GRAPE CREEK'CO!L CO.
&: TRUST CO.
'891
GRAPE CREEK COAL CO. at at v. FARMERS'LOAN & TRUST CO. (Circuit Court of Appeals, Seventh Circuit. 1'10.148. 1. PRACTICE-AsSIG.NMENT OF ERROR.
May 31, 1894.)
Under the eleventh rule of the circuit court of appeals for the seventh circuit (1 C. C. A. xlv., 47 Fed. vi.), requiring: the error urged to beset out separately and particularly, an assignment of error cannot bego9d if it is necessary to look beyond its terms to the brief for a specific state-ment of the question to be presented. Upon foreclosure ot ,a mortgage for nonpayment of Interest,' when the principal .isnot due, and is not, by the terms of the mortgage, to becOme due upon default in payment of. interest, it is both proper alfd necessary for the courtto find- the amount of principal unpaid, and decree its payment out of the proceeds when the property is to' be sold as an entirety. UNPAID BUT NOT DUE.
.
2.
.8.
SAME-WHERE PRINCIPAL NOT DUE-REDEMPTION.
A mortgage securing an issue of bonds provided-First, that if the interest should be in arrear for six months, or if the principal, should not be paid at maturity, or if a· stipulated payment to a sinking shollld not be made, the trustee should' take possession, manage the property, pay the interest in default, and cOllPons maturing from time ,to time, and apply the remaining income upon the principal of the bonds; .second, that after .",ix months' default in payment of principal or interest the trustee should sell the property as an entirety, and apply the proceeds to the payment of principal and interest, "whether the priricipli.! is then {iue or not;" and, third, that in case of the trustee's taking possession, or proceeding to sell, if the mortgagor, before the bonds became due, and before sale, should pay all arrears of interest, with costs, etc., the proceedings should be discontinued by the trustee, and, the property restored to the mortgagor. Held, upon a bill to foreclose for default in payment of interest, that a power to decree the whole ·lebt due could not be inferred from the foregoing provisions, and though it was proper to direct payment of the Whole debt from the proceeds of the property, when sold as an entirety, the mortgagor sh(mlrl be permitted by the decree to redeem ·before sale, upon payment of the overdue interest and costs only. The provisions of the mortgage permitting the mortgagor to stay proceedings by paying the overdue interest does not render harmless the error in a decree adjudging the whole debt due, since, until modified in some lawful way, Soucb decree is conclusive for every purpose of the 'amount due. The fact that a sale had actually been made pursuant to a decree erroneQus in adjudging the whoie debt due, should not prevent its reversal; the el'l'or being substantial, and the appellate court not being In a position to determine the bona fides of the sale. It is no objection to a decree for foreclosure that it leaves uncertain the amount of costs, counsel fees, etc" to be paid in order to redeem before sale; it being common practice to leave such amounts unfixed, and it being in the power of any party to move to have them fixed. ·
4. 'SAME-HARMFUI, ERROR.
11.
SAME-SALE PENDING ApPEAL.
,,6.
[i'OREcr,OSURE-CQST-AMOUNT NOT FIXED.
'1.
MORTGAGE-LIEN UPON AFTER-ACQUIRED PROPERTY.
Courts of equity extend the lien of a mortgage to after-acquired property upon the theory that, though ineffective as a conveyance, it operates as !ll1 executory agreement attaching to the property when acqUired. It seems, therefore, that a mortgage, purporting to convey all after-
'892
I'EDJl:BAL kJl:PORTER,
vol. 63.
acquIred lands In V. county, but contaIning covenants for further con·and. assurance.of. property afterwardlil. acquired for the' business of the mortgagor, would cover the latter only.
