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the judgment was rendered, and which was at the time of its rendition the owner of the property, together with its franchise, subject to certain stated prior liens. Defendant took possession and thereafter retained and operated the road, incorporating it with its system, making large improvements, and paying off the stated incumbrances prior to the judg ment, amounting to $3,000,000. In 1859 the road had been sold under a mortgage subsequent to the judgment, and the purchasing company in 1864 issued bonds secured by mortgage. Defendant never recognized the validity of such mortgage as against its own title, and no part of either principal or interest of the bonds was ever paid. In 1898 complainants, claiming to be owners of most of such bonds, brought suit to enforce the mortgage. The Wisconsin 10-year statute of limitations (Rev. St. 1898, § 4211), in force since 1858, provides that "where the occupant, or those under whom he claims, entered into the possession of any premises under claim of title, exclusive of any other right founding such claim upon some written instrument as being a conveyance of the premises in question or upon the judgment of some competent court, and there has been a continual occupation and possession of the premises included in such instrument or judgment under such claim for ten years the premises shall be deemed to have been held adversely." Held, that under such statute defendant held adversely to the mortgage from the time it went into possession in 1867, and the right of action to enforce such mortgage became barred in 10 years thereafter.

Appeal from the Circuit Court of the United States for the Western District of Wisconsin.

For opinion below, see 117 Fed. 629.

In the year 1858 the La Crosse & Milwaukee Railroad Company owned and operated a railway extending from Milwaukee, by way of Beaver Dam and Horicon, to Portage City, and thence to La Crosse, the railway from Milwaukee to Portage City being denominated the "Eastern Division," and the road from Portage City to La Crosse being called the "Western Division." The incumbrances upon the property on June 1, 1858, were as follows:

Upon the Eastern Division:

(1) A mortgage to Palmer, as trustee, to secure an issue of bonds to the amount of....

(2) Two mortgages to the city of Milwaukee to secure issues of bonds to the amount of......

(3) A mortgage to Bronson and Soutter to secure an issue of bonds to the amount of....

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(1) A mortgage to Bronson, Soutter, and Knapp, trustees, known as the "Land Grant Mortgage," to secure an issue of bonds to the amount of............

(2) A mortgage to Helfenstein, trustee, to secure an issue of bonds to the amount of...

The entire road was also subject to two judgments:
(1) A judgment in favor of Selah Chamberlain, in the Cir-
cuit Court of the United States for the District of
Wisconsin, rendered October 2, 1857, for....
(2) A judgment in favor of Newcomb Cleveland, in the Cir-
cuit Court of the United States for the District of
Wisconsin, October 7, 1857, for......

$ 950,000 00

314,000 00

1,000,000 00

4,000,000 00

200,000 00

629,089 72

111,727 31

On June 1, 1858, the company executed another mortgage to William Barnes, trustee, upon the entire line of railway, to secure the payment of an issue of $2,000,000 of bonds. At this date the entire railway was in the possession of and operated by receivers of the La Crosse & Milwaukee Railroad Company, appointed in suits brought in the United States Circuit Court for the District of Wisconsin to enforce prior liens. Upon default in payment of the first installment of interest, a statutory foreclosure of this mortgage was had, and on the 21st of May, 1859, the railway was purchased by Barnes, as trustee.

The bondholders thereupon organized the Milwaukee and Minnesota Railroad Company (herein for brevity designated the "Minnesota Company"), to which company William Barnes, as trustee and purchaser, conveyed the railway. On October 24, 1864, the Minnesota Company executed a mortgage to James H. Fonda and G. Hilton Scribner, as trustees, to secure an issue of bonds to the amount of $600,000, maturing July 1, 1884, with interest semiannually at the rate of 8 per cent. per annum. This mortgage was upon the railway of that company extending from the city of Milwaukee to Portage City, a distance of 95 miles, being the Eastern Division of the La Crosse & Milwaukee Railroad Company. The Western Division in April, 1863, was sold, upon foreclosure of the land grant mortgage, to purchasers who organized the Milwaukee & St. Paul Railway Company, now the Chicago, Milwaukee & St. Paul Railway Company (herein for brevity called the St. Paul Company). On January 20, 1866, the Eastern Division was turned over to the Minnesota Company, under an order of the Circuit Court of the United States for the District of Wisconsin, in a suit to foreclose the Bronson and Soutter mortgage, which order provided that upon payment of the interest due on the bonds issued unler that mortgage, amounting to $462,057.80, the Minnesota Company should be let into possession of the railroad from Milwaukee to Portage.

