Penn Mut. Life Ins. Co. v. Heiss

• Court: Illinois Supreme Court
• Writing for the Court: The other facts fully appear in the following statement by SHOPE
• Citation: Penn Mut. Life Ins. Co. v. Heiss , 141 Ill. 35, 31 N.E. 138 (Ill. 1892)
• Decision Date: 09 May 1892
• Parties: PENN MUT. LIFE INS. CO. et. al. v. HEISS et al.

141 Ill. 35

31 N.E. 138

PENN MUT. LIFE INS. CO. et. al.

v.HEISS et al.¹

Supreme Court of Illinois.

May 9, 1892.

Appeal from circuit court, Marion county; B. R. BURROUGHS, Judge.

Bill by Peter Heiss, Hugo Prill, Fred Buehler, Matilda Loyer, Gottfried Zoeller, Charles Kaiser, Bertha Buehler, Amelia Ackerman, Clara Jahn, Theresa Jahn, Anna Eis, Matilda Baumer, Fred Sanders, Anna Schuchmann, A. Vortride, administrators of Minnie Vortride, deceased, Isaac S. Coe and Barbara Widmann, administratrix of Philip Widmann, deceased, against the Jacksonville Southeastern Railway Company, the Louisville & St. Louis Railway Company, J. Henry Dunn, Edgar H. Butler, and John G. Hortall. A cross bill was filed, in which the Penn Mutual Life Insurance Company and others were made parties. A decree was rendered on the cross bill, and the Penn Mutual Life Insurance Company, the Pennsylvania Fire Insurance Company, Charlemagne Tower, Jr., and Richard Henry Lee, executors of Charlemagne Tower, Sr., deceased, Ferdinand A. Litz, Daniel B. Cummins, executor of Isaiah V. Williamson, deceased, Daniel B. Cummins, John M. Kennedy, and Edward Y. Townsend appeal. Affirmed.Morrison & Whitlock, for appellants.

T. E. Merritt, Casey & Dwight, and H. C. Goodnow, for appellees.

The other facts fully appear in the following statement by SHOPE, J.:

The Jacksonville Southeastern Railway Company was organized under the statute of Illinois in the years 1879, and empowered to construct, build, and own a line of railway from the city of Jacksonville to Centralia. It acquired title to the line of railway then existing from Jacksonville to Virden, and on July 1, 1880, it executed a mortgage on its line of railroad from Jacksonville to Virden, and its contemplated line from Virden to Litchfield, Ill., and issued 300 bonds of $1,000 each, secured by said mortgage, and drawing interest, payable semiannually, at 6 per cent. per annum, and having 30 years to run. On July 1, 1882, the company executed a second mortgage upon all of its line of road then constructed, and thereafter to be constructed, from Jacksonville to Centralia, including all property then owned or thereafter to be acquired, to secure 1,120 bonds of that date, payable July 1, 1912, each for $1,000, drawing interest at the rate of 6 per cent. per annum, and payable semiannually. Said bonds contained a condition that the trustees therein appointed, or their successors in trust, might enter and take possession of said railroad and equipment if the railroad company should permit its interest to remain due and unpaid for six months, or should fail to pay taxes for six months, after due; and providing that said trustees might, after said interest had so remained due and unpaid for six months, declare the principal of said bonds due and payable. By the terms of the mortgage the bonds were to be issued as the work progressed at the rate not to exceed $10,000 for each mile of completed railroad. The length of the main track of railroad, from Jacksonville to Centralia, is 110 miles. The mortgage was duly recorded in each of the counties into and through which the contemplated line was projected. On the 10th day of January, 1883, the city authorities of Centralia duly passed and published an ordinance granting to the railway company the right to lay a single railway track upon Chestnut street in said city, the same to conform to the grade to be fixed by the city authorities, and to be used thereafter for railroad purposes. These bonds were sold in the market, and with the proceeds thereof the railway from Litchfield to Centralia was constructed, and in the month of October, 1883, a track was laid on Chestnut street in compliance with said ordinance, and the same has been since used and operated for general railroad purposes. In December, 1887, and in the early part of January, 1888, 14 suits at law were instituted against the Jacksonville Southeastern Railway Company in case by owners of property abutting on Chestnut street to the February term, 1888, of the circuit court of Marion county. At the August term, 1888, of the court, in the suit wherein the heirs of one Philip Widmann, deceased, were the plaintiffs, leave was given to amend, and amendment was made by striking out the names of the heirs, plaintiffs, and inserting the name of Barbara Widmann, administratrix of the estate of Philip Widmann, deceased. It also appearing that Minnie Vortride, the plaintiff in one of said suits, had departed this life since the suit was instituted, A. Vortride, as her administrator, was substituted as plaintiff.

