Iowa & California Land Co. v. Hoag

HENSHAW,J.

—Both of these actions were actions to foreclose mortgages executed "by the defendants to secure their promissory notes. The notes and the securities passed by sundry transfers and assignments to the plaintiff. The questions, involved upon these appeals are identical, and the cases may therefore be considered and decided together.

[628]

The defendants executed their promissory notes, secured by mortgages upon lands in California, to the Union Loan and Trust Company, a foreign corporation organized under the laws of the state of Iowa. The Union Loan and Trust Company, to secure its debenture bonds, deposited with one Garretson, as trustee, certain notes and mortgages, among which were the ones executed by these defendants. Thereafter the Union Loan and Trust Company became insolvent, and made an assignment to one Hubbard, as assignee for the benefit of its creditors, of all of its remaining right, title, and interest to the securities under the control of Garretson, trustee. Garret-son, in turn, became insolvent, and the creditors of the Union Loan and Trust Company filed a bill in equity in the district court of the state of Iowa for the county of Woodbury, a court of general jurisdiction, setting forth these facts, and praying for the removal of Garretson and the appointment of some fit and proper person in his place. The Iowa court rendered its decree in accordance with the prayer of its petitioners, ousting Garretson from his trusteeship and appointing F. B. Hutchins in his place, and empowered him to use all proper means to enforce the collection of the securities so intrusted to him. Under this appointment, Hutchins, as trustee, commenced his action in the superior court of this state to foreclose these mortgages. Before commencement of this action, Hubbard, the assignee for the benefit of creditors, had assigned the notes to Hutchins. Thereafter, and during the pendency of this action in this state, certain other creditors of the Union Loan and Trust Company, and holders of the debenture bonds of that company, attacked and opposed the order and decree of the court appointing Hutchins as trustee, upon the particular ground that the court, by its order and decree, had enlarged the powers of Hutchins as trustee over and above the powers conferred by the articles of trust under which Garretson had been appointed. They pleaded that the court’s order authorizing and empowering Hutchins to employ counsel and maintain suits to enforce collections of securities intrusted to him was null and void. After hearing, the district court of Iowa— the same court which had appointed Hutchins trustee—declared and adjudged that its former decree in the premises was a nullity; that Hutchins was without authority or capacity to sue; revoked its order appointing him trustee, and in place thereof appointed him receiver of the property of the