ATTORNEY AT LAW THE DECISIONS OF THE Supreme Court of the United States, AT OCTOBER TERM, 1877. JOHN S. SHAW ET AL. Appts., v. CHARLES E. BILL, Trustee, etc. (See 8. C., 5 Otto, 10-16.) Appearance by counsel-supplemental bill-insolvent corporation—railroad mortgage. company. times a large amount of bonds, secured by mortgages upon its property. There were five issues of bonds, varying in amount from $500,000 to over $2,000,000, and carrying interest from seven to ten per cent. per annum, payable semiannually. Each issue was secured by a separate mortgage. The first mortgage was executed in February, 1851; the second, in February, 1852; the third, in November, 1853; the fourth, in February, 1855; and the fifth, in December, 1856. They were all made to Douw Williamson, as trustee for the bond holders, the complainant, Charles E. Bill, being named as sub powers of the trustee were to vest in case of the death, incapacity or resignation of Williamson. *1. The appearance of counsel specially for a corporation, and his moving to dismiss the petition of an individual creditor for the appointment of a receiver of its property, do not preclude him from subsequently appearing for the trustee of the bond holders in proceedings to foreclose mortgages of the 2. Upon a supplemental bill in chancery, no proc-stitute or successor, in whom the estate and the ess of subpoena need issue unless new parties are brought in. A rule upon parties already served to answer the supplemental bill is sufficient, 3. Where a corporation is insolvent, and has no The several bonds as they matured, and the funds at the place where its bonds are payable, de- interest stipulated, not being paid, the trustee, mand of payment at such place need not be made in August, 1857, filed a bill in the Circuit Court before suit brought to foreclose its mortgages exe- of the United States for the District of Indicuted to secure the bonds. 4. A mortgage by a railroad corporation which in ana, for the foreclosure of the several mortgages. terms covers all the following, present and in The corporation was served with process of subfuture to be acquired property" of the company, naming in the description of such property its en- pœna, appeared to the suit and demurred to the gines, cars and machinery, carries not only the en- bill. It does not appear from the record what gines, cars and machinery in existence at the date of disposition was made of the demurrer, but it is the mortgage, but such as take their place or are subsequently added to them by the company and that it was abandoned. At any rate, in Decemto be inferred from the subsequent proceedings are in existence at the time of the foreclosure. [No. 3.] ber of the following year (1858), a decree was Argued Oct. 10, 1877. Decided Oct. 22, 1877. entered in the case by consent of parties, one not foreclosing the mortgages as prayed in the APPEAL from the Circuit Court of the Unit- bill, but declaring the rights and interests of ed States for the of Indiana. The case is stated by the court. Messrs. Samuel A. Huff, Joseph E. McDonald, Jas. Hughes and M. C. Hunter, for appellants. Mr. Henry Crawford, for appellee. Mr. Justice Field delivered the opinion of the court: the bond holders and stockholders under the termed a basis of adjustment and settlement, several mortgages, in accordance with what was proposed to them by the president and directors of the company. The practical effect of the decree was to extinguish all the liens upon the created by the first and second mortgages; to property of the company, except such as were provide for a reorganization of the company, and to convert the subsequent bonds into common stock of the reorganized company. In 1849, the New Albany and Salem Railroad Company was incorporated under the laws of Indiana, with power to construct a railroad Before this decree was rendered, the bond from New Albany, on the Ohio River, to Mich-holders, waiving their priority, had consented igan City, on Lake Michigan. To enable the to an interlocutory decree, entered in June, company to raise the necessary means to com- 1858, authorizing the trustee to borrow $200,000 plete and equip the road, it issued at different to pay certain unsecured debts, and to hold pos * Head notes by Mr. Justice FIELD. NOTE.-The lien of a mortgage on after acquired property. See note to Pennock v. Coe, 64 U. S., XVI., 436. session of the mortgaged property until this loan should be repaid with interest. The decree of December, 1858, provided for the prior payment of this sum, and also of a mortgage of another company for $175,000, which had been previously assumed. Nearly ten years afterwards, in August, 1868, the bond holders secured by the first and second mortgages, or at least a large portion of them, demanded that the trustee should take proceedings to foreclose those mortgages. The trustee, acting upon the assumption that the original suit, brought in the Circuit Court for that purpose in 1857, was ended by the decree of December, 1858, commenced suit for the foreclosure desired, in a court of the State of Indiana. That suit proceeded to a final decree, under which the property was sold in May, 1869. The purchasers organized themselves under the law of Indiana into a new company, called the Louisville, New Albany and Chicago Railway Company, which held possession of the property until it was transferred to a receiver, upon the application of the appellant, John S. Shaw. This appellant held a bond of the fourth mort gage issue, and some stock of the company is sued for bonds surrendered