Limitations upon the power of a trustee in a railroad mortgage
to take proceedings to enforce payment of the amount secured should
be construed strictly.
A provision in a mortgage that the mode of sale provided by it
"shall be exclusive of all others" is an attempt to provide against
a remedy in the ordinary course of judicial proceedings and oust
the jurisdiction of the courts, and is therefore invalid.
A provision in a statute authorizing notice to be given to an
absent defendant to appear by publishing the same in a newspaper
once a week for four months is not satisfied by a publication once
a week for four lunar months, but the word "month," when so used,
signifies a calendar month.
To support a decree for foreclosure against an absent defendant
brought in by publication, publication for the full period required
is necessary.
Cooper v.
Reynolds, 10 Wall. 308, distinguished.
This was an appeal from a decree of the Circuit Court for the
Northern District of Florida dismissing a bill of foreclosure filed
by the appellant to which the Green Cove Springs and Melrose
Railroad Company, the Western Railway Company, the Green Cove
Springs and Midland Railroad Company, and a number of other
individual defendants were made parties. The mortgage or deed of
trust was made June 20, 1882, by the Green Cove Springs and Melrose
Railroad Company to the plaintiff to secure its bonds, and the bill
averred $25,000 of such bonds to be outstanding and unpaid, and
also contained the usual allegations with regard to the nonpayment
of interest coupons. The bill further averred, in substance, that
the company had lost possession of its road and
Page 139 U. S. 138
other property, which was in the possession of and operated by
other parties under a pretended sale made August 3, 1885, in
pursuance of certain judicial proceedings in the Circuit Court of
Clay County, Florida, but claimed that notwithstanding such sale,
its lien under the mortgage was not discharged or extinguished.
These proceedings were instituted by certain persons composing the
firm of Budington, Wilson & Co., who, on July 25, 1884, began a
suit in equity in the Circuit Court for Clay County against such
railroad company and one Canova, in which the plaintiff, the Trust
and Safe Deposit Company, was also mentioned in the stating part of
such bill as defendant. It appeared that such suit was begun to
enforce a statutory lien for work and labor; that there was no
prayer for a foreclosure of plaintiff's deed of trust, nor other
relief against the grantee in said deed; nor was any case stated in
hostility to the deed or the lien thereunder. It was further
alleged that an attempt was made to serve the grantee in the deed
by a publication of a notice in accordance with the statute of
Florida in the case of a nonresident defendant, but that such
statute was not complied with; that no notice was ever served upon
the plaintiff, either by publication or otherwise, and the court
had no jurisdiction of the person of the plaintiff in such suit,
and the sale thereunder was null and void; that at no time before
or at the commencement of the publication of the order to appear,
nor at any time during the publication of said order, did the state
court take possession of said road, or of any of its property, by
attachment, receiver, or other process made or issued in said suit;
that on January 16, 1885, a decree
pro confesso was
entered for want of the appearance of plaintiffs therein; that on
March 11, 1885, the firm of Budington & Wilson, a distinct and
separate firm from Budington, Wilson & Co., and one Osias A.
Budington, intervened in said suit by petition, and alleged a new
and distinct cause of action against the defendant railroad company
not stated in the original bill of complaint, namely, a statutory
lien for labor performed for the sum of $1,700, and said Budington
also averred that he had recovered a judgment against said company
for the sum of $1,012.50, and they prayed for leave
Page 139 U. S. 139
to prove their claims in said suit. But neither of the said
intervenors prayed any relief against the grantee in the deed of
trust, nor did either of them, nor did any person in their behalf,
serve or attempt to serve any notice on said grantee of the filing
of said petition, nor the claims therein asserted. It was further
alleged that on the 12th of November, 1884, the several parties who
had appeared in the said suit entered into an agreement for a sale
of the road, which took place on August 3, 1885, the defendant
Greely becoming the purchaser, as trustee for himself and all
others who had filed claims or demands against said company, for
the sum of $20,000, and that subsequently, and under an agreement
of the various creditors of the road who had transferred their
claims to Greely, consenting that he should organize a new company,
he executed a lease of the road to a corporation known as the
"Western Railway Company," by which it was agreed that such company
should pay, by way of rent, eight percent per annum upon a
valuation of $30,000, for five years. The bill further charged
that
"the feeble defense and supineness and indifference to the
interests of the said bondholders on the part of the said Green
Cove Springs and Melrose Railroad Company, its directors and
officers, as shown by the said judicial proceedings in said state
court, if the same was intended to affect and destroy the lien of
said deed of trust, was and is a fraud upon the rights of the said
trustee and said bondholders;"
that the sale and subsequent proceedings were fraudulent, and
should be vacated and set aside;
"that said company, grantor in said deed of trust, in effect
consented to a sale of said road to pay simple contract debts and
demands, which were not a lien upon its property paramount to said
lien created by said deed of trust, and many of which had not been
reduced to judgment;"
that every lien for work and labor performed was declared by the
decree of the court in favor of persons who were not parties to the
original bill of Budington, Wilson & Co., but who had come into
said cause long subsequent to the decree
pro confesso, and
asserted their claims thereafter, of which said grantee and
bondholders had no knowledge whatever; that the aggregate amount of
the said statutory liens so
Page 139 U. S. 140
found to exist was less than $700; that no time for redemption
was allowed, but, on the contrary,
"a decree of sale was made before the indebtedness claimed to be
due was ascertained, whereby no party in interest was given any
time or opportunity to redeem or pay said indebtedness."
