1. Where there had been a foreclosure and sale under a railroad
mortgage to secure certain bonds, exceptions to the sale were
refused to be entertained in favor of such of the bondholders as
had been parties to a scheme under which the sale bad been made for
the formation of a new company and had surrendered their bonds in
exchange for stock and bonds of such new association.
2. Where as to a bondholder differently situated, the decree
below, in confirming the sale, had imposed the condition of payment
to him by the new company of the full amount of his bonds of the
old company, principal and interest, such decree was affirmed
without considering the abstract validity of the exception taken by
him.
These were two appeals from the Circuit Court for Wisconsin, one
by Crawshay and Oddie and one by Vose, to review an order
confirming the sale of a railroad under a mortgage. The case was
shortly this:
Soutter and Knapp, surviving Bronson, were trustees for the
benefit of bondholders of a mortgage called a land grant mortgage
given by the La Crosse & Milwaukee Railroad Company on a part
of its road. The mortgage had been foreclosed, and as is frequent
in such cases in Wisconsin, a new company, named the St. Paul, was
formed by the purchasers, here the bondholders. Among the
bondholders were Crawshay, Oddie, and Vose, the appellants. The two
former surrendered all their bonds and took certificates of stock.
The latter (who had been appointed by his co-creditors a trustee to
organize the new company), however,
Page 73 U. S. 740
yet had in his possession bonds for $5000, for which he held
certificates of the trustees entitling him to a corresponding
amount of stock in the new company. A difference arose between him
and his co-trustees; and the court having confirmed the sale of the
old road under the mortgage, he, Crawshay, and Oddie appealed from
its action. The confirmation had been made subject to payment by
the new company of his debt, principal and interest.
MR. JUSTICE DAVIS delivered the opinion of the Court in the
cases.
After a protracted litigation, the Circuit Court for the
District of Wisconsin, at its last September Term, confirmed the
sale made by the marshal in what is known as the land grant
foreclosure suit, brought by Soutter and Knapp, surviving trustees,
against the La Crosse & Milwaukee Railroad Company. These
appeals are brought here to review that order of confirmation, and
will be considered together. Various exceptions were taken in the
court below, and are renewed here, to the report of the marshal of
the sale of the mortgaged premises, but it is unnecessary to notice
them, as Crawshay and Oddie are not in a condition to avail
themselves of them, and the rights of Vose, as owner of bonds or
certificates, are protected by the order of confirmation. Crawshay
and Oddie were original bondholders under the land grant mortgage,
but before filing their exceptions to the report of sale, they had
surrendered their bonds to the trustees appointed under the scheme
for the adjustment of the affairs of the La Crosse company, took
certificates of stock, and subsequently the bonds and stock of the
St. Paul company, as provided in the agreement for organizing it.
By doing this, they elected to abide by the action of the trustees,
and cannot now be heard to interpose any objection to the
confirmation of the sale.
Vose was one of the trustees appointed by the bondholders
Page 73 U. S. 741
of the La Crosse company to adjust its affairs and form a new
company, but differences sprung up between him and his co-trustees,
resulting in their refusal to cooperate with him. It is unimportant
to inquire whether his co-trustees were justified in their
treatment of him, because, before the confirmation of the sale by
the court, the trust agreement was substantially closed. All the
bondholders except Vose had exchanged their securities for the
bonds and stock of the St. Paul company. Vose, at the time of
filing exceptions to the report of the sale, was the owner of five
bonds of the La Crosse company, for which he held the certificates
of the trustees, entitling him to a corresponding amount in bonds
and stock of the new company. It is not necessary to determine
whether, by exchanging his old bonds for certificates of stock in
the new company, he was not so far committed to the adjustment
scheme as to prevent his withdrawal from it, for in any aspect of
the case all rights that he could possibly have under the land
grant mortgage were protected by the court. The order of
confirmation was expressly made subject to the payment to him by
the St. Paul company of five bonds of one thousand dollars each,
with all accrued and unpaid interest, upon the surrender by him of
the certificates of the trustees, and all claims for dividends.
He certainly could reasonably ask no more than the payment of
the principal and interest of his La Crosse bonds -- if he was
unwilling to take the stock and bonds of the St. Paul company with
their unpaid dividends, according to the trust agreement -- and as
the court obliged the St. Paul company to pay him the full amount
of his La Crosse bonds, it is hard to see how he is aggrieved by
the order of confirmation.
Decree affirmed.