under the decree of December, 1858. Upon his petition, purport ing to be filed on the foot of that decree, and alleging various irregularities and fraudulent practices on the part of the trustee and the first and second mortgage creditors, a receiver of the property of the company was appointed. His position was, that the railroad property was placed under the exclusive wardship of the Circuit Court of the United States, by virtue of the two decrees of June and December, 1858, and that, consequently, the foreclosure proceedings in the state court were irregular and void. Ulti mately, and after protracted ligitation, this view of the appellant was sustained by the Circuit Court. It is unnecessary to detail the various steps taken by the parties upon the petition of Shaw. It is sufficient to mention that they led Charles E. Bill, the successor of the original trustee, to apply for leave to file a supplemental bill for the foreclosure of the mortgages remain ing in force, and that his application was granted. It is upon the subsequent proceedings that the questions arise for our determination upon this appeal. It seems that, when the petition of Shaw for the appointment of a receiver was presented to the court, Mr. Hendricks, with others, appeared as special counsel for the company, and moved its dismissal. Subsequently, Mr. Hendricks appeared as counsel for the trustee in the proceedings on the supplemental bill for the foreclosure of the mortgages, and on his motion the default of the company was entered. This second appearance of counsel against the company is regarded by the appellant as exhibiting “an anomaly in chancery practice" so great as to vitiate the decree. We do not perceive any anomaly or irregularity or impropriety in the conduct of the counsel. He might very well have appeared for the company to defeat a petition of a single creditor asking for the appointment of a receiver of its property, and yet subsequently have appeared for the trustee, to foreclose its mortgages. There was nothing in the duties required on the motion which in any way conflicted with the duties required in the subsequent proceedings. There is not even a colorable pretext for calling in question the propriety of the action of counsel. The fact that process of subpœna was not is sued upon the supplemental bill is of no consequence. Such process is only necessary where new parties are brought in. The supplemental bill is a mere adjunct to the original bill and, where the parties have already been served, no further subpoena for them is required. In this case, the company was ruled to answer; and the new parties appeared by counsel, and both demurred and answered. The fact, that leave was granted upon motion of counsel to issue a subpoena against the company some months after its default had been entered, does not alter the case. Nothing appears to have been done upon the leave, and it was probably asked inadvertently. The position that the appellants' demurrer to the supplemental bill should have been sustained, because it did not aver a demand of payment at the place where the bonds were payable, is without merit. No such ground is stated in the demurrer, which is special; and, had it been, it would have been unavailing. The insolvency of the company and its want of funds at the place designated appear from the allegations of the bill; and, where such is the fact, no demand at the place is required. The law does not exact, in such a case, the performance of a fruitless act. The objection that the decree covers property not embraced or intended to be embraced by the mortgages is equally untenable. The terms of the mortgages are as broad and comprehensive as could be used. They embrace all existing property of the company, except such surplus lands as were not required for the roadway, depots and stations, and other uses of the road, and all its future property, both such as might be purchased with the proceeds of the bonds issued and such as might be acquired by other means. The language used is, "All the following, present, and in future to be acquired property of the parties of the first part" pertaining to the road; "that is to say, their road made and to be made, including the right of way and land occupied thereby, together with the superstructure and tracks thereon, and all rails and other materials used therein or procured therefor, inclusive of the iron rails purchased or to be purchased or paid for with the above described bonds, or the money obtained therefor, and the machinery purchased with the same; bridges, viaducts, culverts, fences, depot grounds and buildings thereon, engines, tenders, cars, tools, materials, machinery, and all other personal property, right thereto or interest therein pertaining as aforesaid, together with the tolls, rents, or income to be had or levied therefrom, and all franchises, rights and privileges of the said parties of the first part of, in, to, or concerning the same;" with a proviso that the surplus lands mentioned might be sold. The reference made in this description to the property which might be afterwards purchased with the bonds issued, does not operate as a limitation of the lien of the mortgage to such future acquired property, but only to remove any doubt that might otherwise possibly arise whether the property thus purchased would also go to increase the security offered. We do not deem it of any moment whether the rolling stock and machinery in use by the company at the date of the decree were acquired with the proceeds of the bonds or with the subsequent |