New Orleans Pacific Railway Company v. Parker

Action by John D. Parker and another against the New Orleans Pacific Railway Company and others to foreclose a mortgage. Defendants appeal from a decree for complainants. Reversed.

STATEMENT BY MR. JUSTICE BROWN.

This was a bill in equity to foreclose a mortgage, and a cross-bill to have the mortgage decreed not to be a lien upon the land grant involved in the controversy. The bill was originally filed February 15, 1886, by the plaintiff Parker, 'for himself and for all parties holding bonds and coupons similar to those herein set forth,' against the New Orleans, Baton Rouge & Vicksburg Railroad Company, (hereinafter called the 'Baton Rouge Company,') the Union Trust Company of New York, the New Orleans Pacific Railway Company, (hereinafter called the 'Pacific Company,') John F. Dillon and Henry M. Alexander, trustees in certain land-grant mortgages of the Pacific Company, and Samuel D. McEnery, then governor of Louisiana, to foreclose a mortgage given by the Baton Rouge Company, October 1, 1870, upon the property of the company, and upon a land grant claimed to be covered by such mortgage. Plaintiff Parker claimed only the amount of coupons matured upon two bonds. Subsequently one Hamlin, another bondholder under the same mortgage, intervened in the cause, which was tried in the circuit court, and two distinct decrees rendered upon the same day,-one in favor of Parker, in the sum of $2,400, with interest at 5 per cent. from October 1, 1885; and one in favor of Hamlin, for $6,000, with like interest. 33 Fed. Rep. 693. The mortgage in question, so far as it is material to be considered, purported to cover the right of way; 'also all other property, real and personal, of every kind and description whatsoever and wherever situated in the state of Louisiana, which is now owned, or which shall hereafter be acquired, by the said company, and which shall be appurtenant to or necessary or used for the operation of said main line of railroad or any of said branches,' etc. The mortgage, which was made to the Union Trust Company of New York, provided that the holders of bonds and coupons should have the right to institute legal proceedings for its foreclosure. The company put the bonds, secured by this mortgage, upon the market, and disposed of a number of them. This mortgage was by public act, and was recorded in several of the parishes through which the main line and the branches were to run.

By an act of congress approved March 3, 1871, (16 St. 573,) to incorporate the Texas Pacific Railroad Company, certain lands in Louisiana were granted to the Baton Rouge Company in aid of its construction of a railroad from New Orleans to Baton Rouge; thence by way of Alexandria to the eastern terminus of the Texas Pacific Railroad at Shreveport.

On November 11, 1871, the Baton Rouge Company filed in the general land-office a map designating the general route of its road from Baton Rouge, by way of Alexandria, to Shreveport; and thereupon the withdrawal of the public lands along this line was ordered, in accordance with the provisions of the above act of congress, sections 12 and 22. In 1881 the Baton Rouge Company transferred all its right, title, and interest in these lands to the Pacific Company, and in March, 1885, patents were issued to said company, as assignee of the Baton Rouge Company, for 679,287 acres of land lying in different parts of the state.

At the time this assignment was made, no work, either upon the main line or upon the branches, had been done by the Baton Rouge Company. December 28, 1870, the Baton Rouge Company executed a second mortgage to the governor of the state, as trustee, to secure the payment of certain bonds, which were never issued. Such second mortgage having been subsequently canceled, on September 4, 1872, one Allen, assuming to act as president of the Baton Rouge Company, also executed a mortgage to secure the payment of 12,000 bonds, which, however, appear never to have been issued.

By acts of mortgage dated April 17, 1883, and January 5, 1884, the Pacific Company executed to appellants Dillon and Alexander a land-grant and sinking-fund mortgage upon the lands acquired from the Baton Rouge Company, to secure the payment of certain bonds, which the bill averred to be subsequent and subordinate to the mortgage executed by the Baton Rouge Company to secure the payment of the bonds in suit.

None of the defendants named in the bill appeared except the Pacific Company and Dillon and Alexander, trustees of the land-grant mortgage of this company. These parties filed a general demurrer, which was argued and overruled, in September, 1886, and a decree pro confesso was entered against the other defendants. Subsequently an answer was filed, alleging in substance that the charter of the Baton Rouge Company did not authorize a mortgage on the land grant or on future property; that the mortgage did not embrace the land grant; that the Baton Rouge Company made no definite location of its road, nor built any portion of the same; that the Pacific Company purchased from the Baton Rouge Company, as alleged in the bill, and thereupon constructed its road; and that the legal title to the land grant remained in the United States until patents were issued to this company. October 13, 1886, these defendants filed a cross-bill, setting forth that the cross-complainants were endeavoring to sell the lands that had been patented to them, and were being embarrassed and prevented by reason of the claim set up by Parker in his bill; that, as the mortgage sought to be foreclosed, and the outstanding bonds secured thereby, did not mature for several years, they would continue to be embarrassed for a long time; that Parker had sued on behalf of himself and of other holders of bonds issued under the mortgage of 1870, and, as complainants were advised and believed, represented upwards of 200 of said bonds, each holder of which might bring suit, and involve them in a multiplicity of suits; and that only a court of equity could afford relief by removing this mortgage as a cloud upon the title of the Pacific Company to the lands; and prayed for a decree adjudging that the mortgage did not embrace the land grant in question. Parker subsequently filed a demurrer to this cross-bill. On December 24, 1886, Hamlin intervened by petition, and was admitted as a co-plaintiff in the cause. Subsequently the case was heard, and separate decrees rendered in favor of Parker and Hamlin for the amounts of their several claims, adjudging the mortgage to be a valid lien upon the lands, which were ordered to be sold, and dismissing the cross-bill. Appellants took an appeal from these decrees to this court. Parker thereupon moved for a dismissal of the appeal as to him, upon the ground that less than $5,000 was involved. The consideration of this motion was postponed to the merits.

W. W. Howe, john F. Dillon, and Wager Swayne, for appellants.

A. H. Garland, A. H. Leonard, and A. Goldth waite, for appellees.

[Argument of Counsel from pages 46-50 intentionally omitted]

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.