Court Opinion

ID: 7287383
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:29:12.394481+00
Date Added: 2024-06-11T16:19:11.749166
License: Public Domain

The Chancellor.
The first question which presents itself in the consideration of this application is, whether there is any occasion for the interference of the court with the conduct of this suit. It is well settled that the eestuis que trust in such a case as this are not necessary parties. Willink v. Morris Canal & Banking Co., 3 Green’s Ch. R. 377; New Jersey Franklinite Co. v. Ames, 1 Beas. 507. The petitioners claiming that the proceedings are defective, ask to be made parties complainant, merely in order that they may thus be the better enabled to watch over, protect and secure their interests in the subjects of the litigation, particularly in reference to the Long Branch and Sea Shore Railroad and its appurtenances, and the steamboats and other vessels mentioned in the petition, property which the mortgagors did not own when the mortgage was made, but which the petitioners insist, was acquired by them after its execution and delivery. The petitioners claim that this property is liable for the payment of the mortgage debt. The trustees, on the other hand, consider the proceedings apt and sufficient to protect and secure all the rights and equities of the petitioners. Of none of this property, however, does the bill make mention. It seeks the foreclosure and sale of the mortagecl premises described in the mortgage, but makes no express claim to any property acquired by the mortgagors after the execution of that instrument. By its terms and covenants the mortgage extends to and covers with the lien it creates, not only the railroad of the mortgagors then constructed, but also all railroads which they thereafter should construct in connection with it, and all real and personal property held or acquired, or thereafter to be held or acquired by the company, their successors or assigns, for use in connection with their railroads or branches, or with the business thereof, including all steamboats, boats, barges, lighters, locomotives, tenders, cars and other rolling stock or equipments, &c., and all the property, franchises, rights and things of whatsoever name or nature, then held or thereafter to be acquired by the mortgagors or their successors, &c. The *20mortgagors covenanted and agreed with the trustees, • that whenever, and as often as the former, or their successors or assigns, should thereafter acquire any lands, or any equipment, or any other property or things of whatever name or nature, for use in connection with their railroads or of any part of either thereof, or of any other railroad which they then were authorized to construct, or should acquire any other property, rights, franchises or things whatsoever, they or their successor's or assigns should and would acquire, possess and hold the same and every part and parcel thereof, upon and subject to the trusts of the mortgage, until conveyance thereof in pursuance of the covenant for further assurance should be duly made and delivered to the trustees or the survivor of them, or their successors in the trust. They further covenanted that they and their successors and assigns would execute, deliver and acknowledge from time to time and at all times thereafter, on request of the trustees, all such further deeds, conveyances and assurances in the law, for the better assuring to the trustees or the survivor of them, and their successors in the trust, on the trust in the mortgage expressed, the railroads, equipments, appurtenances, franchises, property and things thereinbefore mentioned and to which the company then were or might thereafter for any reason become entitled, or which they or their successors or assigns might in any manner acquire; and also, all other property, rights, franchises and things whatsoever, which might thereafter be acquired by the company, their successors or assigns; as by the trustees or their counsel learned in the law, should be reasonably advised, devised or required. If the company acquired, as the petitioners insist they did, after the delivery of the mortgage, the property in question, among which are the Long Branch and Sea Shore Railroad and its appurtenances, and the vessels above mentioned, the lien of the mortgage attached to it the instant it was so acquired, and by operation of these covenants, they held it on, and subject to the trusts of the mortgage. Metcalfe v. Archbishop of York, 1 M. & C. 547; Lyde v. Minn, 1 M. & K. 683; Wellesley *21v. Wellesley, 4 M. & C. 561; Lewis v. Maddocks, 17 Ves 49; Fisher on Mortgages 57; Coote on Mortgages 235; Langton v. Horton, 1 Hare 549; Pennock v. Coe, 23 How. 117; Willink v. Morris Canal & Banking Co., 3 Green’s Ch. R. 377; Field v. Mayor of New York, 2 Selden 179.