In 1887 the Louisville & St. Louis Railway Company constructed a line of railroad from the southern terminus of the line of the Jacksonville Southeastern Railway on Chestnut street, in Centralia, to Drivers, a station on the line of the Louisville & Nashville Railroad, and from that time trains ran through from Jacksonville to Drivers. On the 19th of June, 1888, the Jacksonville Southeastern Railway Company conveyed its line of railway to the Louisville & St. Louis Railway Company, and from that time till the trustees, Dunn and Butler, named in the mortgage of July 1, 1882, entered into possession for nonpayment of interest, the latter company operated the same. The trustees entered into such possession in June, 1889, and declared the principal of the bonds due for default in payment of interest for more than six months. Executions were issued on said several judgments at law, and returned ‘not satisfied,’ to the February term, 1889, of said court. The plaintiffs in said common-law judgments filed their bill in chancery, setting up said judgments in their favor, and charging that said conveyance to the Louisville & St. Louis Railway Company was void for want of power in the grantor to make or the grantee to accept a deed for said property, and asking for a receiver. Afterwards the bill was amended by making the trustees named in said deeds of mortgage parties defendants. The Jacksonville Southeastern Railway Company, the Louisville & St. Louis Railway Company, and Dunn and Butler, as trustees, filed separate answers to the bill as amended, setting up as prior liens the mortgages before mentioned, and insisting the lien created thereby was superior to any demands in favor of the complainants, or either of them; alleging the judgments were not binding upon the mortgage creditors. Dunn and Butler, as trustees, also answered that they were in possession of the road under the provisions of the mortgagedeed for default in payment of taxes and interest, and that they, under the powers given them by the provisions of the mortgage deed, had declared the principal of the 1,120 bonds due; that, holding a first and superior lien upon the property, and being in possession for condition broken, the court had no power to oust them and appoint a receiver until the debts they represented had been fully paid. Shortall and Frier, as trustees under the first mortgage, answered, setting up the first mortgage, and asked to be protected.

Appellants, as holders of the bonds, secured by the mortgage deed of July 1, 1882, second mortgage, filed a bill in the circuit court of Morgan county, seeking to foreclose the mortgage. A motion was pending in said chancery cause of Peter Heiss and others, plaintiffs in said common-law judgments against the Jacksonville Southeastern Railway Company and others, for appointment of a receiver, and a stipulation was made by which it was agreed that the motion for a receiver should be postponed until the next term of the circuit court of Marion county; that the deed of June 19, 1888, from Jacksonville Southeastern Railway Company to Louisville & St. Louis Railway Company, referred to, should be treated as for nothing as against the complainants in the bill; that the parties filing the bill in Morgan county for a foreclosure of the mortgage should dismiss the same, and ask to be made defendants in the chancery suit pending in the Marion circuit court, and have leave to file a cross bill; and that two questions should be made: First, whether the several judgments set up in the original bill were to be held as conclusive upon the mortgage creditors of the railroad; and, second, whether any sum that might be found due complainants, or either of them, should, under the constitution of the state, be held to be a superior or first lien upon the mortgaged property; or should the lien created by the mortgage which was prior in date of execution and recording be held the first and superior lien? The appellants thereupon became parties defendant to the bill pending in Marion circuit court, and filed an answer to the same, in which they set up that they were each holders of bonds of the Jacksonville Southeastern Railway Company, secured by the deed of mortgage of July 1, 1882, and that the mortgage was prior in date to that of any claim originating in favor of either of the complainants in the original bill; that their lien was superior to that of complainants; and that, if any part of the demand of the complainants was to be held superior to that of the mortgage, it could be only for such as in fact existed by reason of injury to the real estate mentioned; and that the holders of said securities were not bound by the several judgments set up in the bill; that they were holders of said bonds purchased in open market; and that the proceeds of the sale of said bonds had been used in the construction of the railroad from Litchfield to Centralia. Appellants also filed a cross bill against said railroad companies, and also against the said complainants in the original bill, setting up the same facts, and alleging the several ownership of the bonds of the issue of July 1, 1882, by the cross complainants, and sought foreclosure of said mortgage. It is admitted that the damages claimed by complainants in original bill were for injury to the abutting property on Chestnut street, by reason of the...