The bill prayed for a receiver and injunction against the
transfer or encumbering of the road; a decree of foreclosure of the
deed of trust, and for a decree declaring the sale under the
judicial proceedings in the state court to be null and void, as
against the plaintiff and the
bona fide holders of any of
its bonds.
Two answers were filed to the bill, which presented three
distinct defenses: first, that the mortgage or deed of trust
required that sixty percent in value of the outstanding bondholders
should request the trustee in writing to initiate proceedings, and
that no such request was alleged in the bill; second, that
plaintiff herein, the Guaranty Trust and Safe Deposit Company was a
party defendant to the proceedings in the state court, was bound by
the decree and sale in that court, and that such sale extinguished
the lien of the mortgage sought to be enforced in this suit; third,
that there were no bonds of the railroad company which executed the
mortgage to the plaintiff legally outstanding, and consequently it
had not sufficient interest or title to maintain its suit. A decree
was entered in the circuit court dismissing the bill, but no
opinion appeared to have been delivered or filed.
MR. JUSTICE BROWN, after stating the facts as above, delivered
the opinion of the Court.
1. The answer of Philip J. Canova raises an objection to the
maintenance of this bill in the fact that sixty percent in value of
the bondholders had not requested action upon the part of the
trustee, as required by the trust deed, which, in covenant numbered
second, provides in substance that in case of default
Page 139 U. S. 141
after demand made, for a period exceeding twelve months, to pay
the semiannual interest upon the bonds or for a period exceeding
six months to pay the principal of such bonds,
"it shall be the duty of the said trustees for the time being,
and they shall or will, upon written request of the holders of
sixty percentum of the said bonds then outstanding, enter upon and
take possession of the said railroad property and estate,"
and operate the same, appropriating the net income to the best
advantage, etc.,
"or the said trustee shall and will, after or without entering
upon or taking such possession, upon the written request of the
holders of bonds of a like amount, proceed upon and under this
indenture of mortgage to sell the railroad property and estate, . .
. at public sale, in the City of Philadelphia, first giving at
least four weeks' notice by publication,"
etc., "and grant and convey the same to the purchaser, freed
from all and every trust hereby created," etc.
As there is no averment in the bill that sixty percent of the
owners of the outstanding bonds had requested action on the part of
the trustee, it is insisted that these proceedings were instituted
without authority, and the case of
Chicago &c. Railroad Co.
v. Fosdick, 106 U. S. 47,
106 U. S. 77, is
claimed to be decisive of this question. In that case, which was a
bill for foreclosure, the proviso was that the trustee, upon the
written request of the holders of a majority of the bonds then
outstanding, should proceed to collect both principal and interest
of all such bonds outstanding by foreclosure and sale of said
property or otherwise, as therein provided. It was argued that the
office of this clause was merely to make the obligation of the
trustees imperative, instead of optional, but the Court held that
the whole article must be taken together as a unit, and "the nature
of the provision and the character of its object must be taken into
consideration as furnishing the rule of its interpretation." It
will be observed, however, that the proviso was directed against
the very proceeding taken by the trustee in the suit -- namely a
foreclosure and sale of the property -- while in the present case
it is directed only to a taking possession, or a sale
under the
deed of trust, without the institution of legal
proceedings.
Page 139 U. S. 142
A case nearer in point is that of
Morgan's Steamship Co. v.
