The petition alleges, in substance, that on the 20th day *of January, 1851, the said railroad company executed and delivered to the plaintiff, a mortgage upon so much of their road as was already made and to be made between the cities of Columbus and Zanesville, Ohio, with its fixtures, etc., including all materials, and iron rails purchased and to be purchased therefor; and comprising, also, all machinery, engines, cars, etc., etc., to be used thereon. That this mortgage was made in trust, to secure the payment of certain bonds, four hundred and fifty in number, of one thousand dollars each, which the said railroad company proposed issuing, and on a sale thereof, to raise funds with which to purchase iron for their said road. Said bonds were to be made payable on the first day of February, 1861, bearing interest at the rate of seven per cent, per annum, payable semi-annually, on the first day of each February and of each August, after the date thereof, until the principal should be paid.
In case of default of payment of principal or interest, an option was given to the plaintiff, in respect to his remedy on behalf of the bondholders under the mortgage, as follows :
1. At any time after sixty days from the date of such default, he might, at the request of the holders of each of said bonds, take possession of all or any part of the mortgaged premises, and as the attorney in fact, or agent of said railroad company, use and employ the same, and apply the proceeds, less expenses, to the principal and interest due and unpaid. Or,
2. He might, at his discretion,'or, on the request of the holders of at least one-half of the bonds then unpaid, cause said premises, or so much thereof as might be necessary to j>ay the principal and interest of all such bonds as might then be unpaid, to be sold at public auction in the city of Zanesville, or Columbus, Ohio, after giving forty days’ notice thereof in the public journals; and upon such sale being made, to execute proper deeds of conveyance, and apply the proceeds to the payment of costs, expenses, *and the satisfaction of the principal and interest due and unpaid on said bonds.
The petition alleges that said mortgage was duly recorded in the proper counties, and that it provided for all further necessary assurance.
The petition then proceeds to state that, on the 21st day of April, ■ 1852, the said railroad company executed and delivered to the plaintiff another mortgage, by which they conveyed to him their road as then made, or to be made, between the city of Zanesville and the point upon the Ohio river opposite the city of Wheeling, in the State of Virginia—including all the property of said company between the aforesaid points. This mortgage was also made in trust to secure the payment of eight hundred bonds of one thousand dollars each, payable on the 1st day of May,'1804, with interest at seven per centum per annum, payable semi-annually, which the said company then proposed to issue, for the purpose of constructing their road and furnishing the same with rails and machinery between the aforesaid points. That the said mortgage contained the same stipulations and covenants on the part of said railroad company, and provided for the execution of the same trusts and duties by the said plaintiff, as to the sale, entry upon, and management of said railroad company, in event of default in the payment of the principal and interest of said last-named bonds, as are contained in the first indenture above described; and also provided for all further necessary assurance of subsequently acquired property.
That afterward, on the 22d day of August, 1853, the said railroad company made to the plaintiff a third mortgage upon their entire road and property, in trust, to secure the payment of another series of eight hundred bonds of one thousand dollars each, payable on the first day of September, 1865, with interest semi-annually, at seven per cent, per annum. That said mortgage contained the same stipulations in respect to the management of the property, upon default, as are contained in the first and second mortgages *above set forth, and also with respect to the execution of any further necessary assurance.
That, on the 22d day of October, 1855, the plaintiff having demanded a further conveyance of the property acquired by the said l’ailroad company subsequently to the date of the mortgage above set forth, the said railroad company did, upon that day, make and deliver to him another indenture, reciting the making of the three previous mortgages, and the provisions thereof, and conveying to him, upon the same trusts, and with the same stipulations and covenants, the entire road and property of the said railroad company, together with all the property they might subsequently acquire.
■ That said mortgage was duly recorded in the proper counties through which said road passed, prior to the several judgments and levies of the defendants.
The petition next proceeds to show that the plaintiff has assumed the duties of the trust; that the bonds provided for under said mortgages have been issued and negotiated, and the proceeds applied to the construction of the road. That the possession and use of the road and its equipments by the company, is indispensable, in order to enable them to earn the money with which to pay the interest upon said bonds, as it matures.
The petition next shows the recovery of sundry judgments by the different defendants, to a large amount; that levies have been made thereunder on a portion of the personal property covered by said mortgages, and that the defendants are threatening to make sale thereof; that plaintiff, as trustee, and the several bondholders will sustain great and irreparable injury if such sale is made, said railroad company not having means with which to replace the property so taken on execution. The plaintiff therefore prays an injunction, restraining any further proceedings under said executions, and-tho sale of any part of the property levied on, and any interference with the same.
It is also alleged in said petition, that the interest upon *all the bonds negotiated under said mortgages, had been punctually paid, and that no part thereof was due and unpaid at the date of filing said petition.
To this petition a general demurrer is interposed by the defendants against whom the injunction is prayed.
B. P. Banney, G. B. Goddard, and J. B. Stanberry, for plaintiff.
Gurtis & Scribner, for defendants.

Opinion:
Gholson, J.
Several of the questions presented in this case have been decided in a previous case, during the present term. (Coe v. The Columbus, Piqua and Indiana Railroad Company, ante 372.) Without any further discussion of those questions, it will be sufficient to state, that the claim of the plaintiff in this case, that all of the property embraced in the mortgages referred to in his petition, shall be preserved intact during the period the loan secured by those mortgages has to run, so that the railroad company may be able to earn money wherewith to pay the interest as it accrues, can not bo sustained. It appears that the company, under the terms of the mortgage, had, at the time of the levy of the executions, the possession of the property which was the subject of that levy, and a right to its use and enjoyment at least, until default should be made in the payment of the interest secured by the mortgages. The personal property in which a debtor has such an interest, we have held, would be the subject of a levy as his property.
When by non-payment of interest, or under the conditions of the mortgages, they become absolute, or the right to demand possession of the property accrues, it may or may not become necessary to have recourse to the property so levied on, for payment of the money. There might be sufficient property to pay in full the principal and the interest which had then accrued, without disturbing the lien *of the creditor. If this would be so, then the mortgagees could have no claim to relief in equity. To entitle them to relief, they must show by a sufficient Statement of facts, that their security would be in that way affected. It is not sufficient to say, as in this case, that the constant and uninterrupted use and enjoyment of the property by the directors of the company, is indispensable to enable them to earn money with which to pay the interest as it becomes due. As we understand the averments in the petition, it is upon that ground alone that any injury from a removal of the property is claimed. It is nowhere averred that tbo property which would be left, would be insufficient to pay in full the principal and interest due, or which would be due upon the first default in payment of interest. The claim, therefore, is, that the company shall be protected in the use and possession of the property, so as to be enabled to carry out the arrangement for the payment of a semi-annual interest for a number of years, and at the end of the time, the payment of the principal. This claim, as against the creditors of the company, can not, we think, be sustained.
The statements in the petition do not, therefore, in our opinion, make out a ease for the relief asked, a perpetual injunction against the claims of creditors, and the demurrer must be sustained. But leave will be given to amend the petition.
Brinkerhoee, C. J., and Scott, Sutlife, and Peck, JJ., concurred.