68 F. 263 | 6th Cir. | 1895
after stating the case, delivered tbe opinion of the court.
The first ground pressed on us by appellant’s counsel for reversing the decree of the circuit court is that there was no jurisdiction to enter it. The contention is — First, that the circuit court had no-power to entertain and grant relief on the bill of Knox and Jesup, because the parties to it had not the necessary diverse citizenship; and, second, that no power existed to bring in Compton, because, he being a citizen of the District of Columbia, his presence as a party would destroy the necessary diversity of citizenship, even if it before existed. It must be conceded that the circuit court had no jurisdiction to hear and determine the controversies presented by the Knox and Jesup bill, on the ground of diverse citizenship of the parties, for it did not exist. The jurisdiction was assumed on a very different ground. When the bill was filed in the court below, the property which it was thereby sought to sell on foreclosure was in the possession of receivers appointed by that court in a previous litigation instituted to foreclose mortgages junior to the Knox and Jesup mortgage, and to sell the roa.d to pay all junior liens and floating indebtedness. It is true, the litigation had proceeded to foreclosure sale and final decree; but for some reason, not plainly disclosed, the court refused to deliver possession to the purchasers, and retained it in the custody of the court for the purpose of protecting the interests of all the parties to the original litigation. Knox and Jesup wished to foreclose their mortgage, to marshal all liens, to sell the road at the highest price, to preserve the road and its income from waste by the appointment of a receiver. It is manifest that no other court than that in which the receivers then in possession had been appoirited could grant such relief. Whether other courts could decree foreclosure and marshal liens, or not, certainly no other court could take possession of and sell the road, and deliver an unclouded title to a purchaser. If Knox and Jesup could not file their bill in the court below, then the act of that court in maintaining possession of the mortgaged property through its receivers would result in great injustice to them, and would constitute an abuse of its process. To prevent this, the court below had inherent ancillary jurisdiction, pending its possession of the railroad, to hear and determine all petitions for relief presented to it in respect of the possession and control of the road. It is of no importance that the custody of the railroad was likely soon to be changed from the court to the intending purchaser under the previous foreclosure proceedings, at which time any tribunal of competent jurisdiction could give all the relief prayed by Knox and Jesup. Their mortgage was then due. They were not obliged to await the uncertain delays of other litigation before taking steps to assert their rights. They therefore properly appealed to the court below, as the only tribunal which could do so, to give them adequate relief at once; and this was properly accorded to them, without regard to the citizenship of the
Now, it frequently happens that under the process of the federal courts, exercising the original and lawful jurisdiction conferred expressly by the federal constitution and statutes, possession is taken and control exercised over property in which persons not indispensable parties to the suit have an interest, by lien, mortgage, and in other ways. In such cases there often is no diversity of citizenship between such persons and the plaintiff or defendant to the suit which would warrant the federal court in hearing an independent suit between them. But it may be essential, to preserve intact, their rights in the property, that such third persons should be permitted, at once, to have specific relief, which can only be granted by a court having possession and control of the property. And yet, in accordance with the principle already stated, no court but the federal court can exercise possession and control over the property in its custody. Of
.“The parties did no more than wliat they could have been compelled to do by the injunction of the latter [that is, the federal court], and what would have been done by such compulsory order, if they had not submitted to it by agreement.”
In Krippendorf v. Hyde, 110 U. S. 276, 4 Sup. Ct. 27, a marshal, on mesne process issuing out of the federal court, attached property, as the property of the defendant, in the possession of another, who claimed to own it. It was held that this other, although a citizen of the same state as the defendant, might seek redress in the federal court, either by a petition pro interesse suo, or by ancillary bill, or by summary motion, according to circumstances. In this case Mr. Justice Matthews reviews the decision and language of Mr. Justice Nelson in the case of Freeman v. Howe, and, speaking for the court, fully approves the same. He said:
“It has been sometimes said .that this statement was obiter dictum, and not to be treated as the law of the case; but it was, in point of fact, a substantial part of the argument in support of the judgment, and, on consideration, we feel bound to confirm it, in substance, as logically necessary to it. For if we affirm, as that decision • does, the exclusive right of the circuit court in such a case to maintain the custody of property, seized and held under its process by its officers, and thus to take from owners wrongfully deprived of possession the ordinary means of redress by suits for restitu-*281 lion in state courts, where any one may sue. without regard to citizenship, it; is hut common justice to furnish them with an equal and adequate remedy in the court itself which maintains control of the property; and as this may not he done by original suits, on account of the nature of the jurisdiction, as limited by differences of citizenship, it can only be accomplished-by the exercise of the inherent and equitable powers of the court in ancillary and dependent proceedings incidental to the cause in which the property is held, so as to give to the claimant from whose possession it has been taken the opportunity to assert and enforce his rigid..”
In Gumbel v. Pitkin, 124 U. S. 132, 8 Sup. Ct. 379, a United States marshal, by invalid process issued from a federal court, took possession of property. A sheriff sought to levy on the property by virtue of a lawful attachment for a state court, and left it with the. marshal as garnishee. Subsequently the marshal sold the property miler a valid process coming to his hands after the sheriff’s attempt at garnishment. It was held that the plaintiff in the state attachment proceedings might intervene in the federal court, and be awarded the priority to which he would have been entitled had the sheriff been permitted to make an actual levy under his writ. Said Mr. Justice Matthews, in summing up the conclusion of the court:
“The case, therefore, stands thus: For the reasons growing out of the peculiar relation between federal and state courts exercising co-ordinate jurisdiction over the stunt! territory, the circuit court acquired the exclusive jurisdiction (o dispose of Uto property brought into its custody tinder color of its authority, although by illegal means, and to decide ail questions of eonJiieling right thereto. The plaintiff in error, having pursued his remedy by action against his debtor in the stale court, to which alone, by reason of citizenship, he could resort, attempted the levy of his writ' of attachment upon the goods in the possession of the marshal. Not being- allowed to withdraw from the marshal the actual possession of the property sought io be attached, he served upon the marshal notice of his writ as garnishee. Not being able by this process to subject the marshal to answer personally to the srate court, he made himself a party to the proceedings in the circuit court, by its leave, and proceeded in that tribunal against its- officer and the creditors for whom he had acted. On a regular trial it appeared as a fact that at the time of the notice the marshal was in possession of the property wrongfully, as an officer, and therefore chargeable as an individual. It was competent for the circuit court, and, having the power, it was its duty, to hold the marshal liable as garnishee; and having in its custody the fund arising from the sale of tlie property, and all the parties interesxecl in it before it, that court was bound to do complete justice between all the parties, on the footing of these rights, and give to the plaintiff in error the priority over all other creditors to which, by virtue of his proceedings, and as prayed for in his petition of intervention, he was entitled.”
The case most like the ease at bar is that of Morgan’s L. & T. Railroad & Steamship Co. v. Texas Cent. Ry. Co., 137 U. S. 171, 11 Sup. Ct. 61. In this suit the complainant company, a citizen of Louisiana, filed a bill in a circuit court of the United States silting in Texas against the Texas Central Railway Company, a citizen of Texas, against the Farmers’ Loan & Trust Company, a citizen of New York, and the Metropolitan Trust Company, a citizen of Yew York, seeking to have certain debts owing by the Texas Central Railway Company to it declared a lien on the railroad of the railway company, prior* in right to mortgages upon the same road held by the other
“It may be that, so far as it sought the further aid of the court beyond the purposes of defense to the original bill, it was not a pure cross bill, but that is immaterial. The subject-matter was the same, although the complainant in the cross bill asserted rights, to the property different from those allowed to it in the original bill, and claimed an affirmative decree upon those rights. A complete determination of the matters already in litigation could not have been obtained,' except through a cross bill, and different relief from that prayed in the original bill would necessarily be sought. * * * And whether this bill be regarded as a pure cross bill, as an, original bill in the nature of a cross bill, or as an original bill, there is no error calling for the disturbance of the decree because the court proceeded upon it in connection with the other pleadings. The Jurisdiction of the circuit court did not depend upon the citizenship of the parties, but on the subject-matter in litigation. The property was in the actual possession of that court, and this drew to it the right to decide upon the conflicting claims to its ultimate possession and control.”
The clause in the foregoing which we have italicized shows clearly that the ancillary jurisdiction of the federal court growing out of its possession of property may be invoked by original bill as well as by intervening petition. ■
. Other cases to the same point are Trust Co. v. Bridges, 6 C. O. A. 539, 57 Fed. 753; Conwell v. Canal Co., 4 Biss. 195, Fed. Cas. No. 3,148; Carey v. Railway Co., 52 Fed: 671.
