Joseph Pennock and Nathan Hart, Appellants v. George Coe, Trustee of the Cleveland, Zanesville and Cincinnati Railroad Company

• Decision Date: 01 December 1859
• Parties: JOSEPH PENNOCK AND NATHAN F. HART, APPELLANTS, v. GEORGE S. COE, TRUSTEE OF THE CLEVELAND, ZANESVILLE, AND CINCINNATI RAILROAD COMPANY
• Court: U.S. Supreme Court

64 U.S. 117

23 How. 117

16 L.Ed. 436

JOSEPH PENNOCK AND NATHAN F. HART, APPELLANTS, v. GEORGE S. COE, TRUSTEE OF THE CLEVELAND, ZANESVILLE, AND CINCINNATI RAILROAD COMPANY.

December Term, 1859

THIS was an appeal from the Circuit Court of the United States for the northern district of Ohio.

The bill was filed in the Circuit Court by Coe, mortgagee of the road of the railroad company in trust, for securing the payment of its bonds, to enjoin the execution of a judgment recovered at law against the company by Pennock and Hart, two of the defendants.

The facts of the case are stated in the opinion of the court.

After the case was ready for a hearing, at September term, 1857, the Circuit Court passed the following decree:

'This cause came on to be heard upon the bill of the complainant, the joint answer of Joseph Pennock and Nathan F. Hart, the separate answer of the Cleveland, Zanesville, and Cincinnati Railroad Company, the replication to said answer, the exhibits and testimony, and the motion of said Pennock and Hart to dissolve the injunction heretofore allowed in this case, and was argued by counsel. On consideration whereof, the court do overrule said motion; and the entire facts in the case being before the court, and the arguments of the counsel upon the motion to dissolve said injunction embracing the entire merits of the case, the court do order, adjudge, and decree, that said injunction be made perpetual, and that the said Pennock and Hart be forever restrained from selling, or causing to be sold, by the marshal, the locomotives, tenders, and cars, mentioned in said bill, to satisfy the judgment recovered by them against said railroad company therein described.'

From this decree, Pennock and Hart appealed to this court.

It was argued by Mr. Stanton for the appellant, upon which side there was also a brief filed by Mr. Spalding and Mr. Parsons, and by Mr. Otis for the appellee.

The arguments upon the question whether the mortgage was void, on the ground of uncertainty as to the property described or attempted to be described therein, and conveyed to the mortgagee, are omitted from this report, inasmuch as the court did not think it necessary to decide that point. Upon the other and principal branch of the case, viz: whether the mortgage was good as conveying subsequently-acquired property, the views of the respective counsel were as follows, as also upon the point whether the railroad company were authorized to make the road which they did make.

The counsel for the appellants stated the law which governed the case to be the following:

The laws of Ohio authorizing railroad companies to borrow money and secure the payment of the same, are found in the 'act regulating railroad companies,' passed February 11, 1848, sec. 13, and in the 'act to provide for the creation of incorporated companies in the State of Ohio,' passed May 1, 1852, sec. 14.

See Swan's Revised Statutes of Ohio, pages 199 and 203.

To secure the payment of money borrowed, they 'may pledge the property and income of such company.'

The act to revive and amend an act to incorporate the Cleveland and Pittsburgh Railroad Company, passed March 11th, 1845, which is claimed to be the charter of the Cleveland, Zanesville, and Cincinnati Railroad Company, provides, in section six, that 'the said company, by its proper officers, duly authorized by the directors, is hereby authorized and empowered to mortgage, hypothecate, or pledge, all or any part of said railroad, or of any other real or personal property belonging to said company, or of any portion of the tolls and revenues of said company which may thereafter accrue, for the purpose of raising money to construct said railroad, or to pay debts incurred in the construction thereof.'

Local Laws of Ohio, vol. 43, page 401.

It is insisted, on the part of the appellants, that so much of the indenture, made between the Akron branch of the Cleveland and Pittsburgh Railroad Company and George S. Coe, trustee, on the first day of April, 1852, as purports to put in pledge or mortgage 'future acquisitions,' is inoperative and void.

Yelverton v. Yelverton, Croke Elizabeth, 401.

Comyns Digest, Grant D., vol. 4, page 310.

Mogg v. Baker, 3 Mees. and Welsb., 195.

Jones v. Richardson, 10 Metcalf, 481.

Moody v. Wright, 13 Metcalf, 17.

Otis v. Sill, 8 Barbour S. C. Rep., 102.

Rose v. Bevan, 10 Md., 466.

The railroad company had no authority, as a corporate body, to make a railway from 'Hudson to Millersburg,' and, as a necessary consequence, had no power to borrow money for that purpose. The charter only authorizes the construction of a railroad from Hudson, in Summit county, to Wooster, in Wayne county, or some other point in the Ohio and Pennsylvania railroad between Massillon and Wooster.

