218 F. 336 (2nd Cir. 1914), 156, Central Trust Co. of New York v. Chicago, R.I. & P.R. Co.

Docket Nº:156, 157.
Citation:218 F. 336
Party Name:CENTRAL TRUST CO. OF NEW YORK v. CHICAGO, R.I. & P.R. CO. et al. (two cases).
Case Date:November 19, 1914
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 336

218 F. 336 (2nd Cir. 1914)

CENTRAL TRUST CO. OF NEW YORK

v.

CHICAGO, R.I. & P.R. CO. et al. (two cases).

Nos. 156, 157.

United States Court of Appeals, Second Circuit.

November 19, 1914

Page 337

         Louis Marshall, of New York City, for appellant.

         A. H. Van Brunt and H. B. Stimson, both of New York City, for appellees.

         Before LACOMBE, WARD, and ROGERS, Circuit Judges.

         WARD, Circuit Judge.

         These are appeals from two orders of the District Court denying the petition of one Nathan L. Amster for leave to intervene in a foreclosure suit brought by the Central Trust Company as trustee against the Chicago, Rock Island & Pacific Railroad Company, and also motions by the trustee to dismiss the said appeals.

         The Chicago, Rock Island & Pacific Railroad Company is the owner of $71,353,500, par value, of the capital stock of the Chicago, Rock Island & Pacific Railway Company outstanding to the amount of $75,000,000, which is substantially the only property it has. August 1, 1902, the Railroad Company mortgaged this stock to secure the payment of its 4 per cent. collateral bonds due November 1, 2002, aggregating $71,353,000-- that is, one bond of $1,000 for every 10 shares of stock-- and appointed the Central Trust Company of New York trustee under the mortgage.

         February 26, 1914, it being quite apparent that the Railway Company could declare no dividend on its stock, and therefore that the

Page 338

Railroad Company, which had no other source of income, would default on the interest of its bonds due May 1st. a protective committee of bondholders was formed. The president of the trustee became chairman of this committee, its counsel became the counsel of the committee, and the trustee the depositary for the committee. May 1st the Railroad Company defaulted in the payment of its interest. September 2d the Trust Company, the 90-day period having expired, provided in the mortgage, declared the principal of the bonds due and began a suit to foreclose the mortgage. September 16th the Railroad Company filed an answer admitting the allegations of the bill. Thereafter the Trust Company submitted the decree of sale to the court.

         September 28th Amster, as owner of bonds to the amount of $350,000 and as representing the owners of bonds to upwards of $700,000, applied to the District Court for leave to intervene in the foreclosure suit and be made a party...

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