Craft v. Indianapolis

• Decision Date: 11 May 1897
• Citation: 46 N.E. 1132,166 Ill. 580
• Court: Illinois Supreme Court
• Parties: CRAFT v. INDIANAPOLIS, D. & W. RY. CO. et al.

166 Ill. 580

46 N.E. 1132

CRAFT

v.INDIANAPOLIS, D. & W. RY. CO. et al.

Supreme Court of Illinois.

May 11, 1897.

Appeal from circuit court, Edgar county; F. Bookwalter, Judge.

Suit by Elijah R. Craft against the Indianapolis, Decatur & Western Railroad Company and others. The bill was dismissed, and the prayer of a cross bill granted, and complainant appeals. Affirmed.

Henry Crawford, Wm. R. Crawford, and H. Van Sellar, for appellant.

Chas. Robinson Smith and John S. Miller, for appellees.

WILKIN, J.

On December 31, 1875, the Indianapolis, Decatur & Springfield Railway Company executed to Emmett and Crane, trustees, a mortgage to secure the payment of bonds, to the amount of $1,800,000 on its 152 miles of railroad, from Decatur to indianapolis, ‘together with its equipments, appliances, franchises, rents, issues, and profits.’ In the year 1887 the property passed to the Indianapolis, Decatur & Western Railway Company, subject to said mortgage; and on January 2, 1888, the latter company executed three mortgages, covering the same property described in the first, to the Farmers' Loan & Trust Company of New York and Noble T. Butler, as trustee, to secure $138,250 first, $1,382,500 second, and $774,200 income, bonds. On the 10th of May, 1894, the property was sold, in the city of New York, under the first mortgage, and purchased by George Sherman. Subsequently he conveyed the Illinois end of the line to the Decatur & Eastern Railway Company, and the Indiana end to the Indiana, Decatur & Western Railway Company. Elijah R. Craft, being the holder of the bonds secured by the mortgages of 1888, filed his bill in the circuit court of Edgar county, alleging that the sale of the Illinois end of the said railroad under the first mortgage was illegal and void, and asking the court to decree that the Decatur & Eastern Railway Company took no title thereto by its deed from Sherman, praying a foreclosure of the 1888 mortgages, and that he be allowed to redeem from the first mortgage after an accounting. The Indianapolis, Decatur & Western Railway Company, mortgagor in the three mortgages, Sands and Pierce, successor trustees under the first mortgage, the trust company and Butler, trustees in the three mortgages, and the two corporations claiming under the conveyances from Sherman, were made defendants. These two companies alone answered the bill, and, pending the litigation, they were consolidated under the name of the Indiana, Decatur & Western Railway Company. This consolidated company adopted the answers filed by the individual companies, and also filed a cross bill, claiming the absolute title to the property by virtue of the sale under the first mortgage, alleging that the mortgages of 1888 clouded its title, and praying that the same be removed as such, and Craft, the complainant in the original bill, be perpetually enjoined from setting up and attempting to enforce such mortgages. Upon a hearing, the circuit court dismissed the original bill, for want of equity, and granted the prayer of the cross bill. Craft prosecutes this appeal.

The issue formed by the pleadings and the material question in the case is: Was the sale of the property under the mortgage of 1875 legal, and binding on the holders of the indebtedness secured by the junior mortgages of 1888? All that is said in the argument of counsel for appellant as to the invalidity of the first mortgage is foreign to the case made by his bill. He not only treats that mortgage as valid by his allegations, but admits it, by asking to be allowed to redeem therefrom. Appellees base the validity of the sale to Sherman-First, upon the power contained in the mortgage; second, the execution of that power under the directions of the superior court of Marion county, Ind., on the application of the trustees; and, third, a valid decree of foreclosure by said superior court. The substantial objections by appellant to the sale under the power are that it was not made by legally appointed trustees; that it was made in New York, without the publication of proper notices in Illinois, and in the absence of any written appointment of or conveyance to the parties who acted as trustees, vesting in them any title, estate, trust, or power in the Illinois property, or connecting them with the 1875 mortgage. As to the other grounds upon which appellees rely, appellant insists the superior court of Marion county, Ind., was without jurisdiction as to the mortgaged property situated within this state. The original trustees named in the mortgage were James Emmett and John J. Crane, and it was provided in the deed that, in the event of the death of either of them, the board of directors of the first party should appoint a new trustee in his place, and in case it neglected to do so, or the person appointed by it was unsatisfactory to them, the holders of a majority in amount of the bonds therein secured should make the appointment. Emmett died prior to February 27, 1885, and on that day the board of directors of the railway company, by a resolution adopted at a duly convened meeting, appointed Benjamin A. Sands in his stead. Subsequently Crane died, and the same board, on November 22, 1888, by like resolution, appointed Robert B. F. Pierce to succeed him. Afterwards, in the year 1890, the holders of a majority in amount of the bonds secured by the mortgage, by a statement in writing, also appointed the same parties successor trustees to Emmett and Crane, deceased.

