Central Nat Bank of Boston v. Stevens

• Decision Date: 21 February 1898
• Docket Number: No. 38,38
• Parties: CENTRAL NAT. BANK OF BOSTON et al. v. STEVENS et al
• Court: U.S. Supreme Court

169 U.S. 432

18 S.Ct. 403

42 L.Ed. 807

CENTRAL NAT. BANK OF BOSTON et al.

v STEVENS et al.

No. 38.

February 21, 1898.

The Lebanon Springs Railroad Company was organized in the year 1852, and by virtue of various acts of the legislatures of New York and Vermont was authorized to construct and maintain a railroad extending from Chatham, N. Y., to Bennington, Vt. On 1st day of July, 1867, the said company duly executed and delivered to the Union Trust Company of New Yor a mortgage of that date on all its property, rights, and franchises, to secure the payment of bonds to the amount of two million of dollars, which bonds were then or soon after sold to a great number of persons. In January, 1870, the Lebanon Springs Railroad Company consolidated with the Bennington & Rutland Railroad Company under the name and style of the Harlem Extension Railroad Company. The new company, on April 1, 1870, executed and delivered to the said Union Trust Company a mortgage on its road and franchises to secure bonds to the amount of $4,000,000. Of these bonds there were sold to outside parties to the amount of $1,500,000. The remaining $2,500,000 of bonds were reserved to take up and be exchanged for the $2,000,000 of bonds of the Lebanon Springs Railroad Company and for $500,000 of bonds which had been issued by the Bennington & Rutland Railroad Company; but such exchange never took place, and accordingly only $1,500,000 of the said bonds of the Harlem Extension Railroad Company were ever issued. Both said mortgages were duly recorded in the proper counties in the states of New York and Vermont.

On February 22, 1872, the interest upon the said bonds of the Lebanon Springs Railroad Company falling due after January, 1869, not having been paid, the Union Trust Company of New York began an action in the supreme court of New York to foreclose the mortgage of that company, in which action the Lebanon Springs Railroad Company and the Harlem Extension Railroad Company were made defendants.

On November 15, 1872, the Union Trust Company of New York filed bills in the court of chancery in the state of Vermont to foreclose both of said mortgages, in which actions the Lebanon Springs Railroad Company and the Harlem Extension Railroad Company were made defendants, and said defendants duly appeared in that court prior to December 1, 1872.

While the above-mentioned actions were pending, and on December 18, 1872, the Harlem Extension Railroad Company and the Pine Plains & Albany Railroad Company, a corporation of the state of New York, consolidated their roads, property, and capital stock under the name of the Harlem Extension Railroad Company; and on December 19, 1872, the New York, Boston & Northern Railroad Company and the said last named the Harlem Extension Railroad Company duly consolidated their roads, property, and capital stock, and thus formed one company under the name of the New York, Boston & Montreal Railway Company.

The above-mentioned foreclosure suits were so proceeded with that in the said action in the supreme court of New York a judgment of foreclosure of the said mortgage given by the Lebanon Springs Railroad Company, and for a sale of its road, property, and franchises within the state of New York, and of all its right, title, and interest to the railroad and franchises within the state of Vermont, was rendered on December 10, 1872; and on January 25, 1873, the property and franchises mentioned were sold to one William Butler Duncan for the price of $100,000, and on said day Charles S. Fairchild, the referee appointed by the court to effect the sale, executed and delivered to one James C. Hull his deed of conveyance of the said road, property, and franchises bearing date the said 25th January, 1873, and said deed was duly recorded in the clerks' offices for the counties of Rensselaer and Columbia.

On the 7th day of December, 1872, decrees of foreclosure of the mortgage of the Lebanon Springs Railroad Company and of the Harlem Extension Railroad Company's mortgage, and directing a sale, were rendered; and in pursuance of such decrees the said road, property, and franchises within the state of Vermont were, by Daniel McEwen, a special master in chancery, appointed by the court for that purpose, sold on January 20, 1873, to one Charles G. Lincoln, for the sum of $50,000, and deeds of conveyance of that date were made and delivered to said Lincoln by the said master in chancery.

On January 28, 1873, Hull and Linco n, the respective purchasers at the said foreclosure sales, executed and delivered to the said William Butler Duncan and to one Trevor W. Park a bond in the sum of $5,000,000, and a mortgage to secure the same on all the roads, property, and franchises of the Harlem Extension Railroad Company, including those of the Lebanon Springs Railroad Company and of the New York & Vermont Railroad Company.

