Grape Creek Coal Co. v. Farmers' Loan & Trust Co.

• Decision Date: 31 May 1894
• Docket Number: 148.
• Citation: 63 F. 891
• Parties: GRAPE CREEK COAL CO. et al. v. FARMERS' LOAN & TRUST CO.
• Court: U.S. Court of Appeals — Seventh Circuit

63 F. 891

GRAPE CREEK COAL CO. et al. v. FARMERS' LOAN & TRUST CO.

No. 148.

United States Court of Appeals, Seventh Circuit.

May 31, 1894

J. B Mann (C. H. Remy, of counsel), for appellants.

H. B Turner and William Burry, for appellee.

This appeal is from a decree of foreclosure in favor of the Farmers' Loan & Trust Company, appellee, against the Grape Creek Coal Company, Grape Creek Coal & Coke Company Mason M. Wright, and John B. Brown, appellants, foreclosing a mortgage executed by the first-named company to secure the payment of a series of 500 bonds, each for $1,000. The other appellants are judgment creditors of the mortgagor, who recovered their respective judgments pending the foreclosure suit. The first bill of complaint for foreclosure was filed December 17, 1891. A second bill was filed April 11, 1892. The two suits were consolidated by order of court April 14th. On May 23, 1892, the first bill was dismissed by the complainant, and the case proceeded to decree April 19, 1893, on the second bill, which, on July 7, 1892, had been amended to include certain after-acquired real estate. The mortgage or trust deed bore date April 1, 1886, and contained the following, with other, conditions: 'First. That if the interest on any of the bonds so issued shall not be paid by the party of the first part when the same shall become due, and if such interest remain in arrears for sic months after demand at the place where the same is payable, or if the principal of said bonds, or any of them, shall not be paid at their maturity, or in case of default for six months in the payment of whatever may be due on the sinking fund hereinafter provided for, then it shall be lawful for the party of the second part, or its successor in trust for the time being, and it shall be the duty of such trustee, upon the request in writing of the holders of not less than one-half of the then outstanding bonds of the issue hereby secured, to enter forthwith, demand, take, and maintain possession of, all and singular, the estate and premises hereby conveyed, and as the attorney in fact or agent of the said party of the first part, by itself and agents or substitutes, duly constituted, have, use, manage, operate, and enjoy the same, and' (after paying expenses of management) 'shall apply the remaining income and revenue arising from the use of said mortgaged property, and coming to its hands, to the payment of the interest in default, and maturing from time to time, satisfying the said coupons in the order of their several maturities, and thereafter apply the residue upon the principal of the then outstanding bonds. Second. And upon the further trust that if a six-months default shall occur in the payment of either principal or interest of any of hte bonds hereby secured, after such actual demand, as aforesaid, then it shall be lawful for said party of the second part, or said trustee for the time being to cause, and upon the written request of the holders of a majority in amount of said bonds then outstanding, it shall, with or without entry, as aforesaid, cause, all and singular, the said premises, appurtenances, equipments, and property of every description, hereby conveyed, to be sold as an entirety, at public auction, to the highest bidder, * * * and on such sale said party of the second part, or the trustee for the time being, shall make, execute, acknowledge, and deliver unto the purchaser or purchasers thereof a good and sufficient deed, in see simple, conveying the property so sold * * * and after deducting from the proceeds of sale the costs and expenses thereof, and a reasonable compensation to said trustee and its attorneys and agents for services in connection therewith, shall apply so much of the proceeds as may be necessary to the ratable repayment of principal and then-accrued interest of all the said bonds, whether the said principal is then due or not. * * * Third. In case of any such taking possession or proceeding to sell the mortgaged premises for default of payment of interest or sinking fund, if the said party of the first part, before the said bonds shall be come due, and before such sale shall be made, shall pay and satisfy all interest then in arrears on all such outstanding bonds, and shall also pay and discharge all costs, expenses, and disbursements and reasonable compensation incurred by reason of such default or possession, then, upon evidence thereof to his satisfaction, the said party of the second part shall thereupon discontinue such proceeding, and restore possession of the mortgaged premises to the party of the first part, to be thereafter held subject to these presents, in like manner as if such default or entry had not occurred. Fourth. The said party of the first part expressly covenants and agrees that it will, on demand, from time to time, hereafter, execute, acknowledge, and deliver unto the said party of the second part any and all such further and other conveyances and assurances as may be necessary and proper to fully convey to and vest in the party of the second part, or the trustee for the time being, all such future-acquired ground, estate, equipments, and property as it may hereafter, from time to time, purchase for use in the working and carrying on of its said mines. And the said party of the first part doth still further agree that it will, in case of any default in the payment by it either of the principal or interest of any of its bonds hereby secured, forthwith, upon demand of the party of the second part, or the trustee for the time being, surrender the full and peaceable possession of, all and singular, the premises hereby conveyed, or intended to be conveyed, including all the real and personal property by it acquired subsequent to the date of these presents for use in connection with its said mines. * * * Seventh. It is further agreed that beginning April first, A.D. eighteen hundred and ninety-two, and annually thereafter, the said party of the first part shall and will set apart the sum of twenty thousand dollars as a sinking fund to be used and applied in the payment of said bonds. * * * Eighth. It is further agreed that, when any of the lands hereby conveyed shall no longer be available for mining purposes, they may be sold and conveyed in the discretion of the parties of the first and second part, both parties uniting in any conveyance to be made, and in such sale may be either of the lands, reserving all mines underneath the surface of the ground, or with such mines as the parties hereto shall deem proper; and the proceeds of said sale shall be reinvested in coal lands, and brought under this mortgage, or be added to the sinking fund provided for in the previous section, and applied as therein directed.'

The court found and decreed the lien of the mortgage to be superior to any other lien in favor of any party to the cause; that default had been made in the payment of interest due, entitling the plaintiff to a sale of the mortgaged property and premises, including the after-acquired lands described, 'unless the defendant mortgagor shall pay the amount of the entire...