New York Security & Trust Co. v. Lincoln Street Ry. Co.

• Decision Date: 07 May 1896
• Citation: 74 F. 67
• Parties: NEW YORK SECURITY & TRUST CO. v. LINCOLN ST. RY. CO. et al.
• Court: U.S. District Court — District of Nebraska

74 F. 67

NEW YORK SECURITY & TRUST CO. v. LINCOLN ST. RY. CO. et al.

United States Circuit Court, D. Nebraska.

May 7, 1896

Hornblower Byrne & Taylor and Harwood, Ames & Pettis, for complainant.

Cobb &amp Harvey and SAWYER, Snell & Frost, for defendants.

SHIRAS District Judge.

This suit was commenced on the 25th day of March, 1895, and on the 7th day of October, 1895, an amended and supplemental bill was filed, to which the defendants have interposed several demurrers. Upon the argument had upon the demurrers, the point made is that, when the original bill was filed, the right to proceed by way of foreclosure did not exist; that the facts recited in the supplemental bill, showing that since the filing of the original bill defaults have been made in the payment of interest coming due upon the bonds secured by the mortgage executed by the Lincoln Street-Railway Company, and that a majority of the bondholders had in writing directed the trustee to declare the principal debt secured by the mortgage to be due and payable, which declaration had been made by the trustee in accordance with the provisions of the mortgage, could not be availed of in support of the suit, because such facts did not exist when the suit was commenced; and that in the original bill a right to ask a decree of foreclosure was not shown to exist.

The question is whether the original bill set forth a substantial cause of action, for it is admitted by counsel for complainant that, if the original bill fails to set up a state of facts justifying the relief sought, or, in other words, fails to set up a clause of action then existing, a supplemental bill, based upon facts occurring after the filing of the original bill, cannot be sustained. Bernard v. Toplitz, 160 Mass. 162, 35 N.E. 673; Shields v Barrow, 17 How. 130; Candler v. Pettit, 1 Paige, 168. If, however, the original bill is well founded, or, in other words, sets forth a clause of action and ground for relief, then it is permissible to set forth in a supplemental bill facts happening after the filing of the original bill, which show that complainant is entitled to further relief, within the scope of that sought in the original bill. Thus, if a bill for foreclosure of a mortgage is filed upon the ground that part of the debt secured by the mortgage,-- as, for instance, installments of interest-- has come due and is unpaid, and the court would be authorized to grant a decree of foreclosure therefor, it is, in such case, open to the complainant, by filing a supplemental bill, to show that since the original bill was filed other installments of interest have fallen due and remain unpaid, or that the principal, in part or in whole, has become due and payable, either by lapse of time, or by the action of the trustee, in pursuance of the provisions of the mortgage deed. Jones, Mortg. (4th Ed.) Sec. 1186; Malcolm v. Allen, 49 N.Y. 448. In fact the cause of action in this case is based upon the alleged violations of the terms of the mortgage, and the right of foreclosure created thereby. When the foreclosure takes place, account must be taken, not only of the portions of the debt actually due, but, also of the portions yet to come due. Thus in Howell v. Railroad Co., 94 U.S. 463, it was said:

'The company, therefore, had a right to mortgage property for the payment of these installments of interest, as well as principal, and to make it one of the provisions of the mortgage that it might be foreclosed, if these installments were not paid as they fell due. There can, in fact, be but one decree of foreclosure of the same mortgage on the same property, and it is a necessity of that foreclosure, under the...