United States Trust Co. v. Wabash, St. L. & P. Ry. Co.

• Decision Date: 02 June 1890
• Citation: United States Trust Co. v. Wabash, St. L. & P. Ry. Co., 42 F. 343 (S.D. Iowa 1890)
• Parties: UNITED STATES TRUST CO. v. WABASH, ST. L. & P. RY. CO. et al.
• Court: U.S. District Court — Southern District of Iowa

42 F. 343

UNITED STATES TRUST CO. v. WABASH, ST. L. & P. RY. CO. et al.

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

June 2, 1890

Theodore Sheldon, for complainant.

H. H Trimble and H. S. Priest, for defendant.

SHIRAS J.

On the 15th day of February, 1879, the St. Louis, Kansas City &amp Northern Railway Company executed a mortgage on its line of railway, then in course of construction, between Pattensburg Mo., and Council Bluffs, Iowa.In the following November the named company was consolidated with the Wabash Railway Company, under the title of the Wabash, St. Louis & Pacific Railway Company.In June, 1880, the latter company executed a blanket mortgage covering all the property of the consolidated lines to the Central Trust Company of New York and in 1883 a further mortgage to the Mercantile Trust Company.In the spring of 1884 the consolidated company filed its bill in the circuit court of the United States for the eastern district of Missouri, at St. Louis, admitting its insolvency, and asking that receivers of the property be appointed to take charge of the property for the protection of all interested therein.To this billthe trustees in the several mortgages were made parties.On the 29th day of May, 1884, the court at St. Louis appointed Solon Humphreys and Thomas E. Tutt receivers according to the prayer of the bill, and they forthwith took possession and control of the entire property of the Wabash, St. Louis & Pacific Railway Company, including that upon the line from Pattensburg to Council Bluffs, which was known as the 'Omaha Division of the Wabash, St. Louis & Pacific System. ' In carrying on the process of disintegration necessary to settle the rights of the various mortgages holding liens upon the different lines of railway that had been consolidated to form the Wabash system, bills for the foreclosure of the mortgage executed to the United States Trust Company by the St. Louis, Kansas City & Northern Railway Company were filed in the statedistrict court of Iowa and circuit court in Missouri, which were each removed into the United States circuit courts for these districts.On the 6th day of January, 1886, the United States Trust Company, the complainant in said bills of foreclosure, applied to the United States circuit court at St. Louis for the surrender to the receiver to be appointed in the foreclosure case in Iowa, by the receivers Humphreys and Tutt, of so much of the property in their possession as was subject to the lien of the mortgage given to complainant.The court at St. Louis granted the order sought, which contained the following:

'Provided that, inasmuch as the rolling stock and equipment properly covered and conveyed by said mortgage has been used indiscriminately with the rolling stock and equipment belonging to other divisions of the railway, and inasmuch as an equitable apportionment of the rolling stock and equipment will be made as hereinafter provided, it is further ordered that for the time being, and until a final distribution and apportionment of the rolling stock is made to the said Omaha Division, Receivers Humphreys and Tutt shall permit said trustee, or its representatives, or receiver appointed as hereinafter provided, to have the use of such rolling stock and equipment in kind and amount as has been needed in the business of said Omaha Division during the three months last past.* * * It is further ordered that the matter of the division and equitable apportionment of the rolling stock and equipment between said Omaha Division and said Wabash, St. Louis & Pacific Railway Company be, and the same is hereby, submitted to the courts in which the actions brought by said trustee for the foreclosure of its said mortgage are pending for adjudication and settlement and decree.'

On March 1, 1886, Thomas McKissock was appointed receiver by this court of the line known as the 'Omaha Division,' and possession of this line was delivered to him by Messrs. Humphreys and Tutt, in accordance with the order previously made by the circuit court at St. Louis, including certain stock as contemplated in that order.

The question in dispute between the mortgagees under the blanket mortgage of June, 1880, and the mortgagees under the mortgage of February 19, 1879, as to the rolling stock covered by the latter mortgage, was brought before this court by means of a petition filed by Thomas McKissock, receiver, setting forth the order made by the circuit court at St. Louis in regard to the necessity of an apportionment of the rolling stock, averring that such apportionment had never been made, praying that an account might be taken of the rolling stock belonging to the Omaha Division, and 'that the said Wabash receivers may be ordered and decreed to deliver to your petitioner the full amount of the rolling stock and equipment covered and conveyed by the said mortgage, or its equivalent in amount and kind, as this court may determine. ' Upon the hearing on this petition a decree was entered on the 6th of October, 1887, adjudging that the mortgage of February 15, 1879, covered the rolling stock marked 'Omaha Division,' and naming certain specific cars which belonged thereto, and further authorizing the petitioner or the purchasers of the Omaha Division at the foreclosure sale, or their successors or assigns, by proceedings in equity or otherwise, to procure an adjudication as to what other rolling stock in addition to that specifically named was covered by the lien of the mortgage in question; it being further provided that nothing in the decree contained should be regarded as affecting the right of the petitioner or the purchasers of said Omaha Division, or their successors or assigns, from recovering from Humphreys and Tutt as receivers, or any person or corporation succeeding to the possession of the property held by them, a reasonable rental for the use by said receivers or those succeeding them of such rolling stock as might be adjudged to belong to the Omaha Division.The present complainant, the United States Trust Company, thereupon filed a supplemental petition, in which it prayed that it might have the benefit of the original suit and the proceedings thereunder; that an account be taken of the rolling stock belonging to the Omaha Division; that the same be ordered to be transferred to it as the trustee in the mortgage executed February 15, 1879, or to McKissock as receiver; and that said mortgage of February 15, 1879, be declared to be the first lien on such rolling stock.At the March term, 1889, of this court, on the hearing on this petition, it was held that the lien of the mortgage of February 15, 1879, attached to all the engines and cars which in fact had been purchased for the Omaha Division, and had placed thereon the proper designating marks, according to the requirements of the mortgage.See opinion reported, in 38 F. 891.In the mean time in the circuit court at St. Louis, in the original cause therein pending, there was granted a decree of foreclosure on the 6th of January, 1886.In May following, a sale was had under this decree, and the trustees in the mortgages became the purchasers, and a deed of conveyance was executed to them.In April, 1887, the property thus purchased was conveyed to the Wabash Western Company, a corporation created under the laws of the state of Missouri, and the receiver delivered up possession of the property; the said Wabash Company entering into a stipulation to be responsible for all claims existing against said receiver growing out of such receivership.On the 12th day of October, 1886, in the suit pending in this court for the foreclosure of the mortgage of February 15, 1879, a decree was rendered, and under it a sale was made, December 28, 1886; the property being bought by a purchasing committee acting on behalf of the bondholders, who subsequently organized a corporation known as the 'Omaha & St. Louis Railway Company,' and created under the laws of the state of Missouri.

Upon the filing of the opinion reported in 38 Fed.Rep., a decree was entered, which, among other things, decreed that the mortgage of February 15, 1879, was the first lien upon certain described rolling stock, formerly belonging to the Wabash, St. Louis & Pacific Railway Company, but purchased for and used upon the Omaha Division; that the said Omaha &amp St. Louis Railway Company was entitled to the possession of the remainder of said equipment belonging to said Omaha Division, and enumerated in the decree, which had not already been delivered over; it...