Appeaifrom the Circuit Oourt of the United States for the Southern District of Illinois. . Suit by the Farmers' Loan & Trust OOD;lpany against th.e Grape Company, the Grape Qreek Coa1.& Coke CoIIl.pany, Mason M. Wright,andJohn B. Brown- Complainant obtained a decree. Defen<lantsappeal. ;i , This appeal Is from a decree of foreclosure. in favor of the Farmers' Loan Company, appellee, again,st ,the Grape Creek Coal Company, Grape OQ11l. &. Coke Company;, MaSon M. Wright, and John B. Brown, appelamortgag¢ executed, by thefirst-p.amed company to secure the pa);:ffiWlt ofa serles of each for $1.000. The other appellants are ,.1Uo,gI;XIent creditors .of. 'We .who. recovered. their respective judglllents pending the tor¢qIosw-e BUit.The1irst bill of complaint for foreclosure was filed December 17. 1891: A second bill was filed April 11, 1892. The two suits were consolidated by order of court April 14th. On Mll,y 23,1892, the first bHlwas diSIijissOO by the complainant, and the case Pl'O.ceeded to decree on the second bill, which, on July 7, bad been amended after-acquired real estate. .The or trust deed bore date April 1, 1886, and contained the following, with other, conditions: "FIrst. That!f the'Interest on any of the bonds so n,ot be paid by the party of the first part when the same shall beciime due, and If Buch'interest remain In arrears for six months after demand at the place where the same Is payable, .or If the principal of said 'bOJ:t(ls,orany of them, shall not be paid at their maturity, or in caSe of defaUlt for six months In the ,payment of whatever may be due on the $Inking fund hereinafter' provided for, then' it shall be lawful for the party of the second part, or its 1luc¢essor in trust for the time being, and it shall be the duty of such trustee, upon tberequest in writing of the holders of not less than one-half of the then outstanding bonds of the iS$1le hereby secured, to' enter forthWith, . demand, take, and maintain of, all and singular; the estate and premises hereby conveyed, and as the attorney in fact or agent of the sflld party of the first part, by itself and agents or substitutes, duly constituted, have, use, manage, operate, and, enjoy the same, and'" (after paying expenses of management) "shall apply the remaining income and revenue arising from -the use of said mortgaged property, and coming to its hands, to the payment of the interest in default, and maturing' from time to time,· satisfying the said coupons in· the order of their several maturities, and thereafter apply the residue npon the principal of the then outstanding bonds. Second. And upon the further trust that if a six-months default shall occur in the payment of either principal or interest of any of the bonds hereby secured, after such actual demand, as aforesaid, then it shall be lawful for said party of the second pari, or said trustee for the time being to calise, and upon ·the written request of the holders of a majority in amount of said bonds then outit shall, with or without entry, as aforesaid, cause, all and singular. the said premises, appurtenances, equipments, and property of every descriPtion, hereby conveyed, to be sold as an entirety, at public auction, to the bidder, .· · · and on SUch. sale said party of the second part, or the trustee for the time being, shall make, execute, acknowledge, and deliver 'Unto the purchaser orpui'cbaserSthereof a good and sufiicient deed, in fee simple, conveying the property so SOld ..... ... and after deducting from the proceeds of sale the costs and' expenses thereof, and a reasonable compensation to said trustee and its attorneys and agents for services in connection thereWith, shall apply SO much of the proceeds as may be necessary to the ratable repayment of principal and then-accrued interest of all the said bonds, whether the said principai is then due or not. · · ... Third. In case of any such taking possession or proceeding to sell the &.
GRAPE CREEK COAL CO. II. FARMERS'LOAN & TRUST CO.
893
due, and before such sale shall be made, shall pay and satisfy all interest then in arrears on all such outstanding bonds, and shall also pay discharge all costs, expenses, and disbursements and reasonable compensation incurred by reason of such default or possession, then, upon evidence thereof to his satisfaction, the said party of the second part shall thereupon discontinue such proceeding, and restore possession df the mortgaged premiseS to the party of the first part, to be thereafter held subject to these in like manner as if such default or entry had not occurred. l<'ourtl). The said party of the first part expressly covenants and agrees that it will, on demand, from time to time, hereafter, execute, acknowledge, an\i deliver unto the said party of the second part any and all such further and other conveyances and assurances as may be necessary and proper to fully convey to and vest in the party of the second part, or the for the time being, all such future-acquired ground, estate, and property as it may hereafter, from time to time, purchase for use ill the working and carrying on of its said