88 FEDERAL R,EPORTER.
them appear to be available early in July for this 25 pel: cent. The stay should be so modified as to permit this payment. Some question has been made about the coming of some of the claims within the time, and being for the proper purpose; and opportunity should be afforded for parties interested to make objection specifically to particular claims for .either of these reasons. The list is file, and the time before the 1stofJuly seems sufficient for filing on _ objections to any of them. Stay so modified as to permit payment after the 5th,of July of 25 per cent. of claims against which specific objections are not filed by the 1st of July, and objections to stand for disposition on the 5th of July.
GRAND TRUNK RY. CO. v. CENTRAL VERMONT R. CO.
(Circuit Court. D. Vermont.
May 21, 1898.)
FORECI.OSURE OF RAILROAD MOR'rGAGE-PARTIES.
Where a mortgage to secure rallroad bonds provides that it may be foreclosed, u'pon default of payment, at the request of a majority of the bondholders, a bill filed by the trjJstee, ajlegin,g such default and request. is not subject to demurrer because bondholders are not joined as orators. Where receivers have all the property in their hands, under order ot the court, for whomsoever it maybe found to belong, and all proceedings In the cause are tor the purpose of ascertaining the rights of all claimants, and how the property should be disposed of, It is not necessary to make the receivers technical parties defendant to each bill filed, as the proceedings are in their nature in rem, and the receivers are in effect parties to all the proceedings.
2. SAME-CREDITORS' SUIT-RECEIVERS AS PARTIES.
Where a second mortgage covered leased lines, without touching the -.rights of lesso-rs, and the forec1osllre isa part of a suit In which all the property is in. the hands of receivers, neither the mortgagor, the first mortgagee, nor any lessor is, in strictness, a necessary party. Where the description of the property in the bill is the same as in the mortgage. the -necessity for evidence of the situation of the property, In order to the application of the description to It, is not ground of demurrer. one of the consolidated corporations to enable a judgment creditor, who joined in the original petition for Its distribution among creditors on the ground of Insolvency, to seize it because of a supposed moral equity, and thus defeat the object of the petition.
'- SAME-DESCRIPTION OF PROPERTY.
5. CREDITORS' SUIT-JODGMENT CREDITOR-'-SEtZURE OF PROPERTY. The receivership will not be withdrawn from unincumbered property of
In a proceeding to foreclose a first and a second mortgage, in which the same corporation Is trustee In both, when a question arises as to what property is covered by each, as' 'against the other, representative bondholders under each mortgage sbduld be permitted to become parties, and properly lltigate the question.
SECOND MORTOAOES""':CONFLICTINO INTERESTS- FORECLOSURB B1I SAME TRUSTEE. .
Chas. M. Wilds, for Grand Trunk Ry. Co. Moorfield Storey and Elmer P. Howe, for American Loan & Trust 00. Benjamin F. Fifield, for Central Vt. R. Co. Michael H. Cardozo, for Baker.
GRAND TRUl\K RY.CO. V.CENTRAL VERMONT R. CO.