Texas Central Railway, 137 U. S. 171,
decided at the present term, in which the condition was that on
default continuing for sixty days in the payment of interest, or
any part of principal, the principal of the bonds should become
immediately due, and that, upon request of seventy-five percent of
the holders of bonds, and written notice of the same, the trustee
should take possession of the property, and operate it for the
benefit of the bondholders, and that upon like request he should
proceed to foreclose the mortgage and sell the property to the
highest bidder for cash. It was also provided that nothing
contained in the instrument should be construed to prevent or
interfere with the foreclosure by any court of competent
jurisdiction. It was held that the trustee could maintain a bill to
foreclose the mortgage upon occurrence of a default, without
averring or proving a request of seventy-five percent of the
bondholders, as such request was necessary only in case the trustee
wished to proceed to foreclose or take possession
ex mero
motu without the intervention of a court.
We think that such limitations upon the power of the trustee to
take legal proceedings to enforce payment of the amount secured
should be strictly construed. In this case, the condition only
relates to the taking possession of the property under the deed of
trust, or to a sale in the City of Philadelphia, under the power of
sale contained therein, and we think it should not be held to apply
to foreclosure proceedings begun in a court of competent
jurisdiction to obtain a judicial sale of the property. This was
the ruling in the Eighth Circuit by Judge Dillon in
Alexander
v. Central Railroad of Iowa, 3 Dillon 487, and by Judge
Caldwell in
Credit Co. v. Arkansas Central Railroad
Company, 15 F. 46, and we think it is sound.
It is true there is a subsequent provision in the deed of trust
to the effect that neither the whole nor any part of the premises
mortgaged shall be sold, under proceedings either at law or equity,
for the recovery of the principal or interest of the bonds, it
being the intention and agreement of the parties that the mode of
sale provided by the mortgage "shall be exclusive
Page 139 U. S. 143
of all others." This clause, however, is open to the objection
of attempting to provide against a remedy in the ordinary course of
judicial proceedings, and oust the jurisdiction of the courts,
which, as is settled by the uniform current of authority, cannot be
done.
Hope v. International Society, 4 Ch.D. 327;
Edwards v. Society, 1 Q.B.D. 563;
Horton v.
Sayer, 4 H. & N. 643;
Scott v. Avery, 8 Exch.
487, 5 H.L.Cas. 811;
Thompson v. Charnock, 8 T.R. 139;
Mitchell v. Harris, 2 Ves.Jr. 129;
Tobey v. County of
Bristol, 3 Story 800;
Noyes v. Marsh, 123 Mass. 286;
King v. Howard, 27 Mo. 21;
Conner v. Drake, 1
Ohio St. 166;
Trott v. City Ins. Co., 1 Cliff. 439; 2
Story Eq. ยง 1457.
Again, it is evident that this was a condition for the benefit
of the grantor and its assigns, and that intervening lienholders,
and those who have purchased the property under decrees in their
favor, do not stand in a position to take advantage of this
covenant. The sole object of the covenant was to protect the
mortgagor against a seizure and sale of its property for nonpayment
of interest or principal at the mere caprice of the trustee, or
without the consent of a majority of the bondholders, and it has no
application to a case where the mortgagors have already lost the
property under adverse proceedings instituted by parties having no
connection with the mortgage.
2. The validity of the sale in the state court is attacked upon
the ground that proper notice of the proceedings was not given to
the plaintiff in this case, as required by the Florida statute,
which provides, in substance, that nonresident defendants may be
required to appear, if residing within the United States, within
four months, by a publication to be made once a week for the four
months. The facts with regard to the publication in this case are
as follows: on February 23, 1884, Philip J. Canova filed a bill in
the state court against the Green Cove Springs and Melrose Railroad
Company. The gravamen of the bill was that the company owed Canova
over $19,000 as contractor, and that he had a lien as such
contractor superior to the lien of the bonds secured by the
mortgage to the plaintiff in this case. Plaintiff was not named
as
Page 139 U. S. 144
defendant in that bill. On the day the bill was filed, the state
court appointed a receiver of the property.
