Wade v. Chicago St Co American Loan Trust Co of New York v. Wade

• Decision Date: 10 May 1893
• Docket Number: Nos. 247 and 248,s. 247 and 248
• Citation: 149 U.S. 327,13 S.Ct. 892,37 L.Ed. 755
• Parties: WADE et al. v. CHICAGO, S. & ST. L. R. CO. et al. AMERICAN LOAN & TRUST CO. OF NEW YORK v. WADE et al
• Court: U.S. Supreme Court

149 U.S. 327

13 S.Ct. 892

37 L.Ed. 755

WADE et al.

v CHICAGO, S. & ST. L. R. CO. et al.

AMERICAN LOAN & TRUST CO. OF NEW YORK

v. WADE et al.

Nos. 247 and 248.

May 10, 1893.

F. N. Judson and Saml. P. Wheeler, for complainants.

Adrian H. Joline, for Pratt, trustee, successor to Am. L. & T. Co., intervener.

Mr. Justice JACKSON delivered the opinion of the court.

The appellants, Belle N. B. Wade and Warner M. Hopkins, testamentary trustees of the estate of Robert B. Wade, as holders of 50 first mortgage bonds of the Chicago, Springfield & St. Louis Railroad Company, on January 27, 1887, filed their bill in the United States circuit court for the southern district of Illinois for the purpose of enforcing a mortgage lien upon the property and railway of said company, extending from Springfield, Ill., to East St. Louis, Ill. The material facts of the case, as set out in the bill, and as disclosed by the record, are as follows:

The Chicago, Springfield & St. Louis Railroad Company was incorporated January 17, 1883, under the general laws of Illinois, to build and operate a proposed line of railroad from Springfield to East St. Louis, in that state. After surveying the route, and designating the same on a map filed in the office of the company, and after securing certain rights of way on the line of the road, on March 3, 1883, it entered into a contract with the Empire Construction Company, of which one Wing was president and sole stockholder, to build, finish, and equip the proposed railway of the Chicago, Springfield & St. Louis Railroad Company within a stipulated time. The contract provided as follows:

'These articles of agreement, made and entered into this third day of March, A. D. 1883, by and between the Empire Construction Company, a corporation of the state of Illinois, party of the first part, and the Chicago, Springfield & St. Louis Railroad Company, a railroad corporation of the same state, party of the second part, witnesseth:

'That for and in consideration of the covenants and payments hereinafter recited, to be made by said party of the second part, said party of the first part hereby, for itself, its successors and assigns, covenants and agrees to furnish all the material and labor necessary to construct, iron, bridge, and complete the railroad of said party of the second part, as now surveyed and designated on a map filed in the office of the party of the second part, which railroad commences at a point on the Gilman and Clinton branch of the Illinois Central Railroad at the city of Springfield, and extends, by way of Litchfield and Mount Olive, to the bridge junction at East St. Louis, Illinois, a distance of about ninety-eight (98) miles, passing through the towns of Pawnee, Litchfield, Mount Olive, Alhambra, Marine, Troy, and Collinsville, with four and one-half (4 1/2) miles of side track, (necessary to the places marked on said map for the business of the line at the time of the opening,) and to furnish the said railroad with depots, water tanks, and turnables, and to equip the same with engines and cars as hereinafter provided.

'The road and side tracks hereby agreed to be constructed are those on said map marked and specified only, and said map is hereby referred to for further particulars in this behalf; and the said road and side tracks are to be built in manner and according to the specifications and conditions following; and the bridges, depots, water tanks, turntables, engines, and cars are to be those only also hereinafter mentioned in the specifications.'

Certain specifications were made a part of the contract, but they need not be recited.

In consideration of the premises and of the undertakings of the construction company thus set forth, the railroad company agreed to pay therefor, in its negotiable bonds to be issued thereafter, the amount of $2,500,000, and $990,000 of its capital stock, fully paid and nonassessable. The bonds were to be secured by a trust deed or mortgage in proper form, and duly executed by the company, upon all its property, real or personal, owned by it, or afterwards acquired, including its franchises of every kind. The construction company, its successors or assigns, were to receive from the trustee 25 bonds, to the amount of $25,000, and eighty shares of capital stock, of the value of $8,000, as each mile of the road was constructed and completed, and on the chief engineer's certificate obtained therefor.