The bill of Knox and Jesup was therefore cognizable by the court belo.w, as ancillary to the litigation in which the mortgage of the Central Trust Company and Cheney, trustees, was foreclosed. That, it will be remembered, was a consolidation of the insolvency bill filed by the Wabash, St. Louis & Pacific Railway Company against the Central Trust Company and others, and of the foreclosure bills of the Central Trust Company removed from the state court. Some claim is made that the federal court had no jurisdiction to entertain the insolvency bill, because such a proceeding was without precedent. Whether precedents in equity practice and jurisprudence justified the bill was for the decision of the court in which the bill was filed. It cannot be reviewed in this proceeding, which, while dependent on that, and ancillary to it, is collateral to it, in so far as to-prevent an examination of the correctness of the orders and decrees made in it. Railroad Co. v. Humphreys, 145 U. S. 82, 12 Sup. Ct. 787; Mellen v. Iron Works, 131 U. S. 352, 9 Sup. Ct. 781. The jurisdictional fact upon which the right of the court below to hear and determine the cause of action presented by Knox and Jesup’s bill rested was the pending possession by that court’s receivers of
It is further objected that the court below had no power to lake possession of the railroad property by its receivers in 1884, pending the suit of Compton, in the common pleas court, to subject the property to the payment of his liens. The argument is that Compton’s suit was in the nature of a proceeding in rem, which impounded the property, and excluded anv other court from assuming actual possession of 'it. Heidritter v. Oil-Cloth Co., 112 U. S. 294, 5 Sup. Ct. 135, is cited in support, of this proposition. That was an ejectment suit. The plaintiff claimed under a sheriff’s deed executed to a purchaser at a judicial sale by order of a state court, in a proceeding to enforce a mechanic’s lien against the premises in controversy. The defendant claimed under a marshal’s deed executed to the purchaser at a judicial sale by order of a federal court, in a proceeding, under the internal revenue laws, to forfeit the premises because used for illegal distilling. When claims for the mechanics’ liens were filed, and suits were brought to enforce the same, in accordance with the TSrew Jersey statute, the premises were in the actual custody of the United States marshal, who had taken possession under process of attachment issued on an information to enforce a. forfeiture, which resulted subsequently in a sale, and the deed under which defendant claimed. The sale under the proceedings in the state court took place a few days after that by the United States marshal. It was held that proceedings begun in the state court in the nature of proceedings in rem to subject the premises to sale were ineffectual to confer any legal title on a purchaser, if at the time they were begun the property was in the actual custody of the federal court for the purpose of a judicial sale by the latter court. It was not decided, however, that the proceedings in the state court might not be valid to establish the lien. The holding was expressly limited to the point that a deed under the state proceeding vested no legal title, as against the title conferred by the court first having actual custody of the property. It was the actual custody of the premises in the federal court which excluded the right of another court to entertain jurisdiction .of a proceeding to subject the property thus removed from its control and disposition to a sale for the purpose of vesting a title superior to that which might be conferred by the federal comí:. Mere constructive possession would not have been enough to exclude possession by another court. In a conflict of jurisdictions, it is manifest that there can be no constructive possession by one court, where it cannot take actual possession, but it by no means follows that the 'Constructive possession of one court will exclude the actual taking possession by another. For this reason, even if the proceeding in
We come now to the objection that, even if the jurisdiction of the bill be conceded, the court had no power to bring Compton before it. The argument is that the right of the federal court to grant relief to persons claiming an interest in property in its custody, without regard to their citizenship, is founded on its duty to prevent an abuse of its process to the prejudice of strangers to the suit, and is dependent on the wish of such strangers to secure that relief, expressed in an affirmative and voluntary appeal for the aid of the court, and that no power exists in the court to compel such a stranger to come into court, against his will, simply because he claims an interest in the property impounded, if his citizenship would prevent the issue of such process against him in the- original suit. L'et it be conceded, for the purpose of the argument, that the distinction made is a sound one. It does not help Compton. He was not brought into court to prevent prejudice to him by the federal court’s possession of the res. He was brought into court to prevent prejudice to Knox and Jesup, who, otherwise having no right to invoke the action of the federal court, did so on the ground that its possession of the res prevented their getting full and adequate relief in the state tribunals, and who were therefore entitled to bring into the case every one whose presence as a party was necessary to give them such relief. They had the right to have the railroad sold free from all liens, so that the purchaser should have an unclouded title, and this could not be done without Compton’s presence. Compton was not a resident of .the district in which the court’s ordinary process ran, and he could not be brought in by subpoena. Knox and Jesup’s bill was, however, a proceeding against property in the jurisdiction of the court. It was competent for congress, in such a case, to provide for constructive service, which would bind the person against whom it issued to the extent only of the res which lay within the territorial jurisdiction of the court. Pennoyer v. Keff, 95 U. S. 714; Heidritter v. Oil-Cloth Co., 112 U. S. 294, 300, 301, 5 Sup. Ct. 135. Statutory provision of this kind is found in section 8 of the act of March 3, 1875 (18 Stat. 470), which was not repealed by the jurisdiction act of March 3, 1887 (24 Stat. 552), or of August 13, 1888 (25 Stat. 433), and is still in force. It provides:
“That when in any suit, commenced in any circuit court of the United States, to enforce any legal or equitable lien upqn or claim to, or to remove any incumbrance or lien or cloud upon the title to real or personal property within the district where such suit is brought, one or more of the defendants therein shall not be an inhabitant of or found within, the said district, or shall not voluntarily appear thereto, it shall be lawful for the court to malee an order directing such absent defendant or defendants to appear, plead, answer, or demur, by a day certain to be designated which order shall be served on such absent defendant or defendants, if. practica-*285 tile, ■wherever round, and also upon the person or persons in possession or charge of said property, i£ any there he; or -where sueli personal service ui>ou such absent defendant or defendants is not practicable, such order shall be published in such manner as the conrt may direct, not less Than once a -week for six consecutive weeks; and in case such absent defendant shall not appear, plead, answer or demur within the time so limited, or within some further time to be allowed by the court, in its discreiion, and upon proof of the service or publication of said order, and of tlu> ’performance of the directions contained in the same, it shall be lawful for the court to entertain jurisdiction and proceed to the hearing and adjudication of such suit in the same manner as if such absent defendant had been served with process within the said district; but said adjudication shall, as regards said absent defendant or defendants without appearance, affect only the property which shall have been tlie subject of the suit and under the jurisdiction of the court therein, within such district”
The meaning of this statute is not doubtful. It applies to every suit of tlie kind mentioned in the section provided, only, the circuit court of the United ¡states in which the proceeding is taken has otherwise jurisdiction of it. Whether it be a suit arising under the laws and constitution of the United States, or a suit to which the United Slides is a party, or a suit in which there is a controversy between citizens of different states, or a suit like the one.at bar, of which the circuit court has jurisdiction indispensable and ancillary to its original jurisdiction, if it also satisfies the description of the statute, the process therein provided is available. The case of Brigham v. Luddington, 12 Blatchf. 237, Fed. Cas. No. 1,874, has nothing in it to conflict with this conclusion. In that ease, Circuit Judge Woodruff refused to make an order for substituted process against the owner of the property, because he was a, citizen of the same slate as the complainant, and Ms presence as a party would oust the jurisdiction of the court. The bill was an original one, and the jurisdiction could only rest on diverse citizenship. In the suit at: bar, Compton’s presence as party defendant would not oust (he jurisdiction of the court, because, as already shown, it is not dependent on diverse citizenship. The circuit court had jurisdiction of the cause otherwise than by virtue of the section above quoted. The suit was brought to enforce a legal and equitable lien on real estate lying in the district, and to remove the cloud of Compton’s lien from the title of the purchaser at: the foreclosure sale. Compton was therefore properly brought into court by the substituted or constructive process provided in the section above quoted. Farmers’ Loan & Trust Co. v. Houston & T. C. Ry. Co., 44 Fed. 115; Greeley v. Lowe, 155 U. S. 58, 15 Sup. Ct. 24.
Having disposed of the jurisdictional objections to the demíe below, we now come to consider the merits of the case. We fully concur with the court below in its holding that the decree in the Tyson or Ham suit in Indiana, did not bind Compton, or prevent his pursuing bis remedy in the court of Ohio, if he chose to do so. The bill in the Tysen suit only made parties to it those equipment bondholders who chose to come in and contribute to the expenses of it. Compton did not: do either. The Ham decree was no bar to Compton's prosecuting the Ohio decree in Ms favor, for the reasons which
“First, because he was not a party to that proceeding, and did not appear therein; second, because the Ham suit was not, in its inception, or at the time Compton commenced his action in the state court, such a class suit, or so representative in its character, as to bind him without his being or becoming an actual party thereto (Pom. Rem. & Rem. Rights [2d Ed.] 396-399); and, third, because, if the Ham suit had been so representative in its character as that the decree of the supreme court therein could or would have concluded said Compton on the question of the lien of the equipment bonds, neither the pendency of said suit, nor the decree of the supreme court was ever interposed by the defendants to his suit in the state courts, either by way of abatement, or in bar thereof, although ample time and opportunity so to do was afforded them. Grant v. Ludlow, 8 Ohio St. 1; Matthews v. Davis, 39 Ohio St. 55; Dimock v. Copper Co., 117 U. S. 560, 6 Sup. Ct. 855.”
