Beekman v. Hudson River West Shore Ry. Co.

35 F. 3 | U.S. Circuit Court for the District of Southern New York | 1888

Lacombe, J.

1. The first ground of demurrer suggested is that this court has no jurisdiction of the subject-matter of the suit; that it is a suit in rem, to establish the lien of a mortgage, and foreclose the same; and that the mortgaged premises are wholly in territory not within the Southern district of New York. By certain acts of the legislature of New York, the jurisdiction of that state in and over the land belonging to the United States at West Point was ceded to the federal government. Ownership of and jurisdiction over such territory are both in the United States, and therefore, as demurrants contend, “those lands are wholly excluded from the territory of.the state.” By section 541 of the Revised Statutes of the United States, the state of New York is divided into three districts, the Northern and Eastern of which are described as including certain counties of said state, with the waters thereof, while the Southern district is defined as including “the residue of said state, with the waters thereof.” Hence it is contended that the government reservation, being no longer a part of the state for any purpose, is not included within such residue, and therefore is not within the Southern district of New York. The- authorities, cited in support of this proposition fall within one or other of two groups. To the first belong such decisions as that of the New York supreme court in Murdock v. Railway Co., Orange special term, December, 1885, which was a suit brought by the trustees, who are defendants here, to foreclose this very mortgage. They hold that when the state has by express statute turned over to the federal government a portion of its territory, indicating in plain language its intention no longer to claim or exercise jurisdiction therein, the inhabitants of the ceded tract thereafter neither have political nor civil rights, nor are liable to the burdens of citzenship under the laws of the state. Inasmuch as the federal constitution, art. 1, § 8, subd. 16, authorizes congress to exercise exclusive jurisdiction over such places, state statutes abandoning state jurisdiction therein are.held to have accomplished their evident intent. State jurisdiction is thereafter at an end. To this group belong Dibble v. Clapp, 31 How. Pr. 420; Com. v. Clary, 8 Mass. 72, 1 Metc. 580; Mitchell v. Tibbetts, 17 Pick. 298. To the other group belong those cases in which it is held that when congress in organizing territorial governments, or establishing the limits of jurisdiction for some particular tribunal, has expressly excepted certain lands out of such jurisdiction or government, they constitute no part of such territory'or district, although they are included within its geographical boundaries. Here again the federal statute is interpreted according to its plain intent. To this group of cases belong U. S. v. Dawson, 15 How. 467; Langford v. Monteith, 102 U. S. 145; Harkness v. Hyde, 98 U. S. 476. The question raised by the demurrer in this case, however, is controlled by none of the decisions above cited. By section 2 of the act of September 24,1789, “to establish the judicial courts of the United States,” (chapter 20, 1 St. at Large, 73,) the United States were divided “into thirteen districts, to be limited and called as follows: * * * One to consist of the state of New York, and to be called ‘ New York District,’ etc.” By this act the lands in question were undoubtedly included in the district named. What, if anything, has taken them out of it? The earliest state statute cited in the briefs of counsel ceding jurisdiction to lands at West Point is chapter 64 of 1826. Later acts are found as chapter 359 of 1875, and chapter 410 of 1876. It may be that there are earlier statutes bearing on the subject, but it is altogether improbable that any of them antedated the establishment of the military academy in 1802. These state statutes, however, are of course powerless to effect an amendment of a federal statute, under which congress has regulated the exercise of federal jurisdiction by federal courts. Such an amendment must be found, if at all, in the federal statutes themselves. In 1814 (chapter 49, 3 St. at Large, 120) the state of Now York was, “for the more convenient transaction of business in the courts of the United States,” divided into two districts, “in manner following, to-wit: