| U.S. Circuit Court for the District of Eastern North Carolina | Dec 20, 1895
This is a petition praying leave to intervene and be made parties defendant to the main cause. The Cape Fear & Yadkin Valley Railway has a line having its termini at Wilmington, N. C., and Mt. Airy, in the same state. The road has three divisions, known as “A,” “B,” and “C.” Bonds were issued upon each division. The bonds secured by Division. A are known as the “A Bonds,” those secured by Division B as “B Bonds,” and so with bonds secured by Division C, as “O' Bonds.” Each class of bonds has the first lien on its own division. The mortgage was executed to the Farmers’ Loan & Trust Company, securing all of these bonds, but distinguishing them so that the extent of the prior lien of each class of bonds on its own division was expressed and declared. Default having been made, the complainant, as trustee of all the bonds of every class, filed its bill for foreclosure of the mortgage and the appointment of a receiver. To this hill the railroad company was made a party defendant, with other parties. But all the bondholders were represented by their trustee. A receiver was appointed. Creditors were called in, and all the bonds have been presented tp and proved before the special master thereto named. The special master has made his report as to all existing claims, and the cause is nearly, if not quite, ripe for a final decree. Looking to that contingency, the bondholders have been in consultation, and are now endeavoring-to agree upon a plan of reorganization. To that end a committee was formed, called hereafter the “Baltimore Committee,” of which Messrs. Blackford, Perot, Tompkins, Redwood, Gordon, and Riddendorf are the memberá. They have formulated
There can be no doubt that as a general rule the trustee of a railroad mortgage represents all the bondholders, and that Ms acts bind them, if done in good faith. Richter v. Jerome, 123 U. S. 246, 8 Sup. Ct. 106, and eases there cited. And, when differences of opinion exist between the bondholders, “it is not improper that he should be governed by the voice of the majority, acting in good faith and without collusion, if what they ask is not inconsistent with the provisions of the trust.” Bank v. Shedd, 121 U. S., at page 86, 7 Sup. Ct. 807. But this decision of the trustee is not final. It is reviewable by the court, and in such review the objecting bondholders have the right to be heard on their own behalf. This follows as a corollary. In the ca.se just quoted, bondholders in person were allowed to intervene and to become parties. In Williams v. Morgan, 111 U.S. 684" court="SCOTUS" date_filed="1884-05-05" href="https://app.midpage.ai/document/williams-v-morgan-91152?utm_source=webapp" opinion_id="91152">111 U.S. 684, 4 Sup. Ct. 638, two bondholders in the foreclosure of a railroad mortgage were allowed to come in and state their own objections to the course of the trustees, and to the distribution of proceeds of sale. In that case Mr. Justice Bradley says:
“Wo think the position of Williams and Thomson made them quasi parties in the case, and brought them within the reason of the former cases decided by this court, in which persons incidentally interested in some branch of a cause have been allowed to intervene for the purpose of protecting- their interest, and even to come into this court, or to he brought here on appeal.”
'Hie -principle is that when, for any reason, the trustee cannot fully represent the bondholder, he can himself be beard on Ms own behalf. Having proved his bonds, he is already a quasi party; that is to say, with a voice in the cause, although not on the record. When lie shows a cause of complaint, he has the right to be put in the record, so that complete relief can be given for or against Mm. In the pres-