The contract further provided that the construction company, its successors or assigns, for the purpose of construction, should have the right to the full and free possession, use, and control of said railway, equipment, and property of the railroad company, as constructed, made, or furnished under the agreement, or otherwise obtained, together with the right to use and operate said railway in the name of the railroad company, under its franchises necessary thereto, for the transportation of persons and property, until the final and ultimate completion and acceptance of said railroad, without charge therefor by the railroad company, and, also, at its own cost, keep said railroad in good repair and condition, ordinary wear and tear excepted.

The contract further provided that, if at any time a change of the route of the said road was necessary to be made, it was agreed that the same might be done on certificate of the chief engineer, and approval of the president of the construction company, and thereupon all of the terms and conditions of the contract as to said modified route wer to be the same as agreed in respect to the route then specified on the map.

In pursuance of this contract, and under proper authority of law, by vote of the stockholders of the railroad company, its board of directors was authorized to issue bonds of the company in the sum of $2,500,000 to pay for the building of the road, and to execute to the Central Trust Company of New York a mortgage upon all the properties and franchises, which were particularly described in the mortgage as follows:

'All and singular, the several pieces or parcels of land forming the track or roadway of said railroad company from a point on the Gilman and Clinton branch of the Illinois Central railway at the city of Springfield, and extending by way of Litchfield and Mt. Olieve to the bridge junction at East St. Louis, Illinois, a distance of about ninety-eight miles, passing through the towns of Crow's Mills, Pawnee, White Oak, Litchfield, Mt. Olive, Alhambra, Nervine, Troy, and Collinsville, and being in or through the counties of Sangamon, Montgomery, Macoupin, Madison, and St. Clair, whether the same is now acquired and owned by said railroad company, or may be hereafter acquired and owned by said company; also, the railroad of said party of the first part, and any and all its branches thereof, and any and all switches, and turnouts thereof, together with all the rails, bridges, depots, stations, station houses, section houses, fences, and other structures and appurtenances thereto belonging, now owned by said railroad company, or that may hereafter be constructed, completed, finished, acquired, or owned by said company; also, all the tolls, income, issues, and profits and alienable franchises of said party of the first part, connected with its railroad, or relating thereto, including its rights and franchises as a corporation; and also, all and singular, the property of every kind hereinafter mentioned, whether now owned, or that may hereafter be acquired and owned by said railroad company; that is to say, all the rolling stock of every description, all the machine shops, car shops, and blacksmith shops, all the machinery, stationary engines, and all articles used in the construction, replacing, and repairing thereof, together with all the tools and materials, and any and all other property now owned, or hereafter to be acquired by said party of the first part.'

This mortgage was duly executed and properly recorded, near that date, in the several counties through which the railroad was located, and was to be constructed. The bonds secured thereby were 2,500 in number, of the denomination of $1,000 each, redeemable in gold May 1, 1913, with interest-bearing coupons attached, payable semiannually at the American Exchange National Bank, New York. These bonds were delivered to the trustee, to be by it delivered to the construction company in amounts of $25,000, on the certificate of the engineer of the railroad company as each mile of the road was completed, under and in accordance with the terms of the contract of the construction company with the railroad company; and, in addition to the bonds to be thus delivered, 80 shares of nonassessable stock of the railroad company, at the par value of $8,000, were to be delivered to the construction company upon the same conditions.

The construction company, under and in pursuance of this contract, commenced the construction of the railroad, and in July, or early in August, 1883, had completed two miles of the road, and thereafter, on October, 1883, received from the Central Trust Company, upon certificate of the chief engineer of that fact, 50 of the mortgage bonds.

These bonds, so received by the construction company, were deposited on November 5, 1883, by Wing, the representative of said company, with a trustee, as collateral security to secure the payment of the sum of $35,000, evidenced by the note of said Wing, and indorsed by Robert B. Wade for the accommodation of Wing and the said construction company. By the terms of the pledge of these bonds the trustee was authorized, upon the failure of Wing or the construction company, to pay said note at maturity, to sell said bonds, which sale it was agreed might be made without notice to Wing or to the construction company, and by express terms Wade was to have the same power or privilege of purchasing at said sale as any other person. Demand was made upon Wing, at the maturity of the note,...