30 N.J. Eq. 494 | New York Court of Chancery | 1879
Francis S. Lathrop, receiver of the Central Railroad Company of New Jersey, and William Z. Earned, receiver of the New Jersey West Line Railroad Company, by their petitions, pray, that the sale made by the sheriff of Hudson county, under the execution for the sale of the mortgaged premises in this suit, may be set aside, on the ground of surprise.
The property is a tract of land, and land under water, of more than one hundred acres, known as the “West Line Tract,” in Communipaw Cove, in Hudson county, and is said to be of very great value, very far beyond the amount ($123,000) at which it was sold by the sheriff.
The receiver of the West Line Company was interested in the property, because the title to it was in his company, which was the mortgagor. Mr. Lamed was also interested as the holder, as executor, of encumbrances on it subsequent
About the 5th of May, 1876, the solicitor of the complainants, then attorney-general of this state, was informed that a suit had been instituted in the United States circuit court for the district of New Jersey, by John Taylor Johnston, in which an injunction staying the proceedings in this suit was issued. It appears that soon after he obtained that information, and while the injunction was in force, and in view of it, he directed the sheriff to discontinue the adjournment. The injunction was not dissolved until the 30th day -of November, 1878. He supposed that his instructions had been obeyed, and that the adjournment had been discontinued, and that new advertisement would be necessary. So, also, did his successor, the present attorney-general, who represented the complainants in the suit in the federal court, on the application to dissolve the injunction. When the order dissolving the injunction was made, he said, in the presence of the counsel of Mr. Johnston, who were, also, of counsel with the receiver of the Central Railroad Company, that the adjournment had been discontinued.
After the injunction was dissolved the complainants’ solicitor directed the sheriff to re-advertise the property, but was informed by the latter that it would be unnecessary, because he had continued the adjournments. He thereupon directed that the sale take place, and it took place accordingly.
It is urged, also, that the receiver of the Central Railroad Company has no interest. What has been said in regard to the interest of the West Line receiver is applicable to him as the holder of bonds. He also claims to have an interest in the property by title superior to that on which the complainants’ mortgage rests, but that title, if it exists, will not be affected by the sale, and, in that respect, the receiver is a stranger, and, therefore, cannot intervene to set aside the sale. It will be sufficient, however, for the purposes of this motion, to consider the question, in view of the standing which the West Line receiver undoubtedly has. On the 25th day of July, 1878, he was about to sell the interest of his company in the property (and his title is that under which the complainants’ mortgage was given), when his proceedings to that end were stopped by this court, of its own motion, by an order of that date. That action on the part of the court was induced by the consideration that the property was claimed by two insolvent corpora
The object of the litigation in the federal court was to assert and protect the paramount title which the Central Railroad Company claimed to have to the property.
The West Line receiver subsequently asked leave of this court to take steps to intervene in that suit to protect the interest of his company. The leave -was not. accorded, because of want of funds, and the fact that it was supposed that the right of the West Line Company would be represented and defended by the complainants in this suit, in the protection of their mortgage. He subsequently, in November, 1878, again sought such leave, representing that the Lehigh Valley Railroad Company, which was largely interested as holder of bonds of the West Line Company, had agreed to indemnify him against the costs and expenses of his defence. The leave was then accorded to him. The injunction in the suit in the federal court was dissolved without his knowledge. It was dissolved on the ground that, not having been renewed, it continued only until the next term of the court after May 5th, 1876, when it was granted. The property was then put up for sale under the execution, and it was struck off to Mr. Hartshorn, vice-president of the Lehigh Valley Railroad Company, and treasurer of the Easton and Amboy Railroad Company, for (as he says) the latter company, at the price of $123,000, the amount due the complainants on their mortgage.
If the sale stands, the interest of Mr. Lamed in the property as receiver and executor is gone. The whole amount of the liens on the property will not exceed $300,000. It is
While it is the duty of the court to uphold judicial sales fairly conducted, and to give to purchasers thereat the benefit of their purchases, it is no less its duty to see to it that the defendant in execution has the benefit of that important provision for notice which the law has made for his protection. Cummins v. Little, 1 C. E. Gr. 48.
It may be added that, in view of the action of the court before mentioned, in restraining the West Line receiver, the sale may justly be regarded as a surprise upon the court itself.
The sale will be set aside on such terms as to protect the complainants against loss on a resale of the property, and to indemnify the purchaser for loss of interest on the percentage paid by him, and his costs of this application.
It will, therefore, be ordered that, if the petitioners, or one of them, furnish bond (not to be signed by either of them, however, as receiver) that the property on a resale shall bring the amount then due the complainants on the execution,