is. . DE WI'n w. CmcAGo,B. & Q. Ry. Co. sCal· . (C'lrcuU Cowrt,D. Massachusetts. January 29, 1890.)
Where a corporation executes a mortgage that the holders of a certain issue of bonds mayexchanf,e them for a new issue. 'at any time after the exeoudelJvering thereof, 'a court of equity will not enforoe aneichange after tion 14 years, in favor of purohasers of said bonds, not parties to the mortgage.
CoMPAlfIEB-BoNDS AlfD MORTGAa,ES-OFFER OJ!' EXCHANa,z-LAClIEB.
In Equity. Billfiled by JohnE. De Witt against the Chicago, Burlington & Quincy Railroad Company et al." to enforce an exchange' of bonds. Hutchins&: Wheeler, for c()tnp]ainant. Richard Olney and E. O. Perkins, for defendants. J.In 1872 the defendant corporation issued bonds to the of $7,026,000, payable on January 1, 1896, with interest at the rate of 7 per cent. per annum. The bonds were not secured by mortgage on the property of the railroad. On July 1, 1873, the defendant corporation executed a mortgage to the defendant trustees, whereby all its property was conveyed to the said trustees upon the trusts therein set forth. '1'he mortgage, among other provisions, contained the following clause: "It is exprMlillyunderstood and agreed that of said bonds the amount of twentymilliqns of. dollars thereof shall be set aside and held by the parties of part, and they and the proceeds thereof Shall be lIsed and appropriated exclusively and' only for the funding. paying off, and discharging the bonded and other indebtedness of 'the said first party, its said contingent liabilities hereinbefore mentioned. and to keep good said sinking fund; and that of said as may be required for. that twenty million of slIch bonds 80 Dlany purpose may be exchanged at par for saiq sev(ln (7) per cent. bonds of said first party, dated January.first, (1st,) A. D. eighteen hundred and seventy- , two. (1872,) and payable January first, (1st,) A. D. eigbteen hundred and ni!1ety-six, (1896.) heretofore issued and now outstanding; and the holders shall have the right to make' such exchange at the office of said first party in the city of Boston, at any, time after the execution and delivery thereof; allofwbicb said outstan.dlng· seyen per cent. bonds. when so ex· cMnged and tak(ln. up by said first party, shall be canceled 1)y said first party, ",ho tlhalJ caus.e to be on the fapeofthe same the date of such exchange. II In the present bill the plaintiff, who is the owner of nine $1,000 b\)ndsof the issul'! of 1872, asks: that the defendant corporation be or· dered to deliverto him nine of its 'bonds dated July 1, 1873, in exchange for his 1872 bonds, claiming that .under the.above provision in the mortgage it made a contract so to do. It appears that the railroad company, after making the mortgage of July 1, 1873, issued two printed circulars to the effect that the holders of the unsecured bonds had the opportunity to exchange them for the consolidated mortgage bonds. The last of the circulars was dated June 23,1879. In January, 1881, the finance committee of the company decided to make no further exchange, and all COLT,
DE WITT .,. CHIOAGO, Do &: Q. BY.
co.
486
offers and proposals for exchange on the part of the holders of the 1872 bonds .have been refused since that date. In August, 1887, the plaintiff requested the company to exchange his bonds for the 1873 issue, 1881 and 1886 the price of the 1872 bonds and was refqsed. declined from 128 to less than 120, and the price of 1873 bonds rose from 130 to 135. The plaintiff in August, 1886, knowing the terms of the mortgage, and having heard that the defendant corporation had in certain instances refused to make further exchanges, bought from other parties nine of the 1872 bonds. Of the $30,000,000 of bonds which the corporation might issue under the mortgage of July 1, 1872, only $13,998,000 has in fact been executed, the last in 1879, and of these $8,566,000 has been applied for the purposes of exchange. The railroad now holds in its possession 12 of these bonds executed in 1879. Whatever right of exchange a holder of 1872 bonds might have had under the· mortgage of 1873, to which he was not a party, it seems to me that such a privilege did not exist permanently, but only for a reasonable time. The railroad company invited exchanges to be made from 1873 up to 1881, a period of nine years, and issued circulars to the holders of the 1872 bonds, stating their willingness to make such exchanges, but it surely was not contemplated that this should go on indefinitely. The plaintiff, 13 years after the making of the mortgage, and more than 5 years after the company stopped making exchanges, at a time when the 1872 bonds were selling at a lower price than the mortgage bonds, knowing that the company had refused to make further exchanges, purchases the bonds in controversy, and one year later tenders them to the company for exchasge. I do not deem it necessary to go into the question of the legal right of the 1872 bondholders to enforce an exchange of. their bonds, but, admitting such a right, I am of opinion that this plaintiff is barred in a court of equity from enforcing it,byreason of the lapse of time. The language of the indenture of 1873, that an exchange of bonds may be made "at any time after the execution and delivering thereof," marks the time when the exchange was to begin, and it does not mean that the process might continue with DQ limitation as to time. The circumstances under which an offer of exchange was made in 1873 might greatly chp,nge in 1887. What the company might deem advantageous at that time may prove to be, otherwise 14 years later. The rule laid down by Parsons on Contracts (volume 1, p. 482) seems to me applicable to this case: "It may be said that, whether the offer be made for a time certain or not, the intention or understanding of the parties is to govern. * * * If no definite time is stated, then the inquiry as to a reasonable time resolves itself . into an inquiry as to what time it is rational to suppose that the parties contemplated; and the law will decide this to be that time which as rational men they ought to have understood each other to have had inmind." . See, also, Iming v. Oityof B0,8ton, 7 Mete. 409; Hill v. 113 Mass. 103; Minnesota Linseed Oil Co. v. Collier White Lead Co., 4 Dill. 431; Hotel 00. v. Montefiore, L. R. 1 Exch. 109; Baily'8 l;... R. 5' Eq. 428.
