« ForrigeFortsett »
to the relief granted in the Ohio decree, to wit, the sale of the Ohio Division subject to those mortgages. This prevents objection from the purchaser as assignee of the rights either of the defendant corporation, the Wabash, St. Louis & Pacific Railway Company, or of all the mortgagees with liens junior to Compton's, or of the Wabash Railway Company, and the Toledo, Wabash & Western Railway Company, predecessors in title of the defendant, for these were all parties to the Ohio decree. As the assignee of the rights of what party to the cause below can the purchaser object to the redemption of the Ohio divisional mortgages? Have the Ohio mortgagees a right to object? It is difficult to see how they can complain if their debts are paid in full, as they must be if Compton shall redeem. All that they can require before submitting to redemption is that Compton shall have acquired an interest in the equity of redemption. The owner of the equity when this suit was brought was the Wabash, St. Louis & Pacific Railway Company. The Ohio decree established that, as against that company, Compton had obtained an interest in the equity from the Toledo & Wabash Railway Company, one of its predecessors in title, and the immediate grantee of the mortgagor Ohio companies. The Ohio mortgagees cannot dispute this transfer of an interest in the equity of redemption to Compton. When a mortgage is given, the mortgagor does not thereby restrict his right to convey or incumber the equity of redemption in him. 1 Jones, Mortg. 676; Hodson v. Treat, 7 Wis. 263; Flanagan v. Westcott, 11 N. J. Eq. 264. It therefore follows that conveyances or decrees binding upon the original mortgagor or his privies with reference to the ownership of the equity of redemption, or an interest in it, are, with reference to the mortgagee, res inter alios acta, which he has no right or concern to impeach or dispute. Barney v. Patterson, 6 Har. & J. 182, 203; Gregg v. Forsyth, 24 How. 179; Secrist v. Green, 3 Wall. 744; Baylor's Lessee v. Dejarnette, 13 Grat. 152; Taylor v. Phelps, 1 Har. & G. 492, 503. Other illustrations of the same principle may be found in Candee v. Lord, 2 N. Y. 269; Raymond v. Richmond, 78 N. Y. 351; Pray v. Hegeman, 98 N. Y. 351; Curtis v. Leavitt, 15 N. Y. 51; Hall v. Stryker, 27 N. Y. 596; Way v. Lewis, 115 Mass. 26; Swihart v. Shaum, 24 Ohio St. 432; Wingate v. Haywood, 40 N. H. 437; Inman v. Mead, 97 Mass. 310; Brigham v. Fayerweather, 140 Mass. 411, 413, 5 N. E. 265; Cincinnati v. Deikmeier, 31 Ohio St. 242. In other words, if the mortgagor railroad company had the right itself, at the time the lien of the equipment bondholders attached to its property, to redeem the Ohio divisional mortgages without redeeming the Indiana mortgages, it had the right to convey it to some one else; and whether, by the act of issuing the bonds and the consolidation, it did convey such right to the equipment bondholders, is a question to be settled between the mortgagor railroad company and its successor in title, on the one hand, and the equipment bondholders on the other, without regard to the wish or consent of the prior mortgagees. The Ohio decree is a conclusive settlement of the question, and cannot be disturbed or attacked by the divisional mortgagees.
It is strongly urged, against the views that the Ohio mortgagees may not object to a redemption of their mortgages alone, that the mortgagees in the Indiana divisional mortgages are the same as in the Ohio divisional mortgages, namely, the Farmers' Loan & Trust Company in the first two divisional mortgages, and E. D. Morgan in the second two, and that it is a general equitable principle that where two mortgages in default are held by the same party, as mortgagee or assignee, equity will not decree redemption of, one unless it be accompanied by redemption of the other, on the same piece of property. I think that this principle no longer obtains in this country; that it is, in its last analysis, the basis for the English doctrine of tacking mortgages, which has been pronounced to be harsh, and unsuited to our jurisprudence. But I do not find it necessary to discuss the question whether this rule is sound, or not, because, in my view, it has no application whatever to the case at bar. It is true that the Farmers’ Loan & Trust Company is the trustee in an Ohio divisional mortgage, and is also a trustee in an Indiana divisional mortgage, but it is not true that the mortgagee in those mortgages is the same. The Farmers' Loan & Trust Company, in each mortgage, is trustee for certain bondholders, but there is no evidence whatever to show that the bondholders under one mortgage are the same as the bondholders under the other. Therefore the real parties in interest in the two mortgages are not the same, and therefore even the strict and inequitable rule with reference to tacking mortgages in England would not apply to such a case. E. D. Morgan, as trustee for one set of bondholders, has no power to assert the rights of other bondholders, for whom, in another mortgage, he is also acting as trustee. It is not a union of the two Securities and the two titles in the same person. John Smith, as trustee for John Jones, is not the same person, in law, as John Smith the trustee for John Robinson. The title conferred by the mortgage is held in two different capacities. The rights of the One cannot be made to inure to the other. It therefore follows that this case is to be treated exactly as if the mortgagees in both the Indiana divisional mortgages were different from those named in the Ohio mortgages.
