property subsequently acquired by it, which | of railroad of the said party of the first part Argued Jan. 7, 1891. Decided March 2, 1891. District of Ohio in favor of defendant in an Statement by Mr. Justice Brewer: as the same now is or may hereafter be con- the southeasterly end of Washington Street, Creek in said city; thence over said Swan Creek and the Miami and Erie Canal and over and along Mill Street and Canal Avenue, in said city, to the westerly limit thereof; and thence to the point where said railroad On the 17th of January, 1880, the Toledo, crosses the westerly limit of said City of Delphos and Burlington Railroad Company, Toledo; together with all and singular the a corporation organized by the consolidation franchises, rights of way, station-grounds, of several constituent companies, executed a shop-grounds, side-track grounds and grounds mortgage to the Central Trust Company of of any and every kind, for whatever purpose New York, by which it conveyed the follow-bought, between the points aforesaid, viz., ing property: "All and singular the line of railroad of the said party of the first part, as the same now is or may hereafter be constracted, between Toledo, Lucas County, Ohio, through the Counties of Lucas, Wood, Henry, Putnam, Allen and Van Wert, in the State of Ohio, and the Counties of Adams, Wells, Huntington, Wabash, Miami, Grant and Howard, in the State of Indiana (and not including the branch line from Delphos, Allen County, Ohio; thence via Spencerville, Mendon and Mercer, and through the Counties of Allen, Van Wert and Mercer, to Shanesville, Mercer County, Ohio), being about one hundred and eighty miles in length, together with all and singular the rights of way, road-bed, made or to be made, its track, laid or to be laid, between the terminal points aforesaid, together with all the stations, depot-grounds, rails, fences, bridges, sidings, engine-houses, machine-shops, buildings, erections, in any way now or hereafter appertaining unto said described line of railroad, together with all the engines, cars, machinery, supplies, tools and fixtures now and at any time hereafter held, owned or acquired by the said party of the first part, for use in connection with its line of railroad aforesaid, and all its depot-grounds, yards, sidings, turnouts, sheds, machine-shops, leasehold rights and other terminal facilities now or hereafter owned by the said party of the first part, together with all and singular the powers and franchises thereto belonging, and the tolls, income and revenue to be levied and derived therefrom;" and also provided: "The said party of the first part expressly covenants and agrees that it will, on demand, from time to time hereafter execute, acknowledge and deliver unto said party of the second 16 part any and all such further and other conveyances and assignments as may be necessary and proper to fully convey to and vest in the party of the second part or the trustee for the time being all such future acquired depots, grounds, estates, equipments and property as it may hereafter from time to time purchase for use in and upon its said line of railroad and intended to be hereby conveyed." On June 21, 1880, the same railroad company executed to the same trustee another mortgage, known as the "terminal trust mortgage." The property thereby conveyed is thus described: "All and singular the line On foreclosure proceedings, duly had, of the first mortgage, appellee became, in the interest of the bondholders, the purchaser. After confirmation of sale and passage of title, and during the pendency of a suit to foreclose the second mortgage referred to, this proceeding was commenced by the trustee in the latter mortgage and certain holders of bonds secured thereby, against Kneeland, the purchaser. The bill was practically one to quiet the title of those security holders to the terminals in Toledo. To this bill Kneeland filed an answer and cross-bill. In the latter he set up his title under the first mortgage and the sale, and prayed to have his title quieted to these terminals. Upon proofs and hearing, the circuit court rendered a decree in favor of Kneeland, quieting his title to all except a small strip of the right of way, thereby adjudging priority of lien to the first mortgage. This decree the appellants have brought to this court for review. Mr. W. W. Mac Farland for appellants. Messrs. Robert G. Ingersoll and Clarence Brown for appellee. Mr. Justice Brewer delivered the opinion of the court: [417] [419] The first mortgage had the “after-acquired [420] “Terminal Advantages. property" clause in it. It is settled that the proceeds of the mortgage of January 17, Railroad has the right of way through and "The Toledo, Delphos and Burlington down the very center of the City of Toledo. It enters the city near the Miami and Erie Canal, and substantially follows the canal to Washington Street; thence down Washington Street to Swan Creek and to lake navigation, within three squares of the postof very great importance to the business of office. This franchise is very valuable and the road, and adds greatly to the pecuniary value of the property of the corporation. No other road entering the city approaches so near to its center; none whose freight and passenger business is transacted so near to considered valuable to the road not only the business of the city. This franchise is from the fact that it affords unusual business facilities, but because it becomes independbusiness secure without submitting to a ent of other corporations and renders its heavy tax on its traffic." and build, complete, equip, pay for