Las Vegas Ry. & Power Co. v. Trust Co. of St. Louis County

• Decision Date: 29 August 1910
• Parties: LAS VEGAS RY. & POWER CO. et al. v. TRUST CO. OF ST. LOUIS COUNTY.
• Court: New Mexico Supreme Court

110 P. 856

15 N.M. 634, 1910 -NMSC- 057

LAS VEGAS RY. & POWER CO. et al. v. TRUST CO. OF ST. LOUIS COUNTY.

Supreme Court of New Mexico

August 29, 1910

Appeal from District Court, San Miguel County; before Justice John R. McFie.

Suit by the Trust Company of St. Louis County against the Las Vegas Railway & Power Company and another. From a judgment for plaintiff, defendants appeal. Conditionally affirmed.

Not only is the price for which the property was sold inadequate, but there are also additional circumstances which render it inequitable to permit the sale to stand. The purchaser is conceded to be a disinterested party and purchased in good faith. The sale should be set aside and a new sale ordered therefore only upon terms.

This is a proceeding in equity brought by appellee against the Las Vegas Railway & Power Company (a corporation) and William A Buddecke to foreclose certain deeds of trust made in favor of said appellee to secure the payment of bonds of the Las Vegas Railway & Power Company to the amount of $300,000, the said deeds of trust conveying the franchise and all property, real and personal, of the appellants situated at Las Vegas, in the county of San Miguel and territory of New Mexico. The bill of complaint in said cause was filed on the 28th day of September, A. D. 1908, and service was made upon the said defendants, who appeared, but filed no answer, and afterwards a decree pro confesso was obtained and a final decree entered in said cause against them on the 5th day of December, A. D 1908, providing for the sale at public auction of all of the property mentioned and described in the several trust deeds to pay said bonds amounting to $300,000 and the interest thereon. Thereupon a special master was appointed to make the sale of said property, who thereafter gave a public notice thereof, and fixed the date of sale on Monday the 15th day of March, 1909, at the east front door of the courthouse in Las Vegas, San Miguel county, territory of New Mexico, and on said last-mentioned date all of said real estate and premises, personal property, and franchises were sold to Joseph M. Cunningham for the sum of $65,000. At the time of the sale, notice of protest against it was given by William A. Buddecke, and afterwards, on the 10th day of April, A. D. 1909, and before the confirmation of the sale, he filed said protest in writing. On the same day, there were various other protests in writing filed by various owners and holders of bonds of the said Las Vegas Railway & Power Company. Together with these protests was filed a motion to set aside and annul the sale of said property. The grounds upon which these protests were made were, in brief, that one G. W. Garrels, both before the time of the sale, and at the time of the sale, prevented competitive bidding at the said sale, and also that the price for which the said property was sold was inadequate, and did not represent its fair market value. Many affidavits, both in support of the protests and in opposition thereto, were filed, and the same were taken up for hearing by the court, and on the 15th day of April, 1909, an order was entered confirming the sale. Afterwards, on May 13, 1909, appellants filed a demurrer and motion in said cause to set aside the default and decree pro confesso, also the order of sale and all of the proceedings had thereunder, for the reason that the same was null and void, the bill of complaint not stating facts sufficient to constitute a cause of action, and that the court was thereby without jurisdiction to enter the decree herein, also alleging that the said suit was instituted in fraud of the company and its stockholders, and in fraud of the minority bondholders, and that the decree was caused to be entered in fraud of said parties. The demurrer and motion were also overruled by the court, from which ruling on said motion and demurrer an appeal was taken to this court. Such further statement of facts as is necessary for the determination of the issues is contained in the opinion.

Veeder & Veeder and W. B. & Ford W. Thompson, for appellants.

William G. Haydon and Charles A. Spiess, for appellee.

WRIGHT J. (after stating the facts as above).