In the latter part of July, 1884, Budington, Wilson & Co.
filed a bill in the same court against the Green Cove Springs and
Melrose Railroad Company, Philip J. Canova, the Chester
Construction Company, and the Guaranty Trust and Safe Deposit
Company, plaintiff in this suit, to recover for labor in building
the road and to enforce the payment of certain of these bonds
deposited with it as collateral security. On the 6th of February,
1885, these two suits in the state court were, by order of that
court, consolidated, and thereafter proceeded as one suit. Before
this consolidation was effected, however, and on July 29, 1884, the
court made an order that the Trust and Safe Deposit Company appear
and answer the bill of complaint on or before the first Monday of
December, 1884, "otherwise the complainants' said bill shall be
taken
pro confesso." It was further ordered that this
order "be published once a week for four months in some paper
published in Clay County, Florida." The only evidence of
publication appears from the affidavit of H. E. Bemis, the business
manager of the Springs, a newspaper published in the Town of Green
Cove Springs, that the foregoing notice "was duly published in the
said newspaper for nineteen consecutive weeks prior to this date,
to the best of his knowledge and belief." This affidavit was made
and subscribed the 15th day of December, 1884. The testimony
further established that the newspaper was published on Saturday of
each week, and, as the manager swears that it was published for
nineteen consecutive weeks prior to this date, the last publication
must have been upon Saturday, December 13th, and the first
publication on the 9th of August. The notice, however, required the
absent defendants to appear and answer the bill on or before the
first Monday in December, which was the first day of the month;
hence there could have been only seventeen publications, including
the first on the 9th of August, before the day the defendants were
required to answer, and from this day to the first Monday of
December would be only 114 days, more than four
lunar
months, but eight days less than four
calendar months,
before the first of December.
Page 139 U. S. 145
The regularity of the proceedings, then, resolves itself into
the question whether the provision that publication shall be made
once a week for four months is satisfied by a publication for
sixteen weeks or four lunar months. We think it is not. It is the
settled law both of this Court and of the Supreme Court of Florida
that the word "month," when used in contracts or statutes, must be
construed, where the parties have not themselves given to it a
definition, and there is no legislative provision on the subject,
to mean calendar, and not lunar, months. In
Sheets v.
Selden's Lessee, 2 Wall. 177, it was applied to
proceedings for the forfeiture of a lease. It was contended in that
case that in the absence of any legislative provision on the
subject, the term must be construed to mean lunar, and not
calendar, months, in accordance with the English rule, but it was
held that the term was not technical, that it must be construed in
its ordinary and general sense, and that in this sense calendar
months are always understood. In
Bacon v. State, 22 Fla.
46, it was applied to the limitation by law of the time for
presenting a bill of exception to the judge for allowance, the
court holding that where the term "month" is used in an order of
this kind, and no other meaning is given to it by the terms of such
order, it should be construed as meaning a calendar month. "Such
has been the practical construction of the word in this state in
matters of practice." In both cases, the old English rule was
alluded to and disapproved. Indeed, that rule, which was apparently
general, except as applied to bills of exchange and other
commercial contracts, never seems to have obtained any substantial
foothold in this country, though followed reluctantly in some of
the older decisions, and has been practically abolished in all the
states either by express statute or by judicial interpretation. The
word was held to import a calendar month as early as 1794, in the
Circuit Court for the District of Pennsylvania, in construing an
act of the legislature, (
Brudenell v. Vaux, 2 Dall.
302), and in 1808, in the Supreme Judicial Court of
Massachusetts, it was said that
"in this state, as well before as since the Revolution, a month
mentioned generally in any act had immemorially been considered as
a calendar
Page 139 U. S. 146
month."
Avery v. Pixley, 4 Mass. 460, 461. Indeed, the English
rule was not adopted without a protest from Lord Kenyon, one of the
most eminent of her common law judges, in
Lacon v. Hooper,
6 T.R. 226, and was abolished by statute in 1850. 13 & 14 Vict.
c. 21.
It is claimed, however, that as the proceeding to foreclose this
deed was
in rem, the seizure of the property proceeded
against was the foundation of the jurisdiction of the court, and
that a defective publication of notice, though it might reverse a
judgment in such a case for error in departing from the directions
of the statute, does not render such a judgment, or the subsequent
proceedings, void, and the case of
Cooper v.
