Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/819

 CHAP. XVII.] LEGAL RELATIONS AMONG CREDITORS. [§ 815. cannot proceed alone and enforce his rights against the cor- poration to the detriment of other creditors similarly situated. When persons have a common interest in a security, equity will not allow one of them to appropriate it exclusively to himself, or impair its worth to the others ; for community of interest involves mutual obligation. Thus, although one bondholder under a railroad mortgage may often use it to enforce the payment of his claim, 1 he cannot use it to obtain an advantage for himself over the other bondholders ; he can- not use it to become the owner of the mortgaged premises at the lowest possible price, leaving unpaid the bonds of the other bondholders. His duty, if he uses the security, is to make it productive of the most obtainable for all interested in it; and if he seeks to make a profit at the expense of those whose rights in the security are the same as his own, he is un- faithful to the relation which he has assumed, and guilty of fraud. 2 " If a single bondholder has any right at all to insti- tute proceedings, he is bound to act for all standing in a simi- 1 When a trustee under a mort- gage, on being applied to in pursu- ance of its terms, refuses to sue, the bondholders may themselves sue, making the trustee, the corpora- tion, and the rest of the bondhold- ers parties. Hotel Co. v. Wade, 97 U. S. 13; Commonwealth v. Susque- hanna, etc., R. R. Co., 122 Pa. St. 306. See Galveston R. R. v. Cow- drey, 11 Wall. 459; Western Penn. Hospital v. Mercantile Library Hall Co., 189 Pa. St. 269; §682. But see Hackensack Water Co. v. DeKay, 36 N. J. Eq. 548; and compare New York Guaranty, etc., Co. v. Memphis Water Co., 107 U. S. 205. Unsecured creditors are not proper parties to a suit to foreclose a mortgage on the property of a corporation. Herring v. N. Y., etc., R. R. Co., 105 N. Y. 340. In a recent case in Maine, damage was occasioned by sparks from a locomotive, while the railroad was being operated by trustees under a mortgage, before foreclosure. An action was brought under a statute providing that, " when a building or other property is injured by fire com- municated by a locomotive engine, the corporation using it is responsi- ble for such injury." It was held that a corporation subsequently formed of the bondholders was not liable; nor were the bond- holders liable themselves, as the trustees were operating the road on their own responsibility and not as agents for the bondholders; and a statute protected the trustees. Stratton v. European, etc., R'y, 74 Me. 422. But see S. C, 76 Me. 269. 2 Jackson v. Ludeling, 21 Wall. 616. In this case, the managers and local officers of an embarrassed rail- road company, holding a small por- tion of its bonds, had obtained a hasty order of sale and sold out the road, grossly disregarding the rights of the rest of the bondholders. At the suit of the injured bondholders 799