The counties of Rensselaer, Albany, Schenectady, Schoharie, and Delaware, together with all that part of the said state lying south of the said above-named counties, shall compose one district, to be called the ‘ Southern District of New York;’ all the remaining part of said state shall compose another district, to be called the ‘Northern District of New York.’” In 184.8 (chapter 32, 3 St. at Large, 414) the counties of Albany, Rensselaer, Schenectady, Schoharie, and Delaware were transferred from the Southern to the Northern district. These statutes w'ere passed before the first state act of cession above cited, and when, for all that appears in this case, the lands in question were politically, as well as geographically, a part of the state of New York. Even had the cession been made before their passage, however, it could not fairly be claimed that, by an act plainly providing solely for the division of a district already provided by law with .the machinery by which federal jurisdiction was exercised in every part of it, some portion of the district so divided was deprived of the exercise of that machinery altogether. The intention of the legislature, when plainly deducible from the language used, will prevail over a mere verbal construction. Wilkinson v. Leland, 2 Pet. 627; Brown v. Barry, 3 Dall. 365; U. S. v. Freeman, 3 How. 562. It is manifest from an examination of these acts that congress, finding that the judicial machine they had provided in 1789 for the New York district was insufficient to dispose of all the cases cognizable in existing federal courts, undertook to provide additional courts to dispose of them. That in so doing they intended to bar any part of the old district out of the jurisdiction of both the original and the supplemental courts is a conclusion unwarranted by anything in the statute. The same remarks apply to the act creating the Eastern district, (Act Feb. 25, 1865; chapter 54, 13 St. at Large, 438,) and to the Revised Statutes, § 541, which, after defining the Northern and Eastern districts, describes the Southern district as including “the residue of said state, with the waters thereon.” No federal statute passed subsequent to the creation of the New York district, and accepting the cession of these lands, is cited by counsel. It appears that in 1790 (chapter 26, 1 St. at Large, 129) “the president was authorized to cause to be purchased for the use of the United States the whole or such part of that tract of land, situate in the state of New York, commonly called ‘West Point,’ as shall be by him judged requisite for the purpose of such fortifications and garrisons as may be necessary for the defense of the same.” The executive has from time to time since purchased these lands, apparently solely under this authority. To find in this act, however, sanction for the proposition contended for by the demurrants, would be to hold that the very same congress (1st Cong. 1789-1791) which created the New York district provided that the lands at West Point might at any time thereafter by mere executive action, whether congress were in session or not, be taken out of the district, and left a no-man’s- land, wholly unprovided either with state or federal 'courts. There is nothing in the phraseology of the act of 1790 to warrant such a construction. Neither is there anything in the opinion in Re Manufacturing Co., 108 U. S. 401, 2 Sup. Ct. Rep. 894, in conflict with the views above expressed. In all the instances of a shifting boundary therein referred to, there was a federal statute ratifying or approving the change. The assent of congress was given to the contract between New York and New Jersey by the. act of June 28,1843, (chapter 126, 4 St. at Large, 708.) The cession by Massachusetts to New York of the district of Boston Corner was consented to by the act of January 3, 1855, (chapter 20,10 St. at Large, 602.) The conventional boundary line between Massachusetts and Rhode Island was sanctioned by the act of February 9, 1859, (chapter 28, 11 St. at Large, 382.) Bach of these acts, when read in connection with the judiciary act of 1789, plainly imported that, when a state boundary was changed, lands theretofore assigned to one district were or were to be transferred to another. It was never pretended that any such change was effected by the mere operation of state statutes, and in the case at bar there is cited no federal statute which will bear such construction.

