101 Tenn. 297 | Tenn. | 1898
These two causes are proceedings to foreclose mortgages of the Chattanooga Electric Railway Co. because of default in payment of interest coupons. The suits were brought within two months after the coupons matured. Before the lapse of sis months after maturity, but after the bills were filed, the defendant company paid all interest in default.
As the cases come to us, two questions only are presented: (1) Whether the bills were prematurely filed; and (2) whether the trustee in the first cause should be allowed compensation for himself and counsel; and, in the second case, whether the counsel of complainants should be allowed fees, the trustee in the latter case having failed, and being unable to act, and the suit being brought by the bondholders, who are beneficiaries under the trust.
The first assignment presents a question of difficulty, and its solution depends upon the proper construction of the provisions of the mortgages as to the remedies of the trustee or beneficiaries in case of default in payment of the interest coupons at maturity.
The provisions of the mortgage in the first case are substantially, so far as need be stated, “that if
It is further provided by the next section, that if default shall be made as aforesaid, and shall continue as aforesaid, the trustee, after entry as aforesaid, or other entry, or without entry, by itself or agent, or by proceeding in Court, may sell the property, etc., and pay the proceeds on said interest and on the principal of said bonds, whether due or not.
The provisions of the mortgage in the second case are, that if default is made in payment of principal or interest, and if such default continue for six months, the mortgagee or trustee may take possession and proceed to operate, and, after paying expenses, pay the interest and principal and may sell the property, etc. It further provides, ‘ ‘ upon default and entry as aforesaid, or without such entry, the party of the second part may proceed to sell the mortgaged property, either by virtue of the power of sale herein contained, or by proceeding in a Court of Equity, in the manner and for the purposes herein mentioned,5 ’ etc.
The question of controversy in the case is, whether the mortgagor company, under these provisions, has
The identical same cases are relied on by appellant to sustain a contrary view, and are urged by appellee to sustain the Court of Chancery Appeals.
As an original proposition, free from any controlling or persuasive authority, we would .hold that a, proper construction of each mortgage is, that it is not until after default in payment of interest had continued for six months, that foreclosure proceedings or other proceedings to take possession could be had either in or out of Court. Upon any óther construction we are unable to give any force or effect to the words “within six months,” contained in one mortgage, and “if such default continue for six months” in the other. “Within” a certain time embraces the last day of the time limited, as does the word “after.” 29 Am. & Eng. Ene. L., 524; 26 Am. & Eng. Ene. L., 4; 1 Am. & Eng. Enc. L., 323. If the provision that “within six months
So, in the other mortgage, the entry and foreclosure are to take place, and Court proceedings may be had, if such default continues six months. If it do not continue for that time, the right of entry and foreclosure, in or out of Court, has not accrued under the terms of the mortgage.
But it is said the right to go into Court, and foreclose on default, does not depend on the provis
We do not understand the case of Railroad v. Fosdick, 106 U. S., 47, to be in conflict with this view. In that case the provisions are very similar to those now under consideration, and the Court does say that upon default in payment of any interest the trustee or any bondholder may file a bill to foreclose, but the Court was evidently
But just prior to this the Court says the condition of the mortgage was broken, and, continuing for six months, entitled the trustee to take possession and sell, etc. See same page, near middle.
In that case, moreover, the interest had been in default from October, 1873, to February 27, 1875, before the bill was filed, so that the questions of time and prematurity of suit were not material and really not considered.
It will be noted, also, that in the Fosdick case the provision of the fourth article of the • mortgage, as stated by the Court, was that the mortgagor’s right of possession was to terminate upon a default in the payment of interest as well as principal, while in the mortgages now under consideration the clear intent is that the mortgagor is to remain in possession until the termination of the six months and until demand is made.
The rule is, we think, correctly stated in general terms in Farmers’ Loan & Trust Co. v. Chicago, etc., Ry. Co., 27 Fed. Rep., 151, substantially as follows: “When the trustee may proceed to foreclose on account of default depends on the construction of the mortgage. It is generally held that the right exists to proceed at once unless it appears from the terms of the mortgage to be the intent of the parties to postpone the right.”
The mortgage in each of the ca^es now under consideration provides for a sale under Court proceedings at the same time and on the same conditions that sale may be made-' out of Court, and under such provisions it is the clear intention of the parties that the Court proceedings should be had only in like cases and conditions where foreclosure might be had out of Court, and we do not think the provision for Court foreclosure can be treated as simply and alone in aid of proceedings out of Court.
Costs of the appeal and of the Court below will be paid by the original complainants and their sureties on their prosecution bond, and the bills are dismissed. In this view we need not consider the second assignment.