.; : FEDERAl<
the proceeds of these goods, which were sold by him after the suppleor, in lieu thereof, shall execute a bond mental order was serv,e4 on with approved security to pay any judgment that may be recovered in an action to qy the receiver 9f the judgment;debtor for such proceedsj otherwise, the motion for contempt will be granted.
TRUST . Co. 'V. EAST
R. Co. et al.
(OircuitOourt,N. iJ,4labama, 8. D. January 11, 1889.)
Intervenor filed a bill against a railway company to judgment, based on his claim for building parts of the road, declared a first lien on portions of the road, for an accounting of the valid indebtedness of the company, and for foreclosure;ofdeeds of tl'ust,giveribythe company..Oomplainant, as trustee under the deeds of trust, demurred to intervenor's bill, and afterwards filed'a bill to foreclose the deeds of trust. The suits were collsolidated by order of court, and the parties called complainant and intervenor; respectively.. The intervenor .tiled a plea of lis pendens'to 'complainant's bill. Held that,Aside from the order of consolidation, the plea was insufficient. because, although intervenor asked for an account and marshaling of assets and foreclosllt:e of some deeds of 'trust. yet' there coul:d 1)'e no foreclosure under intervenor'8 bill ". unless comphl.;inant filed· a crose·bill for that purpose., , ' : .
. . '., .
OF LIS PENDENS.
Under Const, Ala. at:t.14.&4, providing that no "foreign corporation shall , do any business in this state withdut having at least one knbwn place of busi· ness, and an authorized agent; !!.though the complainant. a trust company of Ne'Y: doe.s, busi,!Hlss in,A!ablima without having a knownplaQe,of business or authOrized agent, its contracts made in the state, and relating to Alabama property. are not 'but voidable, and a'plea in bar to complain· ant's foreclosure suit, bllsedon such constitutional provision, is insuBicient.
demurrer andiWeas. for cOPlplainant. Tili'1TJ,an,. Jor
PARDEE, J.\On the 13th of March, 1888, James W. Schley, aeitizen ,of Georgia, bro.ught his bill against the East & West Railroad Company the American Trust Company etal., and therein he. had beena,cpnt,ractor for the building of certain por.tion.B E;ast&;,WestRailroad Company of Alabama,. and ,that for the am.ouIj.t due him c:m, the construction of a certa,in portion of ,the. line he had recovered a judgment against said railroad company in the circuitcQurt .of Cherokee county, Ala., for the sum of $13,760 and costs of suitjthat. said judgment was wholly due and unpaid; that said .raHroad compll.I1Y was insolvent; and that complainant was unable, by process of execution, to collect hisjudgment. He further averred that ,about.jhe cpnstructionofjts line, and the maintenanoe thereof, Railroad Oompany of Alabama had contracted and the.said :illsued 8 QOJ;ldE!d indebtedness for about $1,100,OOO,known as the "First ¥Qrtgage Bonds" of said. rajlroadcompany, .w hieh said bonds were se-
AMERICAN LOAN' &: TRUST CO. V. EAST & WEST R. CO.
enred :by a first'mortgllge or deed of trust on its said road-bed, right of wayj franchiSl's"andall othet property which belonged to said company, conveying the same to said Anlerican Loan & Trust Company, as a trus· tee for the holders of said bonds, and that the said bonds, so secured, were issued and negotiated in the state of New York; and that afterwards, for purposes and Uses not 'known to the complainant, the said East & 'Vest Railroad Company ofAlabama had issued and negotiated a.bout $500,000 of what is known as "Debenture Bonds," secured by a second mortgage or deed of 'trust to the same trustee, some of which were negotiated; and that the entire bonds of the said railroad company, including both the aforesaid issues, on the 19th day of February, 1887, amounted to $1;600,000; that on or about the 19th day of February, 1887 ,the said railroad company issued its consolidated bonds at the rate of $15,000 a mile, and executed a deed of trust upon all its property to the said American Loan & Trust Company, which said bonds were to be deposited with the said trust company, to be certified and delivered to said railroad company only at the rate of $15,000 per mile of road, as the same shall be com pleted and ready for operation. It is further averred in said bill that, after the issue of the said consCllidated bonds as aforesaid, the East & West Railroad' Company gave in exchange consoli. dated bonds for the aforesaid debenture bonds, and that the said debenture bonds, for reaSOnS in said bill stated, were without consideration, illegal and void, and constituted no part of the valid indebtedness of said railroad company ,and that the consolidated bonds given in exchange were also illegal and void., The relief sought by the bill was that 'an aecount be taken bv the dourt of the valid indebtednes8 of said railroad company on its said bonds and