We come next to the question Avhetlier the Ohio divisional mortgages cover the Toledo terminal property. The facts appear in the statement of the case at length. The propositions of Compton’s counsel are as follows: First. No property can be included in an after-acquired property clause in a railroad mortgage, except that which is acquired by the mortgagor or its successor in title by virtue of the franchises under which the mortgagor issued the mortgage. Second. The Toledo terminals were acquired by the Toledo & Wabash Railway Company, which, being a consolidated company of Ohio and Indiana, took them under new franchises, received directly from the state, and not under old franchises, received by assignment from its predecessors in title to the railroad. Therefore the terminals are not included in the after-acquired property clauses of mortgages executed by such predecessors. The extent of the property included in the grant of a mortgage by a railroad company depends on two questions: First, what property had it the power to mortgage? and, second, what property did it intend to mortgage? Section 3287 of the Revised Statutes of Ohio, in force at the time of the issuance of the divisional mortgages, permitted railroad companies of Ohio to issue bonds and notes, and to secure them by a pledge of their property and income. It was held by the supreme court of Ohio that the power to mortgage, property and income included power to mortgage after-acquired real and personal property. “The pledge is to bé all the property and income. The income intended must have been the future income, and was to be produced by property in possession, and to be acquired. If the future product can be conveyed, why not that by which it is credited?” Coe v. Railroad Co., 10 Ohio St. 372-393; Pennock v. Coe, 23 How. 117. We have no doubt that under these two decisions a railroad company authorized by its charter to build and operate a railroad between two named points would have the .power to mortgage its road then built, or to be built by itself or by any successor in title to the same railroad, whether exercising the mortgagor’s franchises, or similar franchises granted by the same sovereign. What is mortgaged is the property, and all accretions to the property possible within the limitations of the then charter; and it does not seem to
The question remains, therefore, what did the mortgagors intend to mortgage? Did they intend to limit the effect of the after-acquired property clauses to that which was acquired under their own franchises, or did they intend to make the clauses cover every addition and accession to the same railroad which they were constructing and operating, whether that railroad passed into the hands of a new company, with new franchises, or continued in operation under the then franchises? There can be no doubt of the intention of the parties upon this point. It was the road of the two mortgagor companies. made and to be made together, with tin; necessary depot grounds and depot buildings, erected and to be erected. What was ihe road? It was the road running from Toledo to the west line of Paulding county. No question can be made of its identity. It is not disputed that the Toledo terminal property here in question is a proper part of (his railroad which the original Toledo & Illinois Railroad Company and its successors in title had full charter powers to build and operate. It was obviously the intention of each of the mortgagor companies that whatever was added to the railroad at each of the terminal points named for use as part of it should be embraced by the mortgage. Every person or company acquiring the railroad thus described, or any interest in it, from the mortgagor companies, took title sxibject to the mortgages thus construed, and, in making additions or accessions within the terms of the mortgage, was estopped by privity of title with the mortgagor companies
We next come to the form of relief to which Compton’s decree entitled him in the court below. Whether the decree established in his favor an indivisible lien on the railroad extending from Toledo to the Illinois state line, or a lien on the Ohio Division only, it is certain that it was junior to the Ohio divisional mortgages, and also to the Indiana divisional mortgages, if it extended to Indiana. As Compton was properly made a party to the action of foreclosure by the divisional mortgagees, a sale in such a proceeding would ordinarily pass to the purchaser a title clear from Compton’s lien, which Avould be transferred to the proceeds of sale, and would be satisfied out of what should remain after the satisfaction of the prior divisional mortgages. If the amount realized by the sale was not sufficient to pay the prior mortgages, Compton’s lien would entitle him to nothing, but the railroad in the hands of the purchaser would nevertheless be forever discharged from its incumbrance. The record discloses that the amount realized at the sale from the Ohio Division
“And the defendant James Compton haying in open court, on the final hearing, objected to the rendering or entry of any decree in this canse at this time, on the ground that the issues raised by the amendment to the complainant’s amended and supplemental ancillary bill, and to the cross bill of the cross complainants Solon Humphreys and Daniel A. Lindley, trustees, and the answers of the defendant James Compton, to be filed herein, have not been tried and determined, the court overruled such objection; and the defendant James Compton duly excepts to such ruling, and the entry of this decree. But it is adjudged and deweed in the premises that the rendering and entry of this decree in advance of the trial and determination, of such issues is upon and subject to the following conditions. ”
Express language could hardly be plainer than the implication from the foregoing italicized words that the clause about to follow was intended by the court to be a means of relieving Compton from the great disadvantage to which an early sale would subject him. In this light is the saving clause to.be construed. The court said, in effect, to the mortgagees pressing for a sale, “the sale will be ordered, but as a condition, and for the purpose of preventing injustice to Compton, its effect shall be limited.” Shortly stated, the first paragraph of the condition provides that if Compton’s Ohio supreme court decree, and the lien therein adjudicated in his favor, are found to be in full force and effect, then, within 10 days from the decree in his favor, the purchaser or his successor in title shall pay the full amount of the lien, and “in default of such payment this court shall resume possession of the property covered and affected by the said lien of the defendant James Compton, and enforce such decree as it may render herein in his favor by resale of such property, or otherwise, as this court may direct.” If this paragraph stood alone, it might well mean that the purchaser should take the property burdened with the Compton lien, if adjudged valid as a first lien, and that," in default of his paying it, the property should be sold again to satisfy it, — in this way giving it precedence over even prior mortgages. But the second paragraph clarifies the meaning of the first, and shows that the resale, if ordered, was to be a sale like the first, the proceeds of which would be applied to the mortgage and liens in the order of their priority. It provides, first, that, notwithstanding the sale, Compton’s lien shall proceed to a decree which shall bind the purchaser at the sale in respect of any property affected by the lien. It provides, second, that nothing in the decree of sale shall be construed to be an adjudication against Compton, or “to prejudice, annul, or abridge any right, claim, or interest, or lien which the said James Compton may have in, to, or upon the premises hereby directed to be sold, or any part thereof, or in, to, or upon any property whatsoever embraced in this decree; it being the intention to hereby preserve the rights of said Compton in the relation in which he now stands towards the mortgagees, parties hereto.” The purpose which
It is suggested for the first time in this court that the saving clause was not intended to prevent the transfer of Compton’s lien from the property to the proceeds of sale, but that it was inserted merely to give the court power, in case Compton’s lien should subsequently be held valid, to compel any purchaser who hadpaidhisbidin bonds secured by subsequent and junior mortgages, as permitted by the decree, to replace the same with cash sufficient to pay Compton’s lien, if the amount of the bid was large enough to leave a balance for application to that lien after satisfying prior mortgages. The decree for sale was approved by Judges Jackson and Gresham at Chicago, though it was formally signed by Judge Brown in the court below. Those judges certainly understood that Compton’s lien remained on the property after the sale, and was not transferred to the proceeds, because otherwise they would have had. n& power to decree redemption in Compton’s favor, as they subsequently did. The provision in the decree permitting payment of bids in bonds, at the option of the purchaser, was wholly inadequate as a reason for the insertion of so elaborate a saving clause. The provision was that there should be paid in cash, of the price at which the property should sell, in addition to an amount required as a deposit at the time of the sale, such further sum as the court might thereafter direct. “The remainder of such purchase price may be paid either in cash or in bonds, with overdue coupons thereto appertaining, at such proportion or value as the holders thereof would be entitled to receive thereon in case the purchase price were paid by the purchasers in cash.” If the saving clause had been inserted in the decree to prevent injustice to Compton from this provision, it is impossible to explain why language was not used especially referring to the bond provision, and directing a substitution of cash for bonds by the purchaser. More than this, the purchaser was not obliged to pay in bonds. He was at liberty to pay cash, and yet the saving clause applies to every purchaser, whether he pays in cash or in bonds. Every purchaser was required to pay Compton’s lien, or give up possession of the property to the court for a resale, or other remedy. If its purpose was as stated, why was not an exception introduced in favor of purchasers paying in cash? Take another instance, and the one which did occur, namely, that the bid should be paid partly by cash, and partly by first mortgage bonds conceded to be prior in right to Compton’s lien. Compton, if remitted to the proceeds, could not
Thus far, in this opinion, I have been expressing the views of the entire court. We are agreed that the saving clause of the decree secured to Oompton the same right to enforce his lien as if he had not been a party to the proceedings. Judge LURTON' and I are not able to agree upon the remedy which (his construction of the saving clause of the decree should secure to Oompton. Judge BÍOKS thinks that the questions upon which Judge LURTON and X differ are of sufficient importance and difficulty to require that they shall be certified to the supreme court, and therefore expresses no opinion upon them. In this conclusion the differing judges concur, and the questions will be certified. As it may be of some assistance to the supreme court to know the grounds of our difference, I now proceed to state my own views:
How may Compton enforce his lien in the court below? By resale of the Ohio Division, or by redemption of it, or by a redemption of the railroad from Toledo to the Illinois line, as decreed by the court below? These questions must be considered in three aspects: First, with respect to the rights of those who were parties to the Ohio decree; and, second, with respect to the rights of the Ohio divisional mortgagees; and, third, with respect to the rights of the Indiana divisional mortgagees. By virtue of the sale the assignee of the purchaser the Wabash Railroad Company acquired the rights of the Wabash, St. Louis & Pacific Railroad Company, and the mortgage rights of all the mortgagees whose mortgages were foreclosed in the
As against those who were parties to the Ohio decree, Compton had the right to a sale of the Ohio property subject to the Ohio divisional mortgages. This was the relief accorded to him by the Ohio decree. I do not think they can be heard to object, after that decree, to Compton’s working out his remedies against the Ohio Division. It is pressed upon us that to allow Compton to divide up the railroad, against which he has an indivisible lien, is most inequitable, and that no court of equity should lend its aid to accomplish such a result. The power of this court to withhold such relief, though secured by the Ohio decree, is asserted on the principle laid down in Lawrence Manuf’g Co. v. Janesville Cotton Mills, 138 U. S. 554, 11 Sup. Ct. 402, that, where the aid of a court of equity is invoked to enforce or “piece out” (as the phrase is) an incomplete decree of another or the same court, the court appealed to may examine the justice of the decree sought to be enforced, and refuse its aid, if it finds the decree inequitable, or may impose, as a condition of its granting relief, any variation or limitation with respect to the operation of the decree which justice and equity may require. The decision in the case cited seems to be rested chiefly on the fact that the previous decree therein sought to be enforced was a decree entered by consent of parties, and not by the adjudication of a court. But, conceding the soundness of the general principle, it has application only to bills in equity to carry a former decree into execution, where no ordinary process on such former decree will serve, because of the neglect of the parties to proceed on the decree promptly, and the embarrassment of their rights caused by subsequent events. Daniell, Ch. Prac. (4th Ed.) 1585. It is only the defendant in the new suit who can call the former decree in question. The plaintiff never can. Id. 1586; Robinson v. Robinson, 2 Ves. Sr. 225. The court exercises the power because the plaintiff is voluntarily seeking aid for a decree, and so it may impose its own conditions in granting it. But such a doctrine, it seems to me, has no application to a case like that of Compton, who was brought into the court below against his will, and compelled to set up his lien, and required to work out his rights in this jurisdiction on penalty of losing them. Under such circumstances, he is certainly entitled to rely on the full measure of his rights, as then defined and adjudged by the decree of a court, in enforcing which he did not voluntarily seek the court below to aid him, and which he would not have set up in the court below until required to do so on pain of forfeiting every benefit it secured him. Added to this, the mode by which the court below acquired jurisdiction of Compton and his claim suggestsreasons-of peculiar force for not abridging in the slightest degree the rights adjudged to be his in the Ohio decree. The jurisdiction, as already explained, is ancillary and unusual. It rests — -First, on the necessity for avoiding conflicts between courts for possession and control of property; and, second, on the duty of courts to prevent an abuse of their process. When jurisdiction is thus assumed by federal courts over controversies
It is next objected that the Ohio decree is not binding on the parlies to it with reference to the appropriation of the Ohio Division to the payment of the equipment bonds, because in this respect the decree was not responsive to the issue raised between the parties. It is true that a. decree or judgment is only res judicata in so far as it is responsive to the issues tendered by the pleadings, or to the matters which, by the record, appear to have been actually controverted. Reynolds v. Stockton, 140 U. S. 254, 11 Sup. Ct. 773. The Ohio decree is uot open to this objection. The question at issue between the parties to the decree in the supreme court of Ohio was — First, whether Compton had a lien upon the property of the Toledo & Wabash Railroad Company, reaching from Toledo to the Illinois state line; and, secondly, how it could be enforced. The supreme court held that he had such a lien, and directed the Ohio property to be sold for its enforcement. The prayer of Compton was for (lie enforcement of his lien by the sale of the whole railroad. If he asked for a sale of the whole property, the court had the right to enforce in his favor that remedy, or any remedy less than that which it thought just and proper. It was therefore within ifs jurisdiction, as invoked by Compton’s prayer, to take so much of the property on which it declared the lien to exist as, in equity, it thought it had the right to take. It took that over which it had territorial jurisdiction. See opinion of court in 45 Ohio St. 592, 623, 16 N. E. 110, and 18 N. E. 380. Whether it erred in this, neither the court below nor this court is vested with the power to decide. It is true That the record does not show that any formal issue was made with reference to the amount of property to be sold to pay the lien, but
“In considering tbe operation of this judgment, it should he home in mjnd, as stated by counsel, that there is a difference between the effect of a judgment as a bar or estoppel against the prosecution of a second action upon the same claim or demand, and its effect as an estoppel in another action between the same parties upon a different claim, or cause of action. In the former case the judgment, if rendered upon the merits, constitutes an absolute bar to a subsequent action. It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand; but as to any other admissible matter which might have been offered for that purpose.- Thus, for example, a judgment rendered upon a promissory note is conclusive as to the validity of the instrument and the amount due upon it, although it be subsequently alleged that perfect defenses actually existed, of which no proof was offered, such as forgery, want of consideration, or payment. If such defenses were not presented in the action, and established by competent evidence, the subsequent allegation of their existence is of no legal consequence. The judgment is as conclusive, so far as future proceedings at law are concerned, as though the defenses never existed.”
