Baker v. Springfield & Western Missouri Railroad

Black, J. — Ejectment for property in Greene county described as follows: “ All that certain railroad and its appurtenances, beginning at a point in the city of Springfield and extending thence in a northwestern direction to Ash Grove, being about twenty miles.” The property sued for is a part of the road bed of the old Kansas City and Memphis railroad, a branch of the Hannibal and [77] St. Joseph railroad. The “executive construction and. managing committee” appointed, or rather confirmed, by the Hannibal & St. Joseph Railroad Company, received subscriptions to a large amount to aid in the construction of the branch road, and one of its members expended over $200,000 in grading and masonry in the preparation of the road bed from Springfield, in Greene-county, to Greenfield, in Hade county. Out of the twenty-two miles graded in Greene county the right of way was procured to the branch road for five miles only and that in detached parcels. This work was done in 1870, 1871 and 1872. Nothing further appears to have been done in the way of construction by the branch road. A new corporation, The Kansas City and Memphis Railroad Company, was organized to build a road over the same route. The executive committee of the branch road in 1872 and 1878 assigned, or undertook to assign, and transferred to-the new organization the property rights, subscriptions, etc., of the branch. The new company in April, 1875, conveyed the road bed to Shepard and others, who, in September of that year, sold the same to defendant, a corporation organized to build a road from Lamar in Barton county by the way of Greenfield to Springfield. Thereafter the defendant procured to itself the remainder of the right of way, repaired and completed the grading and masonry, tied, ironed and put the road in operation. To raise money to prosecute this work defendant, on the first of January, 1878, made a deed of trust on all of its property to James Baker, the plaintiff here, and Mr. Wells, to secure an indebtedness of which . there is outstanding some $200,000. On July 28, 1876, James Hayes recovered a judgment against the Hannibal & St. Joe Railroad Company for $18,000 on account of a grading contract, to be levied only of the property of the branch road, the Kansas City and Memphis railroad. By virtue of an execution issued thereon these eighteen [78] •or twenty miles of said road bed sued for were sold to Patrick Hayes in November, 1876, and in February, 1879, he conveyed the same to the plaintiff. This was .after the plaintiff became trustee for defendant and its bondholders in the deed of trust before mentioned. The statement of the case would lead to the inference that the plaintiff’s purchase was intended to be for the benefit of the defendant. The contention, however, is that he is only a dry trustee with no duties to perform .and may purchase and assert an outstanding title. It is true these trustees have no active duties to perform so long as the interest and principal of the debt is paid. ‘The bonds, however, are designed to pass from hand to hand in the market and are doubtless held by many persons scattered throughout the country. Any of the holders of these bonds to the amount of ten thousand dollars, in case of default, may call upon the trustees to .■sell. By the terms of the deed these bonds, were issued to raise money to construct the road, and for the better ¡security the trust covers the franchises as well as all of the property of the company. Express stipulation of the deed is that the defendant shall' remain in the possession, use and management of the road and its appurtenances so long as there is no default in payment of the •principal or interest. The ability of the defendant to pay the interest and debt must depend upon the continued use of its entire line. To deprive it of the eighteen miles out of the sixty-five is to practically destroy the whole line. The trustees holding the franchises, as they do, owe a duty to the public as well as to the defendant and bondholders. Generally, a trustee who holds the legal title for the use of another will not be permitted to speculate with the trust property. He •cannot purchase an outstanding title and assert and hold it for Ms own use. It makes no difference in his favor that the title acquired was purchased at a judicial sale, ■nor that it is superior to the title conveyed to him ia [79] trust. Roberts v. Moseley, 64 Mo. 507; McAllen v. Woodcock, 60 Mo. 174; Lass v. Sternberg, 50 Mo. 124. In Perry on Trusts (sec. 749), it is' said with respect to trustees for bond holders in the class of cases now under consideration: “They should not acquire interests or put themselves in positions or relations which are antagonistic or hostile to' the interests of the bondholders.” We see no reason why this cause should be taken out of the general rules before stated. Reason and authority are against the right of the plaintiff to assert his title, if any he acquired through the sheriff’s sale, in hostility to the defendant. Other questions are presented by this record, all of which have been duly and fully considered, but the conclusion above stated must determine this cause and it is •deemed unnecessary to further discuss them. Affirmed. All concur.