South St. Louis Ry. Co. v. Plate

• Decision Date: 20 June 1887
• Citation: 92 Mo. 614,5 S.W. 199
• Parties: SOUTH ST. LOUIS RY. CO. v. PLATE and others.
• Court: Missouri Supreme Court

5 S.W. 199

92 Mo. 614

SOUTH ST. LOUIS RY. CO. v. PLATE and others.

Supreme Court of Missouri.

June 20, 1887.

1. CONTRACT — EFFECT — PARTIES.

One L. was a trustee of the first mortgage bonds of a street railway company. The company needing a further loan, it was agreed by a so-called "tripartite contract" between one P., L., and the company, that P. should take charge of the railway, and advance a sum not to exceed $50,000 for its assistance, and, as a security for this sum, should have a first lien upon all of the company's property; "a final settlement to be made between the parties at the end of three years from the date of the contract." The company having failed to meet the interest on the bonds, L. foreclosed the mortgage for the benefit of the bondholders and P. In a suit by the company to set aside the mortgage, solely on the ground that under the "tripartite contract" the interest on the bonds was not due until the expiration of the three years, held, that the contract did not apply to the payment of interest on the bonds, and that such claim was without foundation.

2. SAME.

In a so-called "tripartite contract" the railway company contracted with P. that he should advance a sum of money, and L., the trustee under the company's mortgage, agreed with P. that the latter's claim should have preference over the mortgage, but there were no undertakings in the agreement as between the company and L. Held, that the company could not under the contract claim that the right of L. to foreclose the mortgage was affected thereby.

3. EVIDENCE — COMPETENCY — WAIVER OF OBJECTION.

Plaintiff had introduced evidence of the history of a certain written contract, and the circumstances which induced it, for the purpose of showing a meaning which it did not express in terms. Evidence was then offered by defendants to show circumstances subsequent to the making of the contract to indicate the interpretation that plaintiff had given it. Held, that the latter evidence was competent if the evidence of plaintiff was so, and plaintiff was in no position to object; but, if originally well taken, the objection was waived by the subsequent introduction of the same kind and some of the same items of evidence by plaintiff itself.

Error to the St. Louis court of appeals.

Suit in equity to set aside the sale of the property of the plaintiff under a mortgage. The circuit court of the city of St. Louis rendered judgment for the defendants, and the plaintiff appealed. The facts of the case are sufficiently stated in the opinion of the court of appeals:

"THOMPSON, J.

This is a suit in equity the general object of which is to set aside a trustee's sale of the property of the South St. Louis Railway Company. The facts appear to be that the street railroad in controversy had formerly been owned by a corporation called the Carondelet Railroad Company; that this corporation had given a mortgage of the property to secure certain bonds of the amount of $185,000; that, default having been made in the payment of the interest and principal of these bonds, the road was sold under the mortgage; that Ira C. Terry, Esq., as the representative of the bondholders, was the purchaser at the sale; that subsequently the corporation was formed, to which Mr. Terry conveyed the property so purchased by him, known as the South St. Louis Railway Company, (this plaintiff;) that, in consideration of such conveyance, the South St. Louis Railway Company issued to the holders of the $185,000 of bonds paid-up stock of the South St. Louis Railway Company of the nominal value of $185,000, and also paid $10,175 in cash. In pursuance of this scheme, it was resolved, at a directors' meeting of the plaintiff corporation, that an assessment of five and one-half per cent. be made on all stock, and that said assessment, together with the bonds of the Carondelet Railway Company, be a full and final payment of the stock of the company; that such assessment be paid over to Ira C. Terry at once, according to the agreement made with him, together with the bonds paid in by the stockholders on his subscription. Under this scheme the plaintiff corporation issued $200,000 of capital stock, and called it paid-up stock; the payment for the same being made in the way already stated. This was in April, 1875.