Tbe same principle is laid, down in many cases. Stout v. Lye, 103 U. S. 66; Dimock v. Copper Co., 117 U. S. 559, 6 Sup. Ct. 855.
It is further suggested that the order of sale against the Ohio property was mere process to carry out the decree, and was not an adjudication which, when the decree is pleaded in another court, can be used to secure the same remedy afforded in the Ohio court. Such a contention is untenable. The decree for sale was the operative part. It was the court’s act. All previous to that was mere declaration or finding, upon which the justice of the court’s act was founded. It was within the power of the court to compel a sale of the entire line affected by the lien. So far as the Indiana property was concerned, it might have enforced a sale by compelling the defendant company to convey to the purchaser at its judicial sale. Instead of doing this, it ordered a sale of the Ohio property alone. This required judicial action. In Hill v. Bank, 97 U. S. 450, a trustee under a power of sale sold real estate.separate from water power and paper-mill machinery. A bill was filed by the debtor to set the sale aside. This was done on the ground that the realty, the water power, and paper-mill machinery should be sold as an entirety, and the sale was set aside. Thereupon a bill was filed against the debtor to enforce the payment of the amount in default, and the court below
“The decree upon tlie i>oints in issue, and decided, is as binding upon the parties as a judgment or decree would bo in any other case.”
It is manifest from Shis case Unit the question how large a part of the property involved shall ho sold to pay a lien is as clearly the subject of res judicata, as the decision of any other right. The amount of the property to he sold under a decree in equity is one of the essential adjudications of the court, and is conclusive on the parties. In Railroad Co. v. Swasey, 23 Wall. 405, the question was whether a decree was final, or not, so as to permit an appeal. The action was to subject stock pledged to secure bonds to the payment of unpaid interest; and the court entered the decree appealed from, declaring that the stock must be sold for the purpose, and referring to a master the question what proportion of the stock was equitably applicable. Chief Justice Waite said (page 409):
“An appeal may be taken from a decree of foreclosure and sale when the Eights of the parties have all been settled, and nothing remains to be done by the court but to make the sale, and pa.y out the proceeds. This has long been settled. The sale is the execution of the decree. By means of it the rights of the parties, as settled, are enforced. But to justify such a sale, -without consent. the amount due upon the debt must be determined, and the property to be sold ascertained and defined. Until this is done the rights of the parties are not all settled. Pinal process for the collection of money cannot issue until the amount to be paid or collected by the process, if not paid, has been adjudged. So, too, process for the sale of specific property cannot issue until the property to be sold has been judicially identified. Such adjudications require the action of the court. A reference to a master to ascertain and report the facts is not sufficient A master’s report settles no rights. Its office is io present the case to the court in such a manner that intelligent action may bo there had, and it is this action by the court, not the report, that finally determines the rights of the parties.”
In Winter v. Eckert, 93 N. Y. 367, in a suit to settle up a partnership, a judgment had been entered directing the sale of partnership properly, consisting of the stock and good will of a brewery business, horses and wagons, etc., by public auction, at public auction rooms. The sale was made in accordance with the judgment, and the sale was conhrmed. The order confirming the sale was appealed from, but not the judgment ordering it. In affirming the action of the court below, the court of appeals rested its decision on the binding effect of the provisions of the judgment with reference to the mode of conducting the sale. Ruger, C. J., said:
“This judgment remains in full force as a binding adjudication upon all parties to the action, and conclusively determines, as between them, not only the necessity and propriety of, but the place and manner of, a sale of the property, including the conjunctive sale of the real and personal property therein described at a place where the presence of the personal property on such sale was entirely impracticable.”
It therefore follows that as against the Wabash, St. Louis & Pacific Railway Company, the defendant company below, the successor in title of the mortgagors in the various mortgages foreclosed
It remains to consider, therefore, whether a resale can be decreed as against the Ohio divisional mortgagees. They were not parties to the Ohio decree, and are therefore not bound by it. The ordinary equitable rule is that the junior mortgagee cannot compel the sale of the premises free from the lien of the senior mortgage, against the consent of the senior mortgagee, but that his only remedy is to redeem the senior mortgage. It has been urged upon us, however, that in Ohio, by statute and decision, it has become a rule of property that a junior mortgagee of real estate need not redeem a senior mortgage, but may bring an action for foreclosure, make the senior mortgagee party, sell the premises free of all liens, and compel the senior mortgagee to look to the proceeds of sale for the payment of his debt. Stewart v. Johnson, 30 Ohio St. 24; section 5316, Rev. St. Ohio. Even if we concede that this rule has application to the foreclosure of railroads, and to liens other than mortgages, though the statute in terms applies to mortgages on real estate only, nevertheless I think that the peculiar circumstances of this case require that we shall not order a resale. Compton’s lien, as it was decreed by the supreme court of Ohio, arose from the merger, by consolidation, of the Toledo & Wabash Railway Company in the Toledo, Wabash & Western Railway Company. The same Ohio decree declared a lien in favor of the holders of all the remaining equipment bonds not held by Compton, and the same reasoning would establish a lien in favor of every unpaid creditor of the constituent railroad company. These liens are of equal priority with Compton’s, and depend on the same act of the original creditor. They can be equitably satisfied only by dividing the benefit of the security ratably between them. Justice both to others interested in the property, and to the co-lienholders themselves, would seem to require that all the co-lienholders should be parties to an action
Though, for the reasons given, I do not; think Compton may have a resale of the Ohio Division, it seems clear to me that he may redeem it by paying to the purchaser, the Wabash Railroad Company, the amount due on the Ohio divisional mortgages. As against all the parties to his Ohio suit,hemayexercisethisright,becauseitwasincident
A second ground most forcibly stated for denying the right of Compton to redeem the Ohio divisional mortgages without also redeeming the Indiana mortgages is based on a theory of suretyship. It is said that each company which acquired title to the road by assuming the mortgage obligations became, with reference to the debt under the divisional mortgages, the principal debtor, and, there being no novation of the debts, the grantor corporation remained bound as surety; that the succeeding corporation having promised to pay all the mortgages, as the consideration for the purchase;, ihe grantor corporation had the right to object to a partial discharge of this obligation, and to insist, as surety, that after default the right of redemption could not be exercised, except by a redemption of all the mortgages, payment of which in a single promise had been assumed as a consideration for the purchase. In this wise it is said the Ohio divisional mortgages and the Indiana
But it is said that the same theory, upon which a lien attached in favor of the equipment bonds held by Compton, secured to the Indiana divisional bondholders a similar lien on the entire property of the Toledo & Wabash Railway Company, the constituent of the Toledo, Wabash & Western Railway Company, and therefore that the Indiana, mortgagees have the right to object to a division of their security which covers the entire road. There are several reasons why this objection is untenable:
First. It was not by virtue of the sale in the court below that the purchaser-became the equitable assignee of. the rights of the Indiana bondholders under their mortgage and otherwise, and therefore he cannot represent them on this appeal. In the suit in the court below, the Farmers’ Trust Company and James F. Joy were parties in a trust capacity, - representing, not the Indiana bondholders, but the bondholders under the Ohio mortgages. Under the averments of the bills and cross bills, they were not proper parties to the Ohio suit, because, by virtue of the mortgages, they had no interest in the Ohio property. It is true that, by an error of his counsel in the court below, Joy filed in the court below the same answer as he did in the Indiana suit for the Indiana bondholders; but the error was a palpable one, and the subsequent act of the court, as well as the averments of the bills py which he was made a party below, show that he was only a party as trustee for the Ohio bondholders. It is true that an omnibus decree in the same language was entered in each of the three federal courts of Northern Ohio, Indiana, and Southern Illinois, but it was only operative in each court to foreclose and adjudicate liens on the property of the defendant company within the territorial jurisdiction of that court. No attempt was made by decree to compel conveyances from the mortgagor company to the purchaser of property lying outside the territorial jurisdiction of the court. That a court has the power, when it has personal jurisdiction over the mortgagor, to foreclose the mortgage on property lying outside of its territorial jurisdiction, is plain, and is fully established by the case of Muller v. Dows, 94 U. S. 444, but it must exercise this power by a decree against the person compelling the mortgagor to convey the equity of redemption. Otherwise the decree is inoperative. Carpenter v. Strange, 141 U. S. 87, 106, 11 Sup. Ct. 960. No such decree was
Second. But suppose that it be admitted that the Indiana mortgagees were parties to the suit in the court below, and that the decree for sale did operate to foreclose their mortgages, so that the purchaser became by the sale the equitable assignee of those mortgages. It still does not follow that the purchaser may assert a different lien from, that secured by the mortgage, and arising from an entirely different state of facts, extraneous to the mortgage. The purchaser at the sale below became the equitable assignee of every mortgage or other lien set up. and foreclosed by the decree for sale. Brobst v. Brock, 10 Wall. 519; Childs v. Childs, 10 Ohio St. 339; Stark v. Brown, 12 Wis. 638, 652; Johnson v. Sandhoff, 30 Minn. 197, 14 N. W. 889; Brewer v. Nash, 16 R. I. 462, 17 Atl. 857. The rule is generally applied in cases where,- for some reason, the sale is ineffective to carry the whole title to the property. The
“The grounds of decision are not very fully developed in these cases, but it seems to us that the true ground is this: That while, ordinarily, a stranger to the estate, who voluntarily pays off a mortgage thereon, is not entitled to subrogation to the rights of the mortgagee, a purchaser at the mortgagee’s sale, even when the sale is void, is not to be regarded as a mere stranger; but that having bid off the estate, in good faith, on the invitation of the mortgagee to do so, when, supposing his bid to have been effectual to invest him with the equitable or executory title, he pays the amount of his bid, and the same is applied to the mortgage debt, he has a most persuasive equity to be subrogated to at least the rights of the mortgagee who invited his confidence. In such a case the court does simply what the mortgagee would be bound to do himself, if he could, when it treats the purchaser as the assignee of the mortgagee.”