mines. And the sald party of the first part doth still further agree that it will, in case of any in the payment by it either of the principal or interest of any of its bond/> hereby secured, forthwith, upon demand of the party of the second part, or the trustee for the time being, surrender the full and peaceable possessioll of, all and singular, the premises hereby conveyed, or intended to be conveyed, including all the real and personal property by it acquired subsequent to the date of these presents for use in connection with its said mines. * * * SeventlI. It is further agreed that beginning April first, A. D. eighteen hundred and ninety-one, and annually thereafter, the said party of the first part shall and will set apart the sum of twenty thousand dollars as a sinking fund to be used and applied in the payment of said bonds. * * * Eighth. It is further agreed that, when any of the lands hereby conveyed shall no longer be available for mining purposes, they may be sold and conveyed in the discretion of the parties of the first and second part, both parties uniting in any conveyance to be made, and such sale may be either of the lands, reserving all mines underneath the surface of the ground, or with such mines as the parties hereto shall deem proper; and the proceeds of said sale shall be reinvested in coal lands, and brought under this mortgage, or be added to the sinking fund provided for in the previous section, and applied as therein directed." The court found and decreed the lien of the mortgage to be superior to any other lien in favor of any party to the cause; that default had been maae in the payment of interest due, entitling the plaintiff to a sale of the mortgaged property and premises, including the after-acquired lands described, "unless the defendant mortgagor shall pay the amount of the entire bonded indebtedness secured by the mortgage, with all costs and expenses of the suit, at a short day to be fixed by the court"; that there were secured by the lien of the mortgage the following amounts of bonds and coupons outstanding and past due, with 6 per centum interest thereon after maturity, to wit, $14,760 for coupons due October 1, 1891, the same amounts, respectively, for coupons due April 1, 1892, October 1, 1892, April 1, 1893, and· the sum of $492,000 for the principal of the bonds, aggregating the sum of $555,349.93 due for the principal and interest, and interest upon the unpaid coupons to the date of the decree. It was further ordered and decreed "that unless the parties defendant, or some of them, shall, on or before the expiration of twenty days from the entry of this decree, pa.y the plaintiff the following sums, namely: First, 'a sufficient sum of money to pay the costs of the plaintiff in this cause as they shall be taxed, and its compensation as trustee, with its counsel fees and other expenses and disQursements, as the same may be fixed by this court; and, secondly, the entire sum due for principal and interest, and interest on unpaid coupons up to the date of this decree, as hereinbefore fixed and determined, with interest thereon from the date hereof,-then the said mortgaged premises and property shall be sold as hereinafter directed." A sale under the decree was made September 22, 1893, to Joseph J. Asch, P. J. Cronan, and
if the sald. party of the first part, before the said bonds shall become"
mortgaged premises for default of payment of interest or sinking fund,
·AP'lJ).:'Zl"Iltl.g,for $200,OOO"was,rreported September 26, and November 2, ;!>893','''*uc6nftrmedl This appeaJ,''lVAS taken: October 18, 1893. assigned,' exce;ptlng··tlle first, which is waived, ,eigh,th, :W1't1cllJfanot are ",(2) The circuit c\l:urt erred in dec.ree for any .furthet,or greater sum due interest on/Mid bonds, luulfor due on i funll!; (3) The clr<mlt Ieourt·erred ill' tll;lding. decreeing 1 't11e fsum of'tlTec htfudred and: tlfty"five thousand that and fony"liCtne'dollars 'ninety-three' cents ($555,1H:9.93) was due \lpon said tl'tIst'deed'and bOnd_,secured thereby., :(4) The circuit court erred in finding 'anddec1'oE!e1ng that tt.ll!: said trust dee('1'wasa, lien upon the lands deRcribed 'in sa1'd'1b:stamendJiJeIlt to.said odginal d b1ll; being the IllJldsacquired by said Grape' Creelb 00a:1 Compa.nyafter ,the execution of said ,tnlst deed, of the judrgments;of, said Grape Creek Cqai & Coke Company, I MlLSonM.Wrigh1;, and .Toh!lli B. Brown.. (5) Tile circuit court errEid'ln\Iftnding and.I'decreeing' thattheenttre amounto! mortgage due:.· (6), The cireuit' court erred in not a definite amoUfttlW'lbe said defendantOrape. Creek :0011.1 C911lpany and the theothetie'defendantswithin twenty days from tha entry.; of; said decree. (7) The JictrtUltcou\1l,erred in' leaving uncertaln the amount to be paid by I'la1d llefeudants, 'and' each· of .them,.!n ,order to prevent 8. sale of said 'rnortgli#EM' premlse&.!li' ' : ,
of counsel), for appellants. . H; Burry, for appellee.. ' !',; ",' Before WOODS andJENKINS,Chcuit.Judges, and BAKER, District ' " .'.:':",,':j,:, ,.',',.,,;"'" j"" '\
J.B.: Mann
Lr"'!';t' ';. i'
:'
"';,i:';.'
