Court Opinion

ID: 5495597
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:51:47.123423+00
Date Added: 2024-06-11T08:33:48.350896
License: Public Domain

Barnard, P. J.
The Troy & Boston Railroad Company, a Kew York corporation, made its mortgage for $1,500,000 to secure its bonds issued to that amount. The plaintiff holds 10 coupons, representing past-due interest on five of these bonds. The Fitchburg Railroad was a Massachusetts company. The two roads would make a continuous line, and to effect that object the two corporations consolidated their respective corporations into one, which was called the “Fitchburg Railroad Company.” Such consolidation is authorized by chapter 917, Laws 1869. The plaintiff brought this action to recover of the new company a judgment for the amount of her coupons, and this company deny that it is liable to pay the same. The question presented is as to the true and'legal construction of section 5 of chapter 917, Laws 1869, which is in these words: “The rights of all creditors of, and all liens upon, the property of either of said corporations, parties to said agreement and act, shall be preserved unimpaired, and the respective corporations shall be deemed' to continue in existence to preserve the sanie, and all debts and liabilities incurred by either of said corporations, except mortgages, shall thenceforth attach to such new corporation, and be enforced against it and its property to the same extent as if said debts or liabilities had been incurred or contracted by it. Ko suit, action, or other proceeding now pending before any court or tribunal, in which either of said railroad companies is a party, shall be deemed to have abated or been discontinued by the agreement and act of consolidation as aforesaid, but the same may be conducted in the name of the existing corporations to final judgment, or such new corporation may be, by .order of the court, on motion, substituted as a party. Suits may be brought and maintained against such new corporation in the courts of this state, for all causes of action, in the same manner as against other railroad corporations therein.”
It will be seen by this sectiomall debts of either of the corporations consolidated shall attach to the new corporation, “except mortgages.” Are the bonds and coupons then included in the term “mortgages,” or are they debts of the Troy & Boston Railroad, which attach to the new corporation V I think it was the design of the legislature to make the bonds debts enforceable against the new corporation. As a matter of settled law in respect to all mortgage securities, the debt is the bond, obligation, or note of the debtor. It is, indeed, secured by a mortgage, but the debt can be sued, as against the debtor, without enforcing the mortgage. By the act, “all debts and liabilities” of either company are preserved against the new company. The words “except mortgages” manifestly mean to restrict the lien of the mortgage to its lien on the route of the company which gave it. It would make great complication to extend it over the part of the new company which had not been included in it. The debts of each company are enforceable against the joint company, but a purchaser in foreclosure will not be able to buy more than the company which gave the mortgage included in it. In other words, the property acquired by consolidation would not be subject to the mortgage, but the debts secured by it would be enforceable against a consolidated company.
The judgment should therefore be affirmed, with costs. All concur.