Court Opinion

ID: 8775990
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:01:32.740819+00
Date Added: 2024-06-11T17:02:33.358079
License: Public Domain

WARD, Circuit Judge.
These are appeals from an order of the Circuit Court authorizing the receivers of the Metropolitan Street Railway Company to expend some $400,000 out of income for the completion of three certain car houses, one of which had been destroyed by fire, all three of which were being reconstructed on a larger scale. The appellants are respectively the trustee under the general mortgage of the Metropolitan Street Railway Company to the Guaranty Trust Company and the trustee under the refunding mortgage to the Morton Trust Company. Both mortgages are being foreclosed. The car houses are being erected on ground covered by the latter mortgage only. Both trustees object that there is no sufficient proof that such extensive construction is necessary. The necessity of car houses is quite clear; also that they should be erected on the ground *705on which they originally stood; and also that, when erected, they should be sufficient for the requirements of the. system which the receivers were operating. We think that it was within the sound discretion of the Circuit Court, in view of all the circumstances, to say how extensive the improvements should he, and are not disposed to interfere with its conclusion on this point.
The other objections arise out of the competition between the two mortgages. The trustee of the general mortgage insists that these car houses directly benefit the refunding mortgage, which alone covers the premises, and therefore the receivers should be reimbursed for the expense of construction out of the property covered by it. On the other hand, the trustee of the refunding mortgage says that it is a first lien only upon real estate, which, instead of being improved in value, is injured by the erection of the car houses, especially if it be sold to a person not purchasing the railroad system, upon which the general mortgage is a first and the refunding mortgage a second lien. Therefore it is contended that the expense of construction should be imposed upon the property of the Metropolitan Street Railway Company, for whose benefit, as a railway system, it is incurred.
Each appellant contends that the order should be amended to cover its contention. The Circuit Court and this court have persistently held that the disposition of all competing equities is to be reserved until the final distribution of the whole fund. Judge ffiacombe’s memorandum, handed down with the order appealed from, shows plainly that this was his intention. An application to him for a resettlement would certainly haw resulted in the insertion of a provision that payment out of income in the first instance should not prejudice the claims of any one upon final distribution.
The order is affirmed, but, as some of the parties think that, as drawn, it will finally conclude the matter, with instructions to the Circuit Court to resetde it in this particular, if application to that end he made.