Chicago v. Unionco Massachusetts Mut Life Ins v. Same

• Citation: 27 L.Ed. 1081,109 U.S. 702,3 S.Ct. 594
• Decision Date: 07 January 1884
• Docket Number: ROLLING-MILL
• Parties: CHICAGO & A. R. Co. and another v. UNIONCO. 1 MASSACHUSETTS MUT. LIFE INS. Co. v. SAME
• Court: United States Supreme Court

109 U.S. 702

3 S.Ct. 594

27 L.Ed. 1081

CHICAGO & A. R. Co. and another v. UNION ROLLING-MILL CO.¹

MASSACHUSETTS MUT. LIFE INS. Co.

v. SAME.

January 7, 1884.

The original bill in this case was filed January 8, 1876, by John B. Dumont, a citizen of the state of New Jersey, against the Chicago & Illinois River Railroad Company, the Chicago Railway Construction Company, the Chicago & Alton Railroad Company, and the Union Rolling-mill Company, which for the sake of brevity will be called respectively the Illinois River Railroad Company, the construction company, the Alton Railroad Company, and the rolling-mill company, all corporations organized under the laws of the state of Illinois, and Bradford Hancock, as receiver of the construction company, and Corydon Beckwith, both citizens of the state of Illinois. The purpose of the bill was the foreclosure of a deed of trust. The bill averred in substance as follows: On March 1, 1875, the Illinois River Railroad Company, claiming to be the owner of a railroad constructed and being constructed between Joliet, Will county, and Streator, in La Salle county, in the state of Illinois, and the construction company, claiming to be the owner of certain lands in Grundy county, in the same state entered into an agreement with the Alton Railroad Company by which the Illinois River Railroad Company leased its right of way and its railroad constructed and to be constructed, and all its other property, except engines and cars, to the Alton Railroad Company forever, upon certain terms and conditions therein mentioned. Afterwards, on the same March 1, 1875, the Illinois River Railroad Company executed and delivered its bonds of that date, with interest coupons attached, 1,000 in number, and for $1,000 each, payable 30 years after date, with interest at 7 per cent., payable semi-annually, and on the same day, jointly with the construction company and John H. Rice, its trustees, executed a deed of trust to George Straut to secure the payment of the bonds. The deed of trust conveyed to Straut all the railroad owned or occupied by the Illinois River Railroad Company between Joliet and the Mazon river, and all the property of every kind, (except engines, cars, and tools,) however and whenever acquired by it, between said points, and the railroad company covenanted by said trust deed that it had a perfect title to the railroad and other property so conveyed, subject only to the lease above mentioned. By the same deed the construction company and Rice, its trustee, conveyed to Straut its lands situate in Grundy county, Illinois, and covenanted that it had good title thereto, and that the lands were free from incumbrances. Of said 1,000 bonds, only those numbered from 1 to 474, inclusive, and from 701 to 1,000, inclusive, were issued. The interest on these bonds had not been paid. They were all held either by bona fide purchasers or pledgees.

The deed of trust provided that in case of default in the payment of any interest on the bonds, or in the performance of any covenant in said deed of trust contained, to be performed by the Illinois River Company or the construction company, and in case such default should continue six months, then the trustee might take possession of the property conveyed by the deed of trust, and apply the issues and profits thereof to the payment of the liabilities of the Illinois River Railroad Company and the construction company, as therein provided. The covenants of seizin for quiet enjoyment and against incumbrances, made by the Illinois River Railroad Company and the construction company in the deed of trust contained, were broken on March 1, 1875, and such default had continued more than six months. On March 1, 1875, the Illinois River Railroad Company and the construction company were indebted to the rolling-mill company in a large sum of money for materials furnished for the construction of said road, which the rolling-mill company claimed to be a lien thereon, but its claim was subject to the claims of bondholders represented by the complainant. On September 13, 1875, John F. Slater, being the holder and owner of bonds numbered from 1 to 474, inclusive, applied to Straut, the trustee, to take such action in the premises as he ought to or might take for the protection of his interest. But Straut, being unable or unwilling to act, resigned his trust, and the complainant was, on September 18, 1875, in accordance with the provisions of the deed of trust, appointed trustee in his stead, and on September 20, 1875, Straut conveyed to the complainant, as such trustee, all the property, rights, and powers vested in him by the trust deed. The prayer of the bill was as follows:

'That an account may be taken of the sum due for principal and interest on said bonds, and of the sums due as liens upon said road, and that the premises described in the deed of trust to George Straut may, by order of this court, be sold for the payment of the same, and that your orator may have such other and further and different relief as to equity may seem meet.'

