33 F. 693 | U.S. Circuit Court for the District of Louisiana | 1888
The complainant J. D. Parker, a citizen of Illinois, being a bona fide holder of one bond for $1,000, with--interest coupons attached, sues for amount of over-due coupons, for foreclosure, and for general relief. W. A. Hamlin holds five of the same kind of bonds, and joins in the bill, adopts its allegations, and asks for same relief. The bill is brought against the New Orleans, Baton Rouge & Vicksburg Railroad Company, domiciled at New Orleans, Louisiana; S. D. Mc-Enery, governor of Louisiana; the Union Trust Company of New York; J. F. Dillon and Henry Alexander, of New York; and the New' Orleans Pacific Railway Company, of Louisiana. The defendant company the Union Trust Company and S. D. McEnery made no appearance, and judgment pro confesso was entered against them. The New' Orleans Pacific Railw'ay Company, J. F. Dillon, and Alexander answered. In their answers are set up the following defenses: (1) That future property cannot be mortgaged under the laws of Louisiana; (2) that the future property, claimed to have been included in the mortgage act, w'as not so described as to notify third persons; (3) that the lands granted by congress by act March 3, 1871, never vested in the defendant company; (4) that the mortgage act to secure the bonds w7as never reinscribed; (5) that the lands granted by congress to defendant company were not embraced in the terms of the mortgage act.
Before considering these defenses, and the issues made by the pleadings, let us recite, substantially, such of the evidence as is necessary to be considered in this case. By an act of the Louisiana legislature of December 31, A. D. 1869, certain persons were constituted a body corporate, under the name of the New Orleans, Baton Rouge & Vicksburg Railroad Com
By an act March 3, 1871, incorporating the Texas Pacific Railway Company, lands were granted to the defendant company to aid in the construction of a railway from New Orleans to Baton Rouge; thence, by way of Alexandria, to connect at Shreveport with the Texas Pacific Railway. November 11, 1871, the defendant company filed, in the general land-office, a map designating the route of the line from Baton Rouge, via Alexandria, to Shreveport. In 1881 defendant company transferred, by an act of conveyance, all the lands which had been granted to it by congress March 3, 1871, to the New Orleans Pacific Railway Company, ono of the parties defendant in this suit. In March, 1881, the United States issued patents to said Now Orleans Pacific Railway Company for 679,287 acres of land, situated in different parts of the state. The mort
The defenses relied on.by defendants will be considered in the order in which they have been herein stated. The principles and rules of equity are administered in the federal courts in Louisiana as they are elsewhere in the Union.
1. In equity, future property may be mortgaged. A railroad company authorized to borrow money and issue bonds to enable itself to construct and stock its road, may mortgage sucl} property as it may acquire in the future, and as soon as the property is acquired the mortgage operates on it. 1 Jones, Mortg. § 153; Shaw v. Bell, 95 U. S. 10; 2 Story, Eq. Jur. § 1040; Pennock v. Coe, 23 How. 117; Dunham v. Railway Co., 1 Wall. 254; Mitchell v. Winslow, 2 Story, 630 ; Pierce v. Emery, 32 N. H. 484. The jurisprudence of Louisiana on this subject shows that article 3308, Rev. Civil Code, does not forbid juridical persons to mortgage future property. In this respect such persons are governed by legislative enactments. Underact of the-Louisiana legislature No. 145, session 1854, and act 341, session 1855, a railroad company may mortgage its road, completed and to be completed; and by act No.-, session 1856, such companies are authorized to mortgage their franchises and all property to aid in the construction of their railroads. These several statutes were re-enacted in sections726, 727, 2896, 2397, of the Revised Statutes. In the case of Bell v. Railroad Co., 34 La. Ann. 785, the Louisiana supreme court held that a railway- company may mortgage its franchises and all of its property, present and prospective. The defendant company's charter shows an express power to mortgage future property.
2. In the case just cited it was held that the mortgage “attaches to property subsequently acquired as effectively as if it had been described specifically in the act; it being entitled to the same effectas if it had been a judicial mortgage.” Obviously, it would be difficult, if not impracticable, for a railway company to specifically describe future property that might be acquired by grant or otherwise, and the generality of the language used in the mortgage act should not be fatal objection to the legal efficacy of the act relied on by complainants. Wilson v. Boyce, 92 U. S. 325; Jackson v. Delancey, 4 Cow. 427; Pond v. Bergh, 10 Paige, 140.
3. The New Orleans Pacific Railway Company claims to be, and doubtless is, the assignee of the lands granted by congress, and, as such assignee, the government has issued patents to it for 679,287 acres of said lands; therefore it is contended by complainants that said company should not be heard to dispute that title vested by reason of said grant in defendant company. Whether this contention be correct or not, it seems to be clear that congress, in using the words “there is hereby granted to said company” alternate sections, etc., intended to make, and did make, a grant in.yprxsenti to the defendant company. In Railway Co.
4. It is provided by statute that mortgages executed by railway companies in Louisiana to raise money for their construction need not be re-inscribed. Rev. St. La. §§ 726, 727, 2396, 2397.
