Old Colony Trust Co. v. Standard Beet Sugar Co.

• Decision Date: 15 February 1907
• Citation: 150 F. 677
• Parties: OLD COLONY TRUST CO. v. STANDARD BEET SUGAR CO. et al.
• Court: U.S. District Court — District of Nebraska

150 F. 677

OLD COLONY TRUST CO. v. STANDARD BEET SUGAR CO. et al.

United States Circuit Court, D. Nebraska.

February 15, 1907

W. D McHugh, for complainant.

Charles W. Haller, for defendants Rocheford & Gould.

Charles Battelle, for defendant Kennard Glass & Paint Co.

W. J Courtright, for intervener Edmund R. Gurney.

TRIEBER District Judge.

The complainant filed a bill to foreclose a mortgage executed by the defendant the sugar company on May 1, 1900, and duly recorded in Dodge county, Neb., on May 7, 1900. The mortgage was executed to secure an issue of $500,000 in bonds, with the usual provisions in case of default in the payment of the interest. The mortgage recites that it conveys to the trustee, its successors, and assigns 'the following described real estate, situate, lying and being within the county of Dodge, state of Nebraska, to wit. ' It then proceeds to describe by proper metes and bounds 197 75/100 acres, and then proceeds:

'Together with all and singular the tenements, hereditaments and appurtenances, buildings and factories thereunto belonging or in any wise appertaining; also all the machinery, plant tools and equipment of the company used in or about the same premises in connection with the manufacture of refined beet sugar; together with all other machinery, plant, tools and equipment which the company may hereafter acquire for the aforesaid purposes.'

Among other provisions is the following:

'Sec. 9. * * * The trustee shall from time to time release from such lien any portion of the south half of the southeast quarter of section thirty-two (32), in township eighteen (18) north of range seven (7) east of the Sixth P.M., lying west of the Freemont county ditch, whenever so requested, in writing by the president and treasurer of the company, specifying the portion so to be released, and also giving the name and address of the purchaser and the amount of consideration to be paid for the property so to be released and the terms of payment. Any and all installments of the purchase price shall be paid over to the trustee upon receipt thereof by the company, and shall be held on deposit by the trustee, and may be used by the company for the redemption of bonds or for the purchase of new or additional property or equipment or for the erection of new buildings useful in the business thereof, and shall be paid to the company by the trustee upon a request signed by the president and treasurer of the company, specifying the purpose for which the amount requested is to be used, and such new or additional property, equipment or buildings useful in the business of the company shall be subject to the lien of this mortgage as if they had been originally included therein,' etc.

The bill, in addition to asking for a foreclosure of the premises in Dodge county as hereinbefore described, also alleges that, after the execution and delivery of the mortgage, the defendant purchased over 2,000 acres of land, which are particularly described in the bill, lying in the county of Hitchcock, in the state of Nebraska, which lands, it is charged, were purchased with money of the company to be used for its corporate purposes, in connection with and to constitute with the property described in the mortgage the plant of the defendant, and for this reason it asks that said lands in Hitchcock county be decreed to be subject to complainant's mortgage. The defendants Rocheford & Gould and the Kennard Glass & Paint Company had furnished materials and done some work in 1905 on the factory covered by the mortgage, for which they filed mechanics' liens on the mill and the lands on which the factory stands, and they now claim priority over the mortgage for these claims. The intervener, Gurney, is a creditor of the sugar company, who, two weeks after the filing of the original bill herein, instituted a suit on the law side of this court to recover his claim, and also secured an attachment against the property of the sugar company, which was levied on the lands in Hitchcock county hereinbefore described. Since then he has recovered judgment on the law side and the attachment was sustained, but with a stay of proceedings until the determination of this proceeding. There has been a decree of foreclosure, directing a sale of all the property except the Hitchcock county lands, which, by consent of all parties, was to be determined at a later day, as were also the claims of the mechanic lienors heretofore mentioned. The questions now to be determined, therefore, are, first, whether the mechanics' liens of the defendants Rocheford & Gould and the glass and paint company are entitled to priority over the mortgage, although the work was performed and the materials furnished five years after the execution and recording of the mortgage; and, second, whether the Hitchcock county lands are subject to the lien of the mortgage by virtue of that part of the mortgage which conveys 'all other machinery, plant, tools and equipment which the company may hereafter acquire for the aforesaid purposes.'

1. The claims of the holders of the mechanics' liens, if sustained, must rest solely upon section 9 of the mortgage as under the laws of the state of Nebraska, as construed by its highest court, a mortgage executed before the mechanic's lien accrued has priority over that lien. Henry & Coatsworth Co. v. Halter, 58 Neb. 685, 699, 79 N.W. 616. That a contract made between two parties for the benefit of a third party may be enforced by such third party, if not at law, at least in equity, as contended by these defendants, is beyond doubt. Meyer v. Shamp, 26 Neb. 729, 42 N.W. 757; Dismukes v. Halpern, 47 Ark. 317, 1 S.W. 554; Willard v. Wood, 135 U.S. 309, 10...