Joy v. Jackson & Michigan Plank Road Co.

• Decision Date: 13 January 1863
• Citation: 11 Mich. 155
• Court: Michigan Supreme Court
• Parties: James F. Joy and others v. The Jackson and Michigan Plank Road Company and others

11 Mich. 155

James F. Joy and others v. The Jackson and Michigan Plank Road Company and others

Supreme Court of Michigan

January 13, 1863

Heard November 19, 1862; November 20, 1862 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Appeal in Chancery from Jackson Circuit.

The Jackson and Michigan Plank Road Company was incorporated April 3, 1848, for the purpose of constructing a plank road from Jackson to Michigan, now Lansing. On September 1, 1851, this company, for the purpose of providing means for the construction and completion of their road, buildings and equipments, in pursuance of an act of the Legislature supplementary to their act of incorporation, approved April 3, 1851, and which had been accepted by a vote of the directors, and in pursuance of another vote of the directors, with the approval of a majority of the stockholders, given at a meeting called for the purpose, issued bonds to the amount of $ 15,000, payable in 1856, 1857 and 1858, with semi-annual interest at ten per cent, at the Michigan Insurance Bank, at Detroit; in which bonds the complainants in this suit are named as obligees. As collateral to these bonds, the company at the same time, under the authority of the said supplementary act, executed to the complainants, as trustees for the persons who should become the holders of said bonds, a mortgage "of all that parcel of the plank road of the Jackson and Michigan Plank Road Company, now constructed and hereafter to be constructed, in and extending from the village of Jackson, in the county of Jackson, to and in the village of Eaton Rapids, in the county of Eaton, together with all the toll houses, gates and all other fixtures and erections and appurtenances of every name and kind thereto belonging or in anywise appertaining, together with all the franchises and rights of the said Jackson and Michigan Plank Road Company therein and thereto." A condition, among others, was inserted in the mortgage, that the company should provide and pay to complainants a sinking fund for the payment of the said principal sum of $ 15 000, of eight per cent per annum, to be invested by the trustees; first, in buying the bonds of the company; or, secondly, the bonds of the Michigan Central Railroad Company; or, thirdly, the stock of the United States, New York, Massachusetts, Ohio, or the cities of Boston or New York, as the directors of the Plank Road Company might designate; or, in case they did not designate, as the trustees might deem expedient. The mortgage contained the usual power of sale of real estate mortgages.

Simultaneously with the execution of this mortgage, John Sumner, Daniel B. Hibbard, and a number of other persons, executed a bond to said trustees, in the penal sum of $ 20,000, reciting the said mortgage and its terms; and conditioned that if the Plank Road Company should pay all the liabilities of the company then existing, or which might thereafter exist, and constituting a lien or incumbrance upon the road mortgaged, by virtue of the act under which it was given, or any subsequent law, and should keep the road free and clear of all such liens and incumbrances, so that there should be at no time any lien or incumbrance prior to said mortgage, and provide and pay to said trustees such a sinking fund as was specified in the condition of the mortgage, then the bond was to be void, otherwise of force.

The bonds of the company so issued were negotiated, and $ 6,500 thereof not having been paid by the company at maturity, or a sinking fund provided therefor, complainants filed their bill against the company to foreclose the mortgage, and joined thereto as parties defendants the surviving obligors in the collateral bond (several of them having deceased), praying the usual decree of foreclosure, and decree against said surviving obligors for any deficiency. A portion of the obligors in the collateral bond did not appear, and the bill was taken as confessed by them.

The others, as well as the Plank Road Company, demurred to the bill, but the demurrer was overruled, and they afterwards answered, and the case was heard on pleadings and proofs.

It was shown in the case that the estates of the deceased obligors were solvent.

The Circuit Court in Chancery made decree as prayed, for the sale of "all and singular that parcel of the plank road of the Jackson and Michigan Plank Road Company, now (at the date of said mortgage) constructed, and hereafter (after the date of said mortgage) constructed in and extending from the village (now city) of Jackson, in the county of Jackson, to and in the village of Eaton Rapids, in the county of Eaton and State of Michigan, together with all the toll-houses, gates, and all other fixtures and erections and appurtenances, of every nature and kind thereto belonging or in anywise appertaining; together with all the franchises and rights of the said Jackson and Michigan Plank Road Company therein and thereto." And decree was also made against the sureties in the collateral bond for the payment of any deficiency. The defendants appealed.