Reynolds, 10 Wall. 308, is relied upon in support
of this position. While the ruling of this Court in that case
appears to have been that jurisdiction is acquired by an actual
seizure of the property attached, and that defective or irregular
affidavits and publications of notice do not render such a judgment
void, the case really turned upon the fact that the suit was begun
by a seizure of the property of the defendant under a writ of
attachment, and in that respect it is distinguishable from this
case; for although the court was in possession of the property
proceeded against in the bill filed by Budington, Wilson & Co.,
to which the Trust and Safe Deposit Company was defendant, such
receiver had been appointed upon the bill filed by Canova, to which
the plaintiff was not made a party, and the order consolidating
that cause with the suit by Budington, Wilson & Co., in which
the plaintiff was named as party, and in which it was attempted to
obtain service by publication was not made until February 6, 1885,
two months after the expiration of the time within which the notice
of publication required the plaintiff to answer, and after a decree
pro confesso had been taken against it. The receivership
could not have the effect of subjecting the property to the control
of the court in the particular bill filed by Budington, Wilson
& Co., against the plaintiff until the order of consolidation,
which, as before stated, was after the time limited for plaintiff's
appearance, and after an order
pro confesso had been
entered against it. The case of
Cooper v. Reynolds was
one
Page 139 U. S. 147
where property was seized by virtue of an attachment taken out
at the commencement of the suit in which the proceedings to call in
the nonresident defendant are had, and the record asserted that
"publication had been made according to law." Indeed, Mr. Justice
Miller said in that case, p.
77 U. S.
319:
"We do not deny that there are cases . . . in which the
legislature has properly made the jurisdiction to depend on the
publication of notice, or on bringing the suit to the notice of the
party in some other mode, when he is not within the
jurisdiction."
It was said by Mr. Justice Wayne, in
Williamson
v. Berry, 8 How. 495,
49 U. S. 540,
in reply to an argument that a decree in chancery could not be
looked into in a collateral way, that
"it is an equally well settled rule in jurisprudence that the
jurisdiction of any court exercising authority over a subject may
be inquired into in every other court, when the proceedings in the
former are relied upon, and brought before the latter, by a party
claiming the benefit of such proceedings. The rule prevails whether
the decree or judgment has been given in a court of admiralty,
chancery, ecclesiastical court, or court of common law."
The decisions of this Court upon this subject, beginning in the
year 1794 with the case of
The Betsey, 3
Dall. 6, have been uniform and consistent. The following are a few
of the leading cases upon this subject:
Rose v.
Himely, 4 Cranch 241;
Elliott v.
Peirsol, 1 Pet. 328;
Wilcox v.
Jackson, 13 Pet. 498;
Shriver's
Lessee v. Lynn, 2 How. 43;
Lessee of
Hickey v. Stewart, 3 How. 750;
Webster v.
Reid, 11 How. 437. In the last case, it was held
that where jurisdiction had been sought to be obtained by
publication, as in this case, it was necessary to show that notice
had been given by publication, as the act required. "If
jurisdiction," says the Court,
"could be exercised under the act, it was essential to show that
all its requisites had been substantially observed. It was
necessary for the plaintiff to prove notice, and negative proof
that the notice was not given, under such circumstances, could not
be rejected."
In
Hunt v.
Wickliffe, 2 Pet. 201, an order was made by a state
court of chancery for a nonresident to appear, and that a copy be
published "for eight weeks in succession agreeably to law," and it
was
Page 139 U. S. 148
held that, as the laws of Kentucky only authorized their courts
of chancery to make decrees against absent defendants on the
publication of an order for two months successively, the order of
the Court of Chancery for a publication for eight weeks was not a
compliance with the law, the Supreme Court of Kentucky having
decided that the publication must be continued for two calendar
months. Under this construction of the act, the decree was made
against persons who were not parties to the suit, and it was held
that it could not affect them. So, in
Galpin v.
Page, 18 Wall. 350, it was held that when by
legislation of a state, constructive service of process by
publication is substituted in place of personal service, the
statutory provision must be strictly pursued in order to bind a
citizen of another state not personally served. "Whenever," says
MR. JUSTICE FIELD,
"it appears from the inspection of the record of a court of
general jurisdiction that the defendant, against whom a personal
judgment or decree is rendered was at the time of the alleged
service without the territorial limits of the court, and thus
beyond the reach of its process, and that he never appeared in the
action, the presumption of jurisdiction over his person ceases, and
the burden of establishing the jurisdiction is cast upon the party
who invokes the benefit or protection of the judgment or decree. .
. . When, therefore, by legislation of a state, constructive
service of process by publication is substituted in place of
personal citation, . . . every principle of justice exacts a strict
and literal compliance with the statutory provisions."
Later cases to the same effect are
Earle v. McVeigh,
91 U. S. 503;
Settlemier v. Sullivan, 97 U. S. 444;
Cheely v. Clayton, 110 U. S. 701;
Applegate v. Lexington &c. Mining Co., 117 U.
S. 255, and there is scarcely a state in the union in
which the same principle has not been announced and reaffirmed.
We think the publication of the notice in this case for the full
period required by law was necessary to the validity of the decree
pronounced upon the basis of such publication,
Early v.
