Seibert v. Minneapolis & St. L. Ry. Co.

• Decision Date: 06 January 1893
• Citation: 52 Minn. 148,53 N.W. 1134
• Court: Minnesota Supreme Court
• Parties: SEIBERT v MINNEAPOLIS & ST. L. RY. CO. ET AL., (GRIGGS, INTERVENER. TWO CASES.)

52 Minn. 148

53 N.W. 1134

SEIBERTvMINNEAPOLIS & ST. L. RY. CO. ET AL., (GRIGGS, INTERVENER. TWO CASES.)

Supreme Court of Minnesota.

Jan. 6, 1893.

(Syllabus by the Court.)

1. A complaint in intervention by an individual bondholder, in a suit by a trustee to foreclose a certain mortgage executed by the defendant railway company, and in which other mortgagees are made defendants, set forth, in separate portions thereof, the facts under which he claims the right to have several mortgages securing his bonds foreclosed in this action. Held, that a mortgagee defendant might demur to the separate portion of the complaint relating to his mortgage, though the demand for relief was not fully stated therein.

2. A mortgagee who is trustee, holding title to the security for all the bondholders as beneficiaries, is the proper party to institute foreclosure proceedings, but in case of unreasonable neglect, or a refusal to discharge his duty, any bondholder may bring an action to enforce the security for the common benefit.

3. But it is competent for the bondholders to agree among themselves upon what conditions this right may be exercised by an individual bondholder; and a provision in the mortgage that no proceedings in law or equity shall be taken by any bondholder secured thereby, to foreclose the equity of redemption independently of the trustee, until after the refusal of the trustee to comply with a requisition first made upon him by the holders of a certain percentage of the bonds secured by such mortgage, is reasonable and valid.

4. Such provisions are to be deemed stricti juris, but are to be reasonably construed in view of the nature of the security, and the interest of the bondholders as a class.

5. It is not the purpose or effect of such a stipulation to divest the bondholders of their right to judicial remedies, or to oust the courts of their jurisdiction, but it is merely the imposition of certain conditions upon themselves in respect to the exercise of that right.

(Syllabus by the Court.)

Appeal from district court, Hennepin county; LOCHREN, Judge.

To the suit by Henry Seibert, trustee, against the Minneapolis & St. Louis Railway Company and others for the foreclosure of a mortgage, F. H. Griggs intervened, and from an order sustaining a demurrer to his complaint he appeals. Affirmed.

Cook & Dodge and Akers & Lancaster, for appellant.

Wood & Kingman, for respondent Fidelity Ins., Trust & Safe-Deposit Co.

Keith, Evans, Thompson & Fairchild, for certain bondholders.

Harris & Richardson and Butler, Stillman & Hubbard, (Warner, Richardson & Lawrence, of counsel,) for respondent Central Trust Co. of New York.

H. C. Truesdale, for respondent Farmers' Loan & Trust Co.

VANDERBURGH, J.

This suit is brought to foreclose a certain mortgage executed by defendant railway company to the Central Trust Company, which has been superseded by the appointment of the plaintiff as trustee in its place. The defendants Farmers' Loan & Trust Company and Central Trust Company are named as trustees in other mortgages executed by the railway company. The intervener is the owner of bonds secured by the mortgages executed to the last-named trustees in trust to secure the bondholders holding bonds issued thereunder. In the first three paragraphs of the complaint reference is made to its bonds secured by the mortgage held by the Farmers' Loan & Trust Company as trustee, and therein is set forth the facts upon which he bases his claim for relief, by way of the foreclosure of that mortgage, on his application and for the benefit of himself and other bondholders. The remainder of his complaint presents the facts upon which he bases a similar claim in respect to his bonds secured by other mortgages executed to the Central Trust Company.

1. The defendant Farmers' Loan & Trust Company demurs to that portion of the complaint included in the three paragraphs referred to, as containing the plaintiff's cause of action against it. As this portion of the complaint embraces a statement of all the facts upon which the intervener claims relief against it, we think that the objection that the demurrer is bad, because taken to a part of the complaint only, is not well taken. The court can determine from the issue thus made whether or not the intervener is entitled to any relief against the defendant upon the facts stated.

2. The intervener alleges: “That in the mortgage or deed of trust executed by the Minneapolis & St. Louis Railway Company to the Farmers' Loan & Trust Company, bearing date the 1st day of February, 1877, and securing the twenty-one bonds, and the coupons therefrom, held and owned by intervener, as particularly described in the first division of his complaint, it is provided, among other things, in article 6 thereof, as follows: ‘In case default shall be made in the payment of any of the said coupons, or semiannual interest upon any of the aforesaid bonds, at the time and in the manner in the coupons issued therewith, provided the said coupon has been presented, and the payment of the interest therein specified has been demanded, and in case such default shall continue for the period of four months after the said coupons shall have become due and payable, then and thereupon the principal of all the bonds secured hereby shall become immediately due and payable, anything contained in the said bonds to the contrary notwithstanding.”’ Intervener avers that all of his said described coupons from the bonds in this division referred to have been presented for payment at the agency of the said Minneapolis & St. Louis Railway Company in the city of New York, and the payment of the interest therein specified has been demanded, and payment was refused; and all the said coupons have also been presented for payment to the acting treasurer of said Minneapolis & St. Louis Railway Company, at the city of Minneapolis, Minn.; and the payment of the interest specified was demanded, and payment was refused, and default has been made in the payment of all the described coupons from said bonds. It also alleged that, excepting as to the several coupons aforesaid which became...