St. Louis Trust Co. v. Des Moines, N. & W. Ry. Co.

• Decision Date: 18 May 1900
• Citation: 101 F. 632
• Parties: ST. LOUIS TRUST CO. v. DES MOINES, N. & W. RY. CO. et al.
• Court: U.S. District Court — Southern District of Iowa

101 F. 632

ST. LOUIS TRUST CO. v. DES MOINES, N. & W. RY. CO. et al.

United States Circuit Court, S.D. Iowa, Central Division.

May 18, 1900

Baily Ballereick & Preston, for complainant.

Cummins Hewitt & Wright, for defendants.

SHIRAS District Judge.

From the record and evidence on this case it appears that in 1893 one Thomas J. Moss, then a resident of St. Louis, Mo contracted to furnish to the Des Moines, Northern & Western Railway Company a certain number of railroad ties, and, the company having failed to pay the sum due for the ties furnished, a suit therefor was brought in this court in the name of the St. Louis Trust Company, as administrator of the estate of Thomas J. Moss, whose death occurred in August 1893, and on the 8th day of June, 1896, a judgment in the sum of $2,839.10 was rendered against the railway company. It further appears that the Des Moines, Northern & Western Railway Company was organized under the laws of Iowa, on the 14th day of December, 1891, by the consolidation of two pre-existing companies, known as the Des Moines & Northern and Des Moines & Northwestern Railway Companies, and upon the completion of its organization it executed to the Metropolitan Trust Company of New York a trust deed upon the consolidated lines of railway to secure the payment of $2,770,000 of bonds issued by the grantor railway company. The deed thus executed contained a clause providing that, if default in the payment of the interest on the bonds should occur and continue for the period of six months, then a majority of the bondholders could demand a foreclosure of the mortgage or trust deed. Default in payment of the interest having occurred, a written request, under date of August 30, 1894, was made upon the trustee by a majority of the bondholders, asking that foreclosure proceedings be instituted, and for the purpose of controlling the proceedings an agreement in writing was entered into which, among other things, provided for the appointment of three of the bondholders who were to act as a purchasing committee; it being further provided that the committee should cause to be incorporated under the laws of the state of Iowa a railway corporation competent to own and operate the line of railway covered by the trust deed proposed to be foreclosed; that at the foreclosure sale the committee, on behalf of the bondholders, should bid upon the property, and, if the committee became the purchaser, then the title of the property so purchased should be vested in the newly-created corporation, it being further provided that the latter-named company should issue and deliver to the purchasing committee its coupon bonds in an amount sufficient to cover the total sum due to the bondholders secured by the trust deed about to be foreclosed, and also to cover all sums paid out by the committee in completing the foreclosure proceedings, and should also issue and deliver to the committee capital stock in an amount equal to 50 per cent. in excess of the bonds to be issued. It was further provided that, upon receiving the bonds and stock, the purchasing committee should sell sufficient of the bonds to cover the cash outlay incurred by the committee, the remainder of the bonds being distributed among the holders of the bonds secured by the mortgage about to be foreclosed, and the stock received by the committee should be distributed among and delivered to the stockholders of the Des Moines, Northern & Western Railway Company. Shortly after this agreement was entered into, and on the 22d day of October, 1894, a bill for the foreclosure of the trust deed was filed in this court by the Metropolitan Trust Company, and an answer admitting the allegations of the bill was immediately...