On January 30, 1873, Hull and wife, by their deed, executed and delivered that day, conveyed all said roads, property, and franchises situated in the state of New York to the said the New York, Boston & Montreal Railway Company, subject, however, to said mortgage to Duncan and Park; and, on the same day, Lincoln, by a deed executed and delivered by him, conveyed said roads, property, and franchises situated in the state of Vermont to the said the New York, Boston & Montreal Railway Company, subject to the said mortgage to Duncan and Park, and to the said $500,000 mortgage on the old Bennington & Rutland Railroad.

The New York, Boston & Montreal Railway Company paid the sum of $807,077.05 on account of the moneys due on said bond and mortgage, which had become wholly due and payable on or before February 1, 1875, but has never paid the remainder of the money due on said bond and mortgage.

On March 15, 1873, the New York, Boston & Montreal Railway Company executed and delivered a certain other mortgage in the amount of $12,250,000 to Seligman, Sherman, and Brown as trustees. This mortgage covered the above-mentioned railroad and other properties. On the 1st day of April, 1873, the New York, Boston & Montreal Railway Company executed and delivered still another mortgage on the said railroad and other things in the amount of $12,750,000, in which the New York Loan & Indemnity Company was named as trustee. Enough of the bonds of the said last two mortgages were sold to realize $6,000,000, which were received and disbursed by Seligman and Brown. The said railroad was operated by and on behalf of the New York, Boston & Montreal Railway Company until some time in November, 1873, when said company leased the road to the Central Vermont Railroad Company, by which it was operated until August 20, 1877, when said last-mentioned company withdrew from the possession of and abandoned the road. In the meantime the New York, Boston & Montreal Railway Company had failed to fulfill its obligations, and had become wholly insolvent, and said railroad, when surrendered and abandoned by its lessee, lay unoccupied and unoperated until some time in September, 1877, when it was taken possession of by one Russell C. Root, who subsequently, in November, 1877, delivered possession thereof to a corporation called the Harlem Extension Railroad South Coal Transportation Company, a corporation of the state of New York, and of which said Root was president and which continued to operate said railroad until it came into the possession of John W. Van Valkenburgh as hereinafter stated.

On September 7, 1889, one Marvin Sackett, claiming to be the owner of bonds to the amount of $8,700, issued, as before mentioned, by the Lebanon Springs Railroad Company, brought an action in the supreme court of New York against the said Russell C. Root, the Harlem Extension Railroad South Coal Transportation Company, the New York, Boston & Montreal Railway Company, and Daniel Butterfield, as receiver of the said last-mentioned company, praying for the sale of the whole of the said railroad property and franchises. He claimed to bring the action in behalf of himself and all others, bondholders of the Lebanon Springs Railroad Company, similarly situated, who held any of the $2,000,000 of the bonds of said company. He alleged in his complaint the fact of the mortgage, to secure his bonds, among others to the Union Trust Company of New York, its actions to foreclose the sales under them, the aforesaid sales to Hull and Lincoln, and their mortgage to Park and Duncan, and the conveyance by the latter to the New York, Boston & Mo treal Railway Company, and that Hull and Lincoln and Park and Duncan acted throughout all those matters as the agents and representatives, and for the use and benefit, of the bondholders of the Lebanon Springs Railroad Company.

The summons and complaint were served upon the New York, Boston & Montreal Railway Company and upon Butterfield as receiver, but they did not appear. Russell C. Root and the Harlem Extension Railroad South Coal Transportation Company were also served, and they put in joint answers on September 25, 1880. On October 1, 1880, the complainant Sackett moved for the appointment of a receiver, and on October 7, John W. Van Valkenburgh was appointed and filed his bond as receiver.

On November 12, 1880, one Bloodgood and six others, claiming to own a majority of the bonds of the Lebanon Springs Railroad Company, moved for leave to be made parties to the action. This motion was, on January 10, 1881, denied, but the plaintiff was directed to serve papers and notices of every kind on one F. L. Westbrook, who was, by the order, authorized to appear as counsel of the said Bloodgood and the other six bondholders upon all trials, hearings, and motions. On November 6, 1880, Park and Duncan made an application to the court to be made parties to the action, alleging that they were the owners of over $300,000 of bonds of the Lebanon Springs Railroad Company, and of over $600,000 of bonds of the Harlem Extension Railroad Company, and...