| Ind. | Dec 20, 1858
Lead Opinion
Suit by Martin L. Bundy, the trustee, to obtain a foreclosure and order of sale upon a trust mortgage, against The Cincinnati and Chicago Railroad Company., the mortgagors, and Wright and others, their lessees, having in possession and use the property covered by the trust mortgage.
The company made default. Trial of issues of law and
The case involves a large amount of property, and has been argued upon both sides with unsurpassed ability and thoroughness.
The railroad company, as we have said, made default.
The other defendants first answered simply in abatement. This answer was acted upon and disposed of by the Court, and thereupon the defendants answered over to the merits.
This strikes us as the most convenient practice. At all events, it is not a substantially erroneous one. Newell v. Gatling, 7 Ind. R. 147.
The instrument upon which the suit was brought puported to be executed by The Cincinnati and Chicago Railroad Company, for the consideration of one dol tin L. Bundy, conveying to him lands and rolling the company, “in trust for the uses and purposeWo to-wit: "Whereas, a large portion of the debts of said rail road company have been secured by the personal indorse' ments of the present directors, and others who were formerly directors of the company, and for which they are now responsible, amongst which is a debt due the Citizen’s Bank, at Richmond, Indiana, amounting to over. 50,000 dollars. Now this conveyance is hereby declared to be in trust to secure and indemnify, first, the said persons who are bound for the said debt at the Citizen’s Bank, or who may, at any time hereafter, become bound therefor, either as makers, acceptors, or indorsers thereof, or any portion of the same; and, secondly, to secure all the indorsers of said company against all other debts and liabilities of said company for which they are or may become in any manner liable as makers, drawers, acceptors, or indorsers, for or on account of said company — the said trustee to hold all of said property until the said debt at the Citizen’s Bank, or some part thereof, shall become due and required to be paid; and then, in case of the non-payment thereof, he is hereby directed and required to sell the same, or so much thereof as may be required to pay said debt;” and then he
This instrument purports to have been acknowledged before Samuel Stokes, a notary public of Ohio, on the 10th of November, 1854, and was recorded in Henry county, Indiana, on the 13th of the same month. It is inferable from the record, that the principal office of the company, in this state, was at Newcastle, in said Henry county.
A demurrer to the complaint for a misjoinder of causes of action was overruled; but no point arises in this Court upon the ruling. Section 52, 2 R. S. p. 38, enacts that “ No judgment shall ever be reversed for any error committed in sustaining or overruling a demurrer for misjoinder of causes of action.” See also, § 51, on the same page, and § 72, p. 43.
The defendants answered in twenty-eight paragraphs. A demurrer was sustained to most of them. Trial of the general, and certain special issues, by the Court, and final judgment for the plaintiff, and an order for the sale of the property, &c.
Without-reciting the voluminous pleadings at length, we will endeavor to extract from them the facts upon which the decision of the cause must rest.
1. The mortgage, or deed of trust, ujion -which the suit is founded, was executed November 10, 1854, in Cincinnati, Ohio. It embraces certain land and rolling stock of the company, but not the road bed. It was recorded in Henry and Wayne counties, but not in certain others through which the railroad in question extended, within ten days from its execution; and though it purports to have been, yet there is evidence tending to show that it never was acknowledged.
2. The rolling stock embraced in it was never actually delivered into the possession of the trustee or mortgagee, but was retained and used by the company, or their lessees.
3. There were prior mortgages and liens upon the property.
*6. The company, by her directors, said Martin L. Bundy being one, on the 16th day of October, 1856, leased the road, rolling stock, &c., to Wright and company for five years, and put them in possession. The lease was executed in Cincinnati, Ohio, and is set up by way of estoppel.
7. The debt for which the plaintiff and others are liable, and to secure which the mortgage was executed, was the debt of another company, consolidated with the present, and the assuming said debt was without authority and void.
The point as to parties may be briefly disposed of. If the beneficiaries should have been parties at all, they should have been plaintiffs; but it was not necessary that they should be plaintiffs. 2 R. S. p. 27, §§ 3, 4.
The rights of prior incumbrancers could not be prejudiced by this proceeding. Their liens upon the property would not be divested by a sale under the judgment in this ■ case. As a general rule, prior mortgagees are not necessary parties to a junior’s bill of foreclosure. They may be proper, but are not necessary parties. •
The defense of usury in the debt of Morrison, Blanchard, & Co., is no bar to the suit, according to the decision of this Court in Stephens v. Muir, 8 Ind. R. 352. The debtor does not seek to set up the defense; a third person cannot, without the debtor’s consent. If the defense were allowed, so far as the company, the debtor, was concerned, it would not go to the whole cause of action, but only to a part of it, the interest; or, if the entire debt to Morrison, Blanchard, & Co., were void, still the mortgage or deed of trust is for the securing of other debts which are not alleged to be invalid, and to satisfy which, a sale is necessary.
