Equitable Trust Co. of New York v. Chicago, P. & St. L.R. Co.

• Decision Date: 28 October 1924
• Docket Number: No. 15797.,15797.
• Citation: 145 N.E. 290,314 Ill. 96
• Parties: EQUITABLE TRUST CO. OF NEW YORK v. CHICAGO, P. & ST. L. R. CO. et al. (BRUNDAGE, Atty. Gen., Intervener).
• Court: Illinois Supreme Court

314 Ill. 96

145 N.E. 290

EQUITABLE TRUST CO. OF NEW YORK

v.CHICAGO, P. & ST. L. R. CO. et al. (BRUNDAGE, Atty. Gen., Intervener).

No. 15797.

Supreme Court of Illinois.

Oct. 28, 1924.

Error to Circuit Court, Sangamon County; Elbert S. Smith, Judge.

Action by the Equitable Trust Company of New York, trustee, against the Chicago, Peoria & St. Louis Railroad Company and others, in which Edward J. Brundage, Attorney General, filed motion for leave to file intervening petition, which motion was denied, and intervener prayed an appeal, which was denied, and he brings error.

Affirmed.

Stone, Farmer, and Heard, JJ., dissenting.

Edward J. Brundage, Atty. Gen., Albert D. Rodenberg, of Springfield, George C. Dixon, of Dixon, James B. Searcy, of Springfield, and Edward B. Hayes, of Havana, for plaintiff in error.

Murray, Prentice & Aldrich, of New York City, and Winston, Strawn & Shaw, of Chicago (Silas H. Strawn, of Chicago, I. Howard Lehman, of New York City, and Walter H. Jacobs, of Chicago, of counsel), for defendant in error Equitable Trust Co.

Henry A. Converse and Philip Barton Warren, both of Springfield, for defendants in error Receivers of C. P. & St. L. R. Co.

DUNN, J.

The circuit court of Sangamon county on June 21, 1923, rendered a decree of foreclosure in the case of the Equitable Trust Company of New York against the Chicago, Peoria & St. Louis Railroad Company and others, finding that there was due on the bonds secured by the mortgage in which the complainant was trustee, which was the first mortgage lien on the property of the railroad company, $2,522,678.07; on the bonds secured by the refunding mortgage, which was a subsequent lien, $2,884,510.95; and that $295,000 of receiver's certificates were outstanding. In default of payment of the amount due on the first mortgage it was decreed that all the railways and property of the railroad company be sold by the special master appointed in the cause, and that in making such sale he should first offer the right, title, and interest of the railroad company in one parcel of the property known as parcel 12, consisting of certain equipment included in a conditional sale agreement, and should then offer certain real estate known as parcel 12a at an upset price for each parcel; that he should then offer for sale as one parcel, as an entirety, all of the other property, noting the highest bid for such property as an entirety; and that he should then offer for sale in separate parcels all the property except parcels 12 and 12a in certain fixed parcels and certain combinations of parcels of the property, except parcels 12 and 12a, noting the highest bid for each offer, the bids producing the largest return to be accepted. The number of parcels in which the property,except parcels 12 and 12a, could be sold was 18. On July 11 the Attorney General, on behalf of the people, filed a motion for leave to file an intervening petition to modify the decree. The intervening petition was not then presented, but on September 18, 1923, at the hearing of the motion, it was presented, and the motion was denied. The Attorney General prayed an appeal, which was also denied, and he has sued out a writ of error.

