Humphreys v. McKissock Wabash, St Ry Co v. Same

• Decision Date: 11 May 1891
• Parties: HUMPHREYS et al. v. MCKISSOCK. WABASH, ST. L. & P. RY. CO. v. SAME
• Court: U.S. Supreme Court

140 U.S. 304

11 S.Ct. 779

35 L.Ed. 473

HUMPHREYS et al. v. MCKISSOCK.

WABASH, ST. L. & P. RY. CO.

v. SAME.

May 11, 1891.

The two appeals in these cases are from the same decree. Both will be disposed of by the same decision, which will turn upon the effect of a mortgage executed by a railroad corpora- tion of railroad property upon a subsequently acquired interest of the mortgagor in the stock of an elevator company. The material facts out of which the controversy arises are very fully and clearly set forth in the briefs of counsel. They are substantially as follows: On the 15th of February, 1879, the St. Louis, Kansas City & Northern Railway Company, a corporation created under the laws of Missouri, owned a railroad extending in a north-easterly direction from Elm Flats, in Davies county of that state, through the counties of Davies, Gentry, Nodaway, and Atchison, to the boundary line between Missouri and Iowa. It was also the lessee for a term of years of a railroad extending from Council Bluffs, in Iowa, in a south-easterly direction through the counties of Pottawatomie, Mills, Fremont, and Page to a point on the boundary line, where the railroads connected. On that day, for the purpose of securing the payment of 250 bonds, each for the sum of $1,000, the railway company mortgaged its leasehold estte in the railroad in Iowa, and its title in fee to its railroad in Missouri, to the United States Trust Company of New York, as trustee. The property described in the mortgage is as follows: 'All and every part and parcel of the continuous line of railroad, and all right, title, and interest therein, as now owned, leased, and held by said St. Louis, Kansas City and Northern Railway Company, commencing at Elm Flats, near Pattonsburg, in the state of Missouri, and extending through the counties of Davies, Gentry, Nodaway, and Atchison in the state of Missouri, and through the counties of Page, Fremont, Mills, and Pottawatomie in the state of Iowa, to the city of Council Bluffs in said state, as said railroad now is or may be hereafter constructed, maintained, operated, or acquired, together with all the privileges, rights, franchises, real estate, right of way, depots, depot grounds, side tracks, water-tanks, engines, cars, and other appurtenances thereunto belonging.' On the 10th of November, 1879, the St. Louis, Kansas City & Northern Railway Company was consolidated with the Wabash Railway Company of Illinois, Indiana, and Ohio, and the corporation thus formed took the name of the Wabash, St. Louis & Pacific Railway Company. Afterwards, on the 17th of December, 1880, a corporation was formed under the laws of Iowa by certain parties named Dillon, Hopkins, Keep, Riddle, and Perkins, known as the 'Union Elevator Company.' Its articles of incorporation provided that its principal place of business should be at Council Bluffs, that its stock should be $500,000, and that the subscriptions to the stock should be paid in when called for by the board of directors. The parties who formed this corporation were officers of different railway companies doing business at Council Bluffs. Immediately after its organization, the elevator company, as party of the first part, entered into a written contract with the Union Pacific Railway Company as party of the second part; the Wabash, St. Louis & Pacific Railway Company as party of the third part; the Chicago, Rock Island & Pacific Railway Company as party of the Fourth part; the Chicago, Burlington & Quincy Railway Company as party if the fifth part; the Chicago & Northwestern Railway Company as party of the sixth part; and the Chicago, Milwaukee & St. Paul Railway Company as party of the seventh part; in which each of the companies agreed to subscribe $100,000 to the capital stock of the elevator company, and to contribute equally thereto; and the elevator company agreed that in conducting its business it would not discriminate in favor of or against either of the companies, but would at all times serve them on equal terms. In 1881 these companies subscribed for an equal amount of stock in the elevator company, and in 1881 and 1882 the elevator was erected at a cost of $280,000. When completed it was leased by the elevator company to certain parties, who afterwards operated it as tenants of that company. The different companies subscribed equal amounts for the construction of the elevator, which subscription was in reality only one-sixth of $280,000, and not one one-sixth of $500,000, the authorized amount of its capital stock. Each, therefore, paid $46,666.66, and received its stock, except the Wabash, St. Louis & Pacific Railway Company, which paid only $41,666.66 leaving $5,000 due. For want of this last payment no stock has been issued to that company. It will be entitled to receive its proportional part of the stock upon the payment of that sum. In 1884 the Wabash, St. Louis & Pacific Railway Company became insolvent, and on the 29th day of May of that year Solon Humphreys and Thomas E. Tutt were, in proceedings before the circuit court of the United States for the eastern district of Missouri, appointed receivers of all its property, including the railroad from Elm Flats, Mo., to Council Bluffs, Iowa. In June, 1885, a bill was filed in the circuit court of the United States for the southern district of Iowa,wes tern division, by the United States Trust Company of New York, against the Wabash, St. Louis & Pacific Railway Company, to foreclose the mortgage of February 15, 1879, executed by the St. Louis, Kansas City & Northern Railway Company, (afterwards merged into the Wabash, St. Louis & Pacific Railway Company,) covering the road from Elm Flats to Council Bluffs. On March 3, 1886, that court appointed Thomas McKissock receiver of the premises and property described in the mortgage, with power and instructions to take possession thereof. Previously to this, on January 6, 1886, the circuit court of the United States for the eastern district of Missouri had made an order directing the receivers, Humphreys and Tutt, to transfer and surrender to the trustee of the mortgage, the United States Trust Company, or to any person or receiver appointed at its instance by the circuit courts of the states of Iowa or Missouri, in which the foreclosure suits brought by the trustee might at the time be pending, the entire line of railroad known as the 'Omaha Division of the Wabash, St. Louis & Pacific Railway Company,' by which was meant the line extending from Elm Flats to Council Bluffs; and also all property, real and personal, pertaining to that division, then in their possession and control.

Under the facts as thus stated the situation of the case was this: Humphreys and Tutt, as receivers of all the property of the Wabash, St. Louis & Pacific Railway Company, appointed by the circuit court of the United States for the eastern district of Missouri, claimed possession and the right to hold the interest of that company in the stock of the elevator company. On the other hand, McKissock, as receiver of the property described in the mortgage to the trust company, claimed the stock in the elevator company as covered by that mortgage, and demanded its transfer to him by...