It is said the debt due Morrison, Blanchard & Co. was evidenced by paper payable in New York, and entirely void, because of its being usurious by the law of that state. On this point we need not dwell, as it cannot influence the
We do not think the contract void because executed out of the state. There is nothing in our railroad act requiring the directors of the corporations to transact their business within the state. It is true that corporations cannot migrate from one sovereignty into another, so as to become legal, local existences within the latter sovereignty; but it is also true that the migration of the directors of a corporation from one sovereignty into another does not terminate the existence of such corporation within the sovereignty which created it; for by our statute, 1 R. S. p. 409, the stockholders are the corporation, the directors its agents; and by interstate and international courtesy, corporations created in one state are permitted to contract and sue in others; and if all the directors could there, as agents of the corporation, make a contract, why can they not there authorize one of their number to make it.
The mere place where the active agents of a corporation enter into a contract must, in general, be immaterial. The important question arising must be one of power, not of place. The exercise of the power has relation to the place of their legal establishment, where the contract may be subsequently acted under. The meetings of the directors of a business corporation are not analogous to the sessions of a judicial tribunal. The corporation is organized by the election of directors; but the mere organization of the directors into a formal meeting for business afterwards, is quite a different thing.
States cannot migrate, but by their agents, they are daily making contracts without their territorial boundaries. Besides, our law seems to contemplate that corporations chartered in this state, and local to it, may have offices for business in other states. 1 R. S. p. 113, § 32.—Acts of 1853, p. 102. Such, also, is the spirit of our legislation, authorizing railroad companies in this state to consolidate with those in other states.
It is further objected to the validity of this mortgage or
The Cincinnati and Chicago Railroad Company was formed by a consolidation of other companies of which the company for building a railroad from Richmond to Logamsport was one. The debts secured by the mortgage or deed of trust, executed by the new company arising out of the consolidation, were owed by the Richmond and Logansport company. And it is contended that the new, consolidated company could not assume the debts of the separate members consolidating. This point seems to be settled the other way (see Redf. on Railways, p. 623); but it is not now necessarily to be decided by this Court. The transaction, in the case at bar, did not amount to such an assumption. The directors of the indebted company are still the debtors, and this deed of trust or mortgage simply covers property belonging to the indebted company at the time of the consolidation. If the debts were those of a single company, so was the property transferred in security. In equity it amounts to no more, than though the Richmond and Logansport company had mortgaged the property to secure their own debts before the consolidation, and then entered into the latter act with their property subject to the mortgage. Not having done this, it was right to provide that their property should stand for their own debts afterwards. Perhaps such would have been the case in point of law. The corporation itself, it will be observed, does not deny the validity of its act, nor seek to avoid it.
A question is made upon the recording of the mortgage or deed of trust.. Treating the instrument as a mortgage and not a deed of trust — it is in fact a trust mortgage — and further regarding it as a mortgage of personal property, we think it was sufficiently recorded to constitute constructive notice. It was recorded in the county where the óompany
The statute requires that chattel mortgages shall be recorded within ten days, &c., in the county where the mortgagor resides, to be valid, &c. It contemplates but one residence and one recording; and, if the statute is applicable to corporations, the residence of any given corporation, must be regarded, with reference to this statute, as being at the place of the principal office in this state. See Chenyworth v. Daily, 7 Ind. R. 284.
The mortgage purports to have been acknowledged before Samuel Stokes, a notary public, and has upon it the impress of his notarial seal, and the mortgagor admits the acknowledgment; but a Samuel Stokes testifies that he did not, to the best of his recollection, take the acknowledgment, and that he knows of no other notary in Cincinnati by the name of Samuel Slokes. There is also a certificate of the secretary of state of Ohio, that but one Samuel Stokes has been appointed a notary.
On this evidence, two questions arise.