mortgages, and upon cdmplainant's judgment; thatcbmplainant might be decreed to haven first lien upon a certain pOrtiOll of tb,e railroad line; that said ueoo. of trust, without specifying which one, might be foreclosed for the satisfaction and payment of the debts secured thereby, except, such bonds as were illegally fora receiver pending the litigation; and for general relief. To this bill the .A:mericanLoan & Trust Company, specially appearing for'the purpose, filed a demurrer to the jurisdiction of the court. Afterwards, on the 7th day of July, complainant filed an ,amendment to his bill. This amendment set forth that one AmosG. West, who had been made a party to the original bill as a holder of some of the 'bonds charged to be illegal, was not a necessa.ry party to the suit; and that, inasmuch as he resided in the state of Georgia, in which state the complainant resided, his presence challenged the jurisdiction, and prayed for dismissal as taWest, Upon this the American Loan & Trust COlnpany renewed its demurrer. Afterwards the American LOan & Trust Company brought its bill in this court against: the East & West Railroad Company Of Alabama for the foreclosure of the first consolidated trust deed and mortgage,granted by the East & West Railroad Corilpany of Alabama, arid to this bill James w. Schley, Joel Brown, and S. 1. Stevens were'joined as parties defendant, on the ground that they claimed, an interest in, or liens upon, the railroadc6rt.1pany's property. ,'Complainant alleged default, in' the pay·
ment of interest, the necessary request of bondholders to bring suit for foreclosure, the insolvency of the company, and also prayed for a re-ceiver. Upon notice, the application for a receiver came on to be heard before the circuit judge. After hearing, all the proper parties being be-fore the court, the court of its own motion directed and ordered "that the suit of James W. Schley against the said East & West Railroad Company of Alabama et al., pending in thifl court, be, and the same is hereby, consolidated with the suit of the American Loan & Trust Company, complainant, against the East & West Railroad Company of Alabama et al., without prejudice, however, to the rights of the defendants in suit of Schley against the railroad company to raise any jurisdictional questions now present in the record of such suit; that in such consolidated cause the American Loan & Trust COI;npany shall be the complainant, and the said East & West Railroad Company of Alabama, q,efendant; and .the said Schley shall stand therein as an intervenor, and his pleadings heretofore shall be taken as pleadings sQfficient for such purpose in said consolidated case." Thereupon, on leave of the court, defendant Schley filed two pleas,-one of lis pendens; the other in bar of the suit. By consent of counsel the said two pleas of. Schley and. the demurrer Of the Ameri()an Loan & Trust Company to Schley's bill have been submitted to the circuit judge on briefs, and are now for decision. 1. The demurrer of the American Loan & Trust Company to Schley's bill being on the ground thllt the court was without jurisdiction of the American Loan & Trust Company at the time of the commencement of the suit, ,however good when filed, seems now to fall by the order of consolidation, and the fact thl\t the American Loan & Trust Company has voluntarily appeared; in fact,counsel for· the trust company take this view of the matter, and ask leave to withdraw the demurrer. 2. The. same result seems to follow with regard to the plea of lis pendens filed by Schley to the foreclosure bill. It is doubtful, however, whether this would be sufficient if the order of consolidation had not been made. It is true that Schley, in his bill for an account and marshaling of liens, prays' for a. foreclosure of some deed of trust after an account shall be taken as to the valid outstanding bonds; but it is difficult to see what right he would have to a foreclosure of a mortgage in which he had no title. Besides this, although the foreclosure was prayed for by Schley, no such foreclosure could be had in his suit, unless the trust company had seen fit to ask it by way of cross-bill. When a cross-bill is necessary to thEl defense of a party, he must file it to estah;. lish his defense. When a cro!3s-bill is necessary to bring the parties be-fore the court in order that may be done, the court may order one filed; but where a party is merely entitled to a cross-bill in order to o>btain affirmative relief, he may or not file it, at hi.s discretion, and without prejudice to his rights. 3. The plea in bar filed by Schley is based on section .4, art. 14, of the constitution ofAlabama, as follows: "No foreign corporation shall do any business in this state without haVing at least one known place of business, and an authorized agent or agents
AMERICAN LOAN & TRUST CO. fl. EAST & WEST R. CO.