Hm,
"
J.lI.ItbERAl:. .'REPOl\ItElR; vol. 41;
holders 'oi the f181'2:bonds were not parties ·to the "indenture of of the offerot1 exchange which was voluntarily given: to>tbem by that instrumentl they should ha.ve appliedi therefor within a reasonable time. iAn 'applicatiori not made until fourteen 'years after, comes 'too late. BiUdismissed. · '
BALL tl. TOMPKINS 1 ,!,
et aZ.
(Circuit Cowrt, W. D. MicMgan, '8. D. :February 11, 1890.
L CIRCUIT COURTS-JU1USDIOTI01{-"ADMI:NlSTtU.TION OF 'ESTATES. By virtue of their ohanoery jurisdiotion, the federal oirouit oourts have jurfsdiotwn over the administration of estates when the 'requisite oitizenship and other conexist. .This Nrilldiqtion ,does not extend to the appointm\lnt of administrators; confi.rmation or the probate of wills; nor will it be exercised when the state courtll,of coiicurrent jurisdiction have taken possession of the sub. ject-matter of the , , ' 2, will exclude'the of power by the federal cdurt, and vice m1tst be the posseBBion, of some thing, corporeal or incorporeal, whicl:l has been taken under the dominion of the court. A controversy or inquiry is not suoh tblllg, lind the pendeneyOfa suit or in one oourt, involving aquestioD,:oontroversy,or inquiry, is no bar to'the exerCIse of jurisdiotion in the same question, et,c., in the other. .Testato.r, a reSident. iD. :.M:,iohigan, devised cert.'ain real est.ate in. trust to hisexeoutors, one of wbom was ,nill widow, to colleot the ltents and profitlluntil January 1, 1890, and to pay therefroJ;Ii the taxes, insurancet repairs, and interest on incumbrances, and the remainder; !in 'equal shares, to nis Widow and children, annually , ,or oftener. 'fhey were ,1I!180directed to file annual 8OO0unts of receiptll and dis, bursements in the omceof tllejudg-e of probate of the county in which the property was lnl:.uated. At the expiration of· the trust period the realty was to go to the widlJw and ohildren in equa,1shares. His personalty and other realty were charged with the payment of his debts. The will was probated in the state court, and the executors qualified. By the law then in force, executors and administrators had no tight to the possession p,freal estate. BeZd, that the exeoutors. had possession of the trust property as trustees: and that the possession of the state probate court was not suoh 88 to exolude the feaeral oourt from assuming jurisdiction, upon a disagreement among the the management,ot the trust, and appointing a receiver. . UPOD the. expir$tioD o,f,\.he trust period, it .appearing that the tenants in common disagree, and that they oannot act harmonijJus!y in the .management of the property; the federal court wi'll permit a supplemental bill to be 1l.led, praying for parti. 'tioD, oraale if necessary, and' oontinue the receivership. RECEIVER.
,
S. SAM&-DISAGREEMENT AMONG EXEOUTORS-ApPOINTMENT OF RECEIVERS·
" ·SAME-ExPIRATION OJ'
Equity. Upon to discbarge receiver. T. J. O'Brien, for cOlllplainant. Joseph H.Tompkina1for J'; & M. M. Tompkius. SEVERENS, J. facts,JPaterial to the purposes of the present motion are substantiallJ as follows:. On the 4th day of February, 1876, Byron D. BaU,.()f Gta.nd'Rapids, died testate; ,He left a widow,MartlJll.'M.,-oneof thedMendants,-and four children,of wh9m the complainant isoba, and·threeof ,the defendants are others. The property left by him consisted principally of real estate known as the" Ball Block,"