The appellants assigned only two grounds of error, and in their brief discuss them in the reverse order from that in which they are assigned. An examination of the second assignment of error, and the discussion in the brief thereon, discloses the fact that the appellants rely upon the question of irregularity in the entering of the decree, and the question as to whether or not the complaint states facts sufficient to constitute a cause of action. Under this assignment of error, appellants contend that upon default being made in any case in equity, as the case at bar, that such default was tantamount to a complete denial of the plaintiff's cause of action, which required that the court take full proof of all the material allegations of the complaint before judgment could be entered thereon. An examination of the record, however, fails to disclose any proof whatever that the court did not take full and complete proofs. The appellants attempt to sustain their contention by certain inferences drawn from the trust deeds and complaint. The final decree entered herein contains the following recital: "On this day the above-entitled cause coming on before the court for trial and judgment, plaintiff being represented by William G. Haydon, its attorney, the defendants not appearing, but having made default as hereinafter shown, and the court having heard the evidence in said cause, finds." It therefore appears from the record in the case affirmatively that evidence of all of the material allegations in the complaint was heard by the court. A mere inference cannot be held to contradict a plain recital in the decree to the effect that certain things were duly and regularly done. We think, therefore, that no further discussion of this question is necessary.

A consideration of the other branch of the second assignment of error involves the direct determination of whether or not under the terms of the deed of trust sought to be foreclosed the complaint states a cause of action. The appellants contend that an examination of the deed of trust and the allegation of the complaint would disclose that the action to foreclose was prematurely brought, contending that articles 3 and 4 of the deed of trust, in order to justify the trustee in initiating proceedings to foreclose said deed of trust, required that there must have been, first, a default on the part of the railway and power company in some one of the covenants contained in said trust deed; second, a demand upon the railway and power company to cure such default, either by payment or performance; third, a continuous default for sixty days after such demand; fourth, a requisition in writing signed by the holders of a majority in value of the outstanding bonds asking for a foreclosure after such 60 days have elapsed. The appellants' contention was based upon the wording of articles 3 and 4 of the deed of trust, which reads as fellows:

"Art. 3. If the Railway and Power Company, its successors or assigns, shall at any time hereafter make default, or refuse or neglect or omit for sixty days after the same shall fall due, and be demanded to pay any half yearly installment of the interest payable upon the bond or any of them, intended to be hereby secured, or shall make default, or refuse or neglect, or omit for sixty days after they shall fall due, and be demanded to pay the principal sum of each and all of said bonds, or shall fail for sixty days after, faithfully to keep the covenants in this deed contained, to be kept and performed by the said Railway and Power Company, then, and in either such case the trustee or its successors in trust created or declared in and by this deed, personally, or by its attorney or agents may forthwith enter into and upon, and take possession and control of all and singular the real estate. *** And have, hold, and use the same, operating by its superintendents. ***

"Art. 4. In case any continuous default shall be made as provided in article three hereof, or in case the Railway and Power Company shall make default in the performance of any of the other provisions of these presents, then and in such case, if a majority in value of the outstanding bonds hereby secured, shall so elect, the whole principal of the bonds hereby secured shall thereupon be declared by the trustee to be, and shall immediately become due and payable; and it shall be lawful for the trustee, upon request in writing, signed by holders of a majority in value of said bonds then outstanding, and upon being indemnified to its satisfaction to institute proper proceedings at law or in equity to enforce the lien hereby created, or cause the said property to be taken in execution and sold under such process for the payment of the debts, principal and interest hereby secured; or, the trustee may upon like request and indemnity enter upon and take possession of all of said real estate, *** and proceed to sell the same ***" (after advertisement has been made).

The contention of the appellants is based solely upon two articles. Article 6 of the said deed of trust provides as follows: "It is hereby declared and decreed by and between the parties hereto that it shall be the duty of and it is hereby made obligatory upon the trustee, upon being requested so to do, in manner as hereinafter provided, by the holder or holders of a majority in value of the bonds at the time outstanding, and on being indemnified to its satisfaction, to take needful steps which may be requisite to protect the rights of the holders of the bonds secured hereby. [Then follows a provision as to the...