Metropolitan Trust Co. v. Dolgeville Electric Light & Power Co.

71 N.Y.S. 1055 | N.Y. Sup. Ct. | 1901

Hiscock, J.

This is a motion to confirm the report of the referee appointed to compute the amount due upon the bonds secured by the mortgage of which foreclosure is sought, and to ascertain whether the defendants, or any of them, had or claimed to have some interest in or lien upon the mortgaged premises which was subordinate to the lien of the mortgage and other matters.

The main contest upon said motion, as at the time when the reference was ordered, is whether the lien of plaintiff’s mortgage or the lien of a judgment and levy secured by the defendant Commercial Bank is superior as to certain personal property acquired after the execution of the mortgage. This property consists principally, in value, of some wire purchased for the purpose of stringing a power line from the defendant’s plant to an adjoining village, and which at the time said bank secured its judgment had not been actually strung, but was still in the coils. 3STo question was made, however, that it was obtained for the purpose mentioned, and was about to be strung.

I have no doubt that the terms of the mortgage were broad enough to cover this property and give a lien upon it when it was secured, which would be superior to the lien of said judgment. ¡Neither have I any doubt that th,e powers of the defendant under its organization were broad enough to authorize its establishing the additional line in question into an adjoining town, assuming that that question can be raised at all in this proceeding. The controversy, therefore, reduces itself upon this point to the simple question whether a corporation like the defendant can, if it desires to, execute a mortgage which will cover after-acquired property. I believe that it can.

It was conceded by the judgment creditor upon the argument that a railroad corporation could give a mortgage which would cover such property, but a distinction was sought between such a corporation and the one in question here.

It was urged that the statutes governing railroad corporations gave them larger powers in this respect than are given to the defendant. Without recourse to any extended reasoning, it seems to me that the statutes under which the defendant was incorporated give sufficient power to enable it to mortgage after-acquired property, and in the construction of such statutes substantially the same reasoning must prevail in favor of recognizing the necessity of such powers in the case of one corporation as in the case of the other. The mortgage in question, as must generally happen in such a case, was executed to secure bonds running for a long period of time, and liable to be scattered in the hands of many holders. It probably was executed, and said bonds issued (and in most cases a similar course would be followed), for the purpose of securing money with which to build and equip a plant. Every corporation of the same class as that to which defendant belongs will, at least if it is successful and prosperous and thrifty, desire from time to time to extend its plant, purchase more modern machinery and replace old and worn out construction with new construction. It becomes practically a matter of public necessity that if bonds such as those involved in this action are to be available and merchantable in the public market, they must be secured through the lien of a mortgage upon such extensions and new property. Ho other course is practicable, if the security and standing of the bonds is to be maintained. If this course is not allowed, the more prosperous and more progressive a corporation issuing the bonds becomes, the less valuable the security of the ' latter through interchange of old property for new.

While it was urged by the counsel for the bank that the point was not expressly involved in some of the cases cited by plaintiff’s •counsel, the reasoning found in New York Security Co. v. Saratoga Gas Co., 88 Hun, 569, seems to be applicable and forcible.

There seems to be no reasonable objection to following the suggestion made in behalf of the judgment creditor that the property covered by the mortgage should be sold in parcels, the personal property in question covered by the lien of the judgment being sold in a parcel by itself and last, and the judgment will so provide.

Judgment accordingly.