State v. Ross

Decision Date24 March 1894
PartiesSTATE ex rel. MERRIAM v. ROSS, Judge, et al.
CourtMissouri Supreme Court

to sue on interest coupons, in order to injure the road and its creditors; that this would interfere with operation of the road, and impair the creditors' security; that the value of the property was such that, if handled under the orders of the court, it would pay out, — and praying the court to take possession by a receiver, enjoin interference, and operate the property for the benefit of creditors and stockholders. The defendants named were the trustees of the bonded debts. Held that, no cause of action or real controversy being alleged against anybody, the appointment of a receiver thereunder was a nullity, and collaterally assailable.

2. A bondholder's petition, for himself and all others similarly situated, to enforce the company's contract that, on default in payment of interest on the bonds, the trustee might take possession of the property, and apply the income to pay the interest, is an equitable action in rem, in which a receiver may be appointed; and, this done, the petitioner has standing to ask for prohibition against interference by another court, and by its receiver appointed without jurisdiction.

3. The prohibition cannot be contested for irregularities occurring in the exercise of the jurisdiction of the former court.

4. Nor on the ground that the bondholder brought his suit maliciously.

5. Prohibition from the supreme court is appropriate to restrain a lower court's unlawful exercise of jurisdiction over subject-matter of which jurisdiction has been properly acquired by another court, in view of the imminent possibility of physical conflict for possession between the officers of the two courts.

Barclay, Gantt, and Burgess, JJ., dissenting.

In banc.

Prohibition, on relation of E. G. Merriam, against Alexander Ross, judge of the Cape Girardeau court of common pleas, and others. Writ granted.

H. S. Priest, for relator. John W. Noble, Geo. D. Reynolds, M. R. Smith, Alexander & Green, Dickson & Smith, and R. B. Oliver, for respondents.

BRACE, J.

This is an application for a writ of prohibition. On the 3d of March, 1893, the relator, who is the holder of $76,200 of the bonds of the St. Louis, Cape Girardeau & Ft. Smith Railway Company, secured by deeds of trust on portions of the railway and other property of said company, instituted a suit in the circuit court of Stoddard county against said railway company, Leo Doyle, the trustee in said deeds of trust, and the Mercantile Trust Company of New York, trustee in other deeds of trust made by said company on its property, to recover defaulted interest on said bonds under the following provision contained in said deeds of trust: "That if the interest on any of the bonds so to be issued shall not be paid by the party of the first part when the same shall become due, and if such interest shall remain in arrears for three months, or in case the principal of said bonds, or any of them, shall not be paid at their maturity, then it shall be lawful for said party of the second part, his successor or successors in trust, on the written request of the holders of not less than one-fourth part of said bonds then outstanding, to take possession of all and singular said premises, property, and franchises so conveyed, and, as the attorney in fact or agent of the said party of the first part, by himself, his agent or agents or substitutes, duly constituted, have, use, enjoy, and operate the same, making, from time to time, all needful repairs, alterations, and additions, and, after deducting the expense of such use, repairs, alterations, and additions, and the costs and charges of such taking possession, and a reasonable compensation for the services of said trustee in such taking of possession and while in possession, which shall not exceed $1,500 per annum, apply the proceeds thereof to the payment of the principal and interest of said bonds issued hereunder remaining unpaid, and which have or may have become due, and upon the written request of the holders of at least one-fourth of said bonds issued hereunder, and then outstanding and unpaid, shall cause said premises, real and personal estate, rights and franchises, to be sold at public auction in the city of Cape Girardeau, giving at least 12 weeks' notice," etc. The petition setting forth the plaintiff's cause of action, verified by affidavit, together with certified copies of said deeds of trust, were on that day presented to the Honorable John G. Wear, judge of said circuit court, at chambers, in vacation of said court, and thereupon he made a provisional order in writing appointing Eli Klotz receiver of said railway company, directing him forthwith to take possession of said railway and restraining said company and its officers from in any manner transferring or disposing of the property, and directing the clerk of said circuit court to issue a summons or notice to said defendants returnable Monday, the 13th of March, 1893, to appear at Bloomfield, the county seat of said county, before the said circuit court, and show cause, if any they have, why the appointment of said receiver should not be confirmed. The petition, together with the exhibits and the said order, were on said 3d of March, 1893, filed in the office of the clerk of said circuit court. On the next day (March 4th) George Houck, an attorney, and a brother of Louis Houck, the president and general manager of said railway company, and the principal owner of its stock, telegraphed to the latter, advising him of the institution of said suit, and that Klotz had been appointed receiver, and the amount of bond required.

