American Loan & Trust Co. v. Minnesota & N.W.R. Co.

• Decision Date: 11 October 1895
• Citation: 42 N.E. 153,157 Ill. 641
• Court: Illinois Supreme Court
• Parties: AMERICAN LOAN & TRUST CO. v. MINNESOTA & N. W. R. CO.

157 Ill. 641

42 N.E. 153

AMERICAN LOAN & TRUST CO.

v.MINNESOTA & N. W. R. CO.¹

Supreme Court of Illinois.

Oct. 11, 1895.

Appeal from circuit court, Cook county; M. F. Tuley, Judge.

Bill by the American Loan & Trust Company against the Minnesota & Northwestern Railroad Company. Defendant obtained a decree. Complainant appeals. Affirmed.C. L. Easton, fr appellant.

Gardner & McFadon, for appellee.

BAKER, J.

On September 26, 1881, a corporation was formed under the laws of the state of Wisconsin, called the Chicago, Freeport & St. Paul Railroad Company, for the purpose of building a railroad from the boundary line between the states of Wisconsin and Illinois, in a northwesterly direction, to the eastern boundary line of the state of Minnesota. On December 16, 1881, the St. Paul, Minneapolis & Chicago Railroad Company was organized under the laws of the state of Minnesota for the purpose of constructing a railroad from the eastern boundary line of Minnesota, in a northwesterly direction, to the city of Minneapolis. And on December 27, 1881, the Chicago, Freeport & Northwestern Railroad Company was organized under the laws of the state of Illinois, to construct a railroad from a point near the city of Chicago, via Freeport, to the north boundary line of the state of Illinois. On January 4, 1882, there was a consolidation of the Wisconsin corporation and the Minnesota corporation, in pursuance of the statutes of said respective states, and the consolidated company was called the Chicago, Freeport & St. Paul Railroad Company. On March 20, 1882, this Chicago, Freeport & St. Paul Railroad Company, of Wisconsin and Minnesota, and the Chicago, Freeport & Northwestern Railroad Company, of Illinois, entered into articles of consolidation, which were recorded March 30, 1882, in the office of the secretary of state of the state of Illinois. By these latter articles of consolidation, the new consolidated corporation was to be known and designated as the Chicago, Freeport & St. Paul Railroad Company; and its line of railroad was to extend from a point in Chicago, in a westerly direction, to Freeport; thence, in a northerly direction, to Cadiz, in Wisconsin; and thence, in a northerly and westerly direction, to Minneapolis, in the state of Minnesota. On April 10, 1884, the said consolidated Chicago, Freeport & St. Paul Railroad Company executed its trust deed or mortgage to the American Loan & Trust Company of New York (appellant herein), to secure the payment of $10,000,000 in first mortgage bonds, of $1,000 each, which trust deed, soon after its execution, was recorded in the counties of Cook, Du Page, Kane, Dekalb, Stephenson, and Ogle, in the state of Illinois. This mortgage was upon all the lines and property of the railroad company in the states of Illinois, Wisconsin, and Minnesota, and covered both the present and the after-acquired property of the company. It appears that only 160 of these $1,000 bonds have ever been issued; that 160 bonds are outstanding, and are held by bona fide purchasers for value; and that some of the past-due interest coupons upon said bonds have been paid. Commencing with May, 1885, and ending with December 30, 1885, said consolidated Chicago, Freeport & St. Paul Railroad Company procured right of way contracts from 48 landowners, covering about 18 miles of right of way, from Maywood, in Cook county, to Fox river, at St. Charles, in Kane county; and, shortly after these contracts were obtained, they were recorded in the respective counties of Cook, Du Page, and Kane. It appears that about 1854 a corporation was organized under the laws of Illinois for the purpose of procuring a right of way 100 feet wide through Cook, Du Page, and Kane counties, to the west bank of Fox river, and building thereon a railroad called the St. Charles Air Line; that it practically constructed its roadbed, but in 1855 abandoned said right of way and roadbed, and the former owners of the land taken therefor resumed possession thereof, and thereafter occupied and claimed ownership of the same uninterruptedly for 20 years. In March, 1886, the board of directors of the Chicago, Freeport & St. Paul Railroad Company adopted and laid out its line of railroad, 100 feet in width upon the old roadbed of the St. Charles Line, from a point at the city limits of Chicago, at a place called Maywood, to the west bank of Fox river, at St. Charles, in Kane county. In February, 1886, the appellee, the Minnesota & Northwestern Railroad Company, was incorporated under the laws of the state of Illinois, and authorized to construct, equip, and operate a railroad from the city of Chicago to East Dubuque, in Jo Daviess county; and in April, 1886, to made its surveys over and upon the same line as that made by the Chicago, Freeport & St. Paul Railroad Company,-that is to say, over the old St. Charles Line, from Maywood, near the city limits of Chicago, to the west bank of Fox river, at St. Charles; and, before it made its said surveys, it was notified that the Chicago, Freeport & St. Paul Railroad Company had already surveyed and located its railroad as above stated, and had procured the above-mentioned contracts for its right of way, but that deeds therefoe had not yet been taken. The appellee employed the former attorney of the Chicago, Freeport & St. Paul Railroad Company, who had procured the right of way contracts for said company, to obtain the execution of deeds conveying to it (appellee) the same lands described in said right of way contracts, and for the same considerations named in said contracts. Most of the landowners executing such deeds suposed they were executing the deeds called for by the terms of their respective right of way contracts. Said attorney obtained deeds conveying said right of way to appellee; and appellee entered into possession of the same, and constructed thereon its railroad, and is now using the premises as a part of its railroad route from Chicago to East Dubuque. On December 27, 1886, appellee, the Minnesota & Northwestern Railroad Company, executed a trust deed to the Metropolitan Trust Company, of the city of New York, and Robert H. Benson, of London, England, as trustees, to secure an issue of $8,000,000 in bonds. Said trust deed was duly recorded, and it purported to convey to the trustees all and singular the railroad of the Minnesota & Northwestern Railroad Company, extending from Chicago to Dubuque, constructed and to be constructed, with all the appurtenances thereto, and all property used in connection therewith, together with all its easements, franchises, privileges, and immunities, and all of its right of way.