See Ohio Local Laws, vol. 49, page 468.

As the road is located, the southern terminus, according to the charter, would be Orville, in Wayne county, which is a point in the Ohio and Pennsylvania railroad between Massillon and Wooster, distant thirty-eight miles from Hudson.

Money was borrowed to make the road to Millersburg, in Holmes county, which is twenty-three miles south of Orville, where the road should have stopped under the charter.

'Corporate powers are never to be created by implication nor extended by construction.'

Penn. Railroad Company v. the Canal Commissioners, 21 Penn. State Rep., 9.

Stormfeltz v. the Manor Turnpike Co., 13 Penn. State Rep., 555.

East Anglian Railway Co. v. Eastern Counties Railway Co., 7 Eng. Law and Eq., 505.

Act regulating Railroad Mortgages in Ohio, Swan's Rev. Statutes, 241.

Coleman v. the Eastern Counties Railway Co., 4 Eng. Railway Cases, 382.

Perrine v. Chesapeake and Delaware Canal Co., 9 Howard's Rep., 172.

Inhabitants of Springfield v. Connecticut River Railroad Co., 4 Cushing, 63.

Logan v. Earl Courtown, 13 Beav., 22.

Green et al. v. Seymour et al., 3 Sandford's Chan. R., 285.

The Penn. &c. Co. v. Dandridge, 8 Gill and Johns., 248.

'Notes given by a corporation in violation of law are void.'

Mr. Justice McLean in Root v. Goddard, 3 McLean Rep., 102.

McGintry v. Reeves, 10 Ala., 137.

Commonwealth v. the Fire and Northeast R. R. Co., 27 Penn. State Rep., 339.

Peavy v. the Calais R. R. Co., 30 Maine Rep., 498.

A right cannot be claimed by a corporation under ambiguous terms.

Mr. Justice McLean in Charles River Bridge Case, 11 Peters, 559.

With respect to that point of the case which related to the power of the company to make the road in question, Mr. Otis, counsel for the appellees, cited and commented on the following statutes of Ohio:

1836, March 14; 1845, March 11.

1851, February 19; 1850, February 21.

1846, February 26; 1846, March 2.

1848, February 18; 1848, February 24.

1847, February 8; 1849, March 12.

It would occupy too much room to follow him through the examination of them all.

With respect to the other point, his argument was as follows:

That the mortgage to Coe is a lien upon the machinery and cars levied upon, though the same were not in existence at the time said mortgage was executed, and though the same did not become a part of the road, by accession, when placed upon it.

For the purpose of this argument, I am willing to admit it to be the general rule of the common law, that nothing can be mortgaged which is not in existence and does not belong to the mortgagor at the time the mortgage is executed.

This proposition is fully established by the following authorities.

Winslow v. Merchants' Ins. Co., 4 Met., 306.

Jones v. Richardson, 10 Met., 481.

Lunn v. Thornton, 1 M. G. and S., 379.

Otis v. Sill, 8 Barb., 102.

But these very authorities also establish the fact that this rule is founded solely upon a technicality. A mortgage is a sale upon condition; and, as before stated, by the rule of the common law there can be no sale of a thing not in existence, and which is not at the time the property of the seller.

The rule of the civil law is the very reverse of that of the common law in this particular, and is thus stated by Domat:

'Those who bind themselves by any engagement whatsoever may, for the security of their performance of the engagement on their part, appropriate and mortgage, not only the estate they are masters of at the time of contracting, but likewise all the estate which they shall be afterwards seized or possessed of. And this mortgage extends to all the things which they shall afterwards acquire, that are capable of being mortgaged, by what title soever it be that they acquire them, and even to those which are not in being when the obligation is contracted; so that the fruits which shall grow upon the lands will be comprehended in the mortgage of an estate to come.'

1 Domat, (Cushing's ed.,) 649, art. 5.

'Although the mortgage be restrained to certain things, yet it will nevertheless extend to all that shall arise or proceed from that thing which is mortgaged, or that shall augment it and make part of it. Thus, the fruits which grow on the lands that are mortgaged are subject to the mortgage while they continue unseparated from the ground. Thus, when a stud of horses, a herd of cattle, or a flock of sheep, is put in pawn into the creditor's hands, the foals, the lambs, and other beasts which they bring forth, and which augment their number, are likewise engaged for the creditor's security. And if the whole herd or flock be entirely changed, the heads which have renewed it are engaged in the same manner as the old stock. Thus, when the bounds of a piece of ground that is mortgaged happen to be enlarged by that which the course of a river may add to it, the mortgage extends to that which has augmented the ground. Thus, a house that is built on a ground which is mortgaged, is subject likewise to the mortgage. And if, on the contrary, a house be mortgaged, and it perishes by fire, or falls through decay, the mortgage will subsist on the ground where the house stood. Thus, when a debtor mortgages...