21 Minn. 344 | Minn. | 1875
Most of the questions mooted in this case are disposed of in our opinion filed in State v. Winona & St. Peter. R. Co., ante p. 315. The only question remaining to be considered arises upon the following facts :
By § 5, ch. 1, Sp. Laws 1864, it is enacted that certain lands granted to the Southern Minnesota Eailroad Company, of which the lands to which the present proceeding relates are a part, “ shall be,and are hereby exempted from all assessments and from all taxation whatsoever, until the same shall have been sold and conveyed by the said company.”
On August 8, 1864, said company, as party of the first part, executed and delivered to Euggles and Man, as trustees and parties of the second part, a deed of trust, bj7 way of mortgage, to secure certain bonds of the company, to the amount of $1,000,000. This deed of trust, (called Ex-
On April 1, 1868, the only bonds outstanding and secured by the trust deed of August 8, 1864, were four hundred and fifty, of $1000 each. On said first day of April, the company, as party of the first part, executed and delivered to Buggies and Man, as parties of the second part, an instrument, (called Exhibit C,) so much of which as is important to be referred to, reads as follows, to wit:
“ Whereas the said company has executed four hundred and fifty obligations or certificates of special trust, to bear date as they may respectively be issued, and which are to be issued by the said parties of the second part, in part substitution for certain bonds of said company which were secured by the mortgage made by said company to the same trustees, on the eighth day of August, one thousand eight hundred and sixty-four, each of wMch certificates represents one thousand dollars of the original debt secured by said mortgage, which debt was contracted for the construction and equipment of the railroad of said company, and which certificates are intended as evidence of, and to be secured by a mortgage or special trust, in respect to one hundred thousand acres of the laud now belonging to the company, and covered by said former mortgage: And whereas the said certificates constitute a present indebtedness of said company, to the extent of four hundred and fifty thousand dollars, but which, by arrangement with the holders thereof, is payable through the said trustees, and by and from the-proceeds of said lands only, the said lands to be held and disposed of in like manner, substantially, as was specified in said former mortgage, and the net proceeds thereof to be-received by said trustees, and paid by them to the holders of said certificates in satisfaction thereof: Now this Indenture zoitnesseth, that the party of the first part, in consideration
A sample (Exhibit D) of the certificates mentioned, so far as its contents are important in this case, reads as follows, viz:
“These presents are to certify: 1. That the grantee of this certificate has surrendered for cancellation mortgage bonds of the Southern Minnesota Railroad Company, issued under its mortgage of the eighth day of August, 18G4, to the amount of one thousand dollars. 2. That such surrender is made pursuant to an arrangement between the said company and certain of its bondholders and the undersigned
Of the 450 bonds, 225 were surrendered by the holders thereof, in exchange for certificates. The remaining 225 are still outstanding, and secured by the trust deed of August 8, 1864. This trust deed (Exhibit A) is therefore still subsisting and unsatisfied, and covers, as has already appeared, the 100,000 acres of land covered also by Exhibit C, no part of the same having been released from the lien of Exhibit A.