Counsel for appellees, in their argument, devote considerable time and space to maintaining the validity of powers of sale in such mortgages, but that general propositionis not denied by appellant. Nor do we understand it to be claimed that such a deed may not lawfully provide for the appointment of successor trustees to execute such power. The question raised is, were these successors appointed in conformity with the provisions of the mortgage? We see no reason for holding they were not. We also think the position that no title to the property, or power to execute the trust, vested in them, as successors, for want of a written conveyance to them, untenable. By the terms of the deed, the same title and power which was conferred upon the original trustees vested in their successors when lawfully appointed. 1 Perry, Trusts, § 284; West v. Fitz, 109 Ill. 425;Lake v. Brown, 116 Ill. 83, 4 N. E. 773. Sands and Pierce had the same power and authority to make the sale of May 10, 1894, that the original trustees would have had if living. It is not denied that the place of sale (the city of New York) and the notice thereof were in strict conformity with the requirements of the power; but it is insisted, nevertheless, under the provisions of section 14 of chapter 95 of the statute (2 Starr & C. Ann. St.), the property in Illinois could only have been made in this state upon a notice reciting the amount of indebtedness the instrument was intended to secure, and the amount claimed to be due, and for which the sale was to be made. The section of the statute cited provides: ‘In all sales of real estate under mortgage, * * * thirty days' previous notice of such intended sale shall be given, whether so specified in the power of sale or not; * * * and no sale shall be made except in the county in which the premises are situated. The notice shall be given by publication once in each week, for four successive weeks, in some newspaper or other paper authorized by law to publish legal notices, published in the county or counties where the premises are situated, or, if no paper is published in such county, the nearest newspaper published in this state; but in no case shall a notice be given for a shorter time than is required by the mortgage or deed of trust.’ Manifestly, this provision in our statute was not intended to apply to the sale of a line of railroad with its equipments, franchises, etc. It is well known that the location of such property is rarely confined to a single county. It is not, strictly speaking, ‘real estate,’ or called ‘premises,’ as those terms are used in the statute. We said in Railroad Co. v. Thompson, 103 Ill. 187: ‘Now while a railroad franchise, when considered by itself, will be treated as personal property, and the road itself, when so viewed, will be treated as realty, yet, when considered as an entirety, as they must be when so mortgaged and sold, they are, strictly speaking, neither one nor the other, within the meaning of the law pertaining to redemptions.’

To apply the statute to railroad property, like this, it would be necessary to give notice and sell in every county through which the line of road extended, which, as can readily be seen, would be wholly impracticable. We are unable to see wherein appellant has shown the sale to Sherman to be invalid, as made under the power contained in the mortgage of 1875. The fact that it was made in obedience to a decree of court, especially if that decree was void, as is contended, would not render it nugatory as a sale under the power, if made in conformity with the requirements of the deed. But we entertain no doubt that the sale was legal and valid, as made in pursuance of the decree of a court of competent jurisdiction. The objection to the jurisdiction of the Indiana court in the Sands-Pierce case to affect, by its decree, the Illinois end of the railroad is based upon the theory that the action was a proceeding in rem, and counsel invoke the rule that ‘when the subject-matter of the suit is specific property, and the relief, when granted, is such that it must act directly upon the subject-matter, and not upon the person of the defendant, the jurisdiction must be exercised in the state where the subject-matter is situated.’ 3 Pom. Eq. Jur. § 1318. The general equity jurisdiction of the Indiana court is not questioned, nor is the regularity of its proceedings in any way criticised. On the contrary, it is expressly admitted that, ‘in so far as those judicial...