Opinion ID: 1473139
Heading Depth: 1
Heading Rank: 8

Heading: Refunding and Extension Mortgage.

Text: This mortgage bears date January 1, 1912, and is subsequent in time to the other mortgages involved in this litigation. It is found by the decree to be a lien upon all the property of the present Minneapolis & St. Louis Railroad Company, subject to the other mortgages in foreclosure. It is found to be a first mortgage, however, upon the railway line extending from Watertown, S. D., to Leola, S. D., and from Conde, S. D., to Le Beau, S. D. The appeal of the trustee under this mortgage is from that part of the decree holding that the Iowa Central first mortgage, dated August 1, 1888, is a first lien, subject to certain underlying liens enumerated in the decree, on equipment acquired subsequent to January 1, 1912, to the value of $290,486, and from the decree in so far as it fails to hold that this mortgage constitutes a valid and subsisting lien upon all the equipment described in parcel 3 of lot 7 of article 25 of the decree. The decree adjudging that the Iowa Central first mortgage is a lien on equipment acquired subsequent to January 1, 1912, to the value of $290,486, is based upon the conclusion of the trial court that the Iowa Central first mortgage contained effective after-acquired property clauses covering equipment, but which clauses were terminated by the closure agreement of January 1, 1912. Having determined that the Iowa Central first mortgage does not contain such after-acquired property clauses covering equipment, but that it does contain effective provisions for renewal and replacement of equipment, and that there should be allocated to the Iowa Central first mortgage from the equipment purchased, either by the Iowa Central or its successors, sufficient equipment to keep intact in value the equipment covered by the mortgage at the date of its execution, it follows that the decree will be modified in this regard. We have held that neither the closure agreement of January 1, 1912, nor the sales or consolidations involved in these appeals had the effect of terminating the after-acquired property clauses contained in the Minneapolis & St. Louis first and refunding mortgage and the Iowa Central first and refunding mortgage. The decision as to the liens of these mortgages will of necessity require a modification of the decree with reference to the lien of the refunding and extension mortgage in conformity herewith.