Reading Exhibits C and D together, as parts of one and the same transaction, we are of opinion that their proper construction is as follows : The evident purpose was that the bondholders who exchanged their bonds for certificates, should receive the proceeds of such a proportion of the 100,000 acres of land, as the number of bonds so exchanged bore to the four hundred and fifty originally outstanding. It is equally evident that these proceeds were to be the proceeds of the unincumbered, entire title of this proportion of the 100,000 acres, not the proceeds of a title subject to the incumbrance of Exhibit A. If all of the 450 bonds had been surrendered, and certificates accepted in their place, we are by no means prepared to take the position that Exhibits C and D ivould not, in substance and effect, have operated as a sale and conveyance of the 100,000 acres of land, within the meaning of the charter provision before cited. § 5, ch.l, Sp. Laws 1864. In such case, although, under the provisions of Exhibit C, the lien of the mortgage created by Exhibit A would have been preserved, it would have been preserved for the benefit of the certificate holders only. They would, through the medium of the trustees, hold the fee of the lands, subject only to a mortgage in favor of themselves. In fact and effect, then, there would be nothing to prevent the complete fulfilment of the purpose for which Exhibits
But the case supposed is not the case at bar. The right of the 225 certificate holders who have surrendered their bonds in exchange for certificates, is not a right to the proceeds of the unincumbered, entire title to an undivided half of the 100,000 acres, (as contended by the counsel for the State,) orto the proceeds of the unincumbered entire title to 50,000 acres, in severalty, (under the provisions of the 7th clause of Exhibit D;) but it is, at most, nothing more than a right to the proceeds of the fee, subject to the lien of the mortgage created by Exhibit A, not only in their own favor, but in favor of the 225 bondholders whose bonds ,are still outstanding. But Exhibit A contains the following-provisions respecting the authority and duty of the trustees : ‘ ‘ And it is further provided and agreed that it shall be lawful for the party of the first part, by and with the consent of the parties of the second part, their survivor or successors, or upon such terms as shall have been approved by them, to effect sales, from time to time, of any of such lands, at prices not less than the then existing minimum valuation of the same ; and such sales may be made either for cash, or for any of the bonds aforesaid, at not more than their par value, or partly for cash or bonds, and partly upon credit, such credit not to exceed-five years, and the balance in such case to be secured by contract or mortgage ; but upon effecting any such sale or sales, the same and the terms thereof shall be certified to the parties of the second part, their survivor or successors, and upon the completion of any purchase, by full payment, or by payment of part and mortgage for the residue, the parties of the second part, their 'survivor and successors, shall and will execute are-
“ And it is further provided that the parties of the second part, their survivor or successors, shall have power to appoint an agent or agents, for the purpose and with power to execute good and effectual releases of any lands so sold.
“Audit is further provided and declared that the proceeds of all the lands so sold shall constitute a sinking fund for the payment and redemption of the aforesaid mortgage bonds, and it shall bo, by the parties of the-second part and their survivor or successors, faithfully applied to that object ; and until such moneys shall be so applied, the same shall bo deposited in the city of New York, upon the best terms which can be procured for the same, to the credit of the parties hereto of the second part, their survivor or successors ; and whenever, from time to time, there shall be any money so on deposit, said parties of the second part, their survivor or successors, may, in their discretion, apply the same to the purchase or redemption of so many of the aforesaid bonds as such moneys shall from time to time be adequate to redeem, but at rates not exceeding the par value of the said bonds, it being hereby made the duty of said trustees to purchase or redeem the same, upon such terms as will be most advantageous to the party of the first part ; and in case such bonds cannot be obtained and redeemed without paying more than the par value, and the said trustees shall have in hand more than $10,000 applicable for that purpose, it shall be their duty to advertise in two newspapers of general circulation in the City of New York, for not less than twenty days, for proposals for the sale or rendition for redemption of bonds to the amount so on hand,
From these provisions of Exhibit A, it will be apparent that the obligations of the trustees to the holders of the 225 outstanding bonds are such as to deprive them of the power of securing and appropriating to the certificate holders the proceeds of the unincumbered, entire title to either an undivided half of the 100,000 acres, or of 50,000 thereof in severalty, at least until these 225 outstanding bonds are taken up, or their lien upon the 100,000 acres in some way satisfied or discharged. In other words, Exhibits C and D are so subjected to and controlled by Exhibit A, that the purpose with which they were executed has never been fully carried into effect; that is to say, they have never become operative, so as to pass to the holders of the certificates, or the trustees for them, the right to the proceeds of the entire, unincumbered title, either to the undivided half of the 100,000 acres, (as contended by the counsel for the State,) or to the 50,000 acres thereof in severalty, to which, as it seems to us, it was contemplated that they should be entitled, under the better construction of the 7th clause of Exhibit D. Whatever, then, may be the effect of Exhibits C and D, or the rights of the certificate holders thereunder, we are clear that they do not operate as a sale and conveyance of any part of the 100,000 acres of land, and, as a consequence, they do not render any part of said lands subject to taxation.
The pro forma judgment of the court below to the contrary is therefore reversed, and the lands discharged from the taxes assessed upon them, and attendant penalties, costs and disbursements.