Warren v. Bigelow Blue Stone Co. — 56 N.Y. St. Rep. 416

Majority

p. 416

Joseph M. Warren et al., as Surviving Trustees for the Benefit of the Holders of Bonds Secured by a Mortgage or Deed of Trust, etc., Resp’ts, v. The Bigelow Blue Stone Co. et al., Respt’s. In the Matter of the Application of Helen M. Kellogg, a Stockholder, for Leave to Intervene, etc., App’lt.

(Supreme Court, General Term, Third Department,

Filed December, 1893.)

Headnote

Trust mortgage or deed—Intervention.

After the lapse of more than twelve years with the knowledge of the

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execution and existence of a trust mortgage to secure bond-holders, acquiescence by a stockholder, who was such at the time of its execution, will be presumed, and he will not be permitted to intervene, in an action to foreclose such mortgage, for the purpose of setting up the defense of improper execution or usury.

Appeal from an order denying motion to intervene.

This is an action to foreclose a mortgage given to secure a series of bonds given by the defendant.

Pending the action, Helen M. Kellogg, a stockholder of the defendant, petitions to intervene and to be made a defendant, and permitted to interpose an answer. The court at special term denies her application, and from that order she appeals.

Kellogg, Rose & Smith, for app’lts ; A. T. Clearwater, for resp’t; King & Specie, for Bigelow Blue Stone Co., resp’t; Townsend, JDyett & Mnslein, for Importers & Traders’ Bank, resp’t

We think this order should be affirmed for the reasons stated by the learned judge at special term.

Order affirmed, with ten dollars costs and printing disbursements.

All concur.

The opinion of Mr. Justice Brown in the court below was as follows:

The petitioner on this motion is the owner of shares of stock in the defendant corporation, of which she became the owner in Pebruarv, 1880. She received them from the estate of her father, Luther Baffin, who was a stockholder at the date of the execution of the mortgage in suit.

Interest was paid regularly on the bonds until 1892, and annual statements, showing that mortgage bonds to the amount of $100,000 were among the liabilities of the company, were forwarded to the stockholders. It is not claimed that Mrs. Kellogg, or her father, did not know of the execution and existence of the mortgage, and it appears uncontradicted that some of the bonds were offered to her father at the time of their issue, but he declined to purchase them. Under these circumstances the petitioner cannot be permitted to plead as a defense to an action to foreclose the mortgage that it was not properly executed, or that it was not authorized by the owners of two-thirds of the capital stock. Acquiescence after such lapse of time will be presumed. Kent v. Quicksilver Mining Co., 78 N. Y., 159 ; Skinner v. Smith, 134 id., 240 ; 47 St. Rep., 528 .

The claim that $32,000 of the bonds have been paid by the company does not rest upon the assertion of any fact. It is fully met in the affidavit of Mr. Caswell, and the transaction explained, and it affirmatively appears that none of the bonds were paid bj the company. The defense of usury cannot be pleaded to the mortgage in suit. The petition does not make out a prima facie case, and if all the facts set forth in the moving papers were be

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fore the trial court, the plaintiffs would be entitled to a decree directing a sale of the mortgaged property.

The motion must be denied.