"In October, 1876, this plaintiff corporation gave a mortgage deed of trust to the defendant William C. Lange, as trustee, of its franchises and all its property then existing or thereafter to be acquired, to secure payment of one hundred and sixty bonds of $500 each, payable in ten years, with interest, payable semi-annually upon coupons attached, at the rate of eight per cent. per annum. This mortgage does not seem to differ in the principal features from the railway mortgage deeds of trust which have become common in the United States. It allowed the trustee to sell upon default of payment of any installment of interest, as well as upon default of payment of the principal. It empowered the trustee to petition any competent tribunal for the appointment of a receiver, in certain contingencies, and contained certain provisions for the disposition of the moneys raised by the negotiation of the bonds, which need not be stated.

"The moneys thus raised did not help the plaintiff corporation out of its difficulties. Its operating expenses exceeded its income. It made two or three payments of interest under this mortgage by moneys raised by selling some of the mortgage bonds which had hitherto remained unsold. On the first of December, 1881, it was in arrears in payment of the interest to the amount of $12,800, and it had also a miscellaneous indebtedness amounting to nearly $12,000, in the shape of wages due to laborers, feed bills, taxes, etc. It is said, in the plaintiff's statement, that this floating indebtedness either was, or by suitable proceedings could have been, converted into liens on the company's property which would have a priority over the bonds. This may be true as to the taxes, but no law has been pointed out to us under which the general indebtedness of a street railway company in Missouri can take precedence of a previously existing recorded mortgage of the company's property.

"Such being the state of the affairs of the plaintiff corporation, on the fifth of December, 1881, an agreement was entered into between the plaintiff, as party of the first part, Mr. Lange, as trustee and agent of the mortgage bondholders, of the second part, and Theodore Plate, of the third part, in the following language:

"`This agreement, made in triplicate this fifth day of December, 1881, by and between the South St. Louis Railway Company, a corporation duly organized and existing under the laws of the state of Missouri, party of the first part, and William C. Lange, trustee and agent of the mortgage bondholders of the said railway, party of the second part, and Theodore Plate, of the city of St. Louis and state of Missouri, party of the third part, witnesseth, that whereas, the South St. Louis Railway Company has executed and delivered its first mortgage bonds to the said William C. Lange, trustee and agent as aforesaid, to the aggregate amount of $80,000, with amount of funded and accrued interest now due thereon, — said mortgage being upon the road, roadbed, cars, horses, mules, harness, stables, and all real and personal estate, including each and every portion of the property of the said railway company, along with the franchise and right of way; and whereas, the said South St. Louis Railway Company has become and is indebted to divers and sundry persons in various sums, which said amounts are hereinafter characterized and designated as floating indebtedness; and whereas, the said railroad company is in need of additional stock and equipments to run and operate the same; and whereas, the said Theodore Plate is willing to advance and lend to the said railway company such sum or sums of money as may be necessary or required to fully equip and operate said railway, and to discharge and liquidate such portions of the floating indebtedness heretofore mentioned as the parties hereto may mutually agree upon, provided said moneys so advanced can be properly and satisfactorily secured to him; and whereas, the said railway company and said Wm. C. Lange, trustee and agent as aforesaid, are willing and desirous that said sums so to be advanced by said Plate, or hereafter to be advanced by him, in the arrangement and operating of said railway, as hereinafter set forth, shall be a first lien and obligation upon said railway and all of its property, real, personal, and mixed, including and meaning the franchise:

"`Now, therefore, it is agreed by and between said parties hereto as follows:

"`First. That said railway company, acting by its president aud secretary, under resolution of its board of directors, agree with said Plate to give and vest in him irrevocably the absolute control and management of said railway and all its property, for a period of three years from and after the date of this agreement, and to pay and compensate him for his said services at the rate of $3,000 per annum; said Plate to be vested with the absolute control and management of said road as aforesaid, including the right to dispose of and exchange the personal property thereof at any time during said period when in his judgment the best interests of the parties hereto will be subserved thereby, without the hinderance or interference of the stockholders of said railway whatsoever, or the said Wm. C. Lange, trustee and agent as aforesaid; said Plate being invested with the power, under this agreement, to employ and discharge any and all of the employes and operatives of the railway at any and all times during the said three years.

"`Second. The said Wm. C. Lange, trustee and agent of said mortgage bondholders, agrees to and with said railway company and said Plate that any and all sums of money so advanced...