Answers were filed by the Illinois River Railroad Company, the construction company, and the Alton Railroad Company, Corydon Beckwith, and Bradford Hancock, in which they took issue upon the averments of the bill. On January 13, 1876, the rolling-mill company filed an answer, claiming to have a first lien on the railroad and property of the Illinois River Railroad Company, averring that, on August 7, 1874, it made a contract in writing, of that date, with the Illinois River Railroad Company and the construction company for the sale and delivery, at certain prices therein specified, to said companies of 1,600 tons of steel and 2,500 tons of iron rails and certain named quantities of iron splices, spikes, and bolts, all to be delivered by December 1, 1874. That contract provided that for these materials $60,000 in cash should be paid, and, for the balance of the price, the companies purchasing the same should give notes, payable in six, eight, ten, and twelve months from their dates, respectively, executed by the Illinois River Railroad Company and guarantied in full by the construction company and by the stockholders of the construction company in proportion to their stock, and, for the further security of said notes, there should be pledged certain bonds of the construction company for an amount equal to the aggregate principal of said notes, and secured by a deed of trust, made April 1, 1874, by the Illinois River Railroad Company and the construction company, on the property therein described, constituting the first lien thereon. It also contained this clause:

'And it is also agreed by said party of the second part that the material so furnished by the said party of the first part shall be used and laid upon the road and road-bed belonging to said Chicago & Illinois River Railroad Company, between the cities of Joliet, in Will county, and Streator, in La Salle county, Illinois; and that until the same be fully paid for, and all the notes given in payment therefor paid and canceled, the said party of the first part shall have a lien upon said material furnished by it, and the use and possession of the same by said party of the second part, or either of the corporations constituting the same, or the assignee or assigns of one or both of them shall be the user and possession of said party of the first part.'

The answer of the rolling-mill company further alleged that the company had delivered a large part of the rails, etc., under said contract; that upon the delivery of the last lot, on or about November 12, 1874, the purchasing companies gave the rolling-mill company notice not to deliver any more rails or other material until the spring of 1875; that the rolling-mill company were always ready and willing to deliver the remainder of said rails and other material mentioned in said contract, and that on May 7, 1875, it gave notice to said purchasing companies that the residue of the rails, etc., were ready for delivery, but the companies did not provide cars or vessels for the transportation of said materials, and that, by the terms of the contract, such notice was equivalent to a delivery thereof; and that the rolling-mill company then and thereby complied with its contract, and was entitled to the consideration therein named. It is also alleged that the rolling mill company had received in part payment of said consideration the sum of $95,000, and no more, and that the purchasing companies had wholly neglected and refused to pay the rolling-mill company any further sums of money on the contract, and had neglected and refused to deliver to it any of the notes or securities for deferred payments on the rails, etc., as provided in said contract, although requested to do so; and that thereby the whole amount of the purchase money for the rails, etc., had become due and payable. It further alleged that on May 10, 1875, the rolling-mill company, within the time prescribed by law, filed its bill in the circuit court of Will county, Illinois, for the purpose of enforcing its lien, under the statutes of Illinois, upon the railroad and its appurtenances, and that the bill was still pending and undetermined. The answer still further alleged that the rolling-mill company not only had a statutory lien upon all the materials furnished under said contract, but by the contract it had an express contract lien upon the same, and that by virtue of the contract and the facts set forth it had a lien upon the Illinois River Railroad and its appurtenances paramount to the lien of the bondholders under said deed of trust and all other liens upon the road.

On the same day on which its answer was filed the rolling-mill company obtained leave to file, and did file, a cross-bill in the cause, setting up the same matters stated in its answer, and praying that upon the final hearing a decree might be entered requiring payment of the am unt due to...