The sole basis for giving effect to such an equitable assignment of liens in favor of a purchaser disappears in a case where a lien, though it exists in favor of a party, is neither set up in the pleadings, nor, by the terms of the decree, foreclosed. Of course, the purchase money paid could not be applied to the payment of such a lien, and in no way could the assignment by estoppel be worked out. It is true that if a party defendant, after being required by prayer of complainant to set up such lien as he claimed, failed to do so, he might be thereafter barred from ever again seeking to enforce it. Hefner v. Insurance Co., 123 U. S. 747, 8 Sup. Ct. 337. But this is quite a different result from a transfer to the purchaser of a right to assert affirmatively such a lien against a third person not a party to the suit. In the one case, the lienholder waives his lien; in the other, when he claims part of the purchase money he enforces it. The waiver is not more to the advantage of the purchaser than of every one else interested in the property. By sharing or claiming a share in the proceeds of sale, he does that which ought, in equity, to work an assignment of his lien to the purchaser who pays the purchase price. In the case at bar the mortgages of the Indiana mortgagees, of course, passed by equitable assignment in the Indiana suit to the purchaser, because they were there set up and foreclosed, and the purchase money was distributed to both of them. But those mortgagees never set up any lien on the Ohio property by virtue of the consolidation. If they had any such lien, they waived it, and the lien is as if it never was. The waiver is as much in Compton’s behalf as in that of the purchaser. It is too late, therefore, for either the purchaser or the Indiana mortgagees, if they are to be considered parties to this appeal, to base on such a lien an objection to Compton’s remedy against the Ohio Division for the enforcement of his lien.
Third. But, even if the Indiana mortgagees were present at the bar, they could present no valid objection to Compton’s redemption of the Ohio Division. As already explained, the lien which inured to them and to Compton by the merger of the Toledo & Wabash Railway Company in the Toledo, Wabash & Western Railway Company was a lien on the separate and separable equities of redemption
Fourth. The Indiana mortgagees have a mortgage lien on the Indiana, Division, which they do not waive, but have enforced, and propose to use as a defense against all comers. This is prior to their lien for the same debt on the Ohio and Indiana Divisions we are now considering. If the' Indiana 1 )ivision should sell for enough to pay the mortgage debt, then they could have no subsequent interest in how Compton should enforce his lien. If it should not, and (here should be a, deficiency, then there would be nothing left out of which to enforce their junior lien for the deficiency, except the Ohio Division. How can they, then, object to Compton’s resort to the Ohio Division to enforce his lien, when that is all they propose to leave him by foreclosing their prior mortgage on the Indiana Division? Purely, they cannot prevent Compton from pursuing the only part left of the common security which they themselves divide by appropriation of the other part under a prior mortgage.
For these reasons, I think the suggestion that the Indiana mortgagees, or their alleged assignee, the purchaser, may object to this redemption without including the Indiana mortgages, has no weight. In my opinion, the decree of the court below should be modified so as to secure to Compton the right to redeem the Ohio Division alone from the purchaser of the Wabash Railroad Company by paying to ir the amount due on the two Ohio divisional mortgages.
Finally, it Is insisted that it is in conflict with public policy to permit a redemption of part of a consolidated and continuous line of railway. The decree of the court below permitted such a redemption for the consolidated railway extended from Toledo to Hf. Louis, and redemption was decreed of the road from Toledo to the Illinois state line. Hut it is said that this was because there was a separate lien on the road from Toledo to the Illinois line. That is true, and the same thing is true here. The divisional mortgages divide the line, by reason of their terms, and every succeeding company which embraced the Ohio Division in its line took subject to those mortgages. The only company which had any interest in the continuity of the line upon which an objection to a redemption of part could be based was The Wabash, St. Louis & Pacific Railway Company, and it is prevented from urging such an objection by the (dúo decree. Clearly, the divisional mortgagees, whose rights depend on the very division of which complaint is made, and who are to be paid in full, have no interest, to preserve the continuity of the line. The decree of sale below provided for a separate sale of the Ohio Division, and had Compton been assured of the validity of his lien, as it was subsequently declared, and tin» decree had contained no saving clause, he could certainly have bid in the Ohio Division alone, by offering a sum exceeding the amount of the Ohio divisional mortgage's. Why, then, can he now he prevented from doing what'is substantially the equivalent of such, a purchase?
It remains to inquire how the amount to he paid in redemption of the two divisional mortgages shall he estimated. Of course, the
The last point to be noticed in this long discussion of a troublesome and complicated, case is that presented by the motion to dismiss on the ground that the same decree as that appealed from was entered in Indiana, and was not appealed from. This is said to estop appellant from proceeding here. The question in the Indiana case was what remedy Compton could have for the enforcement of his lien against the Indiana property, not the lien against the Ohio property. The prayer in the Indiana court was confined to Indiana property as the prayer in the Ohio court was confined to Ohio property. Obviously, tibe question whether, under that decree, Compton could appropriate the Ohio Division to pay his lien was very different from the point which he made in the Indiana suit, namely, that by virtue of the decree, and otherwise, he could appropriate the Indiana Division alone to the payment of his lien. The validity of Compton’s lien was upheld in each court. The question was as to the remedy. Certainly, a decree of an Ohio court which directed the sale of Ohio property to satisfy a lien would not be conclusive, in an Indiana court, of the right of the same plaintiff, under Indiana law, to appropriate Indiana property to the satisfaction of the same lien. It follows that as the points decided in the two cases were not the same, and as the subject-matter was not the same, the decree in the one court does not work an estoppel in the other to prevent an appeal.
Judge 'LÜUTON and I differ upon the following questions, which will be eeriified to the supreme court on the statement of facts set forth at the beginning of this opinion: First. Had Compton the right, under the saving clause of the decree for sale, to a decree for the redemption of the Ohio Division only? Second. In fixing the amount to be paid in redemption, is he entitled to have the principal and interest of the mortgages to he redeemed reduced by the net earnings received by the purchaser? Third. Is,the decree of the circuit court of the United States for the district of Indiana between the same parties, and unappealed from, res judicata upon the foregoing questions in this court? It is ordered that all proceedings of the cause be stayed until the instructions of the supreme court upon these questions shall be received by this court.
The contention of Compton that the paragraph reserving his rights should be construed so as to entitle him' to an absolute decree against the purchaser for the amount due him under his Ohio decree, when it was determined that he had a lien, and regardless of its rank, is not founded in reason or justice. Such a construction would operate to prefer his claim over all others, without regard to the place and rank of the other lienors. What the court meant to do was to leave Compton’s claim undetermined by the decree of foreclosure, and to reserve power and jurisdiction over the purchaser to enforce his lien by appropriate remedy, under all the facts, if it should be found that he had one. This view is made manifest by the concluding sentence of the'paragraph, which says, “It being the intention to hereby preserve the rights of said Compton in the relation in which he now stands towards the mortgagees, parties hereto.”
