Gay v. Hudson River Electric Power Co.

• Decision Date: 09 January 1911
• Docket Number: 116.
• Citation: 184 F. 689
• Parties: GAY et al. v. HUDSON RIVER ELECTRIC POWER CO. et al.
• Court: U.S. Court of Appeals — Second Circuit

184 F. 689

GAY et al. v. HUDSON RIVER ELECTRIC POWER CO. et al.

No. 116.

United States Court of Appeals, Second Circuit.

January 9, 1911

3. To pay over the surplus, if any, to whomsoever may be lawfully entitled to receive the same.

'In the event of any sale under or by virtue of the power of sale herein contained, or by virtue of judicial proceedings or decree of foreclosure and sale, the whole of the property hereby mortgaged shall be sold in one parcel and as an entirety, unless the holders of a majority in amount of the bonds hereby secured, then outstanding, shall in writing request the trustee to cause said premises to be sold in separate parcels, in which case the sale shall be made in such parcels as may be specified in such request, so far as the law may allow. It is further provided, declared and agreed that in case any sale shall be made of the said premises, property, rights, franchises and estate under or in execution of the provisions hereof, the purchaser or purchasers at said sale shall be entitled, in making settlement for and payment of the purchase money, to deliver to the person or persons legally appointed and qualified to receive the payment of such purchase money, and to turn in and use any of the bonds and coupons secured by these presents then matured and unpaid, towards the payment of said purchase money, reckoning and computing said bonds or coupons for that purpose at a sum, equal to and not exceeding that which would payable out of the net proceeds of said sale to the purchaser or purchasers, as the holder or holders of said bonds or coupons for his or their just share and proportion in that character of said net proceeds, and a due apportionment and distribution thereof, and after allowing for the proportion of payments which may be required by the court to be paid in cash for the expenses of the trust, and of the sale, or for other purposes.'

In consequence of these proceedings, all the property of the Empire State Company is now in the custody of the Circuit Court through its receivers. There are mortgages on the several properties of the allied companies, and in the course of the receivership proceedings the court on July 7, 1909 made an order allowing these various trustees, including the petitioner, to intervene in the suit-- a creditor's bill-- under which receivers were appointed, and to file cross-bills or ancillary bills for the foreclosure of these mortgages. Most, if not all, of the several trustees have begun suits in foreclosure; but this petitioner has not done so.

This cause comes here upon an appeal from an order of the Circuit Court, Northern District of New York, denying the application of the New York Trust Company, trustee under a mortgage of the Empire State Power Company, for leave to sell the mortgaged property; there having been default in payment of interest and of sinking fund moneys due under the mortgage.

The Empire State Power Company owns a dam, power house, river rights, and four or five dam sites on the Schoharie river and is engaged in the generating of electricity for light heat, and power and the sale thereof in the city of Amsterdam, N.Y., and immediate vicinity. All of its property is subject to the mortgage which was executed May 1, 1900, to secure an issue of bonds of which $210,000 are outstanding. It is a first mortgage on said property. Two of its clauses read as follows:

'Eleventh. In case default shall be made in the payment of any interest on any of said bonds secured hereby, as and when such interest shall become due and accrued, such default shall continue for six months, or in case default shall be made in the payment of the principal of any of said bonds when the same shall mature or otherwise become payable, then, and in every such case, the trustee may, and upon the request of the holders of two-fifths in interest of the bonds hereby secured and then outstanding, by an instrument or concurrent instrument in writing, signed by them or their attorneys in fact duly authorized for that purpose, shall, with or without entry, sell all the premises, estate, property, rights and franchises hereby conveyed, or so intended to be, at public auction in the city of Amsterdam, N.Y., after giving notice of such sale as required by law, and also notice by publication in at least two newspapers published in the county of Montgomery, at least once a week for six consecutive weeks next preceding such sale, and from time to time to adjourn such sale or sales, in its discretion, and without further notice to hold such adjourned sale or sales, and upon any sale or sales hereunder to make and deliver to the purchaser and purchasers of the premises, estate, property rights and franchises so sold a good and sufficient deed or deeds for the same, which sale shall be a perpetual bar, both in law and in equity, against the said Empire State Power Company and all persons or corporations lawfully claiming, or to claim by, through or under it, and, upon the making of any such sale, the principal of all the bonds hereby secured and then outstanding shall forthwith become due and payable, anything in said bonds to the contrary notwithstanding, and upon the making of any such sale, the said trustee shall apply the proceeds thereof as follows, to wit:

'Thirteenth. In case default shall be made in the payment of the principal or interest of any of said bonds when the same shall become due and payable, or in the observance or performance of any covenant or condition in said bonds or herein contained on the part of the party of the first part, and such default shall continue for

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