Benthuysen v. Central New England & Western Railroad — 45 N.Y. St. Rep. 16

Majority

p. 16

Watson Van Benthuysen, App’lt, v. The Central New England & Western R. R. Co. et al., Resp’ts.

(Supreme Court, General Term, Second Department,

Filed February 8, 1892.)

Headnote

1. Railroad—Mortgage—Foreclosure—Tender.

A holder of bonds of a railroad lias the right to bring an action to foreclose the mortgage given to secure them in case of refusal by the trustee, and a tender of interest is not sufficient to arrest such action unless it is a tender of all interest on the bonds which have not agreed to postpone their claim to interest.

:2. Same—Receiver.

In such case it is not material whether the affairs of the road are properly managed, but the bondholders are entitled to take possession by a receiver even if the management is honest and capable.

Appeal from order denying motion for a receiver.

Action brought by plaintiff as holder of ten bonds of the defendant railroad, for himself and other bondholders, to foreclose the mortgage given to secure the same, after a refusal of the trustee to sue on the ground that the request to do so should be made by a majority of the bondholders. After the commencement of the action the railroad company tendered to plaintiff the amount of his unpaid coupons and taxable costs, and on the trial produced an affidavit of a committee appointed by a majority of the bondholders in opposition to a receivership, and stating that an agreement had been entered into waiving the default.

Judge Pratt held this tender to be insufficient as to the costs, but ordered that upon the railroad company depositing with the clerk of Dutchess county the amount of the plaintiff’s unpaid coupons and interest thereon, $612.90, with $600 as costs and allowance, the motion should be denied as to the railroad and real estate of the company, and reserved his decision as to the appointment of the receiver of the stoch until after the hearing before the general term.

Geo. W: Wingate, for app’lt; Milton A. Fowler, for railroad, resp’t; Thomas Thacher, for resp’t, Fidelity Ins. Trust & S. D. Co.

The plaintiff had the right to bring the action in case of a refusal by the trustee.

The tender was not sufficient to arrest the action unless it was a tender of all the interest upon the bonds which had not agreed to postpone their claim to interest. Assuming a default and the plaintiff’s right to sue, it is not material whether the affairs of the defendant are properly managed. The bondholders are entitled to take possession by a receiver and manage the property. The-present management has no right in such a case, even if honest .and capable.

p. 17

The order refusing a receiver should be reversed, with costs .and disbursements, and the receiver appointed.

Dykman, J., concurs; Pratt, J., not sitting.