Bronson v. Railroad Company

• Citation: 2 Black 524,67 U.S. 524,17 L.Ed. 347,17 L.Ed. 359
• Parties: BRONSON v. RAILROAD COMPANY
• Decision Date: 01 December 1862
• Court: United States Supreme Court

67 U.S. 524

2 Black 524

17 L.Ed. 347

17 L.Ed. 359

BRONSON v. RAILROAD COMPANY.

December Term, 1862

This case was brought here by appeal from the Circuit Court of the United States for the District of Wisconsin. It was a bill in equity brought by Greene C. Bronson and James A. Soutter trustee, &c., against the La Crosse and Milwaukie Railroad Company, and divers other defendants, creditors of that corporation. The Circuit Court made a decree in favor of the plaintiffs for one-half the amount of their claim, $565,260.05. From this decree the plaintiffs appealed. After the case came here on appeal, the parties made an agreement that the decree of the Court below should be reversed and a decree entered for the whole amount of the claim, that is to say, for a sum twice as large as that found to be due by the Circuit Court. F. P. James, Isaac Seymour, and N. A. Cowdrey moved for leave to intervene in the cause so as to protect their interests. They were creditors of the Railroad Company and purchasers of part of the road, stock and franchises, and alleged that the agreement to increase the amount of the decree was made with the fraudulent intent to injure them. The motions for leave to intervene and to dismiss the appeal, were made at the same time, were founded upon the affidavits of which the substance is given by Mr. Justice Davis, and were argued together.

Mr. Black, of Pennsylvania, in support of the motion.

Mr. Ewing, of Ohio, and Mr. Carlisle, of Washington City, for the appellants.

Mr. Justice DAVIS. F. P. James, Isaac Seymour, and N. A. Cowdrey ask leave to intervene in this cause, and to dismiss the appeal, and predicate their motion on two affidavits of F. P. James.

The first affidavit states substantially that on the 31st of December, 1856, the La Crosse and Milwaukie Railroad Company executed a mortgage on the western division of their road, lying between Portage and La Crosse, to Greene C. Bronson, James A. Soutter, and Shepard Knapp, as trustees, to secure certain bonds, which mortgage was afterwards foreclosed in the District Court of Wisconsin, and the mortgaged property sold, and purchased by the parties asking to intervene; that the same Railroad Company, on the 17th day of August, 1857, executed another mortgage to these complainants, Bronson and Soutter, on the eastern division of their road, lying between Portgage and Milwaukee, to secure certain other bonds; that suit was also brought on said mortage in the District Court of Wisconsin, where a decree was passed on the 13th day of January, 1862, for one-half of the face of the bonds, from which decree an appeal was taken by Bronson and Soutter to this Court; and that the parties to the suit have entered into fraudulent stipulations to reform the decree rendered below, so that the bonds will be paid in full, and that James Cowdrey and Seymour, as purchasers under the first mortgage, will be injured if the decree is thus reformed.

The second affidavit states that Nathaniel S. Bouton, on the 5th day of April, 1859, recovered a judgment in the same District Court for upwards of $7,000 against the La Crosse and Milwaukie Railroad Company, which judgment was assigned to F. P James & Co., and was a lien when this suit was instituted, and that neither Bouton nor his assignees were notified of the pendency of these proceedings; that there were issued under the mortgage of December 31st, 1856, bonds to the nominal or par value of $4,000,000, the greater portion of which are held by James and his associates in their own right or in trust for others, and that they have by the advice of counsel determined to abandon their purchase and ask for a re-sale of the whole property mortgaged by the deed of December 31st, 1856.

Have James, Seymour, and Cowdrey, a right to intervene in this cause, to make a motion to dismiss this appeal, or for any other purpose? The La Crosse and Milwaukee Railroad is a corporation created by the laws of Wisconsin to build a continuous line of railroad from the City of Milwaukie, on Lake Michigan, to La Crosse on the Mississippi River. Power was given to the Company to mortgage separate portions of their road, and in execution of that power the mortgage of December 31st, 1856, on the western division, and the mortgage of August 17th, 1857, on the eastern division were given. These mortgages were executed to secure specific liens on different parts of the road, and the bondholders evidently relied on these liens alone for their security. Separate suits were brought at different times to foreclose these mortgages, and the parties in one suit were not necessarily parties in the other. The right to intervene as made by the first affidavit rests solely on the ground that James and his associates were purchasers of the western division of the road, which, as they insist, included 'the personal property, machinery, rolling stock, franchises, rights, and privileges of the entire road.'

This Court cannot in this suit decide whether the construction contended for by these parties as to the extent of their purchase is correct or not. Under the pleadings, no question is or could have been raised as to what property is covered by the mortgage deed. The controversy in the Court below was whether there should be a decree nisi for any amount, and if so how much. The Court in fixing the amount due on the mortgage, estimated the bonds not at par, but at the rate of fifty cents on the dollar, and decreed accordingly, and the complainants below appealed. It is not perceived how the stipulation to reform the decree can affect the right of James & Co., to the claim which they advance. If under their purchase they take the rolling stock and franchises of the whole road, what concern is it to them whether the decree is for $500,000, or $1,000,000?

Such a right is surely not dependent on the amount of the decree. But it is claimed, in the second affidavit, that Bouton, a judgment creditor, having lien, and necessarily a party, had no notice of the pendency of this suit. The answer to this statement is, that the record informs us (p. 297) that Bouton did appear by attorney, and consented that a decree might be rendered pursuant to the prayer in the bill.

One other ground remains on which the right to intervene is placed—that of general creditors. James and his associates, owning a large portion of the bonds secured by the lien of the first mortgage, insist that the mortgage is an insufficient security, and that they are, therefore, interested in lessening the amount of the decree to be rendered in this cause. Every creditor is, of course, concerned that his debtor should reduce his obligations. The less the debtor owes the greater his ability to pay.

But was it ever seriously maintained that a general creditor, having no specific lien, had a right to interfere in the contests between his debtor and third parties? If the general creditors of a mortgagor are suffered to intervene in an appellate...