Henry Crawford, for American Express Co. John C. Coombs,for National Bank of Redemption. Ah,.ic R. Herriman, for other banks. Louis Hasbrouck, ,for executors of'Smith. 1.. S. Dabney, for Foss. Hollis R. Bailey, for Jordan & Coffin. ' Hiram A. Huse and Solomon Lincoln, for executors of Langdon. WHEELER, District Judge. This is a creditors' suit, in behalf of all who will join, in which receivers have been appointed, and in which the National Bank of Redemption has joined as an orator, and also in which are pending one bill of foreclosure by the American Loan & Trust Company, as trustee of a first mortgage of the main line and equipment to secure $7,000,000 of 5 per cent. consolidated bonds, of which $7,000,000 were issued, against the Vermont &; Canada Rail· road Company, the Consolidated Railroad Company, the Central Vel" mont Railroad Company, and the receivers; and another bill of fore· closure by the same trustee of a second mortgage of the main line and equipment, and after·acquired lines, and leased lines, equipment, and property, to secure $15,000,000 Central Vermont first consolidated mortgage bonds, into which stock of the Consolidated Railroad might be converted, and of which $3,000,000 have been issued, against the Central Vermont Railroad Company; and in which is pending a peti· tion of the National Bank of Redemption for. the withdrawal of the receivership from property not covered by the mortgages, in order that this property may be levied upon to satisfy a judgment recovered since the receivership, and for leave to become a party defendant in the foreclosure; and of the Welden National Bank, the Farmers' National Bank, and the Ogdensburg Bank for like withdrawal of the receivership; a petition of Ezra H. Baker, chairman of a committee of the first mortgage bondholders, and of executors of .James R. Langdon, holding $379,700 of first mortgage bonds, for leave to become parties to the first foreclosure; a petition of the American Express Company, as holder of $700,000, and of Eugene N. Foss, as holder of $10,000, of second mortgage bonds, for leave to become parties to the foreclosure suits; and a petition of the executors of J. Gregory Smith. as holders of 2,500 shares of preferred and 1,500 shares of common stock, and of N. W. Jordan and E. A. Coffin, as holders of 160 shares of preferred stock, of the Consolidated Railroad Company, entitling them to bonds, for leave to become parties to the second foreclosure, for assertion of their rights as if bondholders. Both bills of fore, closure are demurred to by the Central Vermont Railroad Company, and the demurrers have been argued, and these several petitions have been heard. The causes of demurrer to the bill of foreclosure of the first mOl'tgage, now set down and relied upon, are the nonjoinder of bondholders of that mortgage as orators; the joinder of the receivers, and nonjoinder of second mortgage bondholders, as defendants; and uncertainty and insufficiency of description of the mortgaged property. Those to the bill of foreclosure of the second mortgage are that none of tbe bondholders of that mortgage are joined as orators; that
neither the resident receiver,nor the ¥ermont & Canada Railroad Company, nor the.Oonsolidllted Railroad"Company, nor sonie of. the first mortgage bondholders, nor the' owners of the leased lines, are made defendants; that allegations· of· the title of the mortgagor, of the dpfault of payment, and description of the property are too uncertain and insufficient. . Concerning ,the demurrers for nonjoinder of bondholders as orators in the respective foreclosures, the mortgages which are the foundatiQns of these proceedings :are to be .Jooked at in connection with the,allegationsot the .bills in these particulars. In the first I$ortgage, proceedings lire required. on default, and requ stiiof holders of a majority of the bonds; and the, bill well aIlegelHldefatllt as to 'all 'outeatanding bonds, and that such a request was.ma'de, 'In.fuesecond mortgage, proceedings by the trustee upon any defauIt, and ,a request of holders of a majority of the bonds to make,all··.becpme due, .and for foreclosure by the trustee "in case it seel1ls are required; and that bill also alleges a default, and a request by the holders of a majority of the bonds that the orator therein should proceed at once for a foreclosure. Thus, in each tlf these foreclosures, as they stand separately, the holders of the bonds, in.. majority, are not only theoretically, but actually, at their own request, represented by the trustee. This case differs in this respect froin Brooks v. Railroad Co., 14 Blatchf. 463, Fed. Cas. No. 1/9?4, where, in the proceedings considered, no requestor representatIOn of bondholders, as such, was shown. This cause of demurrer here does not, as these proceedings stand, seem to be technically well founded, however it might be, in fairness to the rights of the bondholders, on account of the position of the trustee in both mortgages, if they should not be otherwise protected. As the receivers have all the property in their hands, under order of the court, for whomsoever it may be found to belong, and all proceedings are required to be and are had in this cause for the purpose of ascertaining the rights of all claimants,.and how the property should be decreed to be disposed of or distributed by the receivers, whether they are technically made parties to every proceeding for establishing rights to the property or not is immaterial. While not parties to the original cause, as orators or defendants, they are in effect parties to all proceedings touching the property in their hands; as in their nature the proceedings are in rem. Krippendorf v. Hyde, 110 U. S. 276, 4 Sup. Ct. 27. The second mortgage, in so far as it touches property covered by the first mortgage, is of the equity of rpdemption only; in so far as it covers leased lines, it is of the leasehold interests only, without touching the rights of the lessors; and, as to property of the mortgagor not covered by the first mortgage, it is independent of either. Therefore neither the first mortgagee or mortgagor, nor any lessor, is in strictness a necessa"y party to a foreclosure of that mortgage, especially when all the property is in the hands of receivers in a suit of which the foreclosure is a part. The' allegation of default in the payment of any of the bonds seems to be sufficient, without setting out owners, and particular demand by, and failure to pay, each. The duty of making due payment was upon the mortgagors, and a
GRAND TRUNK RY. 00. V. CENTRAL VERMONT R. CO.
