Rice v. St. Paul & Pacific Railroad

24 Minn. 464, 1878 Minn. LEXIS 89

Opinion

Berry, J.

*

The St. Paul & Pacific Railroad Company, a corporation created by the legislature of Minnesota, executed on the second day of June, 1862, to the plaintiffs Edmund Rice, Horace Thompson and Samuel J. Tilden, as trustees, a mortgage or deed of trust to secure an issue of the bonds of said company to the amount of $1,200,000. This action is brought for the purpose of foreclosing said mortgage or deed of trust, and in aid of the foreclosure, and upon sundry allegations in the complaint, a receiver is prayed for. The prayer is that “pending this suit the court forthwith appoint a receiver to take immediate possession, control and management of the * * line of railroad from St. Paul to Watab, and of all the appurtenances, rolling stock, lands and other property belonging or appertaining to said line of road, and covered' by said * * * mortgage of $1,200,000, and that full power and authority be given to him to hold, use, manage, control and operate the same, with the usual power of receiver in such cases.”

The original charter of the company is found in chapter 1, Laws 1857, exi^ session. By section 11 of that chapter the company is authorized to borrow money, and “to make, execute, and deliver all necessary writings, notes, bonds, mortgages, or other obligations or securities, in amount and kind as may be deemed expedient by said corporation, in consideration of any such loan, or in discharge of any liabilities which it may incur in the construction, repair, equipment, or operation of said road; and the powers of the said company for the purposes- aforesaid, and for all purposes necessary for carrying out the object of said company, are hereby ratified and confirmed, and the contracts and official acts of said company declared binding in law and equity upon said company and upon all other parties to said contract.” Section 21 provides that “the said company is hereby authorized and empowered, in its corporate capacity, to make, execute, issue, and deliver its bonds or obligations in any amount which the directors may deem necessary or expedient; * * and to secure the payment of all or any of said bonds the said company is hereby authorized and empowered, in its corporate capacity, to make, execute and deliver one or more mortgages or deeds of trust upon the whole or any part of its railroad or branches constructed or authorized to be constructed, and of the estate granted by the act, and any or all other of their estate — real, personal or mixed — in possession or expectancy; and said company is also hereby authorized and empowered, in and by such mortgage or deed of trust, to confer upon the trustee or mortgagee full and ample powers to enter into and upon, and to take possession of, have, use, and employ, or to sell or dispose of the whole or any part of said railroad and branches, ' and all corporate and other franchises, rights,- and privileges of the said company; and in case of any such sale, to grant and convey to the party or parties acquiring title under any such sale, and their associates, successors, and assigns, all and the same rights, privileges, grants, franchises, immunities, and advantages in and by such mortgage or deed of trust enumerated and conveyed, which belonged to and were enjoyed by the said company, as fully and absolutely in every respect as the said company, its stockholders, officers and agents might or could have done if such sale or foreclosure had not taken place.”

At common law, after a mortgage became forfeited by nonpayment of the moneys secured thereby, the mortgagee was autho’ized to proceed immediately to obtain possession of the mortgaged premises in an action of ejectment. Tyler on Ejectment, 45, 169. But by our statute “a mortgage of real property is not to be deemed a conveyance so as to enable the owner of the mortgage to recover possession of the real property without a foreclosure.” The effect of this obviously is to cut off the common law right to maintain an action for the possession before foreclosure. But, as suggested by the counsel for the plaintiffs, “by special law this company is empowered to confer upon the-mortgagee the right of possession upon the common law conditions, or upon any other conditions that may be agreed upon and expressed in the mortgage, ” so that by this special provision of its charter it is made competent for the company, by the terms of a mortgage or trust deed, to confer upon the mortgagee or trustee a right to the possession of the mortgaged property upon default in the payment of bonds secured thereby, and such a right as will entitle the mortgagee or trustee to sustain an action under our practice, in the nature of ejectment to obtain possession, if it is withheld.

We have next to look at the mortgage or trust deed, for the purpose of ascertaining whether the company has availed itself of the power thus conferred. The ninth article of the mortgage or trust deed is as follows, viz : “In ease default shall be made in the payment of any interest on any of the aforesaid bonds secured by this instrument, issued or to be issued, according to the tenor of the coupons thereto annexed, or in any requirement to be done or kept by the party of the first part, and if such default shall continue for the period of six months, it shall be lawful for the said trustees, or the survivors or survivor of them or their or his successors, personally or by their or his attorneys or agents, to enter into and upon all and singular the premises hereby conveyed, or intended so to be, and each and every part thereof, and to have, hold and use the same, operating by their or his superintendents, managers, receivers or servants, or other attorneys or agents, the said railway, and conducting the business thereof, and making from time to time all repairs and replacements, and such useful alterations, additions and improvements thereto as may seem to them or him to be judicious, and to collect and receive all tolls, freights, incomes, rents, issues and profits of the same, and of every part thereof, and, after deducting the expenses of operating the said railway, and conducting its business, and of all the said repairs, replacements, alterations, additions and improvements, and all payments which may be made for taxes, assessments, charges or liens, prior to the lien of these presents, upon the said premises, or any part thereof, as well as a just compensation for their or his own services, to apply the moneys arising as aforesaid to the payment of interest in the order in which such interest shall have become due, or shall become due, ratably to the persons holding the coupons evidencing the right to such interest, and, after paying all interest which shall have become due, to apply the same to the satisfaction of the principal of the aforesaid bonds, which may be at any time unpaid, ratably and without discrimination or preference. ”

