129 N.Y.S. 730 | N.Y. App. Div. | 1911
This action, which has now been at issue for many years, involves primarily the conflicting claims of plaintiff, as trustee, and the defendant Manhattan Trust Company to certain securities pledged with both by the West India Improvement Com-pah-y. The principal issue, as to the right to the possession of the | securities, having finally been determined in plaintiff’s favor, there remains only to be considered the amount of dam
In order to adequately comprehend the questions involved in this appeal it is necessary to refer, as briefly as possible, to the facts found by this referee. On August 28, 1889, the West India Improvement Company succeeded to all the rights and took the place of one Frederick Wesson and his associates under an agreement between said Wesson and the government of the British Colony of Jamaica, embodied in a law passed by the Governor and Legislative Council of said colony, known as the “Jamaica Bailway Company’s Law, 1889.” The West India Improvement Company thereby became the “ promoter ” under said law, and as such undertook to buy an existing government railway in the inland of Jamaica and to build and equip certain extensions thereto, and to transfer both the existing railway and the extensions to a Jamaica corporation to be known as “Jamaica Bailway Company.” The improvement company was to pay to the Jamaica government for the existing railway a sum in cash and £100, 000, out of a total issue of £800,000 of the second mortgage bonds of the proposed Jamaica Bailway Company. It was to receive in return for the cash payment and for its efforts' as “promoter ” the four following items of property, viz.: 1. The remaining £100,000 of second' mortgage bonds, which were to be held, however, by the Jamaica government, as security for the performance of the “promoter’s” undertaking, and were to be transferred to said promoter only upon the completion and acceptance of all the extensions and their equipment. ' x
2. Thirty thousand pounds of the first mortgage bondsl of the new Jamaica Bailway Company. These were to be issiked to the improvement company only after the expiration of twelve months'from the date of the completion and acceptance of the extensions, and then only in case they had not been sold within that timé to defray the cost of repairs and replacements which the improvement company might be under obligation "to make.
3. The entire issue of the common stock of.the new Jairlaica Bailway Company to be delivered in installments as the work progressed. ' I
The improvement company’s right to the second mortgage bonds and to the stock was subject to forfeiture under certain conditions which did not arise and need not be considered. The stock was also subject to repudiation by a decree of court upon a petition of the Jamaica government for the winding up of the railway company. Such a decree was actually entered on April 11, 1900. The improvement company was to be reimbursed from time to time for the. expense of building the extensions out of the proceeds of the first mortgage bonds of the new railway company. In order to raise money to start work and to make the cash payment to the Jamaica government the improvement company, on September 1, 1889, executed a mortgage to plaintiff, as trustee, to secure the payment of first mortgage bonds to the amount of $1,000,000, which were duly issued and negotiated. This mortgage covered all' of the rights of the improvement company under its agreement with Wesson and tne government of Jamaica and all the property which it had acquired, or at any time in the future might acquire, thereunder, including the right to receive, under the prescribed conditions, the £100,000 of second mortgage bonds, the £30,0)00 ot first mortgage bonds, and the capital stock of the 0new Jamaica Railway Company. This mortgage also contained a clause forbidding the improvement company to sell, convey or dispose of any of the property covered by said mortgage, “without the express written assent thereto of the trustee [the plaintiff herein] evidenced by said trustee joining in every such sale, conveyance or transfer.” The improvement company proceeded with the work it had undertaken so far as to make the cash payment to the Jamaica government, and to complete the extensions it had agreed to build and on August 26, 1896, it received from the Jamaica government the £100,000 of second mortgage bonds, and the final installment of the capital stock of the new railway company. In the meantime, however, it had become largely indebted to J. P. McDonald & Co., its contractors, and to meet, in part, these obligations it' executed notes to a large amount and for their security agreed to assign, and- did undertake to assign, to the Manhattan Trust Company
On January 8, 1897, plaintiff commenced this action to establish .its superior claim to a lien upon the stock and bonds, to compel the surrender to it of the shares of the stock and the " second mortgage bonds. The cause proceeded to trial before a referee, who, on February 14, 1898, rendered a decision dismissing the complaint. Immediately afterwards, on March 1, 1898, before a judgment had been entered, the defendant Manhattan Trust. Company sold at public auction for $200,000 the capital stock and second mortgage bonds which had been delivered to.it, and whatever right the improvement company had or might have to receive the £3.0,000 of first mortgage bonds. The proceeds of this sale, after satisfying the costs and charges of the defend- . ant trust company, were applied to the payment of the. notes attempted to be secured by the pledge of the aforesaid securities. The judgment entered upon the referee’s decision was reversed by the Court of Appeals (169 N. Y. 314), which upheld the plaintiff’s prior .claim to the second mortgage bonds, leaving the question of the priority of claim to the stock to be deter- . mined upon the new trial. Upon the second trial the referee has found that thé defendant trust company did not acquire legal title either to the shares of stock or the second mortgage bonds delivered to it by the improvement company, and that plaintiff is entitled to have surrendered to it said stock and
The judgment appealed from will, therefore, be modified so as to provide that the plaintiff is entitled to recover from, the defendant Manhattan Trust Company as damages the sum of $200,000, with interest from March 1, 1898,- and the order denying plaintiff’s motion for an extra allowance will also be reversed, and the motion granted by allowing plaintiff an extra allowance of $2,000, and as so modified the judgment will be affirmed, with costs to the plaintiff..
Ingraham, P. J., Clarke, Miller: and Dowling, JJ., concurred.
Order reversed and motion for extra allowance granted,, and judgment modified as directed in opinion, and as so modified ■ affirmed, with costs to plaintiff. Settle order on notice.