Is there reason to believe that the interest of the bondholders requires that the claim they make in this connection, should be specifically set up in order that it may be litigated? It is evident from the petition, that it is likely to be contested. It is important, therefore, to consider on what foundation it seems to rest. That it is of the greatest importance to the bondholders to vindicate this claim, if it is capable of being established, is most manifest, and it is equally clear that it should be done before a sale of that part of the road, about which there is no contest, takes place, for the relation of the Long Branch and Sea Shore Railroad to the rest of the road is such, furnishing as it does its only northern terminus, that the comparative advantage and disadvantage of selling before this claim shall have been disposed of, are too obvious for remark. From the petition and affidavits the following grounds for advancing the claim may be gathered : that the Yew Jersey Southern Railroad Company, after the delivery of the mortgage, purchased and held, under legislative authority, about sixteen-seventeenths of the capital stock of the Long Branch and Sea Shore Railroad Company; that in the books of the former company, this purchase was entered under the head of “Long Branch and Sea Shore Railroad purchase;” that the Yew Jersey Southern Railroad Company went into possession of the Long Branch and Sea Shore Railroad and its appurtenances, and continued in such possession for years and up to the time when their property passed into the hands of a receiver appointed by this court, under proceedings in insolvency ; that they neither kept any separate account of the earnings or expenses of the road, nor rendered any account or made any return for the use of the road or property, but dealt with them as their own; that they were recognized by the Long Branch and Sea Shore Railroad Com*22pany as the owners of the road; that, when they went into possession, they discontinued the use of their former terminus at Port Monmouth; that they expended on construction account on the railroad and property in question, down to and including the year 1873, more than $300,000, a part of which was spent in building a new pier for freight purposes, and a ferry-slip, both at the terminus of the Long Branch and Sea Shore Railroad, and in constructing about three miles of track at what was the northern and eastern terminus of the road when they took possession; and that the organization of the Long Branch and Sea Shore Railroad Company, from the time when possession was so taken, was merely formally kept up. These facts ai’e relied upon to show that the New Jersey Southern Railroad Company became the owners of the property in question. The merits of the claim are of course, in no sense before me. I can only look into the case as made by the petitioners and the trustees, to ascertain whether there are grounds to warrant me in directing that the claim be put into a position to be litigated. I think there are such grounds. A sale of the property in question, under the proceedings as they now stand, would leave any rights of the Long Branch and Sea Shore Railroad Company or other contestants, not parties to the bill, unaffected. But it is insisted on behalf of the trustees, that a sale under the proceedings, will pass to the purchaser whatever title the New Jersey Southern Railroad Company have acquired to the property, and that the court may either permit the right to be sold in that way, leaving the purchaser to litigate with the advei’se claixnanfs, or may hereafter and before sale, dix-ect that proceedings be takexx to litigate the clainx. The forxner course would inevitably x-esult in a sacrifice of the intex’cst of the bondholders. The latter is the proper one, except that the litigation should be commenced at once and be advanced as rapidly as possible. Thex’ewill be no occasion for.disturbing the px’oceedings already taken. A supplemental bill may be filed, distinctly and fully setting up the claim insisted on by the petitioners, and all the parties in adverse intex’est may be called into coux't to answer that bill. The litigation under *23the supplemental bill will be confined to the subject matter thereof. Ensworth v. Lambert, 4 Johns. Ch. 605; Bignall v. Atkins, 6 Madd. 369; Story’s Eq. Pl., § 334.
The remaining question is, whether the prayer of the petitioners to be admitted as complainants shall be granted. I see no reason for doing so. If the suit which the trustees-have brought has not scope enough (o answer the purposes for which it was instituted, the conn will so direct them in the conduct of it as to remedy the defect. To admit the-petitioners as complainants would be to introduce new magistri litis who may not be in accord with the present complainants in the management of the canse. The very ground on which the petitioners ask to be admitted is their dissatisfaction with the conduct of the suit by the trustees. They ask to be made co-complainants, in order that they may effect a better management. They are admittedly not. necessary parties. Under the circumstances they are not proper parties-complainant. They may be admitted as defendants if they desire it. There will be an order directing that a supplemental bill be filed, setting up the claim to the Long Branch- and Sea Shore Railroad and property, and any other disputed property, which the trustees or the petitioners may, on reasonable apparent grounds, claim to be subject to the lien of the mortgage. The frame of the bill and the question as to who shall be parties to it, will be settled by the court, on notice to the trustees and petitioners. In order to a designation and description of the mortgaged premises to which no adverse claim is-made, the reference asked for by the trustees is necessary. It will, of course, be confined to that property. The trustees-having, since the argument of this motion, filed their petition,, praying that the receiver appointed under the “ act for the relief of citizens on the line of any railroad that has or may hereafter fail to operate,” may be directed to deliver up to them as trustees under the mortgage, the possession of the Yew Jersey Southern Railroad, including the Long Branch and Sea Shore Railroad and its appurtenances, of which he is now in possession, I deem it unnecessary to pass upon the application of the petitioners for the appointment of a receiver.