Woodworth v. Blair

In a suit in equity to foreclose a mortgage from a railroad corporation of its whole railroad, franchise, lands and property, which have since been put in the possession of a receiver, an intervening prior mortgagee of part of the , lands is not entitled to have the amount of his mortgage paid out of the funds in the hands of the receiver, or out .of the proceeds of a sale made pur- , suant to the decree of foreclosure, subject to his mortgage.

APPEAL PROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS. This was an appeal, by a prior mortgagee of a tract of land occupied by the Chicago and Pacific Railroad Company, from decrees in a suit in equity to foreclose two mortgages of its whole railroad. The material facts appearing by the record were as follows: On October 1st, 1872, and on November 6th, 1874, the corporation made to a trustee, to secure the payment of its bonds, two mortgages of all its railroad, right of way, franchise, road bed, stations.and station houses, depot grounds, and other property, already or 'thereafter owned, possessed or acquired through or by reason of die construction of its railroad. After breach of the conditions of those mortgages, the bondholders filed bills in’ equity'for the appointment of a receiver and for the foreclosure of the mortgages,, which were by order of court consolidated as one suit. Pending that suit, and after a receiver had been appointed’ and had taken possession, the appellant filed an intervening pe'■■titicn, alleging thaton February 1st, 1872, at the request of the corporation and for its benefit, she sold and conveyed to Thomas S. Dobbins, its president, a tract of land in Chicago, in consideration of a certain sum in money, and of ten promissory notes made by Dobbins, payable in ten successive years, and secured by a-mortgage from him of the land, which was duly recordód on September 5th, 1872; that the corporation entered upon the land and laid tracks upon it, and continued to use and occupy it until the appointment of the receiver, and the receiver since continued to use it for the benefit of the railroad, and neglected to pay the notes and interest; and praying that the amount thereof might be paid out of any funds in the hands of the receiver, or out of the proceeds of sale under any decree to be rendered in the case. This petition was referred to a master, who reported - that the amount due to the appellant was $59,910.10. The court declined to order the payment of the appellant’s claim, and dismissed her petition, without prejudice; and in the principal suit entered a decree for the foreclosure by sale of the whole railroad, including the road bed, stations and station ■houses, depot grounds and other property, without prejudice to her mortgage. From that decree the appellant prayed an appeal to this court, and offered a bond in order to make the appeal a supersedeas. The court allowed the appeal and approved the bond, and ordered that the appeal should not operate as a supersedeas or delay of the sale, but only delay the distribution of so much of the proceeds of the sale as was necessary to fully secure the . amount due on her mortgage. íhe master afterwards reported that a sale had been made, in accordance with the decree of foreclosure, for the sum of $916,100; and the court overruled exceptions taken by the appellant to the master’s report, and confirmed the sale. The corporation afterwards paid into court the amount of the bid, interest and commissions, as required by the decree and by the statute of Illinois; and the court found that 'the corporation had done what was needful to effect a redemption, and reserved for further consideration the time and terms on which a delivery of the property to the corporation should be directed.