general allegation of failure would be sufficient. Due payment is a defense, and may be brought forward as such if it exists. The description of the property is as definite in the bills as in the mortgages, and, if evidence of the situation of the property is necessary for the application of the descriptions to it, that necessity is not a good cause of demurrer, but only a good 'reason for proceeding in proper manner to take the evidence. These considerations dispose of all the causes of demurrer. The National Bank of Redemption, as an unsecured creditor, has joined in the original bill to have the assets of the Central Vermont Railroad Company, as an insolvent corporation, divided ratably among such creditors, after 'the secured creditors. To now withdraw the receivership from unincumbered property, to enable this creditor to seize it because of some supposed moral equity arising from the imminence of insolvency at the time of the creation of the debt, as is now relied upon, would defeat that very purpose. Some question is made about the validity of its judgment recovered upon constructive notice since the receivership; but, whether it is valid or not, there is nothing about it or the debt to entitle it to preference over other simple creditors. This part of its petition must therefore be denied. As such creditor to a large amount, it is interested in reducing secured debts, and should, in justice, bave an opportunity to be present at any proceedings for ascertaining the sum due in equity on the mortgages. The remainder of the petition is retained fol' that purpose. Were there no question about the extent of the mortgages, in covering property of the respective mortgagors, the fOI'l,eloSUI'es eOllld probably be proceeded with and safely by the trustee in each. as moved by the respective requests of the bondholders to bpgiu tlll'm. without making or permitting any of them to become themselves otherwise personally parties to the pr'oceedings. 'J'he mortgages were made at considerable spaces of time apart. The first, on its facp. assumes to cover future-acquired rolling stock and pl'operty; and the second, to cover the whole, subject to the first mortgage on some. There is necessarily a question concerning what is cm'ered by each. as against the other. The same corporation is trustee in each, and cannot well be on both sides of this question, and tbere adequately represent the interests of its respective cestuis que trustent. For want of such representation upon that <]uestion by the common tI'llStee, some proper number of the first mortgage bondhold('rs should be permitted to appear on the orator's side, and of the second mortg;l.ge bondholders on the defendant's side, of that foreclosure, to raise and contest somehow, by proper mode of procedure, that question, as they may be respectively advised is for their :nterests. Obviously, as the case now stands, the petitioner Baker, as committee of the first mortgage bondholders, and the American Express Oompany, as a very large, and perbaps the largest, holder of second mortgage bonds, are proper parties to appear for themselves, as representing the respective interests of themselves and their associate bondholders in tbis behalf. These now seem to be sufficient and adequate for this purpose, and single may be better for the interests of all than divided
representation or counsels. And as llnyquestiQIl about t:\le proper representation of ,those interested as. owners in the cOIl;cluct of tpe· prosecution or defense of a cause ill always ,before the court, file. applications of other bondholders for .leave to become· parties to, or to be heard upon, this question, should .tQremain on file; and be moved upon without preju.dice, 1n case their illterests should, hereafter be thought to be unrepresented or misrepresented. The second mortgage appears to have been intended to secure. to holders of Consolidated Railroad .stock a right to cOllvert it into bonds of that mortgage, which should stand on a par with. the other bonds... Whether the conversion has been proceeded with far enough by the holders of stock now claiming bonds for it, or the rights of ;been a question fore· bondholders on account of it haw shadowed by their petitions and the motions to dismiss them. Some· times what is agreed to be lillilne.,is, in equity, considered as done. 