Roberts v. Denver, L. & G.R. Co.

• Decision Date: 09 November 1896
• Citation: 46 P. 880,8 Colo.App. 504
• Parties: ROBERTS et al. v. DENVER, L. & G.R. CO. et al.
• Court: Colorado Court of Appeals

46 P. 880

8 Colo.App. 504

ROBERTS et al. v. DENVER, L. & G.R. CO. et al.

Court of Appeals of Colorado

November 9, 1896

Appeal from district court, Arapahoe county.

Action by the Denver, Lakewood & Golden Railroad Company and another against A.W. Roberts and others. There was a judgment for plaintiffs, and defendants appeal. Affirmed.

Error is laid to the rulings of the court on a motion to dismiss the action for want of authority on the part of the attorney to bring it for one of the plaintiffs, and the overruling of a demurrer to the complaint for want of facts sufficient to constitute a cause of action. We take the complaint as an accurate statement of facts, though, as to some of its details, it would be more preferable to set out the exact phraseology of the security involved. This is impossible because the instruments are not set out in haec verba. The Denver, Lakewood & Golden Railroad Company is a corporation organized under the laws of the state to construct and operate a railroad within certain designated points, and branch lines run in connection with it. About the time of its organization, the company issued a series of bonds, 400 in number, each for the principal sum of $1,000 bearing a specific rate of interest, payable on definite dates, as provided for by coupons attached to each of the bonds. According to the following recital in the securities each bond was one of a series "of first mortgage bonds numbered from one upward, each of like amount, tenor, and date, all of which said bonds and coupons are equally and without preference secured by mortgage or deed of trust of even date herewith, duly executed and delivered by the Denver, Lakewood and Golden Railroad Company to the Farmers' Loan and Trust Company of the city of New York." To secure the payment of these bonds, the corporation executed to the Farmers' Loan & Trust Company of New York a mortgage, whereby there was "granted and conveyed unto the trust company and its successors all of the property, franchises, and privileges of the railroad company." As is universally the case in railroad mortgages, both by general language and particular designation, the railroad company conveyed to the trustee whatever property it then had or might thereafter acquire, of every sort and description, including its rents, income, and profits. It was recited in the mortgage that the conveyance was made to the trust company for the benefit of parties who might become purchasers or owners of the bonds, and that the bonds secured by the deed of trust were issued and to be held by the holders of the bonds subject to the agreements and conditions set out in the deed. Among other conditions expressed in the conveyance, and on which the bonds were issued, was this: "That the bonds secured by said deed of trust, though issued and sold at different times, are all to be of the same date, and payable at the same time as set forth in said deed of trust, and are to be equally and without preference secured by said mortgage or deed of trust. It is further provided that in default of payment of either the principal or interest, or until the railroad company shall make default or breach in the performance of some of the conditions imposed by the deed, it should have the right to possess and operate the road, and use the income or revenue, in the same manner as though it was unmortgaged." It was further provided that in case of default in the payment of the principal or interest, and the default should continue for six months, the trust company could enter into possession of the railroad and its property, and operate it for the benefit of the bondholders, appropriating the income to the payment of the delinquent interest, and to the principal which would then be due. The holders of the majority of the bonds were given the right, under certain circumstances, to compel the trustee to proceed. According to another article in the mortgage, the right of action under it was vested exclusively in the trustee, and under no circumstances could any bondholder or bondholders institute an action or other proceeding to enforce any remedy provided, or foreclose the mortgage, except on a refusal of the trustee to act. These are all the provisions stated in the complaint, and probably all which would be needful for us to consider. In November, 1894, Roberts brought suit against the company, before a justice of the peace in Arapahoe county, to recover judgment on nine interest coupons cut from bonds, which he evidently held, of $30 each, being the interest coupons on bonds Nos. 18, 19, and 184, of the series of 400, originally issued and heretofore described. Roberts had judgment for $296.80, and execution was issued against the company for that sum, and costs to a constable, who attempted to execute it by the service of a process of garnishment on the Colorado National Bank. The bank answered that it had funds in its possession belonging to the railroad company, in the sum of $310. The complaint thereafter alleged that the moneys which the bank answered it had belonging to the railroad were moneys which had come into the hands of the treasurer of the railroad as revenue and income in the ordinary business of the operation of the road, and had been deposited by the railroad company in the bank, to be paid out by checks drawn by the treasurer in liquidation of its current debts. These moneys were alleged to be necessary in the management of its ordinary business as a carrier in the state, and that Roberts would appropriate these funds to the payment of his interest coupons, unless he was restrained by the order of the court. As will be observed, after Roberts had obtained his judgment, and levied his process on the funds in the bank, this suit was brought to prevent its enforcement. The action was in the names of the railroad company and the loan and trust company. The only relief sought was an injunction to restrain Roberts and the constable from enforcing the judgment. After the process and writs were served, Roberts appeared, and filed his demurrer to the complaint, and likewise a motion to dismiss the action, because the attorney who brought it was not thereunto authorized by the trust company, which was made a party plaintiff. The motion was denied; the demurrer was overruled; and final injunction issued; and Roberts prosecutes this appeal.

Bartels & Blood, for appellants.

Yeaman & Gove, for appellees.

BISSELL J. (after stating the facts).

While the authorities are not entirely in harmony respecting the practice which must be adopted in order to successfully contend for the dismissal of an action because of the want of authority on the part of the attorney to commence it, we can affirm the ruling with very little difficulty. We do not attempt to determine whether the railroad company was a necessary or an indispensable party, nor that the motion would not lie if it appeared the attorney had authority to proceed on its behalf in beginning the suit. It is quite possible the railroad company might maintain this bill to protect its revenues, as well as incidentally to defend the rights of the bondholders. It transpired at the hearing of the motion that the trust company adopted the acts of the attorney, and authorized him to prosecute the action in its behalf and in its name, in the general discharge of its duties as trustee to the owners of the bonds. This authority came to the attorney almost immediately after the suit was begun, and, on the principle of the ratification of the acts of an agent who proceeded without an original delegation of authority, justified the court in refusing to dismiss the action, and proceeding with it to judgment. Great West Min. Co. v. Woodmas of Alston Min Co., 12 Colo. 46, 20 P. 771; Williams v. Canal Co., 13 Colo. 469, 22 P. 806; Dillon v. Rand, 15 Colo. 372, 25 P. 185; Weeks, Attys. § 247; Mason v. Stewart, 6 La.Ann. 736; Little v. Giles, 27 Neb. 179, 42 N.W. 1044; Clark v. Fitch, 2 Wend. 461. On principle, there should be no trouble with this proposition. While it is the privilege of the defendant to question the authority of the attorney who has brought the suit, his acts may be adopted; and, on general principles, an act ratified is the full equivalent of an act done under antecedent authority. The general law of agency disposes of the contention. We think the court was right in...