The bonds involved in this suit represent money advanced to the railroad company, and the object of the suit was to secure payment to the bondholders of the indebtedness, the validity or amount of which was not questioned. The parties to the suit are the trustees in the mortgages (who represent the bondholders), the railroad company, and the receivers of the railroad company who were appointed on a previous bill to foreclose the refunding mortgage, whose receivership was extended to his suit and who are in possession of the property. All persons who were either necessary or proper parties to the foreclosure suit were made parties. None of them has sued out a writ of error or made any objection to the decree, or, so far as appears, could make any valid objection. The right of the Attorney General to intervene is based upon the interest of the state in the continued operation of the railroad and the assumption that the effect of the decree and a sale under it will necessarily be the discontinuance of the operation of trains and the dismantling of the road. There is no doubt about the interest of the state in the continued operation of the railroad, but the decree does not in any way affect that interest. The proceeding was an ordinary bill in chancery for the foreclosure of a mortgage on the property of a railroad company. There was no question about the existence or amount of the debt, the extent of the lien, or the complainant's right to the usual relief of a decree for the sale of the mortgaged property, and such a decree was entered. There was no issue in which the state was concerned. It was not a party, and neither the complainant nor the defendants could make it a party. The court did not adjudicate upon the question of the abandonment or dismantling of the road or the cessation of its operation. The property of the railroad company is affected with a public interest, but that interest is not affected by the decree.

‘The foreclosure was not a proceeding in rem and could confer no rights except those existing in the mortgagor. A purchaser at the sale would acquire all such right as the mortgagor had to stop operations, whatever words were used in the decree, and, whatever the words, would get no more.’ Bullock v. State of Florida, 254 U. S. 513, 41 S. Ct. 193, 65 L. Ed. 380.

If the road and all the property is sold as an entirety, the purchaser will take it affected with the same public interest as the present owner. If this property is sold in separate parcels, the purchaser or purchasers, one or several, will take it affected with the same public interest. Should the purchaser or purchasers then cease operation or begin or threaten to dismantle the road or abandon operation, the Attorney General would have the same right then against the purchaser or purchasers as he has now against the present owner. His remedy by mandamus or injunction, if he has any such remedy against the present company, would be equally available against the purchaser. That the franchise of the corporation is indivisible and upon a sale in parcels would not attach to the separate parcels is not a valid objection. Whether the property is sold in its entirety or not it will not be operated by reason of the franchise of the present owner. Without regard to that franchise the purchaser may organize a corporation under the general law for that purpose, and if the sale is in parcels a corporation may be organized for the operation of any part. In the foreclosure of mortgages it is the rule that the court will control sales under its decrees so that no injustice will be done to either party. Ordinarily, a sale by parcels where the property is divisible is the proper mode, and it is not unusual, according to the circumstances of the case, to provide for an offering both by parcels and in entirety with a view to the most beneficial result to the parties. Whether the parties can by stipulation in the mortgage control the discretion of the court as to the method of sale is of no importance here, for the reason that, if there were any such stipulation, the parties to the mortgage have waived it and are not complaining of the decree. It cannot be said that any injury to the public interest will result from a sale in any method provided by the decree. It is not within the issues of a foreclosure suit to determine whether the purchaser under the decree shall operate the road or not, and no such issue was determined. The Attorney General has no standing in such a suit. The complainant in the foreclosure suit has an undisputed right to recover the money due on the bonds by the sale of the mortgaged property and to have the sale made in such way as will produce the most money to apply on the debt. The Constitution provides that it cannot be deprived of its property by denying it this right without compensation in order that the public interest in the continued operation of the railroad may be preserved. No one can be required to continue such operation at a loss for the public good. Such compulsion would amount to taking private property for the public benefit without compensation. Brooks-Scanlon Co. v. Railroad Com., 251 U. S. 396, 40 S. Ct. 183, 64 L. Ed. 323.

The public intrest represented by the Attorney General was not affected by the decree, and he had no right to intervene.

The decree was right, and it is affirmed.

Decree affirmed.

STONE, J.

I cannot concur in the opinion filed in this case. It holds that the Attorney General, on behalf of the people, had no right to intervene. It does not hold, and it is not the law, that a party whose interests are affected has no right to a writ of error to review a decree affecting his interests. The contrary is the rule. This is true, though he is not made a party to the action. People v. O'Connell, 252 Ill. 304, 96 N. E. 1008;Anderson v. Steger, 173 Ill. 112, 50 N. E. 665. The writ of error in this case goes further than to complain of the refusal of the court to permit the Attorney General to intervene-it attacks the decree as harmful to the public interest. Without regard to the question of the right of the Attorney General to intervene in the circuit court the people have a right to have this decree reviewed by a writ of error. The Attorney General is the chief law officer of the state and is empowered to bring such action on...