right of all Where a company is incorporated to construct a railroad between two cities named as its termini, a mortgage given by it which, as expressed, is upon its line of railroad constructed or to be constructed between the named termini, together with all the stations, depot-grounds, engine-houses, machine-shops, buildings, erections in any way now or hereafter appertaining unto said described line of railroad, creates a lien upon its terminal facilities in those cities, and is Not only this, but when the mortgage of not limited to so much of the road as is January 17, 1880, was in contemplation, and found between the city limits of those places. on December 12, 1879, when its execution The stations, depot-grounds, etc., in the term- was ordered, the resolution of the directors inal cities appertain to the railroad as fully declared: "That for the purpose of borrow. as similar structures in places intermediate ing money for the use of the company to enthose termini. In the absence of restrictive able it to carry out the purposes for which it words, such is the natural import, and there-is organized and was consolidated, fore must be adjudged the intent and scope, of a mortgage containing that description. This first mortgage contains not only the general terms referred to, but after them, and as if it were to avoid any possible doubt, adds: "And all its depot-grounds, yards, sidings, turn-outs, sheds, machine-shops, leasehold rights and other terminal facilities now or hereafter owned by the said party of the first part. It would be difficult to make language more full, accurate and descriptive. Willink v. Morris Canal & Bkg. Co. 4 N. J. Eq. 377; Morris & E. R. Co. v. Central R. Co. 31 N. J. L. 205; Mohawk Bridge Co. v. Utica & S. R. Co. 6 Paige, 554, 3 N. Y. Ch. L. ed. 1099; Com. v. Erie & N. E. R. Co. 27 Pa. 339. There can be no doubt that by this mortgage a lien was created on the terminal facilities in the City of Toledo, and as this mortgage was executed some months before the terminal trust mortgage, apparently it created a prior lien. And if there were no other facts to be considered, the disposition of this case would be easy. That the parties receiving bonds under this mortgage would understand that they were to have a first lien on all terminal facilities in Toledo then owned or thereafter acquired, is clear. That the railroad company also understood that it owned and was giving a prior lien upon such terminals is evident from the fact that in the year 1879 it executed a mortgage for one million two hundred and four thousand dollars and negotiated six hundred and thirty thousand dollars of the bonds secured thereby, which bonds and mortgages were taken up and satisfied out of No one can misunderstand these declarations. They expressed to every purchaser of a bond secured by this first mortgage a purpose to vest in him a prior lien on all the property of the railroad company, including its terminal facilities-a lien superior to every incumbrance thereon. They unite, therefore, with the clear language of the mortgage, the expressed intent of the mortgagor. To thwart this purpose, so obvious and expressed, there should be a clear disclosure of higher equity, and to the suggestions of that we pass. The second, the terminal trust, mortgage, was executed on June 21, 1880. On September 4, 1880, more than two months thereafter, the Toledo and Grand Rapids Railroad Company executed its mortgage to the Cental Trust Company, to secure, not its own indebtedness, but the bonds secured by the terminal trust mortgage above referred to. This mortgage, in terms, conveyed the grant or's right of way within the City of Toledo, |sumed and paid by the Toledo, Delphos and property which is, in fact, a part of the Burlington Railroad Company, as a considright of way and terminal facilities of the eration of the appropriation by the latter of Toledo, Delphos and Burlington Railroad all the franchises and property of the former. Company. On November 29, 1880, George Whatever, therefore, may be said as to the W. Ballou and wife executed a mortgage to scheme and plan of the parties who in the the same Trust Company, conveying certain spring of 1880 were in control of the Toledo, properties similarly situated and also as se- Delphos and Burlington Railroad Company, curity for those terminal trust bonds. On the fact remains undisputed that its mortgage April 12, 1881, the Toledo and Grand Rap- of January 17, 1880, covered, in terms, all ids Railroad Company conveyed to the To- subsequently acquired terminal facilities in ledo, Delphos and Burlington Railroad Com- the City of Toledo; that purchasers of bonds pany all its properties. The consideration secured thereby were invited to invest, on of such transfer was $265,477.86 cash, an the strength of representations by the comamount supposed to be sufficient, and pro-pany that it covered the terminal facilities; vided to pay all the indebtedness of the To- that the title to the larger portion of these ledo and Grand Rapids Railroad Company. terminal facilities passed directly and unin.. So far as the property standing in the name cumbered by anyone to the Toledo, Delphos of Ballou is concerned, he was the financial and Burlington Railroad Company; that as agent of the mortgagor, the Toledo, Delphos to those portions whose title passed to Ballou and Burlington Railroad Company; and and the Toledo and Grand Rapids Railroad while he took the title to some properties in Company, the purchase price was paid by his own name, the purchase was with moneys the Toledo, Delphos and Burlington Railof the