41 F. 8 | U.S. Circuit Court for the District of Kansas | 1889
In these foreclosure cases', during the last six months, have accumulated several motions and applications, which, by consent
In the order appointing receivers, they were directed to keep their accounts so as to show the earnings and expenses of the separate divisions, and the auditor was thereafter orally instructed to keep the accounts on a mileage basis. The equity of such a basis, as between the northern and southern divisions, having been challenged, in May last I appointed a committee to report an equitable basis therefor. It did make a report, and exceptions thereto were filed by the two trust companies. At the hearing last week no one seemed inclined to call this matter up. Neither trust company pressed its exceptions. I notified counsel that I would make some order. I think the basis reported by the committee just and equitable; and as on May 22, 1889, in the order appointing the committee, I directed that the accounts from and after April 1, 1889, should, upon the final determination by this court of a true and equitable basis between such divisions, be kept and stated upon such basis, and as no reasons have been presented that the basis reported by the committee is not just and equitable, an order will be entered that the exceptions will be overruled, the report approved, and the accounts from April 1, 1889, kept and stated on that basis.
Another matter is the application of the Missouri, Kansas & Texas Railway Company to bring in as a defendant the Missouri, Kansas & Texas Extension Railway Company.- This application will be denied. The present defendant holds the legal title; and in the foreclosure of a mortgage it is generally enough to have the mortgagee and the holder of the legal title parties, without bringing in a grantor of such title. All questions as to the amounts of the various liens, and the portions of the road upon which they rest, can be settled without the presence of the extension company; and therefore it were useless to delay for the sake of bringing it in.
Another matter is the application of the Union Trust Company to hav,e the receivership extended in its behalf to 94 miles of road in Texas. The basis of this application is found in the amended bill and exhibits thereto attached. Upon the papers as thus presented, it wonld seem as though that trust company had a lien upon these miles; and therefore it is fitting that the receivership be extended as applied for, in order that, if the fact and priority of its lien be finally determined, and there be any surplus earnings derived from this portion of the road, they may be awarded to it. Of course, such an order carries no adjudication as to the merits of the claim; nor, considering the lateness of this application, will the receivers make any change in their accounts.
Another matter is this: There is a motion to consolidate the three cases pending in this court for foreclosures of different mortgages given by the railway company. Nothing can be gained by consolidation, for the purposes of hearing. Whether consolidation could be bad for purposes of decree and sale is a matter not necessary now for determination. That the court has power to consolidate cases situated as these are, I hiivo
Another matter: Leave is asked by the Missouri, Kansas & Texas Railway Company to file a cross-bill against the Missouri Pacific Railway Company and the trust companies. This cross-bill seeks an accounting with the Missouri Pacific Railway Company, a decree terminating the lease with the Missouri Pacific Railway Company, and an adjustment between the trust companies of their liens. Such a cross-hill is not necessary for the protection of the rights of the Missouri, Kansas & Texas Railway Company; would tend to delay; and is therefore improper. All matters between the trust companies, as to the extent of their liens and the portions of road subject thereto, can be fully settled without a cross-bill. It would be strange if a mortgagor could delay his mortgagee while he proceeds to establish an accounting with an alleged debtor. If the Missouri Pacific Railway Company owes the Missouri, Kansas & Texas' Railway Company anything, it should be sought by an original action. And, while there is some plausibility in the claim that there should be an affirmative decree against the Missouri Pacific Railway Company, canceling its lease, yet that is a matter of special interest to the mortgagees, and it is safe to trust the matter to them. Their mortgages were prior in time to the lease, and, of course, paramount; and a decree of foreclosure rendered in their favor against tbe Missouri Pacific Railway Company will bar it of any pretense of right founded thereon. Generally speaking, in reference to this and other matters, a court should not, in the foreclosure of a mortgage, unnecessarily incumber the record with parties or questions. So far as possible without injustice to any, the simple matter of the foreclosures should be attended to. Other matters and other rights should be relegated to other suits, so that the foreclosure can be had as directly and speedily as possible.
Another matter is this: Application is made by the Union Trust Company for an allowance to it for expenses already made, and services in the prosecution of this suit and the execution of its trust. The trust-deed provides for the payment of these expenses, as well as compensation for the execution of the trust. An order will therefore be entered directing the receivers, out of the moneys on hand, to pay over to the Union Trust Company $5,000 on account of expenses and services.
Another matter is this: Application is made by the Missouri, Kansas & Texas Railway Company for an allowance out of funds in the hands of the receivers for the payment of its counsel. That there is much litigation carried on by the railway company, and that the services of counsel are easily worth the sum that is asked for, I have no doubt; and it would give me great pleasure to sustain the application, if I could see
A final matter that I shall consider is the motion of the trust companies to set aside the order for the leasing of the Kansas City & Pacific Railroad. The motion is based solely on the ground of a want of power, and the lack of notice to the trust companies; and it is earnestly insisted that a court, in the management of a trust property through receivers, has no power to risk that property in new enterprises, and that the mortgagees and owners of the property are entitled to be heard before any such use of their property is attempted. It is important that the exact situation should be understood, as well as exactly what was done. Prior to the appointment of the receivers, the railway company had been operated by the Missouri Pacific Railway Company, for many years, under a lease. Its lines did not touch Kansas City, St. Louis, or Chicago, the three great cities of the west, from which its business was to be expected. The St. Louis and Kansas City business reached its lines only over the tracks of the Missouri Pacific, the lessee road. A large amount of business came from Kansas City. It could continue its arrangements with the Missouri Pacific, or it could make arrangements with other roads for bringing that business to its lines. It was the duty of the receivers to seek to do that business in the best manner possible for the property they had charge of, and to increase that business as much as possible. The Missouri Pacific, the Kansas City & Southern, the Fort Scott, and the Kansas City & Pacific, all furnished means of bringing that business onto its lines. With the first three roads it could make traffic arrange
This closes all the matters that were presented; and I might, perhaps, properly stop here. And yet; as this is about the last of my official connection with the management of this property, I may be pardoned if I indulge in a brief retrospect of what has been done during this receivership. As heretofore stated, when the receivers were appointed the road had been operated for years by the Missouri Pacific Railway Company under a léase, and practically as one of the divisions of that system. It •had no general offices or officers, no independent relations with-other roads
One thing more: In the early fall the receivers began to consult with me as to what was necessary for the betterment of the road during the coming year. I directed them to make all their estimates and applications, and present them at a time when the counsel for the various parties