29 F. 416 | U.S. Cir. Ct. | 1886
The impressions made at the argument that this case does not present a state of facts justifying the appointment of a receiver have not been removed by a more careful consideration of the subject upon the elaborate printed briefs which have been filed. Undoubtedly there are cases where a court of equity may take hold of mortgaged property before default in the condition of the mortgage and protect the security against impending danger from fraudulent management, but this is not one of them. It would be intolerable to extend that principle so as to transfer to a court of equity every controversy over the management of mortgaged property, or to convert those courts into the supervisors of the control of every corporation where property is pledged to secure its mortgage debts. Take one feature of this case, dependent on the question whether it he wise to construct that extension of the railroad which was in contemplation of the parties to this mortgage and the other contracts connected with it, as a simple example. That involves a matter of discretion in the judicious management of the property which properly belongs to the directors in charge of the company, and it is not the function of a court of equity to direct the exercise of that discretion upon any judgment of the court that the extension should or should not be made. The court, as to that, may be no wiser than the directors, and the complainants no wiser than either. If loss occurs to the mortgagees from unwise action in that regard, it is one of the inevitable results of the mismanagement of property by its owners, and the remedy is not, certainly, to be found in usurpations of control by the court, through a receiver or otherwise.
But it is said the management is influenced improperly by the persuasive manipulations of a rival enterprise. This is a suspicion of bad faith that may be well or ill founded, but we do not see why a court of equity should, even if it be true, assume to determine either that the extension should or should not be made through the process
It is not wonderful that creditors imagine they are entitled to such relief, nor that disappointed speculators suppose there is such a method of mitigating their losses or correcting their mistakes of contract, considering the strides that have been made in using the courts for such schemes; but the case must fall within some one of the departments of equitable jurisprudence to entitle us to entertain it, whatever we may do after we get hold of it.
On this suggestion of a defect in the bill the prayer was amended, and it now assumes the form of a bill to foreclose a mortgage upon default of payment of interest. Now, in this form, we cannot and should not proceed to rescind the contract, or to reform it, or to specifically execute it, or to substitute one board of directors for another, or to give guidance to the existing directory, 6r to transfer the management of the property to others who w'ould like to be in charge, or, indeed, to do anything concerning it—appointing a receiver in the mean time—which the plaintiff would like to have done with it. We can only look at the suit as a bill to foreclose a mortgage, and nothing else, whatever the- facts might, on a bill filed for some other purpose, justify. The difficulty of maintaining any other relief than
This requirement of the case relieves us largely of the necessity of considering the force of the allegations of the bill in respect of any other relief than that which is asked, and confines us to those which arc material to the subject of a foreclosure of the mortgage, and the determination of the dispute whether, as a fact, there has been such a breach of its conditions as entitles the plaintiff to a foreclosure. But before going to that we may say that, while we have conceded the general proposition, that a court of equity will sometimes interfere by injunction to prevent a waste or destruction of the mortgaged property before the conditions of the instrument have been broken and a right to foreclose accrued, it does not thereby result that the court will appoint a receiver to manage the property until the mortgage can bo foreclosed. That would come to the assumption of the management by the court of all mortgaged property whore there was deterioration or fear of it. But in this case it is sufficient to say that, aside from disagreements as to the best mode of managing the property, there is no substantial charge of a waste of it; the controversy about the cross-ties, like the others, being a mere suggestion as to the better management of the affairs of the company, and at most too insignificant in its character to be applicable in support of this motion for a receiver. All this character of allegations in the bill amount to protests against the management of the company under its present control, and are such as a critical business judgment might make against the management of almost any railroad enterprise,—a mere conflict of opinions as to business operations.
We come now to the question whether there has been a breach of the conditions of the mortgage, so that the plaintiff is entitled to fore
We come to this conclusion the more readily because we can see
Motion denied.