To attribute to this decree a determination that Compton’s lien, if he had one, should override all others, and entitle him to an absolute decree against the purchaser, would not be a preservation of the relation in which he stood to other lienors, some of whom were asserting priority over Compton, but to destroy that relation, and settle the rank of his lien, without a hearing upon that question. Such a clause should be interpreted in the light of the whole record preceding it, and of the other portions of the decree of which it was a part, and of the issues which might arise upon Compton’s claim, for he had not then answered. Read in this light, the court adjudged nothing affecting Compton. The fact of a lien, and the rank thereof, was left undetermined. I was at first strongly inclined to the opinion that the effect of the whole decree was to sell the entire railroad, free from all liens, including Compton’s, and that his lien, like all others, was transferred to the proceeds of sale. Inasmuch as the foreclosure decree provided for the payment of the purchase money chiefly in bonds and coupons secured under the several mortgages foreclosed, it was essential to the preservation of Compton’s rights in the fund that there should be reserved a right to require the purchaser to pay off Compton’s lien, if the rank of his lien was found to be such as to entitle him to payment out of the fund, and in advance of securities which had been paid in by the purchaser. I still think there is much room for this interpretation of the decree, in view of its language, and of the strenuous effort made by all the prior and subsequent mortgagees to offer the property free from all liens and incumbrances. This construction would operate to defeat any recovery by Compton, inasmuch as the two divisions covered by his lien did not sell for a sum sufficient to pay off the prior liens. . I have come, however, to an appreciation of the injustice which this construction would do him. He was placed at some disadvantage by a sale in advance of the determination of his rank, the place of all others being fixed and known. This consideration, in the light of other parts of the decree lending support to the idea of a sale subject to any lien which Compton might successfully maintain, persuades me to adopt the view taken by the circuit court, — that his lien was not foreclosed,
1. If we are right in the agreement that the decree reserving Compton’s lien from foreclosure, and his rights for future determination, leaves all questions concerning the validity, extent, and character of his lien, and all questions touching the remedy for the enforcement of his lien, as completely open as if he had never been a party to the foreclosure proceedings, then it must follow that his attitude now is that of a complainant. Neither should the court be moved to enlarge the remedy to wMch he would otherwise be limited by reason of the fact that he was made a defendant in the foreclosure suits, and that he came in unwillingly. He was not enjoined from enforcing a sale under his state decree, and might have proceeded with his sale, although made a defendant to the general foreclosure proceedings. Why did he elect to abandon the remedy the Ohio court had awarded him? The answer is obvious. So many obstacles had arisen, both pending his suit and after his decree, that his remedy by sale had become practically unavailable. Pending his suit the United States courts had taken possession of the entire line of railroad, of which the Ohio Division was but a part, first under the general insolvency bill filed by the Wabash, St. Louis & Pacific Company v. Central Trust Company and others, and finally under an extension of that receiversMp to the foreclosure suits out of which this controversy arose.
The pendency of Ms suit was no obstacle to the institution of these subsequent foreclosure proceedings, and none to the seizure of the property by the courts in which they were begun. If he had not been made a party to these subsequent foreclosure suits, and had proceeded with his sale under his decree, the purchaser would have been' obliged to have intervened in order to have obtained possession, or to have waited until the receivers were discharged, and then, by an independent suit with the purchaser under the federal foreclosure decree, had Ms right and title determined. In either case, as the owner of a mere equity of redemption obtained under a foreclosure decree, to which senior mortgagees were not parties, he could have obtained no relief except through redemption of the prior liens. No injury was done him by making him a party to the subsequent suits, in which it was sought to sell the property free from all liens, and to marshal the assets according to priorities.
2. In the determination of the question as to whether Compton may redeem the Ohio Division without also redeeming the Indiana mortgages, the remedy awarded him by the Ohio court should have no conclusive effect whatever. In permitting him to sell so much of the road as was within the state of Ohio, subject to the senior liens thereon, the court did not adjudge him to have a separable lien on the Ohio Division, and another on' tire Indiana property. It merely awarded him’a sale as at law, under execution. Because the court limited the sale awarded to the property within its jurisdiction, it is not to he inferred that it thereby adjudged that Compton had one lien embracing two separable equities of redemption. No question as to whether, under his lien, he could redeem separately, was submitted, involved, or decided. The remedy awarded .appears to me to pertain to process, and not to be within the principle of res
“This was an action commenced in the court of common pleas of Lucas county by James Compton, asking that certain bonds, of which he claimed to be the owner, with the unpaid interest coupons thereon, should bo declared a lien upon so much of the road of the Wabash, St. Louis & Pacific Railway Company as formerly belonged to the Toledo & Wabash Railway Company, by whom the bonds had been issued, and for the finding of the amount due him thereon, and an order of sale of so much of its road as is within the jurisdiction of the court, subject to certain admitted prior liens, unless the amount found due him should be paid by the Wabash, St. Louis & Pacific Company in a short time, to be named, and for other relief.” Compton v. Railroad Co., 45 Ohio St 592, 16 N. E. 110, and 18 N. E. 380.
The only other reference to a remedy in the course of a very lengthy opinion is found near its conclusion, the court simply saying:
“The plaintiff is entitled to a finding of the amount due on the bonds held by him, and an order for the sale of so much of the road as is within the jurisdiction of the court.”
I am utterly unable to agree that the limitation upon the order of sale to so much of the road as was within the state is an adjudication conclusive upon all the parties to that suit “that he has a lien which may be enforced against the Ohio Division alone, without regard to his remedy against the Indiana Division,” “and that he may redeem it by paying to the purchaser, the Wabásh, St. Louis & Pacific Railway Company, the amount due on the Ohio divisional mortgages.” This conclusion that, because he was permitted to sell the Ohio Division separately, therefore he may redeem it separately, seems to me utterly unsupported by the premises; yet Judge TAFT seems to rest it upon the assumption “that, against all the parties to his Ohio suit, he may exercise this right, because it was incident to the relief granted in the Ohio decree.”
3. But, if it be assumed that a right to separately sell the Ohio Division is within the estoppel of that decree, as to the parties, it is not incumbent on a court of equity, when a complainant applies to it for relief upon an ineffective decree, -which cannot be enforced without further equitable aid, to extend him any assistance, unless he will d'o equity. In the determination of what relief he is entitled to, the court cannot escape a consideration of his rights with reference to the mortgages senior to his lien, as well as his rights in relation to the other titles, rights, and equities united in the purchaser from whom redemption is sought. If his decree is ineffective, for want of means to execute it; if the remedy awarded him by his decree is insufficient, and incapable of practical enforcement, —then the court will look into his decree, even as to its merits, and'
4. Among ihe matters which the court should take cognizance of when Compton asks to be allowed a, separate redemption of the Ohio property, is an inquiry as to his right to redeem at all, for want of proper parties. The lien which lie asseris is not one for his exclusive benefit. All of the unpaid creditors of the Toledo & Wabash Railway Company are equally entitled to share in the security which lie is undertaking to appropriate to the satisfaction of his own claims. The Ohio decree made no disposition of the proceeds to arise from the sale awarded him, but directed that the proceeds should lie paid into court, and held subject to further orders to he made on ihe footing of the decree. The decree itself only declared the lien. The lien is the creature of statute, and arose upon the consummation of the consolidation of 1865, by force of the statute, and Ms decree adds nothing to its efficiency, aside from the finding that lie was a creditor. Compton’s Olvio suit ought to have been a suit for the equal benefit of all entitled to share in the benefits of the lien asserted. It was not. Ilis present suit should have been a suit for the benefit of the whole class, and so brought as to quiet the title of the present owner of the property. It is not. His decree amounts to nothing more than a declaration of a valid and
5. There are other objections which are peculiarly applicable when a complainant seeks relief through equitable redemption. The senior mortgages upon the Indiana and Ohio Divisions operated to vest in the mortgagees the legal title, subject to divestiture upon payment of the debts secured within the time limited by the contract. The failure to pay on the pay day made the title at law absolute. There was no statutory right of redemption, and no redemption or buying back was admissible,' except through application to a court of equity. Chancery courts, to relieve against the forfeiture which at law was absolute, have created an equitable right of redemption, which it allows upon equitable principles, and subject to the equitable maxim that “he who seeks equity must do equity.” Of course, a court of chancery does not, through this maxim, obtain authority to impose arbitráry conditions, not warranted by settled principles of equity jurisprudence. The boundaries within which it may be applied are well defined by Mr. Pome-roy, who says:
“The meaning is that whatever be the nature of the controversy between two definite parties, and whatever be the nature of the remedy demanded, the court will not confer its equitable relief upon the party seeking its inter*317 position and aid, unless lie has acknowledged and conceded, or will admit and provide for, all the equitable rights, claims, and demands justly belonging to the adversary party, and growing out of, or necessarily involved in, the subject-matter of the controversy. It says, in effect, that the court will give the plaintiff the relief to which he is entitled only upon condition that he has given, or consents to give, the defendant such corresponding rights as ho also may be entitled to in respect of the subject-matter of the suit.” Pom. Eq. Jur. § 385.
The first objection which has been' urged to a partial redemption grows out of the relation of principal and surety which exists between the Toledo, Wabash & Western Railway Company and the Toledo & Wabash Railway Company. In November, 1858, the Ohio and Indiana mortgagor companies consolidated their properties, and were merged into a new consolidated company, entitled the Toledo & Wabash Railway Company, -which new company subsequently issued the bonds called “Equipment Bonds,” of which Compton holds 150. The result of this consolidation is very tersely stated by Mr. Justice Gray, when considering the effect of this very consolidation, who said the result was a new corporation, “which took their places, succeeded to their property, and assumed their liabilities.” Railway Co. v. Ham, 114 U. S. 595, 5 Sup. Ct. 1081; Shields v. Ohio, 95 U. S. 319; Compton v. Railroad Co., 45 Ohio St. 623, 16 N. E. 110, and 18 N. E. 380.
The Ohio consolidation statute, under which the successive consolidations occurred, was passed April 10, 1856, and expressly pro vided that:
“All debts, liabilities and duties of either of said companies shall henceforth attach to said new corporation and be enforced against it to the same extent as if said debts, liabilities and duties had been contracted by it.”
The Indiana act of February 23, 1853, authorized the consolidation of railroad companies which might connect at the state line with a road of another state constructed to the state line, “upon such terms as may he by them mutually agreed upon in accordance with the laws of the adjoining state with whose road or roads connections are thus formed.” 1 Gavin & H. St. 526. The consolidation agreement, among other things, provided:
“That the said consolidated company shall assume, and be liable for, all outstanding bonds, indebtedness, and other liabilities of each of the parties to this agreement; and all mortgages given by either of the parties shall be as valid and binding upon the whole of the road, real estate, fixtures, and personal properly which may be described In such mortgage as though the same had been originally executed by such consolidated corporation.”
