26 N.J. Eq. 543 | N.J. | 1875
The opinion of the court was delivered by
This was a proceeding in the Court of Chancery against The New Jersey West Line Railroad Company, as an insolvent corporation. On the filing of the bill, an injunction issued, and by a subsequent order, a receiver was appointed; and this officer having made a report of the condition of the "company, and showing its insolvency, a decree was signed, directing the receiver to sell the franchises and property of the company, in a mode therein particularly described. This decree also ordered that these franchises and property should be sold, with certain exceptions, clear of all encumbrances. It is from this decree to sell, that the appeal has been taken.
This procedure, thus culminating in the decree of sale, was founded, exclusively, on the act of 1870 {Pamph. L., 55), which is a supplement to the act to prevent frauds by incorporated companies. I thus refer to this act as the sole authority and justification for the decree now to be considered, as it is so treated in the opinion of the Chancellor, and, also, as it seems to me undeniably manifest that these proceedings are entirely destitute of the exhibition of many of the facts which are necessary to legalize judicial action of this nature against an insolvent corporation, by virtue of the original act, or any of its supplements, which were passed antecedently to the one .now referred to. Indeed, it appears, upon looking into these papers, as though the solicitor conducting the cause, had intentionally, and with some care, avoided putting his case within the operation of those earlier laws, there existing, no doubt, some good reason.for so doing. -But, whatever the motive, the result is obvious. The decree must find support in this supplement of 1870, or it has nothing whatever to rest upon.
And it is from this posture of the case that the exceptions which have been taken to this decree, have been and ought to be substantiated. The mortgage held by the appellants, is prior to the enactment of this statute; and the complaint is, that the decree, founding itself on this act, has taken away from the appellants certain remedies for the enforcement of their mortgage, to which, at the time of its execution, they became entitled. In support of this contention that clause in the constitution of the state which forbids
These remedies and privileges, the deprivation of which laid the ground of this objection, were several in number, being given by the express stipulations of the mortgage. The general character of this instrument has been referred to ; it was made to the appellants by the railroad company to secure the bonds before mentioned, and was in trust, and conferred upon the trustees certain valuable privileges, in case of a failure, on the part of the corporation, to pay the interest or principal of the debt at the time designated. Among the rights thus given was one to the effect that, in default of payment of the moneys accrued, according to the agreement, it should be lawful for the trustees to take possession of the franchises and railroad, and to operate it, and to conduct its business, applying the moneys thus realized to the liquidation of the debt; and a second right, to the effect that such trustees, at their discretion, might sell the road and franchises for the same purpose. As it was obvious that the sale, by force of the present decree, takes away or supersedes these privileges, it was urged that such assent was illegal, by reason of the constitutional clause just quoted. The argument before this court, on this subject, was interesting and instructive, involving, as it did, the authority of the company to insert in their mortgage the stipulations in question, and a construction of the statute by virtue of which the instrument had been executed, as well as various principles of the law relating to the powers in general of corporations of this class. But this case, in the view in which it presents itself to my mind, does not call for a decision of any of these important matters; for, quite aside froin any point of intricacy, there seems to me a plain ground of solution. I refer to the stipulation contained in the fifth article of the condition of this mortgage, which is in these words :
The principal moneys secured by the mortgage were not to fall due until the first day of May, 1900, unless by force, upon the contingency' mentioned, of the exercise of the option of the trustees as specified in the clause just quoted. There is nothing in the case to show that the trustees have, in any manner, elected that these principal moneys should become due by reason of the default in the payment of the interest due upon the bonds. The consequence then is, that, as the case stands before this court, these principal moneys must be regarded as not due until the year 1900.
Now it is clear that the effect of the present decree is to divert, at once, the lien of this encumbrance on the land, and to make these moneys payable forthwith; and this is done by force of the act of 1870, in which the decree takes root. The inquiry arises, therefore, has the legislature the competency to produce such a result ?
I have failed to find an affirmative answer to this question. It is certain, in a contract for a loan of money, the time fixed for repayment is a material matter, so that to hasten or postpone such period, is to alter such contract in point of substance. If I lend a sum of money on a credit of ten years, it seems certain that I cannot be compelled to accept repayment at any period short of the time so fixed, by force of any legislative act which can be subsequently framed. The constitution of the state, if it is to be of any avail, must annul any
Is one of the decisions made upon this subject, in this state, stand upon reasons which will justify this decree. In the case of Potts v. Trenton Water Power, 1 Stockt. 592, the works of the corporation were sold free of encumbrances, by receivers appointed under an act of the legislature, specially enacted for the purpose. In the, discussion, on that occasion, it was argued that this act was unconstitutional, upon the ground that if; impaired the obligation of contracts, and deprived parties of existing remedies. But the objection did not prevail ; it being held that the remedy provided by the particular law, was not unlike existing remedies, and was more efficacious. But there the decree did not, against the will of the creditor, expedite the payment of a loan; and the law itself, justifying the decree, in regard to its general náture, did not receive an approval, except with reference to its application
Decree unanimously reversed.