Barnes v. Chicago, Milwaukee & St. Paul Ry.Annotate this Case
122 U.S. 1 (1887)
U.S. Supreme Court
Barnes v. Chicago, Milwaukee & St. Paul Ry., 122 U.S. 1 (1887)
Barnes v. Chicago, Milwaukee and St. Paul Railway
Argued March 22-24, 1887
Decided May 23, 1887
122 U.S. 1
APPEAL FROM THE CIRCUIT COURT OF THE UNITED
STATES FOR THE EASTERN DISTRICT OF WISCONSIN
If a decree in equity be broader than is required by the pleadings, it will be so construed as to make its effect only such as is needed for the purpose of the case made by the pleadings and of the issues which the decree decides.
The decree entered in accordance with the opinion of this Court in James v. Railroad Co., 6 Wall. 752, when properly construed, invalidated the foreclosure of the mortgage made by the La Crosse and Milwaukee Railroad Company to the plaintiff in error only as to the creditors of the company subsequent to the mortgage who assailed it in that suit, but did not affect it as to the rights of the plaintiff in error or of the bondholders secured by the mortgage, which were acquired under that foreclosure.
The consent of bondholders required by the statute of Wisconsin to enable the plaintiff in error to commence proceedings for the foreclosure of the mortgage of the La Crosse and Milwaukee Railroad was duly given, and the outstanding bonds which were not actually surrendered and exchanged for stock were held by persons who in law must be regarded as consenting by silence to the proceedings, and the present holders took them with full notice of that fact.
The plaintiff in error has no title under which he can maintain a bill in
equity to take advantage of alleged frauds or irregularities in the foreclosure of prior liens upon the La Crosse and Milwaukee Railroad, or to recover money paid by the Milwaukee and Minnesota Railroad Company to redeem the Bronson and Soutter mortgage of that railroad.
In equity. Decree dismissing the bill. Complainant appealed. The case is stated in the opinion of the Court.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
This is a suit by William Barnes to foreclose a mortgage made to him, as trustee, by the La Crosse and Milwaukee Railroad Company, hereinafter designated as the La Crosse Company. The record shows that this company was incorporated by the Legislature of Wisconsin on the 11th of April, 1852, to build and operate a railroad in that state between La Crosse, on the Mississippi River, and Milwaukee, on Lake Michigan, a distance of about two hundred miles. The road was originally regarded by the company and treated as consisting of two divisions, one, called the "Eastern Division," extending from Milwaukee to Portage City, a distance of 95 miles, and the other, called the "Western Division," extending from La Crosse to Portage City, a distance of 105 miles.
The Eastern Division was encumbered by three mortgages, as follows: 1, The Palmer mortgage, so called, to secure an issue of bonds to the amount of $922,000, 2, a mortgage to Greene C. Bronson and James T. Soutter, to secure bonds to the amount of $1,000,000, and 3, a mortgage to the City of Milwaukee to secure about $314,000. The Western Division was likewise encumbered, 1, by a mortgage to Greene C. Bronson, James T. Soutter, and Shepherd F. Knapp, known as the land grant mortgage, to secure bonds to the amount of $4,000,000, and 2, by a mortgage to Albert Helfenstein, to secure bonds for $200,000.
Judgments had also been rendered against the company prior to June 21, 1858, as follows:
1. One in favor of Selah Chamberlain, in the Circuit Court of the United States for the District of Wisconsin, on the 2d of October, 1857, for $629,089.72; 2. another in the same court, on the 7th of October, 1857, in favor of Newcomb Cleveland for $111,727.31; 3. another in the Circuit Court of Milwaukee County in the spring of 1858 in favor of Sebra Howard for $25,000, and 4. another in the last-named court in favor of the Mercantile Bank of Hartford, Connecticut, on the 12th of June, 1858, for $25,000.
On the 1st of June, 1858, the company being embarrassed by a large floating debt and by its obligations to persons who had mortgaged their farms to aid in building its road, determined to issue other bonds to the amount of $2,000,000, and secure them by another mortgage on its entire line of road between La Crosse and Milwaukee, subject to the prior mortgage encumbrances. Accordingly, the mortgage now in suit was executed to William Barnes, trustee, on the 21st of June, 1858, to secure such an issue. It covered
"all the property, real and personal, of said railroad company to be acquired hereafter, as well as that which has already been acquired, together with all the rights, liberties, privileges, and franchises of said railroad company in respect to said railroad from Milwaukee to La Crosse, except its land grant, but subject to all the prior mortgages above referred to."
Afterwards, on the 11th of August, 1858, a mortgage supplemental to this was executed by way of further assurance. The mortgages thus executed contained a provision that if there should be default in the payment of interest for the space of fifteen days the principal should become due, and the trustee, on the request of the holders of bonds to the amount of $100,000, should advertise and sell the mortgaged property.
Afterwards, the following judgments were recovered against the company, namely, 1. one in favor of Edwin C. Litchfield, in the District Court of the United States for the District of Wisconsin, October 5, 1858, for $26,353.51; 2. another in the same court April 5, 1859, in favor of Nathaniel S. Bouton,
for $7,937.37; 3. another in favor of Philip S. Justice and others, in the Circuit Court of the County of Milwaukee for $2,035.33, and 4. another in the last-named court, in favor of E. Bradford Greenleaf, September 10, 1858, for $840.86.
At the time when the mortgage to Barnes was executed, the Revised Statutes of Wisconsin,
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