Suppose the acknowledgment was not given, still, as the mortgagors delivered the mortgage to the mortgagee as genuine, and the mortgagee delivered it to the recorder as such, and it was regular upon its face, was it not the duty of the recorder to place it upon record? and having done so, was it not legal notice to all persons of its existence ? A notarial seal, prima facie, proves itself, and the acknowledgment of the mortgage upon its face was complete and conformable to law. Had it not been so, or had it been an instrument not within the recording act, it is admitted it would not have been the duty of the recorder to put it upon record, and, hence, could not have operated as notice. As it is, it cannot be said to be entirely clear that it should not thus operate. We do not decide the point, however, as it is not necessary we should, because we do not think the acknowledgment was disproved. How stands the case? Here is a mortgage having upon it a written acknowledgment, with the impress of a notarial seal corres
Further, the certificate of the officer, as to the question involved in this case, is not to a copy of any paper or document, legally in his custody, but to a negative fact, a denial of the existence of a record or document; and it seems, that an authority to certify copies of documents, so that they may be admitted as evidence, does not extend to certifying other facts, so that the certificate can have the effect of evidence. Facts which the officer is not authorized by law to certify must be proved as other facts.
The question has been elaborately argued as to whether the instrument sued on is a mortgage or deed of trust. We have treated it as a trust mortgage, and in the nature of a mortgage; but the point is not material, in the view we have taken. It could only have been material had the instrument not been recorded. The statute does not re
The mortgage having been duly acknowledged and recorded, no question arises upon the non-delivery of possession under it.
It remains to'examine the question of estoppel. The facts upon which it is claimed to arise are these: The railroad company, by a trust mortgage, conveyed her property to Martin L. Bundy, to be held by him as a security for certain creditors of the company, till their claims should become due, and then to be sold by him for the payment of those claims. He was constituted a trustee, without having himself a beneficial interest in the property, and with specified powers as to the holding and sale of it. The trust mortgage was duly recorded, and the law made the record notice to all the world of its contents. This is the general law; and see 1 R. S. p. 502, § 3.
Subsequently the company, said Bundy being one of the directors, leased the property embraced in the trust mortgage to Wright and others, for five years. Before the expiration of the five years, the claims of the creditors, the beneficiaries in the trust mortgage, become due, are not paid, and the trustee, for their benefit, proceeds to obtain an order for the sale of the property. The lessees plead the act of the trustee in participating in the lease to them, as an estoppel, in pais, of his right to foreclose and sell the property.
We do not think the estoppel arises upon the facts—
1. Our statute enacts that, “every sale, conveyance, or other act of a trustee, in contravention of a trust, shall be void.” 1 R. S. p. 503, § 5.
2. His act could not, upon any principle known to the law, operate as an estoppel to the creditors for whose benefit the trust was created, and who had not authorized or consented to his act.
3. The lessees had notice, by the record of the trust mortgage, of the extent of interest possessed by the respective parties, and of the liability to which they might
A precedent debt, according to the line of decision in-this state, constitutes a valuable consideration for a mortgage. Work v. Brayton, 5 Ind. R. 396.
The result at which we have arrived, as to the validity of the plaintiff’s claim under the trust mortgage, renders it unnecessary that we should inquire into the validity of the lease to Wright and others.
Per Curiam. — The judgment is affirmed with costs.
Rehearing
The Same Case.
ON PETITION for a Rehearing.
An earnest petition for a rehearing has been filed in this case. We have, in considering it, carefully reexamined the record of the cause to see if we could discover a doubt of the correctness of the decision already rendered, upon which we might, consistently with the rules of practice, grant the petition.
The suit is by the trustee upon a trust mortgage. It is against the party appearing to have executed the mortgage, and two others, viz., John W. Wright and Jared B. Curtis. The party to the mortgage made default, thus admitting its execution. Wright and Curtis answered. The first paragraph of their answer was the general denial — a denial of each and every allegation in the complaint.
To these special paragraphs a demurrer was sustained. There was no error in this, because these paragraphs amounted to *no more than the general denial. They might have been stricken out on motion. This will not be denied as to the paragraph not verified by oath. That paragraph imposed no burden of proof upon the plaintiff beyond that imposed by the general denial. A moment’s examination will show that the paragraph verified amounted to no more than the one not verified.
Our code provides that, “where a writing, purporting to have been executed by one of the parties, is the foundation of, or referred to in any pleading, it may be read in evidence on the trial of the cause against such party, without proving its execution, unless its execution be denied by affidavit before the commencement of the trial, or unless denied by a pleading under oath. The latter party shall, in all cases, have inspection of the instrument of writing before pleading.”
Here, Wright and Curtis were not parties to the mortgage, and it could not have been read in evidence against them under the general denial without proof of its execution. This point was settled by the unanimous decision of the Supreme Court in Riser v. Snoddy, 7 Ind. R. 442; hence, in the original opinion, it was not deemed necessary to restate it. These defendants, under that issue, had a right to prove its invalidity. Earnhart v. Robertson, 10 Ind. R. 8.—Noble v. Epperly, 6 id. 468.