It will be seen that this article of the mortgage or trust deed, in case of default in the payment of interest, according to the tenor of the coupons annexed to the bonds, expressly confers upon the trustees full power to enter into and upon all and singular the premises by the mortgage or trust deed conveyed or intended so to be, and each and every part thereof, and to have, hold, and use the same, to operate and conduct the business of the company’s railway, and “to collect and receive all tolls, .freights, incomes, rents, issues and profits of the same and of every pa/rt thereof.” The result is that under this article of the mortgage or trust deed, upon a default upon the part of the company (the mortgagor) such as is alleged as one of the facts upon which the plaintiffs (the trustees) rest their right to maintain this action for a foreclosure and their claim of a receiver, the plaintiffs, the trustees, are entitled to enter into and take possession of the mortgaged property without legal proceedings, if they are permitted so to do, and if not so permitted, they are authorized to obtain possession by resorting to an action under our Code, in the nature of an action of ejectment. If any of the property, into possession of which they are thus authorized to enter, is not real estate, and, therefore, possession of it not attainable by an action in the nature of ejectment, there is no reason why possession may not be had by resorting to an action of claim and delivery. Having acquired possession of the mortgaged property, whether with or without recourse to legal proceedings, the trustees are expressly authorized “to collect and receive all tolls, freights, incomes, rents, issues and profits of the same, and of every part thereof.” All this can be accomplished by proceedings at law. The ease is then one in which the plaintiffs have a complete and adequate remedy at law in respect to the very matters on account of which they seek the appointment of a receiver, and, as the appointment of a receiver is an exercise of equitable jurisdiction — purely so in a case of this kind — the fact that the plaintiffs have this complete and adequate remedy at law is, in accordance with a familiar rule, a sufficient reason why a receiver should not be appointed. In the case at bar it is proper to add that the complaint does not allege that the trustees have attempted to obtain possession of the mortgaged property by entry or otherwise, nor that they have even demanded such possession. Neither, so far as we discover, is there anything in the affidavits, used upon the hearing of the motion for a receiver, tending to show any such attempt or demand. From the foregoing considerations it follows, in our opinion, that the motion for a receiver was properly denied.

It remains, however, to consider some of the points made by the counsel for the plaintiffs in favor of a contrary conclusion, which would not appear to be substantially disposed of by what we have already said. It is argued that the trustees are entitled to a receiver because, by the ninth article of the mortgage or trust deed, it is provided that upon the company’s default the trustees may enter into and upon all the premises conveyed or intended to be conveyed by the mortgage or trust deed, and each and every part thereof, and have, hold and use the same, “operating by their superintendents, managers, receivers or servants, or other attorneys or agents.” The claim is that the receivers here mentioned are receivers appointed by a court, and that, therefore, express authority is given to the trustees to demand the appointment of such receiver as a contract right. Irrespective of the doubt whether it is competent for parties to prescribe the action of a court in any such way as this, it must be apparent upon a little reflection that the word “receivers,” as used in the mortgage or trust deed, cannot have the signification contended for; -for a receiver appointed by a court is the receiver and officer of the court, while the receiver contemplated in the mortgage or trust deed is the receiver of the trustees: their receiver, to use the precise language of the instrument, and in no sense a technical receiver to be appointed by a court.

The only other positions taken by plaintiffs’ counsel, to which we deem it necessary particularity to advert further, are such as are taken with reference to the provisions of our statutes (Gen. St. c. 66, title 12,) in regard to receivers, and to-the practice of courts of equity in appointing receivers. Irrespective of statutory authority as to all these positions, we remark generally that they do not, neither does the reasoning nor do the authorities by which they are sought to be susfamed, fairly tend to show any right to a receiver in the case at bar, in which the plaintiffs have an adequate and complete remedy in the premises at law, and without any necessity for calling upon a court of equity to appoint a receiver. If there was not this adequate and complete remedy at law the considerations urged by.the plaintiffs’ counsel would certainly possess great weight. But the object here sought by the appointment of a receiver is to lay hold of and preserve the very “tolls, freights, incomes, rents, issues and profits” which the plaintiffs are, by the' terms of the company’s charter, and of the mortgage or trust deed, authorized and empowered to lay hold of and preserve, by taking possession of the mortgaged premises without suit, if they are permitted so to do, and if not so permitted then by proceedings at law.

These considerations appear to us to dispose of the case, and to render it unnecessary for us to extend this opinion further. The order denying the plaintiffs’ application for a receiver is affirmed.

G-ilfillan, C. J., having been of counsel, did not sit in this case.

Edmund Rice and others vs. First Div. St. P. & P. R. Co. and others. (April 6, 1878.)

Berry, J. This case presents substantially the same questions determined at this term in Edmund Rice and others v. The St. P. & P. R. Co. and others.

The order denying the plaintiffs’ application for a receiver is affirmed for the reasons assigned in that case.

Geo. L. Otis, Gilman, Olough & Lane, Gilfillan & Williams and Wm. M. Scott, for appellants.

Bigelow, Plandn'cm & Glan'Jc, for respondents.