McAllister v. Plant

Chalmers, J., delivered the opinion of the court. Increase C. Plant, the appellee, as the holder of a large number of the first mortgage bonds of the Vicksburg and Meridian (formerly Southern) Railroad Company, filed his bill seeking a foreclosure, by sale, of said first mortgage. He alleged that there had been four other mortgages executed by the corporation, all junior in date and secondary in dignity to the one by which his bonds were protected. To his bill he [117] made defendants the railroad company, one of the trustees named in the first mortgage (the other being dead), the trustees in the four subordinate mortgages, and all the holders of bonds known to him by name under all the mortgages, as also, by general designation, those who were unknown. The appellants, who are trustees in junior mortgages, demurred.to the bill, upon various grounds; and, their demurrer being overruled, they bring the case here by appeal. We will notice such of the grounds of demurrer as seem important. The bill alleged, that by the first mortgage, under which the complainant’s bonds were protected, the franchise, road-bed and appurtenances thereto of the railroad company had been conveyed in trust to Joseph H. Johnson and James Magee, to protect the bonds therein specified, with power in said trustees, upon default made in the payment of the bonds at maturity, to take possession of and operate the road, and to apply the proceeds to making said payment; or, upon the written request of one or more bondholders, to sell the road at public auction, upon two months’ notice; or to enforce payment of the bonds by proper proceedings at law or in equity. It was further alleged, that the bonds were past due and unpaid, and that it had become impossible to have said powers executed, by reason of the death of Johnson, and of the fact that Magee was now a holder of some of the bonds under the first mortgage, and also of other bonds under the junior mortgages, besides being likewise a trustee in some of the junior mortgages; and that being thus an interested party, and occupying antagonistic positions with conflicting interests, it was improper that he should exercise the powers conferred upon him by the first mortgage. The heirs and representatives of Johnson, the deceased trustee, were not made parties, and this is made ground of demurrer. The conveyance to the trustees was joint, not joint and several. It is well settled, that, where an estate is conveyed to trustees jointly, the right of survivorship exists; that, upon the death of one, his interest does not descend to his heirs, but vests in the other; and that this rule is not affected by statutes abolishing joint tenancies and converting them into tenancies in common, unless the language of the statute expressly embraces trust estates. The reason for this is obvi [118] ous. The evil to be remedied by the conversion of joint tenancies into tenancies in common was the improper accretion to one party of that which properly belonged to two, and the consequent enrichment of one and impoverishment of the other’s estate. But inasmuch as trust property, whether held by one or both, would only be held for the benefit of the cestui que trust, whose estate would be in no manner affected by the death of one of the trustees, the reason of the law ceases, and with it the law itself. 1 Wash. Real Prop. 559 ; Williams Real Prop. 125 ; 1 Perry on Trusts, § 343 ; Parsons v. Boyd, 20 Ala. 112. These authorities seem applicable to States where the statutes abolishing joint tenancies are silent as to estates held in trust; but our statutes on this subject expressly except such estates from their operation. Code 1857, p. 309 ; Code 1871, § 2301. The trust conferred upon Johnson and Magee jointly did not, upon the death of the former, descend to his heirs, but vested in the latter. It was not necessary, therefore, to make Johnson’s heirs parties to this proceeding. It is urged further by the demurrants that the excuses given, for the non-execution by Magee of the powers conferred by the mortgage are insufficient, and do not justify the invocation of the authority of the Chancery Court, because the complainant’s remedy was ample under the mortgage, either to take possession of or to sell the road. It is a sufficient answer to this position to say that a power of sale given in a mortgage does not oust the jurisdiction of a Court of Chanceiy, nor preclude a party from resorting to that tribunal. It is cumulative only; and many cases exist (and we think the case at bar is eminently of that character) where various conflicting interests render it highly proper that mortgagees should resort to judicial proceedings rather than to the exercise of the summary rights conferred by the instruments under which they claim. Thompson v. Houze, 48 Miss. 444; Eaton Railroad v. Hunt, 20 Ind. 457. These remarks dispose also of the objection that the first mortgage contemplated that the bondholders thereunder should look first for payment to the net earnings of the road, after the same should have been taken possession of by their trustees, and that no sale should take place until this had [119] been done, and then only upon the written request of some bondholder. We cannot see, from the allegations of the bill, that the trustees or bondholders were confined to any particular order of priority in resorting to any one or all of the several powers conferred by the mortgage ; and, even if they were, this would not, as before remarked, deprive the Chancery Court of its right to foreclose in a proper case. It is objected that no power is shown in the railroad company to execute a mortgage. The charter grants the right “ to acquire, alien, transfer and dispose of ” “ property of every kind.” The power to sell carries with it the power to mortgage ; and this would suffice, so far as the property of the company, as distinguished from the franchise, is concerned. Sessions v. Bacon, 23 Miss. 272; Stone v. Montgomery, 35 Miss. 83. Whether, in the absence of express statutory authority, a railroad corporation can assign or mortgage its franchise, and thus, as it were, transfer to another that existence which is the creature of legislative grant, is a grave question, upon which that most eminent of American authorities, Judge Redfield, declines to express a decided opinion. 2 Redfield on Railways, 514, note. There is no doubt, however, that such a corporation, like any other trading company, may convey, either absolutely or upon condition, all property which it is authorized to hold, or which is essential to carrying on the business for which it ivas designed; and, as remarked by Judge Redfield, the undoubted power of a court of chancery to put the assignees or mortgagees in possession of the property and business of the corporation would leave but little to be decided as between private parties. Whether the assignees could enjoy the franchises and corporate existence derived from the State would seem to be a question in which the State alone would be interested. Wade v. American Colonization Society, 7 S. & M. 663 ; Arthur v. Commercial Railroad Bank, 9 S. & M. 394. This view is strengthened in this State by our statute making the franchises of corporations vendible under execution. Code of 1871, § 2414. Upon these questions, however, we do not now express any decided opinion. By the act of Dec. 26, 1856 (acts of 1856-57, p. 105), the [120] Southern Railroad Company was authorized to buy out and absorb the Vicksburg and Jackson Railroad Company, and by said act was expressly empowered to issue its bonds and execute mortgages to secure the same upon its property, real and personal, and “ upon its appurtenances and franchise.” These bonds, thus authorized and protected, it was declared might be used in paying the indebtedness growing out of the purchase of the Vicksburg and Jackson road, “ or in the construction of the unfinished portion of said road, or in such other way as the company may desire.” Certainly language could not be broader or more explicit than this. All the mortgages of the company were executed after the passage of this act. It is difficult to see how the appellants, who are only parties to this proceeding because they are trustees in junior mortgages, can be heard to say that the corporation had no authority to execute such an instrument. If their position was correct,- they would themselves have no locus standi in this litigation. But it is urged by the demurrants that the allegations of the bill do not set forth with sufficient definiteness that a mortgage was in fact executed, and especially that it is not sufficiently stated that the same was under seal. The allegations are, that the company, by its corporate name, made the bonds and coupons, and on the same day “ made and delivered a deed purporting to be a trust-deed, and by said trust-deed granted, sold and conveyed ” to the trustees certain property, real and personal, which is described. Even in pleadings at law it is only necessary that a writing shall be referred to according to its legal import and effect, without specifying all the details necessary to give it validity. Stephen on Pleading, 311, 353, 390. The allegations of the bill are ample in this regard. Let the decree overruling the demurrer be affirmed, with leave to the defendants to answer within sixty days. Simrall, C. J., having been of counsel, took no part in the foregoing decision.