Knickerbocker Trust Co. v. Oneonta, Cooperstown & Richfield Springs Railway Co.

134 A.D. 775, 119 N.Y.S. 304, 1909 N.Y. App. Div. LEXIS 2981

Opinion

Chester, J.:

The order appealed from denied a motion made at the foot of the decree to compel a conveyance to the appellant of certain property alleged to be covered by the lien of the mortgage foreclosed. The facts are complicated, but when those that are material are stated the correctness of the order appealed from seems apparent. The action was brought by the plaintiff as trustee to foreclose a mortgage given to secure certain bonds. The action resulted in a judgment of foreclosure and sale against the defendant, the Oneonta, Cooperstown and Richfield Springs Railway Company. A sale was had thereunder, and Henry W. Bean, as chairman of a reorganization committee, bought in the property covered by the mortgage for the sum of $960,000. He paid on his bid the sum of $50,000, and deposited with the referee 1,135 $1,000 bonds secured by the mortgage foreclosed, and the referee thereupon delivered his deed of the mortgaged property to Bean and he was let into possession thereof. Thereafter he and his associates organized a new company known as the Oneonta and Mohawk Valley Bailroad Company, to whom the property was conveyed.. This new company operated the road for a period of over two years, during which time it purchased certain property, rights and franchises which are the subject of this appeal. This subsequently acquired property was mortgaged to the Colonial Trust Company, which is now the Trust Company of America, as security for certain money loaned to the reorganization committee. It appears that Bean, as chairman of the reorganization committee, thereafter failed to pay the full amount of his bid for the property, and the property was, because of such failure and pursuant to a provision in the judgment, retaken by the court, and again put up for sale. It was resold on the 9tli day of October, 1908, and on the resale said Joseph A. Starrett was the purchaser. It appears that he represented the minority bondholders under the Knickerbocker Trust Company mortgage, which was foreclosed, and that they have since formed a new railroad company, known as the Otsego and Herkimer Bailroad Company. When the property was put up for resale and prior to its being struck off to Starrett, a notice was read to the effect that the property now in dispute was not included in the mortgaged property, but that it was the property of the Oneonta and Mohawk Valley Bailroad Company, and subject to the claims of the mortgage and general creditors of that company. A full description of such property was given in the notice. After such notice the mortgaged property was struck down to said Starrett for $200,000, and he has paid the amount of his bid. A conveyance has been made to him by the referee on the sale following the exact terms of the mortgage. It is claimed on this appeal that the newly acquired property was a part of the railway property and included in its appurtenances under that term as used in the description of the mortgaged property. The question to be determined here is whether the court should determine this very important controversy as to the title of this after-acquired property upon affidavits in a summary way on a motion, or whether it should be left to be determined by an action in which all the parties would be before the court and when all their rights and equities could be considered and protected. It seems to us clear from the mere statement of the facts that matters of the importance of those involved here cannot properly be determined in this summary way upon a motion. The purchaser on the resale and his assignees cannot complain of this course because he had full notice before he made his bid that it was claimed' that the after-acquired property was not covered by the mortgage, under which the sale was had, and that other parties claimed to own the same, or had rights and interests therein. While some of these other parties appeared to be represented by an attorney on this appeal, yet they are not parties to the action, and it is questionable if they would be bound by any determination made upon this motion.

We think, therefore, that the motion was properly denied and that the order should be affirmed, with ten dollars costs and disbursements.

All concurred.

Order affirmed, with ten dollars costs and disbursements.