Farmers' Loan & Trust Co. v. Chicago & N.P.R. Co.

• Decision Date: 16 May 1894
• Parties: FARMERS' LOAN & TRUST CO. v. CHICAGO & N. P. R. CO. et al.
• Court: U.S. District Court — Northern District of Illinois

61 F. 543

FARMERS' LOAN & TRUST CO. v. CHICAGO & N. P. R. CO. et al.

United States Circuit Court, N.D. Illinois.

May 16, 1894

Turner McClure & Rolston and Wm. Burry, for complainant.

Howard Morris, for receiver of Wisconsin Central Railroad Company.

Herrick & Allen and W. M. Cromwell, for other defendants.

JENKINS Circuit Judge.

If I were at liberty to consider the subject of a waiver, a serious question would be presented whether the defendants are not estopped to assert that the suit was prematurely brought. The defendant the Chicago & Northern Pacific Railroad Company appeared upon the application for a receiver, and interposed no objection thereto. Thereafter upon the application to issue receivers' certificates both railroad companies appeared, and formally consented to the issuance of the certificates. The plea and demurrer were set down for argument. The only question that can therefore be raised is whether the plea and demurrer are sufficient in law. Farley v. Kittson, 120 U.S. 303, 7 Sup.Ct. 534.

The complainant, to present the question of waiver, should either have moved to strike the plea and demurrer from the files, or should by replication have pleaded the estoppel. I am not therefore, at liberty to consider the matter of waiver, suggested at the argument as reason why the plea and demurrer should not be entertained. The defendants urge in abatement of the suit that, by the terms of the trust deed, suit was prematurely brought because default in the payment of interest had not continued for six months. The contention rests upon the terms of article 11 of the trust deed, which, so far as essential to be stated, is as follows:

'In case default shall be made in the payment of any semiannual installment of interest on any of the said bonds, and if such interest shall remain unpaid and in arrears for the period of six months, * * * it shall be the duty of the trustee, upon a requisition in writing, signed by the holders of not less than one-quarter in amount of said bonds then outstanding, and upon adequate security and indemnity against all costs, expenses, and liabilities to be by the trustee incurred, to proceed to enforce the rights of the bondholders under the indenture, either by the exercise of the powers granted by articles 9 and 10 of this indenture, or of any of said powers, or by a suit or suits in equity or at law in aid of the execution of such powers, or otherwise, as the trustee, being advised by counsel, shall deem most effectual to enforce such rights, subject to the power hereby declared of a majority in interest of the holders of said bonds that shall be then outstanding, in writing, or by vote, at a meeting duly held, to instruct the trustee to waive any such default, or upon adequate security and indemnity as aforesaid, to enforce the rights of the bondholders by reason thereof: provided, that no action of the trustee or of the bondholders in waiving a default shall extend to or be taken to apply to or affect any subsequent default, or impair the rights of the trustee or of the bondholders resulting from such subsequent default; it being understood, and it is hereby expressly declared, that the rights of entry and sale hereinbefore granted are intended as cumulative remedies, additional to all other remedies allowed by law, and that the same shall not be deemed, in any manner whatsoever, to deprive the trustee or the beneficiaries under this trust of any legal or equitable remedy by judicial proceedings, consistent with the provisions of this indenture, according to the true

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