The litigation now before us grows out of a bill in equity exhibited in the circuit court of Cook county by the appellant, the American Loan & Trust Company, as trustee under the trust deed of April 10, 1884, at the request of the holders of the 160 bonds secured thereby, against the appellee, the Minnesota & Northwestern Railroad Company, the Chicago, Freeport & St. Paul Railroad Company, the Chicago, Freeport & Northwestern Railroad Company, and the Metropolitan Trust Company of New York, and Robert H. Benson, trustees under the trust deed of December 27, 1886.

The above-stated facts are substantially those that appear in the voluminous bill of complaint found in the record; and the bill charges that the Minnestoa Line, in procuring the deeds for said right of way in the manner stated, fraudulently circumvented the Freeport Line as to its rights under the contracts of right of way which it had previously obtained by its attorney, and who had recorded the same prior to the execution of said deeds, and that, the Freeport Line having offered to pay the Minnestoa Line what it had paid out for the deeds, the title to said right of way lands should be declared to be held by the Minnesota Line, in trust for the Freeport Line. The bill also charges that although the Chicago, Freeport & St. Paul Railroad Company, the consolidated company, executed the trust deed to appellant, and issued the 160 bonds, yet it was the act and deed of the Illinois corporation, the Chicago, Freeport & Northwestern Railroad Company. The bill prays that appellant be subrogated to all the rights of the Freeport Line in reference to the right of way contracts; and that the deed of trust executed to appellant under date of April 10, 1884, be declared a first and prior lien upon the lands described in the right of way contracts; and that an account be taken of the amount due upon the 160 bonds; and that either the Chicago, Freeport & Northwestern Railroad (the Illinois company) or the Chicago, Freeport & St. Paul Railroad (the consolidated company) be decreed to pay to appellant, upon a day certain, the amount so found to be due, and, in default thereof, said railroad companies, and all persons claiming under them, be forever excluded and debarred from all equity of redemption with reference to the lands described in said right of way contracts; and that an account also be taken of the amount the Minnesota Line paid for the deeds of the land described in those right of way contracts, and, if the Minnesota Line elects to retain possession and use of the same as its railroad roadbed, it be required to pay to appellant a sum of money not exceeding the amount of the 160 bonds, interest, costs, charges, and allowances of this suit; and that, upon receipt of the payment of this amount, appellant convey to the Minnesota Line all right, title, and interest in the usurped right of way lands, as the court may direct. And the bill also contains a prayer for general relief. The circuit court sustained a demurrer to the bill, and dismissed it out of court, whereupon this appeal was taken.

A motion was made in this court by appellee to dismiss the appeal for want of jurisdiction, and that motion was reserved to the hearing. The ground of the motion is that a freehold is not involved, because the object of the...