On the same day the following petition was presented to the defendant, the Honorable Alexander Ross, judge of the Cape Girardeau court of common pleas, in chambers: "In the Cape Girardeau Court of Common Pleas within and for the County of Cape Girardeau and State of Missouri. St. Louis, Cape Girardeau & Fort Smith Railway Company, Plaintiff, vs. Leo Doyle, Ed. Hidden & Mercantile Trust Company of New York, Defendants. In the Court of Common Pleas of the County of Cape Girardeau, Missouri, May Term, 1893. Your petitioner, the said St. Louis, Cape Girardeau & Fort Smith Railway Company, states that the St. Louis, Cape Girardeau & Fort Smith Railway Company was organized under the laws of the state of Missouri in 1880; that it was originally organized under the name and style of the Cape Girardeau Railway; that afterwards its name was changed to the Cape Girardeau Southwestern Railway; and that more recently the name of said railroad was changed to the St. Louis, Cape Girardeau & Fort Smith Ry. Co., under the laws of said state of Missouri. Your petitioner further states that said railroad issued $100,000 of first mortgage bonds — bonds under the name and style of Cape Girardeau Railway — on its division of road from Cape Girardeau to Delta, and that Leo Doyle is trustee in said deed of trust securing said bonds, and that said deed of trust is hereto attached and made a part of this petition. Your petitioner further states that it issued $80,000 of bonds on its line of railroad from Delta to Lakeville, a large portion of which bonds are outstanding, and that Leo Doyle is trustee of and in the deed of trust by which said bonds are secured, and said deed of trust is hereto attached and made a part of this petition. Your petitioner further states that it issued $200,000 in bonds on its line of railroad from Lakeville to the St. Francois river, and that Leo Doyle is trustee in the deed of trust by which said bonds are secured, and said deed of trust is hereto attached and made a part of this petition. Your petitioner further states that it issued $230,000 of bonds on its division of road from the St. Francois river to the main line of the Iron Mountain Railroad, and that Leo Doyle is trustee in the deed of trust by which said bonds are secured, and said deed of trust is hereto attached and made a part of this petition. Your petitioner further states that a large number of the said bonds, and a large number of the coupons of the said bonds, are still unpaid, and held by various parties to your petitioner unknown, to wit, the sum of $500,000, and that the said coupons and bonds are an underlying security upon the said property. Your petitioner further states that afterwards, in 1888, $1,000,000 of consolidated bonds were issued upon the said entire railroad of petitioner for the purpose of taking up the said underlying bonds and constructing the said railroad from the main line of the St. Louis, Iron Mountain & Southern Railroad to Hunter, a junction with the Kansas City, Fort Scott & Memphis Railroad, and that many persons to your petitioner unknown are large owners of the said bonds, to wit, the amount of $1,000,000, and the Mercantile Trust Company of New York is trustee in said bonds for the benefit of the holders thereof; and said deed of trust is hereto attached and made a part of this petition. Your petitioner further states that afterwards, to wit, in 1880, a second mortgage income bond of $150,000 was placed upon the said railroad, and that the said mortgage income bonds have been issued, and that Edward Hidden is trustee in said bonds for the benefit of the holders of the same, and that said deed of trust is hereto attached and made a part of this petition. Your petitioner further states that an Arkansas extension on bond of $850,000 is authorized on its road, and $225,000 of said bonds have been issued on said railroad, and said deed of trust is hereto attached and made a part of this petition. Your petitioner further states that the said...

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