therein; and such corporation may be sued in any court where it does business, by service of process upon an agent anywhere in this state." This plea does not aver specifically that the American Loan & Trust
Company is doing business in the state of Alabama, but avers that it is a foreign corporation, has accepted the trust from the East & West Railroad Company of Alabama, and has no known place of business nor authorized agent within the state; the inference seeming to be that the said company is doing business in this state, because it has accepted the trust under the trust deeds issued by the East & West Railroad Company. It is to be doubted very much whether the transaction of its legitimate business in the city arid state of New York, on the part of the American Loan & Trust Company, is doing business in Alabama, in the sense of the constitutional article, when it accepts a trust thereafter on a contingency to be executed in Alabama. The provisions of the trust deed, which is made the basis of the foreclosure suit, do not indicate that any business is to be transacted in Alabama by the trustee, unless default shall be made in the payment of interest, as provided by the trust deed. In case of default, the trust deed provides several lines of procedure upon the Part of the trustee in the execution of his trust. One is that the said trustee may enter into possession of the said railway line and property, andma,nage and operate the same for the accpunt of the bondholders, and apply the proceeds of such management to the payment of interest on the mortgage debt. Perhaps, if this provision of the trust deed should be acted upon, and the trust company should take possession of the railway line and operate the railway, the trust company would then be doing business in Alabama, and would then be compelled, in compliance with the constitutional article, to provide at least one known place of business and one authoriied agent. Another provision of the deed of trust is. that, on default in the payment of interest, and on the petition of bondholders, the trustee shall bring a suit to foreclose the trust deed. Such suit is the one brought by the trust company in this cause. Merely bringing a suit in the circuit court of the United States in the state of Arabama for .foreclosure of a mortgage cannot be said to be'doing business in the state of Alabama in any such sense as to require an agent, other than a solicitor, or any known place of business. However this may be, the question submitted by this plea is decided adversely to the pleader by the jurisprudence of Alabama, as declared in the supreme court of the state. In the case of Sherwood v. Alvis, 83 Ala. 115, 3 and authority that. although South. "Rep. 307, it is held upon a foreign corporation does business in Alabama without having at least one known place of business or authorized agent or agents therein, that its contracts made in the state of Alabama. and relating to AlabaD;la prop-erty, are not void. even if voidable, by reason of the constitutional pro· vision aforesaid. If the deed of trust granted by the East & West Railroad Company of Alabama in favor of the American Loan & Trust Com. pany is not void, there can be no good reason why the said trust company may not bring suit to foreclose the deed of trust. An order will he entered in thil;l case permitting the LOllll & TrustOQmpany
to withdmwits denlUrret: to Schley'lrbiU on payment of costs; if not so' withdrawn, then to be overruled with costs; and declaring the said plea i'n abatement and plea in bar filed by Schley to the bill of the American Loan & Trust Oompany to be insufficient, and that they be overruled, with costs.
DEYO V. OTOE COUNTY.
January 2, 1889.)
VALIDATING ACTS LEGISLATIVE
RAILROAD COMPANIES POWER.
MUNICIPAL AID -
If the holder of valid municipal bonds. such as the ones which form the basis of this suit, surrenders them, .to the municipality, and receives in exchange therefor other bonds which the municipality had not the lawful right to issue, he is not thereby divested of his title to the bonds so surrendered; and such owner and holder of the bonds so surrendered may maintain an ac· tion thereon after the same matures. (Sgllab'U8 by the OQurt.) .
Municipal bonds issued without authority of law. and therefore void, may be validated.by an act of the legislature passed for that purpose, if the legis· lature of the state could authorize the issuing of similar bonds. The bonds sued on.in this case, though void whon issued. for want of authority to issue them,. were made valid obligations of the county by a curative act of the. leg· islature of the state on the 15th day of February, 1869.
BUIE-SURRENDER OF BONDS FOR NEW ISSUE.
At Law. Action on count)"b6nds. WatBoni!c &ofield, for plaintiff. D. T.. Hayden and Montgomery&: Jeffrt'!!/' for defendant.
DUNDY,J. This suit is based upon several bonds issued by Otoe county, aggregating the sum of $5,000. The bonds were originally issued to the Midland Pacific Railway Oompany, a railroad corporation organizes! under the laws of this state. The bonds bear date the 1st day of April, 1868, and matured the, 1st day of April, 1888. These bonds are but a small portion of those issued at the sallle time, and under the same alleged authority. The bonds were issued by the county sioners of the county, after a vote Of the people of the county seemed. to authorize the iSsue, and by virtue of the said vote and the orders made by the pursuant thereto. The bonds had been put on the market by tpe railroad company, and had mostly passed into the hands of innocent holders. But the rightful authority to issue the bonds was soon qnestioiled, and' the interposed for the purpose of validating the bonds. On the15th day of February, 18q9. the legislature passed an act to enab1e comities, cities, and precincts to issue bonds, etc., and to legalize bonds already issued. The eighth section of that act is as follows: ' ' . . .. AU bo'nds heretofore voted and l!lslloo 'by any county or city in state to aid in the construction of any railroad, or other work of internal improv&-
ment,are hel'ebydeclaJ.'ed to be legal and valid, and a lien upon all the tuxable