Rice v. First Division of the St. Paul & Pacific Railroad

24 Minn. 444 | Minn. | 1878

Berry, J.

The apjieals in the foregoing eases were duly argued and submitted to this court at April term, 1875. ■ On August 24,1875, the same being under advisement and undetermined, the attorneys for the respective parties submitted to the two judges of this court, who sit in these cases, a communication, the substance of which is as follows, viz.:

“It is the desire of the parties in interest * * that the several appeals now pending in the supreme court, in ‘the above entitled cases,’ remain, for the present at least, in statu quo. We are not yet sufficiently advised of the arrangement which has been made by the parties to state to what time they are desired so to remain, or what exigency may make decisions of such appeals necessary or desirable, but will, when further advised, communicate further with your honors on the subject, if agreeable to you.”

This communication was signed by the attorneys for the plaintiffs, and by the attorneys for the defendant — the First Division of the St. Paul & Pacific Railroad Company. This communication is, evidently, nothing more than a joint request that proceedings in the appeals should be suspended for the then present. In itself considered, it contains nothing which binds either party to a suspension of proceedings for any particular length of time.

On August 4, 1877, another communication was received, signed by the attorneys for the plaintiffs, withdrawing all assent on the part of the plaintiffs to any further delay in the decision of these appeals, and asking for a speedy determination of the same.

The attorneys for defendants objecting to further proceedings, an order was issued requiring them to' show cause why the appeals should not be proceeded in.

Upon the hearing it appeared that the proceedings were suspended in consequence of an agreement entered into between the defendant, the First Division of the St. Paul & Pacific Railroad Company, as party of the first part, a committee representing certain bondholders of the company, together with such other bondholders as might come into the agreement, of the second part, and certain stockholders of the company, as parties of the third part.

This agreement was entered into with the expectation that the bondholders and stockholders of the company would be able to unite in an arrangement, proposed in the agreement, for an amicable and complete adjustment of the indebtedness of the company, and for relief from the embarrassments by which it was beset. This expectation appears to have failed.

The agreement was not executed by the plaintiffs, as trustees or otherwise, or by all the bondholders; the holders of a large number of bonds having failed to accede to it.

The agreement provided, among other things, for the suspension of the proceedings in these appeals, and it also contained provisions for its own rescission. The defendant, the First Division of the St. Paul & Pacific Railroad Company, claims that it is still unrescinded and in full force, and, among other things, that through its operation the parties of the second part have received certain valuable benefits of which they ' still retain possession, while as a condition of rescission they were bound to restore the defendant, party of the first part, to the status in quo. But we are of opinion that, upon the facts of the case, the agreement did not bind the plaintiffs. In the first place they did not execute it.

In the second place the plaintiffs are trustees and as such bring these actions. Certain property is conveyed to them upon trusts for the security of certain bondholders. The deeds of trust make it the duty of the plaintiffs in a certain contingency, among other things, to institute legal proceedings to collect the principal and interest of the bonds secured by such deeds. The proceedings in which these appeals are taken were instituted for the purpose of discharging the duty thus imposed. Now what it might have been competent for the plaintiffs to have done, if all the bondholders whose trustees they are had entered into and executed the agreement above mentioned, we need not inquire. They did not so enter into or execute it.

It is the duty of the trustees to execute their trusts, and this is a duty which they owe to all the bondholders for whose benefit the trusts were created. It is, therefore, a matter of great doubt whether it would be competent for the plaintiffs, by agreeing with part of the cestui que trusts, i. e., with part of the bondholders, or by assenting to any agreement made by such part, to tie up their own hands so as to bind themselves not to execute their trust; as, for instance, not to carry on legal proceedings instituted, as the present proceedings are presumed to have been, in the discharge of trust duty. There is certainly great reason for doubting whether such an agreeing or assenting would not be a clear violation of their trust obligations. If this doubt is well founded, then, even if the plaintiffs had been parties to the agreement before mentioned, or had acquiesced in or otherwise assented to it, they would not be bound. But whether these doubts are well founded or not, the plaintiffs are in no way bound by the agreement to any suspension of proceedings in these appeals for the first reason given, viz., that they did not execute it. As they were not so bound for any particular length of time, by the communication to this court of August 24, 1875, there is no reason why their request that the appeals should be proceeded with and determined should not be granted. The appeals will be proceeded with and determined accordingly.

G-ilfillan, C. J., liaving been of counsel, did not sit in this case.