')
:','
WOOQS"PircuitcJudge(afterst8;ting the case). The second and error dono'tl,Inconformity with,the eleventh sepatrately and the error An. cannot be good, under this rule, if U,is necessary to look beYli>ri.d its terms, to the brief, for a specific statem.eilt of the question,sol1ght to be presented. Dnder the assignments, it is u.rged that the principal' of the mortfirst of gage and under the second, after concerning, the first was to this, it is urgedrtn addition; that the court erred in allowing interest at six tllan five per cept" on' overdue coupons, and on the per bf,t4e. debt,frol\l the tiJ:iIe when the last coupons matured. There iSEiin!Jthe' record, no assignment of error which properly raises the and in respect to the principal of the debt, whethef <t'lie()r not, it was not only proper, but necessary, that the hayefound the amo:utit pnpaid,and decreed its payment out of ,the pooceeds of the was therefore no error, as second assignment, even if it were otherwise suffi"in finding a decree for any further or tbe ,But the fifth specification states.mow.tetlnitely that the ,entire ,amount'of;the'mortgage indebtedness to be<due, and, though it is not so treat.e'din brief, we will consider as'presented ..' . . . .. .' by Bytije terms of the bonds the prmcIpal debt was not payable , day of 1916t and we find nothing in the conditi?ns Of themot'tgage WhICh authorIzed the court to the debt due
GRAPE
,COAr: Co. V: FARMERS l LOAN &: TRUST CO.
895
before that time. There is, confessedly, no specific provision that the principal may be declared due for default in the payment of in·' terest; but from the authority given the trustee in possession, under the first condition, to apply the residue of income upon the principal of outstanding bonds, and,under the second condition, to cause the property to be sold as an entirety, and from the provision· of the third condition, that, if the trUstee is proceeding to sell the mort· gaged premises for default in interest or sinking fund, the mortgagor, at any time before sale is made, may pay all interest then in arrears, costs, expenses, disbursements, and reasonable compensation, and that thereupon the tru.E!tee shall discontinue the proceeding and sur·: render the possession, it is insisted that the power to treat the prin· cipal debt as due should be inferred. The inference, we think, is neither necessary no'r reasonable. To use the language of the SU·I preme court in Railroad Co. v. Fosdick, 106 U. So 47,75, 18up. at. 10: "It does Dot affect this conclusion that, by the terms of the sixth article of the conditions of the mortgage, it is provided that upon the exercise of the power thereby conferred, resulting In a sale of the mortgaged premises for a single default in the payment of interest (it may be one couIJQn, merely), the property is to be sold as an entirety, and. free of the Incum, brance of the mortgage, so as to pass all the title, both of the mortgag()li and mortgagee, and that the proceeds of the sale are to be applied, after' the payment of overdue interest, to the payment of the principal of the debt, though not yet due. The provision does not, either in terms or in make the whole debt due before the stipulated day of payment. It is simply the application to the case of a sale by the trustees, under the power, .of the practice of courts of equity in cases of judicial sales upon foreclosure. In either case the right of the mortgagee to redeem, and thus prevent the sale, is preserved, on payment, not of the unmatured prin. cipal of the debt, but merely of' the interest then actually due and in arrears,-the very right which, by the decree now in question, was denied. If authority is needed on such a proposition, it will be found in Holden v. Gilbert,7 Paige, 208, and Olcott v. Bynum, 17 Wall. 44."
We find nothing inconsistent with the foregoing in Pope v. Durant, 26 Iowa, 233. It is contended further that, if the decree was erroneous in this respect, no harm was done the appellants, because, "by a tender of the amount due, the decree would have been stayed, and the premises not been sold. Defendants could have come into court, and tendered the amount due, and had the proceedings dismissed." Down to the entry of the decree, the defendants doubtless had that right; but, once the decree had passed, it was no less concIusi ve in respect to the amount due than of other matters involved and determined. We cannot agree that the mortgagor's right to have the proceedings for foreclosure discontinued upon payment of interest in arrears, costs; etc., was so far separate and independent that it needed not to be embodied in the decree, and that the court would have enforced it, as against the trustee, at any time before sale, upon any of the defendants tendering the amount required, and moving to have the case dismissed. If the trustee had been proceeding under the power, as was the case in Tiernan v. Hinman, 16 Ill. 400, the mortgagor's right to prevent a sale by paying the overdue interest might have been asserted, as provided by. the terms of the deed, at any time before
896
FEDERAL .ltEPORTER,