mortgagor. Hence, while he held the road Company; and that the mortgages legal title, the full equitable title was in which they respectively executed to the Cen. the railroad company, and that property be- tral Trust Company were not given to secure came, therefore, in equity, subject to the lien independent debts, but simply as collateral of the first mortgage. Further, the mort- to the terminal trust bonds. gage from Ballou to the Central Trust Company, of date November 29, 1880, was really a tripartite agreement between Ballou, the Toledo, Delphos and Burlington Railroad Company and the Central Trust Company, and recited that the mortgage to the Trust Company was in consideration of forty thousand of these terminal trust bonds received by Ballou. So, not only was this purchase by Ballou made with the funds of the Toledo, Delphos and Burlington Railroad Company, but he received also forty thousand dollars of the terminal trust bonds. Further than that, as we read the record—and there are seventy to eighty deeds and relinquishments of right of way contained in it-apparently the title to the bulk of the right of way passed directly to the Toledo, Delphos and Burlington Railroad Company, and not to Ballou nor to the Toledo and Grand Rapids Railroad Company, so that we have these facts before us: First, the title to the larger portion of the terminal facilities passed directly to the mortgagor, the Toledo, Delphos and Burlington Railroad Company. Second, all that part whose title was taken in the name of Ballou was paid for by the funds of the Toledo, Delphos and Burlington Railroad Company, and therefore it had the full equitable title, and he had only the naked legal title in trust for its benefit. Third, the incumbrance which he placed upon it in the tripartite agreement was not security for an independent lien, but simply additional security for the terminal trust bonds issued by the Toledo, Delphos and Burlington RailBroad Company. Fourth, the mortgage given by the Toledo and Grand Rapids Railroad Company, which was generally of its right of way and terminal facilities, was not to secure an independent debt, but the already issued terminal trust bonds of the Toledo, Delphos and Burlington Railroad Company. Fifth, all the indebtedness of the Toledo and Grand Rapids Railroad Company was as We do not question the proposition invoked by counsel for appellant, that a mortgage with an "after-acquired property" clause creates a lien upon property subsequently acquired only when it is acquired, and in the condition in which it is acquired, and subject to all existing liens; nor the other proposition, that the ownership by one corporation of the stock of another will not of itself prevent the creation of a new and independent lien upon the property of the latter, as adjudged in the case of Williamson v. New Jersey S. R. Co., 28 N. J. Eq. 278, 29 N. J. Eq. 316. Yet we think those propositinos are not decisive of the case here presented. The mortgagor in the two mortgages of January and June, 1880, held the legal title to a large portion of the terminal facilities, and was the equitable owner of substantially the rest. Its first mortgage, its expressed purpose, was a lien upon those terminal facilities. No lien was ever placed by the holders of the legal title on that portion of the right of way and terminal facilities which did not stand in the name of the Toledo, Delphos and Burlington Railroad Company, to secure any new and independent obligation. These collateral and subsequent mortgages were in terms only to strengthen the security already given by the terminal trust mortgage. If they had never been executed, can there be a doubt that on a foreclosure the trustee in either the mortgage of January 17, 1880, or the terminal trust mortgage, could have subjected to its lien all property in fact a part of the right of way and terminal facilities, whether the title of the company thereto was either legal or equitable? They therefore only put into writing that which was already and in equity the obligations resting on the property. So, whatever may have been the secret thought and scheme of the parties controlling the management of these railroad com. panies, we are of opinion that the various [424] properties included in the right of way and ers of Louisiana was a banking corporati We think there was no error in the ruling of the Circuit Court, and its decree is affirmed. [525] WILLIAM CRESSEY v. HERMANN MEYER ET AL. (See S. C. Reporter's ed. 525-528). The amended by an Act dated February 19. 182 1. An action by a creditor of a State, not against be sustained. 2 Although a State may enforce all obligations the defense of laches. In a suit by a creditor of a State to subject debts due to it to the payment of his claim, brought nineteen years after the payment of such debts was due from them to it, the fact that much litigation had intervened during those years, and that bankruptcy proceedings were pending, to which plaintiff was not a party, is no answer to the defense of staleness of the claim. Argued Jan. 12, 1891. APPEAL from a decree of the Circuit Court continued in business until 1842, of the United States for the Eastern Dis- Statement by Mr. Justice Brewer: NOTE.