2. The contention of the demurrants that the pendency of the action in the state court brought by the trustees to foreclose the same mortgage is a bar to this suit is conclusively answered by a reference to Stanton v. Embrey, 93 U. S. 548; Insurance Co. v. Brune’s Assignee, 96 U. S. 588; Weaver v. Field, 16 Fed. Rep. 22.

3. The demurrants next challenge the bill upon the theory that the complainant has not a standing in court for the purposes of this suit. The mortgage contains a clause providing that in case of default for the space of four months in the payment of interest the principal shall become due, and that the trustees may, and “upon the written request of the holders of a majority in amount of * * * outstanding bonds, shall * * * within a reasonable time, being not less than four months, proceed to foreclose.the mortgage,” etc. Acting upon such request, the trustees, in December, .1884, commenced a suit in the supreme court of the state, which -was dismissed at special trial term, December, 1885, for' want of jurisdiction of the subject-matter. An appeal was taken by the trustees, and is apparently unprosccuted, and certainly undetermined. Complainant therefore requested said trustees to bring suit in this court, which they declined to do. The demurrants insist that complainant is not entitled to maintain this action unless it be shown that the trustees have refused to accede to a “written request of the holders of a majority of the bonds then outstanding.” 'Whether or not, as urged by the complainant, the bringing of a suit in a court without jurisdiction of the subject-matter is a failure to comply with the written request, need not be now considered. There is no restriction in the deed of trust upon the right of the coupon holder, without assent of a majority of the bondholders, to foreclose for interest upon default, except when advantage is sought to bo taken of that default as advancing the date when the principal becomes due. This suit may in any event he sustained for interest due, (Railroad Co. v. Fosdick, 106 U. S. 47, 1 Sup. Ct. Rep. 10;) whether it can be sustained for principal may be determined upon the trial.

4. The objection that the hill is not filed on behalf of all other bondholders similarly situated is wholly unwarranted by an inspection of its terms.

5. The next proposition advanced in defendants’ brief, namely, that the demurring defendants’ claims to the property covered by the mortgage are independent and adverse, may be true in fact, but it certainly does not appear on the face of the bill. To the Hudson River West Shore Railroad Company alone was the consent to build a railroad through the WTest Point reservation given by act of congress. The court will not take judicial notice upon argument of a demurrer that §600,000 is not enough to build such railroad,—which is apparently what the demurrants’counsel. expects it to do. For all that appears, the road was substantially completed by the two original companies, and the complainant expressly avers that a large sum of money was expended by them in connection with the properly which is averred to he covered by the mortgage. Across the West Point reservation there is now operated by the demurring defendants a railroad, which is so operated only by virtue of the act of congress-above cited. The only title to this which it is averred the New York Central & Hudson River Railroad Company has, is as lessee in possession of the defendant the West iflhore Railroad Company. The only title which it is averred the last-named defendant holds has come to It through many hands indeed, but ultimately from conveyances made by the mortgagors subsequent to the mortgage. As owner of the equity, and as lessee in possession, the demurrants are proper parties defendant.

6. The demurrants next contend that complainant has slept so long upon his rights that by reason of lapse of time and his own laches he is not entitled to relief. There is no pretense that the suit is barred by any statute of limitations. If delay for any less period than that prescribed by the statute is sought to be availed of in bar of complainant’s right to recover, the fact of such delay is a mixed question of law and fact, which should not be passed upon on demurrer.

7. It is further contended that the bonds on which complainant sues are not valid obligations, for the reason that the “pretended West Shore Hudson River Railroad Company never was a corporation.” That corporation was organized under the general railroad act (1850) of New York, “for the purpose of constructing, maintaining, and operating a railroad for the public use in the conveyance of persons and property, from a point in the boundary line between the states of New Jersey and New York on-or near the west bank of the Hudson river, extending northwardly to the village of Piermont, in Rockland county, N. Y., and intersecting with the Erie Railroad and the southern terminus of the Hudson River West Shore Railroad; also commencing at the northern terminus of the aforesaid Hudson River West Shore Railroad, as the same had been, was, or might thereafter be, located at or near the city of Newburgh, Orange county, N. Y., and extending northerly along the west bank of the said Hudson river through the counties of Orange, Ulster, Columbia, and Greene, and terminating at Athens, in said county of Greene, state of New York.”' The quotation is from the bill, and, it is contended, indicates an undertaking to build two railroads, whereas the statutes only authorize the incorporation of a company to build a railroad. As a matter of fact, the routes southerly to the state line and northerly to Athens touch the respectivo south and north termini of the route of the Hudson River West Shore Railroad Company. Whether that circumstance, taken in connection with the general power to lease and make traffic arrangements, conferred upon all railroad corporations by the act of 1839, (chapter 218,) does or does not deprive the objection of force, need not be now considered. The validity of the incorporation has never been questioned in a direct proceeding by the state, nor by those interested in the corporation. It has acted 'continuously as a corporation; as such acquired the mortgaged premises, and created the mortgage debt; as such received the proceeds of these very bonds, and put them into-the road covered by the mortgage. Objection to the validity of the corporation comes for the first time from these demurrants, the West Shore Railroad Company and the New York Central & Hudson River Railroad Company. The only claim, however, which, so far as the bill discloses, these demurrants advance to the mortgaged premises,—to the concession granted’by congress to the Hudson River West Shore Railroad Company,—is based upon the transfer by the West Shore Hudson River Railrqad Companj*' to the New York, WestShore&ChicagoRailroadonJuly21,1871. It does not lie in the mouths of these demurrants to dispute the existence of the corporation whose acts constitute their own sole source of title. If they have some independent and adverse claim, it i§ nowhere disclosed in the bill. See 2Mor. Priv. Corp. § 746 et seq.; Trust Co. v. Railway Co., 1 Railway & Corporation L. J. 50; Society Perun v. Cleveland, 43 Ohio. St. 481; Palmer v. Lawrence, 3 Sandf. 161; Williamson v. Association, 89 Ind. 389; Railway Co. v. Railroad Co., 32 N. J. Eq. 755; Church v. Pickett, 19 N. Y. 482; Whitney v. Wyman, 101 U. S. 392; Hervey v. Railway Co., 28 Fed. Rep. 169:

8. Finally, it is urged that the mortgage created no lien upon the property of the Hudson River West Shore Railroad Company. The bonds to secure which the mortgage was executed 'were, as recited in the mortgage, bonds of the West Shore Hudson River Railroad Company, issued for the purpose of enabling the latter company to acquire a lease of the road and entire property and franchises of the former, and to build, furnish, and operate its own road. The demurrants contend that a railroad company has no power to mortgage its property to secure the debt of another company. Without discussing the precise question thus raised, it is sufficient to call attention to the fact that the mortgage is a ioint one executed by both roads, and covers “ail and singular the railways of the parties of the first part hereto, constructed or hereafter to he constructed, [between the state line and Newburgh,] and also all and singular the franchises now owned, -possessed, or acquired by the said parties of the first part, or either of them, for the purpose of building, maintaining, and operating their respective lines of railway,” etc. Either prior or subsequent to the mortgage—the phraseology of the hill does not leave the date altogether certain—the Hudson River West Shore Railroad Company leased its road for the entire term of its corporate existence to the West Shore Hudson River Railroad Company, and its entire capital stock was transferred to the latter company. The right of the West Shore Hudson River Railroad Company to mortgage its own property to secure its own bonds is not disputed; and, even if the lease and transfer of stock were not made until after the mortgage, they would be covered by it as after-acquired property, unless such lease and transfer were void. That they were void these demurrants contend, hut their own title depends upon the validity of these very transfers. The concession of congress was to the Hudson River West Shore Railroad Company. Nothing is shown qualifying the title of that corporation to this concession, except the mortgage, the lease, and the transfer. The two last instruments are operativo, if at all, in favor of the West Shore Hudson River Railroad Company; and nothing is shown qualifying the title of the latter company to the property thus sought to be transferred except this mortgage, and the transfer of July 27, 1871, to the Now York, West Shore & Chicago Railroad Company, discussed under the last point, and under which the demurrants claim. They are, therefore, in no position to dispute the sufficiency of the lease and transfer of capital stock. There is no force in their argument that, if they “are to be considered as succeeding to the property and rights of the Hudson River West Shore Railroad Company, they can of course question the validity of the mortgage, if its validity could have been questioned by the corporation itself,” because the very instruments which make them successors to the property and rights of the Hudson River West Shore Railroad Company also operate to make the mortgage valid. If these rights were passed to the West Shore Hudson River Railroad Company, and thence to demur-rants’ grantor, they were covered by the mortgage, which was in existence, and operative ‘to cover after-acquired property, before the West Shore Hudson River Railroad Company passed them on.

The demurrer of the defendants the West Shore Railroad Company and the New York Central & Hudson River Railroad Company is overruled, with leave to answer.