The undoubted and undisputed effect of this consolidation was that the Toledo, Wabash & Western Railway Company became -obligated to pay off and discharge each one of the four mortgage debts which existed at the date of this consolidation, in 1858. Its liability was not merely that of one buying property subject to an existing incumbrance, for it personally assumed, and by the statute became personally liable for, the entire indebtedness of its constituent companies. This much is expressly decided by the Ham Case and the Compton Case, heretofore cited. Precisely (he same liability was imposed upon each of the successor consolidated com
The successive assumptions of these prior mortgage debts did not operate to release or discharge the liability of the original mortgage debtors, or that of any obligor by assumption precedent to the last consolidation. The original mortgage debtors, and each succeeding obligor, were liable to the creditors as joint and several principals, and for deficiency in value of mortgaged property the creditors might have judgment against any or all who were thus liable as principals. The Ohio statute authorizing consolidations for the purpose of preserving the rights of creditors, provided that “the respective corporations may be deemed to be in existence to preserve the same.” “A purchaser who assumes the mortgage becomes, as to the mortgagor, the principal debtor, and the mortgagor a surety; but the mortgagee, unless he has assented to such an arrangement, may treat both as principal debtors, and may have a personal decree- against both. The mere assignment by the mortgagor of his interest in the mortgaged premises to a third person, who agrees to pay off the mortgaged debt, does not release the mortgagor. There is no novation, unless there is something to show that the mortgagee has released the mortgagor, and has agreed to look solely to the purchaser for payment of the mortgage debt.” Jones, Mortg. § 741; Shepherd v. May, 115 U. S. 510, 6 Sup. Ct. 119; Burr v. Beers, 24 N. Y. 178; Ellis v. Johnson, 96 Ind. 377; Insurance Co. v. Hanford, 27 Fed. 588. As between the mortgagor and his successor in the title, who assumes the payment of the debts charged thereon by prior lien and the mortgagee, the land is the primary fund for the payment of the debt. Wells v. Tucker, 57 Vt. 223; Jones, Mortg. §§ 678a, 740-743; Bank v. Thayer, 136 Mass. 459. Thus, the property which the Toledo, Wabash & Western Railway Company acquired by consolidation of the constituent companies was, as between those companies and their mortgage creditors, the primary fund for the discharge of the mortgage debts. If mortgage creditors release this property without the consent of the original debtor companies, it thereby discharges them, to the extent of the value of the security thus abandoned. Paine v. Jones, 14 Hun, 577; Remsen v. Beekman, 25 N. Y. 552; Bowne v. Lynde, 91 N. Y. 92.
This light of the surety companies to have the property which became a primary fund applied in exoneration of their relations as sureties for the new consolidated company is not a right which can be affected or waived by any successor company which occupied the relation of principal towards such surety. The surety entitled to such exoneration might waive it, and so could the creditor; but, as we have seen, a creditor would thereby release the obligation of the surety, to the extent of the value of the property released. This principle has no application, as a consequence of the original con--
First mortgage bonds.$3,400,000
Second “ “ ..2,.‘500,000
iiquipment bonds.-. (500,000
It provided that all its rights, franchises, property, debts, and ehoses in action should vest in the consolidated company, and that the consolidated company should "protect" all of its indebtedness as it should fall due. Thus, the Toledo, Wabash & Western Railway Company assumed the relation of principal obligor, as to all the debts and obligations of its constituents, the Toledo & Wabash Railway Company. The latter company continued bound to the creditor, but, as between it and the Toledo, Wabash & Western, it was a mere surety. Out of this relation originates the right of the Toledo & Wabash Railway Company to object to partial redemption, — a redemption by which (he Ohio Division, which is worth more than the mortgage debts secured specifically thereon, may be redeemed separately, leaving the Indiana mortgage debts unpaid and inadequately secured, to the extent: of 81.3(10,000, as demonstrated by the bids on that division under the foreclosure decree. Such a redemption would leave; the Toledo & Wabash Railway Company liable on the Indiana bonds to the extent of this deficiency. It would have the right to insist that the whole of its property conveyed to the Toledo, Wabash & Western Railway Company shall be applied in its exoneration;
It may be urged that this right of the Toledo & Wabash Railway Company to object to separate redemption upon the ground of its surety relation to the Toledo, Wabash & Western Railway Company is one which can only be made by it, and that it has never been, a party to any of these foreclosure suits. Compton did not bring that corporation before the court in his Ohio suit, and he has not chosen to make it defendant to his present effort to obtain separate redemption. It was not a necessary party to either suit, in so far as the establishing of his debt and lien were concerned. He might bring his suit against the corporation which had succeeded ,to the title and ownership of the property, and which had assumed a primary obligation for his debt. But he cannot escape the effect of • any defense to a separate redemption which any of the predecessors in the title might make, by omitting to bring such predecessors before the court. When he asks for partial redemption, and the court can see that that relief would be inequitable and unjust to one of the obligors of his debt, in its relation as surety to other parties jointly liable as to him, it will either refuse to proceed with the suit until he brings the absent corporation before the court, or grant him only such relief as is consistent with the equities and lights of all affected by the remedy he asks. But it seems to me, on careful consideration, that the purchaser at foreclosure sale unites in itself the legal title and the equities, rights, and defenses which pertained to each of its predecessors in title, and may interpose any defense to the demand for separate redemption which any one of its. predecessors could make if they were called upon to submit to such redemption. If this is not so, then the absent predecessor corporations to be affected by the special relief sought are necessary parties to any proceeding which seeks such relief. If I am right in the proposition that the Toledo, Wabash & Western Railway Company could not redeem the Ohio Division separately, by reason of the surety relation of which I have spoken, then, for the same reason, Compton cannot. His lien arose as the result of the consolidation of 1865. The lien did not attach as a lien on property of the Toledo & Wabash Railway Com-. pany, but as a lien, on so much of the property of the Toledo, Wabash & Western Railway Company as had been acquired from the Toledo & Wabash Railway Company. The language of the consolidation statute, which imposed a liability on the consolidated company for the debts of the constituent companies, was that:
“All debts, liabilities and duties of said companies shall henceforth attach to said new corporation and be enforced against it to the same extent as if said debts, liabilities and duties had been contracted by it.” Act April 10, 1856, § 5.
‘“Tliat. upon ttie consummation of such consolidation, said bonds issued as aforesaid by tire Toledo & Wabash Railway Company * * * became an equitable lien upon all of the said railroad and real property * * * which were owned by said Toledo & Wabash Railway Company, at the time of said consolidation passed to and vested in the said Toledo, Wabash & Western Railway Company, and which afterwards passed to and vested in the defendant the Wabash, St. Louis & Pacific Railway Company.”
The lien did not exist before the consolidation, but arose as a result of the act transferring the property. To say that a lien which originated only as a result of the passage of the title is a lien against the company whose act transferred it to another, would he as inexact as to say that a vendor’s lien rests upon the property of the vendor, when in fact it originates as a result of the passage of the title, and must be a lien on the estate of the vendee in ¡he property. The distinction is a nice one, but it is an obvious one, when we look closely into it. It is also an important fact, in its consequences, for if a lien imposed on the property of the Toledo & Wabasli Kailway Company, while owned by that company, would, as urged by Judge TAFT, be a lien upon the separable equities of redemption owned by that company, a lien imposed after the transfer of the title of the Toledo & Wabash Eaihvay Company to the Toledo, Wabash & Western Railway Company, which took under a single engagement or promise to pay off the debts of the Toledo & Wabash Railway Company, would bring into operation the principle that such single promise required a single redemption. Compton’s right of redemption cannot be other or different than that of the corporation upon whose property the lien rested, whether imposed by law, or arising out of contract. It’must therefore follow that, if the Toledo, Wabash & Western Railway Company could not redeem part without redeeming all, Compton, with, a lieu which rests on its estate, can exercise no higher right of redemption. There seems to me to be still another principle applicable, where equitable redemption is sought, which reinforces what has already been said. That principle is that where several mortgage debts have become consolidated, so that the obligor in each is the same, and the mortgagee the same, though, secured on distinct estates, there can be no separate redemption, against the will of the mortgagee. The principle that a creditor will not be deprived of a legal advantage by a court of equity, except upon equitable conditions, is of wide .application. It was imbedded in the civil law; and a mortgagor was not permitted to redeem or buy back the legal title to realty, or* the possession of a pledge, until he did equity, by paying, not only the debt secured by the mortgage or pledge, but any other debt subsequently created. Story, Eq. Jur. §§ 415, 1010, and note; Jarvis v. Rogers, 15 Mass. 389. There is some doubt as to whether a purchaser of the mortgaged land, or a subsequent incumbrancer, was affected by this equity between mortgagor and mortgagee. Judge
“This hill is brought to redeem the Bast Dales, and to leave Dixon’s farm, now reduced, in point of value, by the mortgagees selling a part for the benefit of the plaintiff, who had the inheritance. The question is whether she can come into this court for such an equity. Every mortgagee, when the mortgage is forfeited, has acquired an absolute legal estate. Upon what terms can this court proceed to a redemption? By giving the mortgagee the value of his money, its fruits, and his costs, and upon those terms only, for it is obvious injustice to help to the restitution of the pledge without a full restitution of what it is first pledged for. If a person makes two different mortgages of two different estates, the equity reserved is distinct in each, and the contracts are separate; yet, if the mortgagor would redeem one, he eanpot, because, if you come for equity, you must do equity; and, the general estate being liable to both mortgagees, this court will not be an instrument to take illegally from a mortgagee that by which he will be defrauded of a part of his debt.”
The editor of the second edition of Eden’s Keports, in a note concerning the modern extension of the rule as stated in Willie v. Lugg, says:
“That a mortgagor of two distinct estates, upon distinct transactions, to the same mortgagee, cannot redeem one without redeeming the other, seems, by modern decisions,, to have been extended to a purchaser of the equity of redemption of one of the mortgaged estates without notice of the other mortgage.”