'fhe provisions of .the mortgage, and the recognition of this principle, seem to give sufficient color to this claim of these stockholders to entitle them to a fair chance to make it good, if they can, in these pro' ceedings. Just how the parties would have this done .has not been made very clear, except that a suggestion is made in behalf of the executors of Smith that it be bv cross bill in the. foreclosure of that mortgage. They are not interested, however, as such stockholders making this claim, in opposition to the mortgage itself, but in favor of it, and of its foreclosure upon the propert,vcovered by it; and a cross bill might not, under these circumstances, be an apt proceeding to aid them, and might be an undue embarrai"sment to the unquestioned bondholders. The opposing interests are those of the mort· gagor to keep the amount of bonds these stockholders might be en· titled to out of the sum due in equity, and of the now bondholders to keep it out from sharing in their security. These questions appear to appertain solely to the taking of an account of the sum due in equity at the proper stage of the foreclosnre. In the taking of such an account no separate pleadings are ordinarily had, or are necessary, for the purpose of trying such rights, and none seem to be nee· essary here. The right to appear and present the claims as sums due in equity, and of the now bondholders to there contest them, seems to be all that is necessary to protect the rights of each. The demurrers are overruled. Leave is granted to Ezra H. Baker to appear as orator,and to the American Express Company to appear as defendant, in the foreclosure of the first mortgage,·:and the defend· ants are respectively assigned to answer each bill by Jnly rule day. The prayer of the petition of the National Bank of,Redemption, and of other banks, for withdrawal of receivership fro.m property, is de· nied. Leave is granted to Consolidated Railroad stockholders to become parties to. the taking of any account of the: sum due in equity in the foreclosure of the second mortgage, without. prejudice to the residue of these petitions as. remaining on file.
BURNHAM 'fl. NORTH CHICAGO ST. RY. CO.
BURNHAM et al. v. NORTH CHICAGO ST. RY. CO. (Circuit Court at Appeals, Seventh Circuit. JUliV 26, 1898.) No. 470. 1.
Where a judgment based on agreed facts is reversed and the cause remanded on the ground that the facts stipulated are eVidential only, and cannot take the place of findings, a new trial is required, in which either party has the right to Introduce additional evidence not inconsistent with the stipulation. A. stipulation that the facts therein stated "shall be considered by the court to be in evidence, and as absolutely true," does not preclude either party from introducing additional evidence not inconsistent with the stipulated facts. Where by stipulation a jury is waived, and a cause tried to the court, such stipulation does not operate as a waiver of a jury on a second trial, after the judgment has been reversed and the cause remanded.
REVERSAL-EFFECT OF MANDATE-NEW TRIAL.
2. TRIAL-STIPULATION OF FACTS-EFFECT.
RIGHT TO JURY TRIAL-WAIVER-EFFECT OF STIPULATION.
In Error to the Circuit Court of the United States for the Northel'J} District of Illinois. A. D. Wheeler, for plaintiffs in error. John A. Rose, for defendant in error. Before WOOM and SHOWALTER, Circuit Judges, and BUN);" District Judge. BUNN, District Judge. This suit has been twice tried in the court below, and is now in this court for the second time. It was brought to recover the price of a street-car traction motor constructed by the plaintiffs for the defendant. Upon the first trial a jury was waived, and the case submitted to the court upon the following written stipulation as to the facts, without other evidence:
"It is hereby stipulated by and between the parties to the above-entitled cause, through their respective counsel, that jury shall be, and is hE'reby. waived, and the said cause submitted to the court for trial upon the foregoing statement of facts. For the purpose of said trial, the said statement shall be considered by the court to be in evidence, and as absolutely true."
The court gave a judgment for costs against the plaintiffs; th0 record showing that the court ruled that the defendant was entitled. in law, upon said abrreed facts in the case, to a judgment against the plaintiffs for costs. A judgment was accordingly rendered upon that finding, and the case brought to this court by writ of error, where the judgment was reversed, and a new trial ordered. The case is reported in 23 C. C. A. 677, 78 Fed. 101. In that opinion this court said:
"The assignment of errors contains numerous specifications, the last of which only (that the court erred In giving judgment for the defendant) need be considered. It Is evident that the case was submitted and tried upon a mistaken view of the so-called statement of facts, which in the main is a statell).ent or evidence, and not of the ultimate or issnable facts. A.n agreed statement of facts. It is well settled, may 'be taken as the equivalent of a special finding of tacts,' presenting for review on writ of error only questions of law; but