-That neither time nor Statute of Limita Chouteau, 20:584. As to effect of state decisions and laws, in regard As to effect of disability occurring after Statute of November 17, its charter was declared forfeited for insolvency, at a suit of the State. In anticipation of this decree of forfeiture, the Legislature of 1842 passed four Acts: one, entitled "An Act to Revive the Charters of Several Banks Located in the City of New Orleans, and for Other Purposes, approved February 5; another, to amend this Act, approved March 7; another, approved March 11, relieving from the rule requiring the reinscription of mortgages at the date of tea the stockholders to this bank: and fourth, years from registry the mortgages given by of March 14, entitled "An Act to Provide for the Liquidation of Banks." This last Act provided forfeiture proceedings in the name of the State, and for the appointment by the governor of a board of managers to wind up tween the State and its debtors, was made in Its affairs. On April 5, 1843, another Act 1847. Thirty-six years thereafter this bill was passed, declaring that the assets of this is filed. If the time for full payment given bank should remain in the possession and by the settlement of 1847 is subtracted, this under the exclusive management of the State suit was commenced nineteen years after the until the final payment of all bonds issued time fixed by that settlement for the last to it by the State. On April 6, 1847, an Act payment had passed. Limitation and laches was passed authorizing the managers of the forbid that this suit should be sustained. It bank to extend by indorsements the bonds in may be that, as against the sovereign, no favor of the bank issued by the State to six, Statutes of Limitation run; and it may be nine, twelve, fifteen and eighteen years, with that, in the courts of Louisiana, the State a privilege to each stockholder to discharge may enforce all obligations due to it, no his obligation to the bank and cancel his matter what period of time may have intersubscription by surrendering bonds of the vened since they were assumed; but the 27] State proportionate to the amounts due from right is personal to the sovereign; it doe him by his subscription. It was further not pass to any of its creditors; and its in provided that the managers should require tervention and appearance in a suit brough such annual or periodical payment by the by a creditor, as against its debtors, does not stockholders as would finally pay the bonds give to such creditor its sovereign exemption due the State; and that the amount might be from liability to the Statute of Limitation distributed through the succeeding seventeen and the defense of laches. Whatever, thereyears. This legislation, so far as any action fore, might be true if the State of Louisiana on the part of the bank was necessary to give were suing in its own courts, this suit must it force, was accepted. On examination, it be treated in the federal courts as one by an was found that the deficiency of assets would individual against individuals; and, brought be about $500,000; and that a contribution nineteen years after by the terms of settleof one hundred and two dollars per share, ment between the State and its creditors the payable in seventeen equal annual install-last payment was due from them to it, must ments, would be sufficient to pay off these be adjudged a stale claim. The decisions of bonds, and such an assessment was duly ordered. This suit was commenced by the filing of a bill in the circuit court of the United States on December 12, 1883, by William Cressey, an alien, against the bank and its board of managers and directors; and afterwards, by an amended bill, filed January 24, 1884, against a large number of stockholders, setting forth the plaintiff's ownership of certain bonds issued by the State under the Act of 1847, portions of which had been paid, and seeking to charge these stockholders for the unpaid portion of the amounts due from them under the settlement of 1847, above the Supreme Court of Louisiana are in accord referred to. Subsequently, the State of CASE MANUFACTURING COMPANY, Louisiana intervened, and was admitted as a party pro interesse suo. On proofs and hearing, the defenses of the stockholders were sustained, and the bill as to them dismissed. Messrs. Walter H. Rogers, George A. King and Charles W. Hornor for appellants. Messrs. J. D. Rouse and Wm. Grant for appellees. Piff. in Err., Mr. Justice Brewer delivered the opinion 1. of the court: One proposition alone requires notice. This was an action by a creditor of the State, not against his debtor, but against its debt28] ors, to secure an appropriation of their debts to it to the satisfaction of its obligations to him. It is a proceeding of a garnishee nature. The appearance of the State, voluntarily, its application to be made a party pro interesse suo, may avoid all questions as to the right of the plaintiff to maintain this suit. Conceding that such a suit is proper, it still remains in the nature of a personal action by one individual against another. As against such a suit, laches and limitations are in a court of equity sufficient defenses. The settlement, which was practically be Where the plaintiff alleges that his acceptance of the notes of a limited liability company was through a mistake, parol evidence that defend NOTE.-As to admissions or declarations of prin cipal and agent, when evidence, see note to Leeds v. Marine Ins. Co. of Alexandria, 4: 266. As to effect of admissions of partner, after dissolution, on his copartners,-see note to Thompson v. Bowman, 18: 736. As to declarations of vendor of chattels; admissibl tty against vendee,-see note to Jones v. Simpson, 29:742. for what purposes, see note to Bank of United States v. Dunn, 8: 316. As to parol evidence as to bill or note; admissible As to parol evidence of previous negotiations, when admissible to affect a written contract, see note to Union Mut. L. Ins. Co. v. Mowry, 24: 674. |