A second ground most forcibly stated for denying the right of Compton to redeem the Ohio divisional mortgages without also redeeming the Indiana mortgages is based on a theory of suretyship. It is said that each company which acquired title to the road by assuming the mortgage obligations became, with reference to the debt under the divisional mortgages, the principal debtor, and, there being no novation of the debts, the grantor corporation remained bound as surety; that the succeeding corporation having promised to pay all the mortgages, as the consideration for the purchase, the grantor corporation had the right to object to a partial discharge of this obligation, and to insist, as surety, that after default the right of redemption could not be exercised, except by a redemption of all the mortgages, payment of which in a single promise had been assumed as a consideration for the purchase. In this wise it is said the Ohio divisional mortgages and the Indiana divisional mortgages were so united by successive assumptions of the obligations declared on them that now a redemption of the former without the latter cannot be permitted. There are several reasons why the principle relied on, even if it be a sound one, has, in my opinion, no application to the case at bar. In the first place, the objection, if otherwise tenable, could only be made by one of the socalled surety corporations. Of these, the Toledo, Wabash & Western Railway Company and the Wabash Railway Company were parties to Compton's Ohio decree; and this, for reasons already given, prevents them from objecting to his enforcing his lien against the Ohio Division alone. Again, neither of them, nor the Toledo & Wabash Railway Company, the first consolidated company, is a party to this action, and it is difficult to see how the objecting purchaser, who never acquired anything but the rights of the Wabash, St. Louis & Pacific Railway Company, the defendant company below, can use the surety rights of predecessors in title to the Wabash, St. Louis & Pacific Railway Company, which that company never acquired, and could never assert. But let us suppose that the Toledo & Wabash Railway Company were a party objecting. Even by it the objection suggested could not be made. It was the first corporation which united the Ohio and Indiana roads. That was the consolidation of the Toledo & Wabash Railroad Company, of Ohio, and the Wabash & Western Railway Company, of Indiana. At the time of the consolidation the two Ohio divisional mortgages were the obligation of the Toledo & Wabash Railroad Company, of Ohio, while the Indiana divisional mortgages were the obligation of the Wabash & Western Railroad Company, of Indiana. The consideration for the consolidation was a guaranty made by the Toledo & Wabash Railway Company to the Toledo & Wabash Railroad Company, that it would pay the Ohio divisional mortgages, and another guaranty by the same consolidated company, moving to the Wabash & Western Railroad Company, that it would pay the Indiana divisional mortgages. The promises in these two guaranties were different, and it therefore, of course, was within the power of the Toledo & Wabash Railway Comipany, the consolidated corporation, to fulfill its promise to its Ohio constituent by redeeming the Ohio divisional mortgages, without regard to the Indiana divisional mortgages. The Toledo & Wabash Railway Company had made no promise to its Indiana constituent that it would pay the Ohio divisional mortgages, and therefore the Indiana constituent had no right to object to a redemption of the one without the other. The Ohio constituent was not a surety for the payment of the Indiana divisional mortgages, nor was the Indiana constituent a surety for the payment of the Ohio divisional mortgages. It seems to me clearly to follow, therefore, that the Toledo & Wabash Railway Company had the right, in equity, to redeem the Ohio divisional mortgages without redemption of the Indiana divisional mortgages, because by no single promise of it to the same promisee had it united its obligations to pay the four divisional mortgages. One of the authorities relied on to support this suretyship argument is Wells v. Tucker, 57 Vt. 223. The case is not very well reported, but, so far as its facts are stated, it appears to have been an action by the successor in title of the purchaser of a farm to redeem the same from a mortgage on an undivided one-half of the farm, Without redeeming a mortgage on the other half. The purchaser had stipulated, as part of the purchase price, to pay both mortgages. The vendor was a party to the action to redeem, and he objected to the redemption of one mortgage without the other. It was held that, as to the vendor, the agreement by the vendee to pay both mortgages to relieve the vendor from liability was single and indivisible, and that, in his position as surety for the payment of both mortgages, the vendor could insist that both should be discharged at the same time. Whether this case can be supported, or not, its ratio decidendi has no application to the question whether the Toledo & Wabash Railway Company, the first consolidated company, could redeem the mortgages on the Ohio Division without redeeming those on the Indiana Division, because there were two different vendors, and the assumption of