35 N.Y.S. 1 | N.Y. Sup. Ct. | 1895
On November 22 the plaintiff wrote to the Holland Trust Oo., the mortgage trustee, that he owned a majority of the bonds, and that he desired “ to ask the proper court to foreclose and sell the property; ” and asked “ what action ” the trustee would take. He added that he had attorneys familiar with the facts and ready to proceed, who would .arrange for the trustee’s protection “ in any manner that may be necessary.” This letter was not a request that the trustee foreclose, but rather the expression of a desire of the plaintiff to do so through his own attorneys. The trustee answered on the same day that before it could take any action it would have to be “ properly indemnified against costs and disbursements for bringing a suit;” that plaintiff would have to deposit his entire holdings of bonds; and that when those ■conditions were complied with it would proceed. This was a ■statement that it would bring the action upon compliance with the conditions named. The plaintiff responded next day
Nor did the failure of the trustee to foreclose for so long a, time after default of the bonds give a bondholder the right to , bring an action to foreclose on the ground of abandonment'or neglect of the trust. The relation between a mortgage trustee and the bondholders does not impose upon the trustee the duty in every case of a prompt foreclosure without any request from a bondholder. On the contrary, the relation is one principally of convenience to the bondholders, who are the real parties in interest, and the usual course is for the trustee-to await a request from them for a foreclosure. In most cases a prompt foreclosure is neither desired by the bondholders, nor desirable for their interests.
I therefore give judgment of foreclosure upon the prayer of the trustee, and not upon that of the plaintiff, and will adjust costs upon the presentation of the judgment. The court having jurisdiction of the case, and control of the trust, it is not vital upon whose motion it acts.
It remains to state how I have disposed of certain other questions, upon which depend the limits and extent of the judgment to be entered.
1: So far as the land covered by the mortgage is concerned, it is enough tó say that it embraces everything which has-become a part of it up to date.
2: So far as personal property is concerned, none will be covered by the decree, or sold thereunder, except that which existed when the mortgage was made. It purports to also cover all personal property to be acquired by the mortgagor afterwards. This is to be regarded only as an executory agreement by the mortgagor to do what is competent and necessary to give a lien upon future property as it comes into existence. It has no force against subsequent liens by attachment and execution creditors or mortgagees, unless such lien be actually effected prior to their liens. Rochester Distilling Co. v. Rasey, 142 N. Y. 570. By the sale thereof under the Wiman execution on May 31, 1892, all of the personal prop
3: The mortgage does not cover the franchise of the mortgagor corporation. It could not be mortgaged without statutory permission (Carpenter v. Black Hawk, Co., 65 N. Y. 50), and no such permission is given by the statute under which the mortgagor company was organized (Ch. 611, Laws 1875), or by any other.
4: By the common law corporations may mortgage their property at will, the same as natural persons. Barry v. Merchants' Exchange Co., 1 Sandf. Ch. 280; 2 Kent’s Com. 281. Restrictions in this respect are statutory. Section 13 of the said act of 1875 (as amended by ch. 394 of the Laws of 1888), authorized companies formed thereunder to issue bonds and to mortgage their real estate in an amount not to exceed one-half of the entire corporate property. The mortgaging of personal property is not restricted. I do not find that the total of the bonds issued, which is the amount secured by this mortgage, exceeded one-half of the corporate property ; but if it did, the mortgage would not be void either in whole or for the excess. The said section does not contemplate that, but only that the directors shall be personally liable for any damages, to bondholders or mortgage holders caused by such over issue, as it provides.
5: The said section also provides that no such mortgage
6: The @63,700 of bonds secured by the present mortgage, which were delivered to the receiver of the Electric Power Co. by Hr. Wiman must be canceled. Wiman had subscribed for 2,480 shares of the stock of the Electric Power Co. of the par value °f @248,000. By the agree- , ment of November 15th, 1892, he transferred all of the property of this mortgagor company (the Richmond Light, Heat & Power Co.), which he had purchased under his aforesaid execution sale, to the Electric Power Co., in full payment for 908 shares of his said subscription to its stock; and the said company agreed to accept the whole or any part of the @150,000 of outstanding bonds of the said mortgagor company, secured by the mortgage now being foreclosed, in payment for an equal amount still due on the said subscription for stock, and cancel the said bonds as received. In this way the property so transferred by Wiman to the said Electric Power Co. would be freed -from the lien of the said mortgage, to the extent of the bonds so delivered up for cancellation. After the receiver was appointed, Wiman delivered to him and he accepted under-said agreement 863,700 of such bonds. It was to the advantage of his trust that the receiver should receive them. By receiving them he reduced the lien of the mortgage that much, according to the agreement, and that is all the advantage the agreement entitles him to. There is no principle of law or equity upon which he may now hold them uncanceled, and share under them in the proceeds of the foreclosure.
Ordered accordingly.