sale; but, when the principal debt has been declared due oy a decree of.courtj it inust be so treated for every purpose, until in some lawful way the decree shall have been modified or set aside. Under such a dec,ree the debt cannot be regarded as due !for one purpose, and not due for another purpose.. The rights of th,e trustee and of the mortgagor.dn this respect were correlative,and it was errol' for the one to:;take an. adjudication wq.ich,either in terms or by necessary impJiea1llon,· was inconsistent with the right of the other. Uis shown. by a supplemental. transoript that a sale made under the been the appeal, and afterwards confirmed; a;p.dit is insistedthaUor that reason the decree, if erroneous, may be modified, but ,$OU]dlOOt be i'eYersed, as against the purchaser. BcignardeIl6;Y. Gl'ay, 1 Walh 627. But whether or not the sale in this case was bema fide, and should stand, is not a question determined now,or which should be allowed to affect the or sCQpe of our onthe appeaJ. Of the amount declareddue, which themortgagqr was reqqired to pay within twenty days. in order to save the mortgaged property from sale less than onetenth','wasRctuallydue; . ,The error, therefore, was a substantial one,which, to the exten;fpossi'ble, $hou]d be corrected by reversing the decl1ee. ,. . The objection that the decree left uncertain the amount to be paid in order to prevent a sale we do not consider important , It amounted t6 no more than rE!servationof power by the courtto include in the decree a ,sum su:fficiEmt to pay, besides taxable costs, the trustee's compensation, counsel fees, and other expenses or disbursements which Should be allowed by the court. The items enumeratedalfe of the nature of costs, which; by common practice, and from necesl;lity, are often left,when decrees or judgments are pronounced, for subsequent taxation. No harm can result, because it is a]wa;ys in the power of any party interested to move for a determination of whatever in such particulars had been left at large. In respect to the after-acquired property, it is not claimed that the mortgage· was invalid or ineffective as between the parties to the instrument. If, therefore, the court erred in extending the lien of the mortgage over property of that kind, the judgment creditors alone were harmed by the ruling, and the error should have been assigned by 'them, or in their behalf, only. MacDooald v. U. S. (by this court) 63 Fed. 426,and cases there cited. But, if properly presented, the question can hardly be deemed to have the general scope given it in the discussion. The theory upon which courts of equity extend the lieb. of a mortgage to after-acquired property is "that the mortgage, th6ugh inoperative as a conveyance, is operative as an executory agreement, which attaches t6 the property when acquired." Borden v. OI'oak, 131 TIL 68, 22 N. E. While in this instance the mortgage,by the general terms of -the granting clause, covers aU other Vermilion county, besides those described, which the companY'shall acquire, there is an e:xpress covenant for further assurance, which is restricted to future-acquired property purchased by the company "for use in the working and car"ying on of its said mines." It would seem, therefore, that this
a
HORTON
v.
NEW YORK CENT. &: H. R. R. CO.
897
mortgage, while valid in respect to lands acquired for mining purposes, should not be construed to include, and it does not appear that by the decree below it was made to include, lands which were not purchased for use in the company's business. We think there was no error in this particular. For the error of the court in dedaring the principal of the mortgage debt due, the decree below is reversed. HORTON v. NEW YORK CENT. & H. R. R. CO. (Circuit Court, N. D. New York. October 22, 1894.) L RES JUDICATA-DAMAGES FOR INFRINGEMENT OF A PATENT.
The owner of a patent obtained a decree for a perpetual Injunction against Infringement, and was awarded damages and profits for infringements occurring prior to a certain time. Held, that he could not maintain a second suit against the same defendant to recover damages and profits arising from other acts of Infringement committed during the same period, but of which no evidence was given in the former suit, and no recovery asked. INFRINGEMENT INJUNCTION SECOND SUIT AGAINST SAME DE-
PATENTS FENDANT
CQmplainant in a bill to recover damages and profits accruing from acts of infringement committed by defendant subsequent to a former decree prayed for an Injunction as well as for an account. Hdd, notwithstanding an injunction was unnecessary, that a decree for an injunction as well as for an accounting would be granted.
This was a suit in equity by Cornelius M. Horton against the New York Central & Hudson River Railroad Company, impleaded with the West Shore Railroad Company, for infringement of a patent. James A. Allen, for complainant. Frank Hiscock, for defendant. WALLACE, Circuit Judge. This cause presents the question whether the owner of a patent, who, in a former suit in this court against the defendant, obtained a decree for a perpetual injunction against infringement, and awarding him damages and profits for the infringements occurring prior to January 11, 1892, can maintain a second suit against the same defendant to recover damages and profits arising from other acts of infringement, committed during the same period, but of which no evidence was given in the former suit, and no recovery asked. I am aware of no principle which authorizes a second recovery against the defendant upon such a state of facts. For aught that appears, the complainant deliberately withheld all proof in respect to acts of infringement which he knew the defendant had committed, and in respect to which he might, if he had chosen, have recovered compensation. His cause of action in the former suit has passed into judgment, and the maxim applies, "Expedit reipublicae ut sit finis litium." The complainant also seeks to recover damages and profits accruing from acts of infringement committed by the defendant since the rendition of the former decree. In this bill he prays for an injunction as well as for an account. Notwithstanding an injunc,. v.63F.no.7-57