Decree against the plank road company modified, and against the other parties reversed.

Johnson & Higby, for complainants:

1. The representatives of the deceased obligors in the collateral bond were not necessary parties. The statute authorizes the sureties to be joined in the foreclosure suit: Comp. Laws § 3567. The representatives do not come within the description of the act. Payment by them could not be enforced as provided by the act, for an execution against an executor or administrator is expressly prohibited. Nor is the representative liable to be sued for a debt founded on contract. We submit that the intention of the statute is obvious, to give us the same remedy in these proceedings as we have in a court of law. Without the statute we could foreclose the mortgage and sue the surviving sureties in a court of law, and have execution for the balance; with the statute we can do it all in this court.

But, independent of the statute, what are the reasons for making those representatives parties? If there are any, they must be on their account or on account of some of the other defendants. One reason assigned in the authorities is, that all the parties interested should be before the court to aid in establishing or resisting the claim, or in taking an account, though they are not directly affected by the decree: 1 Johns. Ch., 437. There can be no pretense that the representatives are necessary parties for either of these purposes. Another reason for making joint obligors parties is to avoid the necessity of another suit for contribution: Ventris, 348, note; 3 Atk. 405; 16 Ves. 321, note. This is the only reason that can exist in this suit. To affect contribution, if it can be affected in this manner, we must examine into the condition of these estates, and if they are found to be settled, then it becomes necessary that the legatees and devisees, and heirs at law, should also be made parties; and in case of their decease, then their representatives must be brought in. Will the Court of Chancery enforce contribution under such circumstances? By statute, creditors must present their claims for proof within a given time, which may be enlarged by the Probate Court before the final settlement of the estate. If Chancery has the power afterwards, we submit it must be an extraordinary case that would induce its exercise.

The question of parties is one addressing itself to the discretion of the court, and will be governed by considerations of convenience: 9 Cow. 329; 1 Johns. Ch., 437; 10 Wheat. 152; 2 Mason 181; 11 Ves. 429, note; Ibid., 365, note; 16 Ves. 321, note.

Lastly. The court will not enforce contribution against the estates of deceased co-sureties: 2 H. & Gill, 305; 1 Pars. on Cont., 32, note 2.

2. The objection that the sureties can not be made parties, because their obligation is not co-extensive with that of the principal, we submit upon the authority of Jones v. Steinbergh, 1 Barb., Ch. R., 250.

3. The act of 1851 is not unconstitutional. In the first place, it was not necessary to enable the corporation to give the mortgage. Private corporations, at common law, have the right of alienation, unless specially restrained by their charter or by statute: 9 Kent 281; A. &. A., on Corp., 104; 1 Cow. 513; 3 Wend. 96; 5 Wend. 590; 2 Hill 265; 9 Paige 470; 1 Sand. Ch., 280. But if we must rely upon the act of 1851, it is not open to the objection made. The mischief the constitutional provision referred to (Art. 4, § 23) was designed to prevent, was the great expense incurred in special legislation, and the rank injustice sometimes done to parties interested. Guardians, trustees and even administrators, were continually in the practice of making application to the Legislature for power to sell, under the plausible pretense of saving expense, while, in most instances, some ulterior object was the moving cause. The constitutional provision was intended to compel all these applications to be made before the proper tribunal, where all parties could be heard, and the rights of all protected.

4. The mortgage is not invalid because not covering the whole road. How much it conveys is a question between the purchaser and the mortgagor. The mortgagor was competent to make it; and he is estopped from saying that he has no title to the property described, or that his description is imperfect: Wanzer v. Blanchard, 3 Mich. 11.

E. Pringle and C. I. Walker, for defendants:

1. Without the aid of clear provisions of statute, a corporation of this kind has no right to mortgage or sell its road and franchise. The franchise was conferred for public purpose and the road is a public highway,...