Elwell v. Fosdick
134 U.S. 500
SCOTUS
1890
Check Treatment
Me. Justice Blatchfokd,,

after stating the case as above, delivered the opinion of the court.

It is contended for the bank that Elwell had no authority,. as trustee in. the second mortgage, to release errors in the foreclosure proceedings or in the decree and to waive the right to appeal from the decree'; that his attempt to do so was a breach of trust', and outside of the powers and duties conferred upon him by the trust deed; and that the release does not' bar the right -of the' bank, as -the holder of bonds secured by the .trust deed to.Elwell and Eish, to prosecute this appeal-by the leave of the court, _ in the name of Elwell, nor furnish' any reason for dismissing it. In the petition of .intervention filed by the bank on the 24th ■ of June, 1884, six days before tne final decree was entered, it was alleged “that, neither before the rendition of the final decree in this cause in this court, nor after its reversal by the supreme- court, has the said Elwell shown'any diligence or attempted to make any arrangement to • prevent a sacrifice- of the interests of your petitioner and others similarly situated; ” and.“ that, unless it shall be permitted to ' become a party to this suit and file its answer therein, it will lose its rights in the premises under some collusive compromise or colorable sale, or through the indifference qr neglect of the said Elwell.” The court denied, the prayer of the *512 intervening petition, of the bank, stating “ that the trustees under said second mortgage are parties to this suit and have appeared and answered herein, and that there is no proof, showing that said trustees are not acting in good faith.”

It thus appears that the court passed. upon the question of collusion on the part of Elwell, and held that the bank was .bound by the acts of Elwell representing it as trustee. No Action' was taken by the bank to appeal for more than three mbnths. By an order made August 3, 1885, it was allowed to appeal in the name of Elwell, trustee, but it failed to perfect any appeal under such allowance. Such appeal was re-allowed on the 28th of June, 1886, and was perfected on the 30th of .June, 1886, being exactly two years after 'the entry of the final decree, and the last day on-which the appeal could be taken. Meantime, by an instrument executed in October, 1884, and filed in the Circuit Court in November, 1884, at a time when no appeal was pending from the decree, the release of errors was’ executed by Elwell, trustee.

“'We are of-opinion that .this release bound all the bondholders represented by Elwell. It appears by the release that only 955' of the convertible bonds were issued; that 58 were issued in exchange for coupons, all of which coupons had been paid out of the proceeds of the sale of the property ; that, of the'remaining 897, the holders of 617 did not desire further litigation; and that the holders of the • remaining 280 had hitherto declined to contribute'to the cost of the litigation.or to protect the trustee against loss or the payment of costs or counsel fees. No substantial reasons appear for permitting the bank, as the holder of only $14,000 of the bonds, to defeat the 'plainly expressed will of the holders of the remainder. Sage v. Central Railroad Co., 99 U. 8. 334.

The allegation of neglect or collusion on the part of Elwell, as trustee, was found by the Circuit Court to be untrue. The trustee represented the bondholders not only in the proceedings which resulted in the’ entry of the' decree, so that the bondholders were not' necessary parties, but he also bound them by his release of errors. His relations to them had not changed between the time of the entry of the decree *513 and the time of ¿he execution of the release. Shaw v. Railroad Co ., 100 U. S. 605, 611, 612; Bank v. Shedd, 121 U. S. 74, 86; Barnes v. Chicago, Milwaukee &c. Railway, 122 U. S. 1.

The release of errors, although not found in the transcript of the record, is properly'brought before this court, for the purpose for which it is presented. In Dakota County v. Glidden, 113 U. S. 222, 225, this court, speaking, by Mr. Justice Miller, said: “ But this court.is compelled, as all courts are, to receive evidence dehors the record affecting their-proceedings 'n a case before them on error or appeal. The death of one of • the parties after a writ of error or appeal requires a new proceeding to supply its place. The transfer of the interest of one of the parties by assignment or by a judicial proceeding in another court, as in bankruptcy or., otherwise, is brought to the attention of the court, by evidence outside of the original-record, and acted on. A release of errors'may be'filéd as a bar to the writ. A settlement of the controversy, with an agreement to-dismiss the appeal or writ of error, or any stipulation as to proceedings in this court, signed by the parties, will' be enforced.”

By the provisions of the mortgage to Elwell, he',- as trustee, could proceed to collect the mortgage debt, by litigation or otherwise, only at the-request of the holders of a majority of the bonds. .As appears from the terms of the release, and is not controverted, the majority of such holders desired the litigation to cease. The'trustee was authorized to put an end to it, and his waiver of an appeal binds '"all who act in his name as trustee. The bank-was not 'a párty to-the suit, and. its right to . appeal 'depended entirely upon the action of the-trustee. Ex parte Cutting, 94 U. S. 14, 21 ; Ex parte Cockcroft, 104 U. S. 578. All that the Circuit Court did was to allow the bank to appeal in' the name of the trustee.. The bank is bound by all the preceding acts, of the -trustee, done in good faith.. On the facts of the case, the appeal must- be considered as the appeal-of the trustee, and’ as. barred by his release executed long before the appeal was granted. •'

*514 The result is that the appeal must be dismissed, am,d it is so ordered.

Me. Chief Justice Fullee, having been of counsel in this case, did not sit in it dr take any part in its decision.