Sacramento & Placerville Railroad v. Superior Court of San Francisco (1880) · DecisionDepot

Sacramento & Placerville Railroad v. Superior Court of San Francisco

Name: California Superior Court Tentative Rulings
Creator: DecisionDepot
License: https://creativecommons.org/licenses/by-nc/4.0/

California Supreme Court Jul 1, 1880 No. No. 7,030Published

Before: Morrison

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Holding. A court of equity has the jurisdiction to appoint a receiver to enforce the specific performance of a mortgage provision that authorizes trustees to take possession of railroad property upon the mortgagor's default.

Issues

Did the lower court have the power and jurisdiction to appoint a receiver to take possession of the mortgaged property following the mortgagor's default?

Disposition. affirmed

Synopsis

Receiver — Jurisdiction — Mortgage — Deed oe Trust — Railroad.—Tho Sacramento and Placerville Railroad Company executed a mortgage or deed of trust upon its property to two trustees, to secure the payment of the principal and interest of certain bonds, and it was provided that upon default in the payment of the principal of the bonds, or upon default for one year in the payment of the interest, the trustees should take possession of tho property, and apply the net income to the payment of the principal and interest of the bonds. Default having been made, an action was brought by the surviving trustee to enforce the lien and trust, and to obtain possession of the property, and a receiver was appointed. IMd, upon an application of the successor in interest of the mortgagor for a writ of prohibition, that the case came within the provision of subdivision C, § 564 of the Code of Civil Procedure, and that the Court had jurisdiction to make the order.

Morrison, C. J.: This is a proceeding under the Code of Civil Procedure, (tit. 1, chap. 1, part iii) to review the action of the late District Court of the Fifteenth Judicial District, in appointing a receiver, and the only question for our consideration relates to the power of the Court below to make such appointment.

It appears, from the return of the writ of review issued out of this Court, that on the 14th day of March, 1864, the defendant (in the original suit) executed and delivered to- Danforth N. Barney and Louis McLane a certain mortgage or deed of trust upon its property, to secure .the payment of seven hundred [455]and fifty bonds of the denomination of one thousand dollars each, bearing interest at the rate of ten per cent, -per annum. The indenture executed and delivered by the defendant, to secure the payment of the principal and interest of its bonds, contains the following clause: “ And the parties of the second part, the survivor of them, and the heirs of such survivor, or their assigns, shall and may at all times after default shall be made in the payment of the principal of said bonds, or any part thereof, or when default for one whole year shall be made in the payment of the interest on any of said bonds, hold, occupy, possess, and enjoy, all and singular, the hereinbefore described lands, tenements, hereditaments, rights, privileges, and franchises, and other premises above granted, bargained, and sold, or mentioned, or intended so to be, with the appurtenances aforesaid, without the let, suit, or hindrance, molestation, or eviction of the said party of the first part, or their successors, or of any person or persons whomsoever lawfully claiming or to claim by, from, or under them; and that the said parties of the second part shall and may, by themselves, their officers, and agents, take, receive, and collect the income and profits of said railroad; first applying the same to the payment and discharge of all current expenses of the said railroad, and the needful repairs thereon; and next to the payment of all taxes that may be duo the State of California and the counties through which the said railroad runs, and also the United States; and then to the payment of the interest and principal of said bonds, in such manner as they may deem proper. ® * ® * * And it is further covenanted, granted, agreed, and understood, by and between the parties to these presents, and the true intent and meaning hereof is, and it is hereby declared to be so, that until default be made in payment of the said principal sum and interest, or some part thereof, aforesaid, it shall and may be lawful to and for the party of the first part, their successors and assigns, to have, hold, possess, occupy, exercise, and enjoy, all and singular, the said lands, tenements, rights, franchises, and privileges, and the said property of all kinds— real, personal, and mixed—and other of the premises, with their appurtenances above bargained, sold, conveyed, and transferred in manner aforesaid, and to have, receive, and take all the rents,

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Section 564 of the Code of Civil Procedure provides that a receiver may be appointed by the Court in which the action is pending, in all cases where receivers have heretofore been appointed by the usages of Courts of Equity. This is not a proceeding to foreclose a mortgage, and to subject the mortgaged property to sale under the decree of the Court, but it is in the nature of a proceeding to enforce specific performance of the [457]terms and conditions of a mortgage; and we find numerous cases in the books in which Courts of Equity have exercised the jurisdiction complained of in this case. The case of Shaw and others v. Norfolk County Railroad Co. and others, 5 Gray, 162, is in point'. In that case a railroad corporation conveyed all its property and franchise to three trustees by deed, conditioned to be void on payment of certain bonds issued by the corporation, and stipulating that the directors might, upon any breach of conditions, take possession and apply the net proceeds to the purpose of the trust, and it was held that it was competent for a Court of Equity to appoint a receiver. The Court there say: “ But the bill may well be maintained by the plaintiffs upon another and different ground. By the contracts expressed in the deed of indenture a trust is created, to the due performance of which they have firmly bound themselves and their successors. In the discharge of the duties thus created and thus assumed, the possession, management, and control of the estates and interests conveyed to them may, and as it seems to us have already, become indispensable. For the due enforcement and regulation of such a trust, ample power is found in the jurisdiction of this Court as a Court of Equity; and the present bill is an appropriate course of proceeding to procure for that purpose the intervention and exercise of its authority. The bill prays for general relief, as well as for a specific decree in relation to the foreclosure of the equity of redemption. And upon the facts stated in it, and which upon the hearing were admitted to be true, we can see no reason why the plaintiffs ought not to be put in immediate possession of the mortgaged property, in order that the purpose for which the conveyance was made may be accomplished, and the trust created by it be properly executed. The defendants have neglected, and still neglect, to pay the interest which has accrued upon a large proportion of the bonds, which were duly issued, and which are held by the creditors of the corporation. These bond-holders are entitled to demand the money which has become due, and it is the duty of the trustees to make use of the "discretionary power which was conferred upon them for the express purpose of insuring the payments to which the creditors should severally become entitled. To that end possession of the mortgaged [458]property is indispensable, and the plaintiffs ought therefore to have a decree by force of which they can obtain it. * * * A decree properly prepared.must therefore be entered in behalf of the plaintiffs, entitling them to have immediate possession of all the mortgaged property.”

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