5. Are the lands which were granted to the defendant company subjected to the mortgage executed to secure these bonds? The effort to solve this question leads us into difficulties which often attend the interpretation of the most carefully written agreements. In judicially determining whether or not the act we are now considering operates on the lands in question, we are authorized, under well-established rules of law, to consider the language used in the act; the extent and nature of the ■authority of the contracting parties; the intention, object, or purpose they had, or may have had, in so contracting; the character and use of the property subjected to the mortgage, and circumstances attending its execution. 3 Wood, Ry. Law, 1617; Smith v. McCullough, 104 U. S. 25. The right and authority of defendant company to subject all of its present and prospective property, as w'ell as its franchises, and privileges, to this mortgage, seems to be clearly shown by the laws of Louisiana, and by its charter. It seems, too, to be well settled that when a railway company is empowered, by its charter, to mortgage all of its property, privileges, and franchises, after-acquired property passes, as an incident to the franchise to acquire property, by a mortgage of the franchise and property of the company. Such a mortgage seems to be a conveyance of the property and franchises of the company as an entire thing. Pierce v. Emery, 32 N. H. 484; Phillips v. Winslow, 18 B. Mon, 431; Willink v. Banking Co., 4 N. J. Eq. 377. Under this principle, a mortgage given by a railroad company on its franchises and road to bo thereafter built, covers a branch road not in contemplation at the time of the mortgage. Coe v. Railroad Co.. 4 Amer. & Eng. R. Cas. 513.
Such circumstances as may be gathered from the evidence shows that a great scheme for building a railway from New Orleans to Vicksburg, with branch lines to Baton Rouge and Shreveport, and to such points on the Mississippi river as may he thought advisable, and to connect the main lines with the railways then being built, or in operation, in adjoining states, and with mines and factories in Louisiana, engaged the attention and effort of certain persons, who obtained a charter granting the amplest powers to build the New Orleans, Baton Rouge & Vicksburg Railroad, from the state legislature. The capital stock was fixed at
The draughtsman of the mortgage act, in his effort to show clearly, and emphasize by special and general recitals, what property was subjected to the mortgage, after using language, a critical analysis of which shows that the mortgagor intended to subject to the mortgage all the property, present and prospective, of the company,—that is, the “whole road;” using the word “road” as synonymous with corporation, as was done by Ihe court in Pierce v. Emery, 32 N. H. 484,—-as a whole thing, with all its corporate rights and franchises, and incidentally, and by way of accession, all of the subsequently acquired property of the road, concludes his description of the property by adding the following language: “Also the tenements, hereditaments, and appurtenances thereto belonging, and all the estate, right, title, and interest, legal and equitaMe, of the said company and its successors and assigns therein, together with all the corporate franchises and privileges of said company at any time granted, or to be granted, by the state of Louisiana relative to the construction, operation, or use of said railroad within said state.” Suppose the defendant company, having authority to sell, had sold the property described in the mortgage act, could not the vendee, in a suit at law, vindicate title to the lands in question? Would it bo held that the said lands were not embraced in an act of sale in which such language as found in this mortgage was used? The same words which, when used in act of sale, import a conveyance of certain lands must, when they appear in act of mortgage, import a mortgage of those lands. Manufacturing Co. v. Bank, 119 U. S. 191, 7 Sup. Ct. Rep. 187.
The New Orleans Pacific Railway Company, by way of illustrating the inequitable character of complainants’ demands, says the New Orleans, Baton Rouge & Vicksburg Railroad Company never built any of the railway contemplated in its charter, and therefore never earned a foot of the land grant. The contention as to the defendant company never having built any of the road is true, as a fact; but if it be true in law that title vested, by reason of the grant, in defendant company, and that filing the map designating the route, in the general land-office, caused the title which was previously imperfect to acquire precision and attach to the lands mentioned in ihe grant, the fact as to whether any of the lands were earned by defendant company becomes a matter about which the grantor, and not the assignee, may inquire. Between the New Orleans Pacific Railway Company and the grantee, the defendant company, to whom congress saw fit, under such conditions as public policy suggested, to give the lands, there can bo no question, under the facts in this case, for the court’s consideration as to whether one or the other or neither of the parties earned the lands in question. There may or may not have been conditions imposed by congress on the grantee, the failure to comply with which would have authorized congress, by proper proceedings, to withdraw the lands from defendant company. But, so far as we are advised, the grantor has done nothing, beyond allowing the assignment of the lands to the New Orleans Pacific Railway Company, to affect the title
It was the policy of the government, probably at the solicitation and in the mutual interest of both companies, to allow and sanction the transfer of the lands, and the New Orleans Pacific Railway Company became the assignee, with full knowledge of all the facts. Notably among these facts it was known that the grant was one in pnesenti, not one in futuro, or a promise to make a grant; that defendant company had in November, 1871, filed a map designating the route from Baton Rouge, via Alexandria to Shreveport, and that, by filing such a map, the title to the, lands, previously imperfect, acquired precision, and attached to the lands; that the mortgage subjecting these lands to secure the payment of the bonds was registered at the company’s domicile; that, whatever rights, in equity or in law, the mortgagees have,'were vested in them prior to the transfer, and such rights cannot be affected by any equities which might appear to be in. the New. Orleans Pacific Railway Company because of the fact that that company constructed a railway from Baton Rouge, via Alexandria, to Shreveport. The facts and authorities show that whatever rights remained in the sovereign grantor, after the passage of the act under which the land grant was made to the New Orleans, Baton Rouge & Vicksburg. Railroad Company, the title to the lands passed in pnesenti, and was completed to that company when congress, in the interest of public policy, allowed or provided for their assignment. Congress did not make any effort to retake the iands, or to make a new grant of them to the New Orleans Pacific Railway Company, and we may fairly presume that its action, in allowing the transfer of the lands, was based on the view of the facts and law herein suggested. Considering that the lands at the time of the transfer were affected by complainant’s mortgage rights, and that this suit can affect no property of the New Orleans Pacific Railway Company, the assignee under the favor of the government, and that complainant was in no way a party to the transfer, I do not think the facts set up by the assignee to show the absence of equity in complainant’s demand can be heard to affect the rights he clearly had at the time of the said transfer. A decree will be entered for complainant.