What has been said in relation to the denial by Curtis of the execution of the mortgage, applies with still greater force to his denial of the acknowledgment. The suit is not against the party who executed that.
The whole question, then, upon the validity of the mortgage, came up on the trial under the general denial. The record recites — “ And thereupon, the issues being joined in this cause, it is, by agreement of parties, submitted to the Court for trial, without the intervention of a jury, upon
“ We agree that the within certificates may be used as evidence in this case without any other proof; and it is further agreed that the copy of the agreement between Bundy and the company in regard to the possession of the property, made part of the complaint, may be used in evidence the same as the original. [Signed] Bundy, Smith, Newman and Siddall, Stuart, Corwine, Bickle and Morton.”
And it is contended that this agreement went to the legal effect of the certificate when in evidence, and not to mere preliminary questions arising in the minds of counsel, touching its admissibility, as to sufficiency of authentication, or whether the signer of the certificate was the secretary, &c.; but we think it clearly went alone to the latter, as did the stipulation to admit the copy of the agreement named instead of the original. What it proved when admitted was a question to be determined by the Court. It was but a link in the chain. It required another link, viz., an Ohio statute,, authorizing it. On this point, we have seen nothing to induce us to change the opinion heretofore expressed. As to the appointments of notaries, in the language of Judge Dewey, in Harris v. Doe, 4 Blackf. 376, touching papers in that cause, “we do not know that they were registered, or required by law to be registered in .any
The Court found for the plaintiff on the general issue, which covered, .as to these questions, the whole merits, and rendered final judgment for the plaintiff. If that judgment is not wrong, tins Court cannot reverse it. It is manifestly right. And .if the evidence is not all in the record, the presumption must be that it sustained the final judgment as rendered by the Court. This remark disposes of. the question of the claim of Wiggins & Co. to a portion of the cars.
The mortgage involved was duly recorded in the counties of Wayne and Henry. It is inferable from the record that the principal office of the company in this state was in Newcastle, Henry county. It appears that the portion of the road operated — that on which the rolling stock mortgaged was used — lay mostly in the two counties above-named, as by the lease to Wright & Co., executed subsequently to the mortgage, it is provided that the road shall be extended from Anderson, a point near the line of Henry county, north-westerly, in the direction of Logansport. It appears that the president and principal directors of the company in Indiana merged at the consolidation with the Ohio company in the new organization, resided at Newcastle, that the shops of the road were there,-and the press for affixing the seal of the company, &c.
Counsel reply, in part, to this, by asking, very disingenuously, how can it be inferred that the principal office of the company was at Newcastle, when it positively appears that that office was in Cincinnati, Ohio ? The Court said nothing about the principal office of the company. The Court asserted that it was inferable that the principal office of the company in this state was at Newcastle. The company may have several offices— one, in Ohio, may be the principal office of the company for the whole road, and
Equally disingenuous with the above-noticed- remark, is the following:
“ It is suggested by the Court, as a circumstance weakening the force of our testimony, that Cincinnati contains a "population of two hundred and fifty thousand inhabitants. How the Court can take judicial notice of that fact, in view of the technical rule which it applies at the same time in regard to the Ohio statute, and the source of notarial commissions, we cannot very clearly see; and especially in view of the case of Shaw v. Wood, 8 Ind. R. 518, in which this Court held that they did not know what Cincinnati was.”
It will be seen by quoting what was said in the case cited, that the Court held no such thing. This is the language and holding of the Court:
“ The only evidence that the note was made in Ohio, is the fact that it is dated at Cincinnati. That is not sufficient. We do not know what Cincinnati that is. Hutchins v. Hanna and another, at this term.”
In the case of Hutchins v. Hanna, the Court held, Judge Stuart delivering the opinion, that where a- note sued on, was dated at New York, the state not being named, the Court could not judicially know that the city of New York, in the state of New York, was the place of date: He says, “there is a New York and a Philadelphia in this state.” Shaw and Wood followed this case. But if the record had shown, in Hutchins and Hanna, which New York was designated, as in this case it does which Cincinnati, the Court might have presumed to apply, if necessary, some geographical knowledge in the decision of the cause. Courts do not. take judicial notice of the laws, but they may of the general geography and history of other states. Ind. Dig. pp. 343, 595.
The form of the judgment is objected to. It was not
Per Curiam. — The petition is overruled.
Counsel were the same as in the first hearing of the appeal.
The opinion on the petition for a rehearing of this cause was delivered on the 12th of March; hut for convenience, it is inserted here.