Doe, 16 How. 610, and, as such publication was not
made for that period, the decree based upon such notice was no
estoppel of the plaintiff in this case.
Page 139 U. S. 149
3. It is claimed, however, that the decree dismissing the bill
was proper because there were no bonds of the railroad company,
whose property defendant purchased at the sale by the state court,
and which executed the mortgage to the plaintiffs, legally
outstanding, and consequently plaintiff had not a sufficient
interest or title to maintain this suit. On December 23, 1886,
about a month after the bill and a few days after the answer was
filed, an order was entered referring the cause to a master, to
notify all persons holding bonds or coupons of the railroad company
to file the same with the master before the 1st day of February,
1887, with power to any party to the suit, or any person who should
have filed any such bonds or coupons, to take testimony before the
master touching the holding and ownership of the same, with a
reservation on the part of the court to pass upon all questions of
law or fact connected therewith. In pursuance of this notice, bonds
to the amount of $23,000 were filed by Ambler & Taliaferro, the
validity of which was made the subject of contention. These bonds
were purchased by them in Jacksonville through John T. Walker,
agent of the purchasers, Taliaferro giving his check for the money.
The bonds belonged originally to Thomas S. Harris, of Philadelphia,
who sent them to J. C. Marcy, an attorney residing at Jacksonville,
with an affidavit that he was a
bona fide holder and owner
of the bonds; that he acquired the same for value, and without
notice that the bonds were issued improperly and without
consideration. Marcy swears in this connection that he sold $23,000
face value of the bonds to Walker as agent of the purchasers, and
was paid that amount of money. He had notified Harris of the order
of the special master that the bonds were to be filed on or before
a certain day and that these bonds must be accompanied by an
affidavit of
bona fide ownership. The sale, which had been
talked about some time before, took place at the National Bank of
the Florida. He delivered the affidavit, with the bonds, to the
purchasers. He also swears emphatically that he had not, at the
time he sold the bonds, knowledge of any fact which led him to
suspect or believe that Harris had no right to sell
Page 139 U. S. 150
them, nor had Walker such knowledge, so far as he knew. He says,
"I cannot by any probability imagine that he could have any
suspicion of the invalidity of any of the bonds sold to him."
Walker, who is also a lawyer at Jacksonville, swears that he was
employed by Ambler & Taliaferro to look into the condition of
the affairs of the company, with the expectation of their becoming
the purchasers if they could do so safely.
"My investigation satisfied me that there were a number of bonds
outstanding of this company which were of doubtful validity as
liens. . . . With Mr. Marcy's assistance, I ascertained all the
facts touching the
bona fide holding of the bonds in
Philadelphia. The evidence satisfied us that all the bonds were
purchased in good faith, and I authorized Mr. Marcy to represent my
clients and complete the transactions with these parties, Dunn and
Harris, carefully instructing him to avoid the purchase of any
bonds of Mr. Shreve Ackley, as to the validity of whose holding I
had come to entertain doubts."
He further testified that he required an affidavit of
bona
fide holding to accompany the bonds, and that no fact came to
his knowledge which would raise any suspicion in his mind that the
holder had no right to sell them. Mr. Taliaferro also swears that
he had not the slightest knowledge of any facts which would lead a
man of prudence to suspect that the bonds were not valid, nor even
a suspicion. He had gone through the country, over the road, and
had made up his mind that it would be a desirable purchase in
connection with his timber interests. Acting under the advice of
Mr. Walker, he authorized him to go to Philadelphia to endeavor to
purchase the bonds. The only fact relied upon to show want of good
faith appears to be that these bonds were sold upon the day of the
sale of the railroad property under the decree of the state court,
and after the parties attending the sale, including Walker, the
agent of the purchasers, had returned from Green Cove Springs,
where the sale was made, to Jacksonville. Without going further
into the evidence, we think there is sufficient to show that there
are bonds outstanding secured by this mortgage upon which plaintiff
is entitled to maintain this bill, and that it is not necessary at
this stage
Page 139 U. S. 151
of the case to determine as a finality the amount, validity, or
ownership of such bonds or the number which were held
bona
fide by the present holders, but that the case should be
reversed and remanded for further proceedings in conformity with
this opinion. Should the court proceed to a decree for foreclosure
and sale, the holders of the bonds can be notified to appear and
file them with the master, and all questions connected with their
amount and ownership can be settled upon a final hearing.
The decree of the court below will therefore be
Reversed.