Sanxey v. Iowa City Glass Co.

63 Iowa 707 | Iowa | 1883

Rothrock, J.

I. J. E. Switzer, a'bondholder, also intervened in the action, but, as he has not appealed from the decree, we need make no statement of the case so far as his rights are involved.

1. practice: objection to standing of intervenor: made too late on appeal. Some question is made by counsel for appellees as to the right of appellant to be heard in this court, because no serviceof notice of his petition was had upon the Glass Company. It appears, however, that the petition of intervention was filed by leave of the court pefore defendant was defaulted, and the intervenor filed his objections to the relief prayed for in the amended petition, and there was a trial, at which evidence was introduced as to the cost of the real estate, buildings and machinery, and that the same were in a good state of preservation.

The contest on the trial was between the intervenor and the trustee, upon an issue in which the power of the court to render such a decree as the trustee demanded was the question to be determined. The intervenor’s standing in the court below was not questioned, and it cannot be questioned in this court.

2. mortgageto trustee for bondholders: foreclosure: ertyfor\vho?¿ notwanant. II. Did the court have the power or authority to direct the trustee to bid in the property at what he deemed its reasonable market value, against the objection of the intervenor? The trust deed conferred authoritv " upon the trustee to foreclose the same. It did n°f authorize him to purchase the property for the benefit of all the bondholders. We have, then, this case: The bonds are held by fourteen persons. Some of these persons guaranteed the collection of the bonds held by the interveuor. If the property should be bid in at the foreclosure sale under this decree for the full amount of the bonded indebtedness, that would extinguish any liability of the guarantors to the intervenor, no matter how much he might lose upon the property purchased for him by the trustee. No one of the bondholders is entitled to any priority over another. They- are all to be paid pro rata from the proceeds of the sale. If the property should be bid in for the full amount due all of the bondholders, their judgments would be satisfied. We think it is very clear that the court had no authority to make a decree which might in any event impair the security which the intervenor held for the payment of the money due to him. ■ Suppose A. owes B., and the debt is secured by a deed of trust running to C., could a court properly decree on foreclosure that O. might bid in the property for B., and fix the price at which B. should take it, when B. did not want the property? We know of no rule of law, and surely there is no equitable principle, by which a creditor is bound to take property in satisfaction of his debt, and at a price to be fixed by another, unless he has contracted so to do. And the case is not different because thirteen other persons hold liens upon the same property, and in the same right.

We have examined the cases of foreclosure of railroad trust deeds, cited by counsel for the parties, and have endeavored to find others bearing upon the question, and we find nothing anywhere which will in principle support this decree. Of course, where a trust deed provides that the trustee on foreclosure may bid in the trust property for the benefit of the bond holders, or where a minority of bond holders acquiesce by their silence in an order of this kind, being represented by the trustee, and afterwards seek to review the decree, there are equitable grounds upon which it may be upheld. Butin this case the bond-holder resists and objects to the decree. He has lost nothing by failing to appear and question the claim made by his trustee, that he shall bid in the property at the sale; and, in view of the probable impairment of his security, we think the decree of the district court cannot be sustained.

Uü v iiiESED.