The cases of Watts v. Symes, 1 De Gex, M. & G. 240; Selby v. Pomfret, 1 Johns. & H. 336; Neve v. Pennell, 2 Hem. & M. 170, are applications of the rule of the old cases in suits for foreclosure, as well as redemption. Beevor v. Luck, L. R. 4 Eq. 537; Tassell v. Smith, 2 De Gex & J. 713; Vint v. Padget, Id. 611; Mills v. Jennings, 13 Ch. Div. 639; Cummins v. Fletcher, 14 Ch. Div. 699,—are all cases involving extensions of the old rule to subsequent purchasers or mortgagees, many of them involving the technical doctrine of tacking, as developed from the early cases of Brace v. Duchess of Marlborough, 2 P. Wms. 491, and Marsh v. Lee, 2 Vent. 337. That doctrine, in brief terms, was bottomed on the maxim of
“The rule as to consolidation of mortgages, in its simplest form, is this: That where one person has vested in himself, by way of mortgage, two estates, the property of the same mortgagor, one of these cannot he redeemed without the other; and this is so whether the two mortgages were originally granted to the same mortgagee, or, haying been originally vested in different persons, have, by assignment, become vested in the same person. This was on the equitable principle that a court of equity would not assist a mortgagor in getting hack one of his estates, unless he paid all that was due, though secured on a different estate. The mortgagor was coming into a court of equity to obtain its assistance in getting back an estate which at law belonged to the mortgagee, anil it was held to he inequitable to allow him to get back an estate of more value than the debt, charged on it, and to leave the mortgagee with an estate charged with a debt due by the mortgagor which might be of a larger amount than the value of the estate. But even the rule in this its simplest form was doubted by Lord Hardwicke in the year 1700, as appears by the report of Ex parte King (1), though he afterwards recognized and adopted it. Moreover, as a mortgagor cannot he allowed to prejudice the rights of his mortgagee by any dealings with the equity of redemption of the estate in mortgage, it has been held that a purchaser or mortgagee of one of two estates already in mortgage is, as regards Ihe consolidation of the mortgages, in the same position as the original mortgagor; that is to say, the purchaser of an equity takes subject to all the equities affecting the person through whom he claims. * * * It is the circumstance of the mortgagor having created two mortgages on two different estates which gives the mortgagee of either estate, as soon as the second mortgage is created, a right to get both the mortgages into his hands; and to hold both until the debt due on each is paid. The principle which allows, as against a subsequent purchaser or mortgagee, the right of consolidation, is that the mortgagor cannot, by any dealing with the equity of redemption, prejudice the rights of his mortgagee. This can only apply to rights already given, or arising from acts already done, by the mortgagor. The same principle will prevent the mortgagor from throwing a greater burden on the purchaser of his equity of redemption by any act done subsequent to the sale or mortgage of this estate. It is true that a mortgagee of one estate may get in and consolidate the mortgages on another estate against a purchaser of the equity of redemption of one of the estates, even though at the time of the purchase the tw'o mortgages were vested in different persons, provided both the mortgages existed previously to the sale of the equity of redemption of one of the estates. But this equity arises out of acts done by the vendor of the equity of redemption previously to the sale; and the act after .sale necessary to give effect to the right of consolidation — namely, the union of the mortgages on both estates in one person — is an act of persons who are no parties to the sale of the equity of redemption, and not bound to the purchaser by any contract*324 inconsistent with the claim to consolidate. In our opinion, the purchaser of an equity of redemption takes subject to such equities as arise from acts previously done by his vendor. He is subject to these equities, though acts of persons other than the vendor may be necessary to give rise to the equity.” Mills v. Jennings, 13 Ch. Div. 639.
The doctrine established by the tacking cases proper — that a third mortgagee, without notice, may buy in a first mortgage, and thereby exclude a second mortgage — is not enforced in the courts of this country, in consequence of the effect of our registration sys-tenij which gives effect to conveyances in the order of registration. The policy underlying registration is that a mortgage shall not be a security for more than is expressed therein, as against subsequent purchasers or mortgagees. I quite agree with what was said by the Virginia supreme court, through Baldwin, J., in Siter v. McClanachan, 2 Grat. 304, that:
“The elements of the doctrine, it will be seen, are the possession by the preferred mortgagee of the legal title, and the pre-existence or accession of a distinct equity, without notice of mesne incumbrance. Hence it is obvious that it could never have been introduced into a country enjoying the benefits of a general registry, intended to give notice to the whole world of all conveyances and incumbrances, and to supply the place of actual notice. * * * In nearly all the states of this Union, the registry is held to be notice to subsequent purchasers and mortgagees, provided the deed has been duly proved or acknowledged. * * * It' is easy to perceive that the operation of the registry laws of Virginia, and of other states of the Union, is to cut up by the roots the English doctrine of tacking, so far as it affects intermediate purchasers and incumbrancers.” '
It is equally clear that our registration system renders inoperative many of the principles upon which the rule now involved, was extended so as to affect subsequent purchasers and incumbrancers. But registration laws manifestly have no effect upon the rule, as between mortgagor and mortgagee, or the application of the maxim upon which the doctrine rests, whenever a plaintiff resorts to equity to redeem or to recover the legal title to lands, or the possession of a pledge. If he seeks equity, he must do equity; and equity will not assist a debtor to deprive a creditor of a security which at law he may hold, until he has done equity, by discharging any just liability which exists between them. Great care must be observed in examining American cases touching this species of tacking, to see that they do not turn on the rule which makes the registration of a deed notice. Whenever they do so turn, they are not in point. Where the question arises between unregistered equities, or when the registry acts are, from any cause, inapplicable, there “seems to be nothing to prevent the holder of a third mortgage from obtaining priority over a second, of which he was ignorant at the time of taking his own, and which has not been placed on record, by buying in the first, or obtaining a conveyance of the legal title in any other way, although the question is of little practical importance, because it cannot arise unless both mortgages are unrecorded, when it will be easier to record the third than to resort to the expedient of purchasing the-first.” 1 White & T. Lead. Cas. Eq. 856. There are many American cases illustrative of the application of this equitable maxim to bills seeking to recover a legal title, or to re
My conclusion is that the Toledo, Wabash & Western Railway Oomx>any, having assumed both sets of mortgage debts at the time it acquired the mortgaged estate, cpuld not redeem one part of the estate without redeeming the other, the mortgagees being the same. Does Compton occupy any better position? Clearly not. He is not an incumbrancer by a single instrument on one of the mortgaged estates. Neither is he a purchaser for value of the mortgagor’s interest in one or both. By force of the Ohio statute the debts due from Ms debtor became, under the Ohio construction of that statute, an equitable charge on all the property of the Toledo & Wabash Railway Company in the hands of the Toledo, Wabash & Western. This general unit lien is the one asserted now by Compton, as affording him a right, in,equity, to redeem a part of the property embraced by the lien. The very least that can be said is that he can stand, with respect to redemption, in no better situation than did the Toledo, Wabash & Western Railway Company. If l hat company, as a principal obligor, had a right, as their mortgaged debts matured, to pay them off, that right terminated when the pay day passed, and nothing remained but an equitable right to he
7. Eut it may finally be said that the same act of consolidation which gave rise to the lien asserted by Compton gave to the Indiana divisional bondholders a similar lien on the entire property of the Toledo & Wabash Railway Company which had been transferred by the consolidation to the Toledo, Wabash & Western Railway Company, and that, therefore, they have the right (o object to any redemption which does not provide for their payment, or does not admit them to a participation in the benefits of the lien. This has not been answered, except by an insistence that the purchaser
.It is next said that the Indiana mortgagees have waived the benefit of the Ohio statutory lien on the Ohio Division by failing to set it up in the foreclosure cases. By this must be meant that this additional security was not asserted in the original pleadings, for its assertion now is an assertion of the claim in the foreclosure proceedings, so soon as it became material to claim the benefit of it. The question as to the existence of any such lien had been decided adversely to the lienors by the supreme court of the United States in the case of Railway Co. v. Ham, reported in 114 U. S. 587, 5 Sup. Ct. 1081, and decided in 1885. That was supposed to be a class suit, and to be conclusive upon all who might have asserted such a lien. The foreclosure proceedings were begun in February, 1887. During the pendency of these suits the Ohio supreme court decided the Comptofi Case, and refused to follow the Ham decision in the construction of the Ohio statute. This decision was made in 1888. Subsequently, Compton was made a defendant, as a person claiming some interest or lien upon the property sought to be sold free from all incumbrance. He had not answered or filed any pleadings when the foreclosure decree was made, and a sale ordered reserving his rights. When he did plead, and asserted this lien, it was found not to be a lien exclusively for his benefit, but one which inured to the equal benefit of all who are unpaid creditors of the Toledo & Wabash Railway Company. Though he sought to avail himself of it for his exclusive benefit, yet this court is agreed in holding that the lien must inure in behalf of all within the benefits of the statute. The contention that the Indiana bondholders are entitled to share in the benefits^ of this lien and of Compton’s redemption is presented, not in a'new or subsequent suit, nor in a collateral proceeding, but in the very suit in which the existence of á class lien is declared, and a remedy for its enforcement is to be awarded. When the circuit court refrained from deciding any question involved in Compton’s assertion of this lien, and reserved jurisdiction to thereafter adjudge his rights in their relation’ to all the other parties to the proceeding, it necessarily operated as a reservation of the rights of all otliei-swho were defendants, who might have
s. If I am right in regarding Cennpton’s remedy as redemption, and that in determining what he shall redeem the remedy accorded him by the Ohio court cuts no figure, then 1 think it must follow that the Indiana decree, disallowing separate redemption, and requiring him to redeem all or none;, is a conclusive adjudication of The question, and may he relied upon to sustain the motion to dismiss or affirm. The parties and the subject-matter were the same. That court had jurisdiction over both, through the power reserved by the Indiana decree over Compton and the purchaser. If this court, reviewing tin; decree of the circuit court for the Northern district of Ohio,.has the authority, to consider the question involved in the insistence for an entire redemption, then the Indiana circuit court could, under like pleadings, and a like reservation of jurisdiction over Compton's lien, grant him proper equitable relief. This failure to appeal from the decree requiring him to redeem all or none is conclusive as an estoppel.
Finally, I think that whether Compton redeems the entire road covered by his lien, or a part thereof, the purchaser- is not subject: to 5in accounting for rents and profits. The liability to an account depends upon whether the purchaser was in possession as first mort