the Ohio mortgages was a promise made to one of them, and that of the Indiana mortgages was a different promise made to the other. There was there. fore no person to whom a single promise was made, involving the assumption of the entire debt under the four mortgages. The mortgages continued to be liens on those divisions which, by their terms, they respectively covered; and the agreements to assume were made to the two constituents respectively and separately, and not to them jointly and unitedly. If the Toledo & Wabash Railway Company had the right, therefore, to redeem the Ohio divisional mortgages separately from the Indiana divisional mortgages, without the violation of any promise made to its constituent companies, then it certainly had the right to transfer these separate equities of redemption in the two divisions to whomsoever it might choose. 1 Jones, Mortg. 676; Hodson v. Treat, 7 Wis. 263; Flanagan v. Westcott, 11 N. J. Eq. 264. The equipment bonds were issued by the Toledo & Wabash Railway Company. By reason of its act in transferring all its assets to the Toledo, Wabash & Western Railway, and the effect of the Ohio statute of consolidation, the debt created by the equipment bonds became a lien on the separate equities of redemption which the Toledo & Wabash Railway Company held under the Ohio and Indiana divisional mortgages. It is true that the Toledo, Wabash & Western Railway Company made a single promise, in the agreement of consolidation, to pay all the indebtedness owing by the Toledo & Wabash Railway Company, and this included the two Indiana divisional mortgages, the two Ohio divisional mortgages, and the equipment bonds, as well as all other debts which the Toledo & Wabash Railway Company had not paid. But it was not by virtue of this promise that a lien passed to the equipment bondholders. It was by virtue of the act of the Toledo & Wabash Railway Company in transferring all its assets to the consolidated company, and the lien arose by that act, Without regard to the promise which the new consolidated company made as the basis of the new consolidation. The equities of redemption upon which the equipment bondholders obtained their lien were the separable equities of redemption owned by the Toledo & Wabash Railway Company, and not the united or single equity of redemption which the Toledo, Wabash & Western Railway Company acquired by virtue of the consolidation. All the consolidated corporations, from the Toledo, Wabash & Western Railway Company down to the defendant below, the Wabash, St. Louis & Pacific Railway Company, were parties to the Ohio decree. That decree settled the right of Compton to resort for the satisfaction of his lien to the Ohio Division alone. Incident to that remedy and relief, and necessary to it, followed the right to redeem the Ohio divisional mortgages, and no party to the Ohio decree can now be heard to object to the enjoyment of that remedy by Compton. But it is said that the same theory, upon which a lien attached in favor of the equipment bonds held by Compton, secured to the Indiana divisional bondholders a similar lien on the entire property of the Toledo & Wabash Railway Company, the constituent of the Toledo, Wabash & Western Railway Company, and therefore that the Indiana mortgagees have the right to object to a division of their security which covers the entire road. There are several reasons why this objection is untenable: First. It was not by virtue of the sale in the court below that the purchaser became the equitable assignee of the rights of the Indiana bondholders under their mortgage and otherwise, and therefore he cannot represent them on this appeal. In the suit in the court below, the Farmers' Trust Company and James F. Joy were parties in a trust capacity, representing, not the Indiana bondholders, but the bondholders under the Ohio mortgages. Under the averments of the bills and cross bills, they were not proper parties to the Ohio suit, because, by virtue of the mortgages, they had no interest in the Ohio property. It is true that, by an error of his counsel in the court below, Joy filed in the court below the same answer as he did in the Indiana suit for the Indiana bondholders; but the error was a palpable one, and the subsequent act of the court, as well as the averments of the bills by which he was made a party below, show that he was only a party as trustee for the Ohio bondholders. It is true that an omnibus decree in the same language was entered in each of the three federal courts of Northern Ohio, Indiana, and Southern Illinois, but it was only operative in each court to foreclose and adjudicate liens on the property of the defendant company within the territorial jurisdiction of that court. No attempt was made by decree to compel conveyances from the mortgagor company to the purchaser of property lying outside the territorial jurisdiction of the court. That a court has the power, when it has personal jurisdiction over the mortgagor, to foreclose the mortgage on property lying outside of its territorial jurisdiction, is plain, and is fully established by the case of Muller v. Dows, 94 U. S. 444, but it must exercise this power by a decree against the person compelling the mortgagor to convey the equity of redemption. Otherwise the decree is inoperative. Carpenter v.