Court Opinion

ID: 6649699
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:52:57.281088+00
Date Added: 2024-06-11T15:59:37.792629
License: Public Domain

Ryan, C.
This action was brought in the district court of Lancaster county by Kent K. Hayden, as trustee, against the Lincoln City Electric Railway Company alone, for the foreclosure of a mortgage made by said company on all its property to said trustee to secure payment of its 150 bonds -of the denomination of $1,000 each. These bonds were payable to bearer, and by virtue of their own provisions were to pass by delivery, unless the .ownership should be registered on the books of the trustee, in which case bonds so registered could only be transferred upon said books when there was a registration to bearer. As the trustee testified that there was no registration showing the ownership of any of the bonds, the provision as to registration is of no importance. While this cause was pending in the ■district court aforesaid several creditors of the original defendant, upon application made for that purpose, w'ere permitted to be made parties defendant. The briefs submitted for appellants are for these intervenors alone, and we shall therefore confine our attention to the several propositions thus presented in argument. The decree rendered found due to certain holders of bonds the amounts thereby evi*683denced as due them respectively and ordered that payments should first be made of these out of the proceeds of the sale directed. The rights of the intervenors, who are appellants in this court, were decreed subject to the rights of the bondholders represented by the trustee, Mr. Hayden.
It is urged by appellants that the mortgage was never authorized by the board of directors. In the answer of the Lincoln City Electric Railway Company there was contained an admission that this mortgage was duly issued, and in the mortgage itself was contained a copy of resolutions of the railway company’s board of directors which clearly show the authority questioned. This was sufficient to esfablish prima fade the authority required. Appellants contend that as the evidence showed without question that certain of the bonds were held merely as collateral security, the holders thereof could not be treated as purchasers and that therefore they had no right to recognition by the district court. In Helmer v. Commercial Bank, 28 Neb., 474, it was held that one to whom, without notice of a defense, was transferred a negotiable promissory note before due as collateral security for a loan then made was entitled to be treated as a purchaser, at least to the extent of the loan. In the decree the rights of holders of collaterals were limited to the amount for which the bonds in each instance stood as security. Each holder of collaterals was thus treated as a purchaser to the extent of the credit extended on the faith of the collaterals in accordance with the holding of this court in the case of Helmer v. Commercial Bank, supra.
As to those appellants who stipulated that a decree of foreclosure should be entered and the mortgaged property sold thereunder, it is proper to say that they cannot now be heard to question such foreclosure. Among these parties consenting were John Eotscli and the German National Bank, by the latter of whom the most persistent attacks have been made upon the entire relief granted. As the mortgage was made with full authority by the president *684and secretary of the mortgagor and was filed for record before the rights of any of the appellants had their origin, the liens of the appellants rvere properly held inferior thereto. The judgment of the district court is
Affirmed.