On April 18, 1866, Frederick P. James, then the owner of the Cleveland judgment, filed his bill in the Circuit Court of the United States for the District of Wisconsin against the Minnesota Company to enforce the lien of that judgment, and praying, among other things, that the Eastern Division of the railway might be decreed to be sold under the order and direction of the court, subject to the mortgages to Palmer, trustee, the city of Milwaukee, Bronson and Soutter, trustees, and the judgment of Selah Chamberlain. The Minnesota Company answered to the suit, and on January 7, 1867, a decree passed adjudging the sum of $98,801.51 to be due on the Cleveland judgment, and that such judgment was a lien, as of the date of October 7, 1857, upon the right, title, and interest of the La Crosse & Milwaukee Railroad Company in and to the railway from Milwaukee to Portage City, together with its rolling stock, franchises, and appurtenances, and directing a sale of the railway, its rolling stock, franchises, and appurtenances then in the possession of and claimed by the Minnesota Company, unless, prior to the sale, the amount adjudged to be due upon the judgment should be paid; directing the sale to be made subject to the stated mortgages and judgment liens; that, upon confirmation, the marshal execute a deed to the purchaser; that the Minnesota Company and all persons claiming under it be barred and foreclosed from all equity of redemption; that the purchaser be let into possession: and that the Minnesota Company deliver possession to the purchaser. On March 2, 1867, the property was duly sold by the marshal to the St. Paul Company for $100,920.94, which sale was confirmed and a deed executed by the marshal, whereupon that company entered into possession of the railroad property and franchises, claiming to be the owner thereof under that decree, sale, and deed, subject to the stated prior mortgages and judgments, and since then has continued in possession, without in any manner accounting to the trustee or bondholders under the Fonda and Scribner mortgage, or in any way recognizing it or the debt thereby secured as a lien upon the railway property or franchises, and has claimed to be in the actual, open, notorious, and adverse possession of the railway and of the franchises of the La Crosse & Milwaukee Railroad Company. On March 2, 1867, Albert C. Gunnison and Aaron S. Bright, claiming to be stockholders in the Minnesota Company, petitioned the court, in the suit brought by Frederick P. James, that an appeal might be allowed from the decree to the Supreme Court of the United States, and that they be allowed to use the name of the Minnesota Company in taking such appeal. This petition was granted, and the appeal was taken by Gunnison and Bright. This appeal was heard by the Supreme Court, and on March 16, 1868, the decree was affirmed, the court stating: "By the statute law of Wisconsin, judgments are liens on real estate, and we do not doubt but that this judgment became a lien on the road from the time of its rendition, and that a sale under a decree in chancery, and conveyance in pursuance thereof, confirmed by the court, passed the whole of the interest of the company existing at the time of its rendition to the purchaser." Railroad Company v. James, 6 Wall. 750, 18 L. Ed. 854.

On January 31, 1868, a bill was filed in the Circuit Court of the United States for the Eastern District of Wisconsin, in the name of Scribner, as surviving trustee under the mortgage executed by the Minnesota Company to Fonda and Scribner as trustees (being the mortgage in suit), against the St. Paul Company and the Minnesota Company, reciting the foreclosure of the land grant and Barnes mortgages, the organization of the St. Paul Company and the Minnesota Company, the execution of the Fonda and Scribner mortgage by the Minnesota Company, the proceedings in the James suit, the sale to the St. Paul Company thereunder, and the possession by the purchasing company of the Eastern Division. The bill charged that the Cleveland judgment upon which the decree was rendered was not a charge upon the Eastern Division, and that such division could not lawfully be subjected to the payment of that judgment; that the decree was without force against Scribner, trustee, or the bondholders, because they were not parties to the James suit; that the right to contest the judgment and to redeem from the incumbrances upon the property remained unaffected by the decree and sale; that the St. Paul Company, · being in the exclusive possession and control of the Eastern Division, had received its earnings and income, and had not applied any part of them to the interest upon the prior incumbrances; and prayed for an account of the earnings and for a receiver, and, if the Cleveland judgment should be decreed to be a valid lien, superior to the lien of the Scribner mortgage, that the earnings of the road during the possession by the St. Paul Company might be applied to the redemption of that judgment, and, if such earnings should prove insufficient, Scribner, trustee, might be permitted to pay the deficiency to the St. Paul Company, and be let into possession of the Eastern Division. The process under this bill was served and a rule to plead entered, but, without further proceedings, the suit remained pending for nearly four years, when, on February 26, 1872, on motion of the complainant's counsel, the bill was dismissed. It is possibly doubtful if Scribner had knowledge of this suit until long after its discontinuance, but it is not doubtful that Gunnison and Bright knew of it, sanctioned and directed it. No further proceedings by the trus tees under the Fonda and Scribner mortgage, or of the holders of the bonds secured thereby, was had until May, 1893, when Richard Carmen Combes, under some arrangement with Albert C. Gunnison and Aaron S. Bright, who claimed to own and control $336,000 of bonds issued under the Scribner mortgage, attempted to bring an action at law against the Minnesota Company in the Circuit Court of Milwaukee County, Wis., on $332,000 of such bonds. An order of the publication of the summons under the state practice was procured. Dwight W. Keyes, claiming to be a stockholder of the Minnesota Company, it it existed as a corporation, moved to set aside the order for the service of the summons by publication, upon the ground that the company had long before that order voluntarily surrendered its corporate franchises and was then nonexistent. The motion was denied, but upon appeal the Supreme Court of Wisconsin, on February 5, 1895, reversed the action of the court below, holding that by the judicial sales the corporation had been divested of all its property, and for 26 years thereafter had not owned any property, or done any business, or elected any officers, or kept any office in the state, and thereby had voluntarily surrendered all of its corporate franchises and had ceased to exist, and therefore could not be sued. Coombes v. Keyes, 89 Wis. 297, 62 N. W. 89, 27 L. R. A. 369, 46 Am. St. Rep. 839. No further action was had respecting the Scribner mortgage, or the bonds issued thereunder, until March 30, 1897, when the bill now under review was filed. The bill recites the execution of the Fonda and Scribner mortgage, the Cleveland judgment, the decree thereon, and sale thereunder; asserts that the judgment was not a lien upon the franchises of the La Crosse Company, notwithstanding the decree; that the franchises were not sold or conveyed, or, if sold, were sold and conveyed subject to the prior lien on them of the Fonda and Scribner mortgage; that the latter mortgage was still a lien upon the franchises in the hands of the St. Paul Company; that Albert C. Gunnison, and George A. Bright as administrator of Aaron S. Bright, were the lawful owners of 500 of the 600 bonds secured by the Fonda and Scribner mortgage, which are due and unpaid, with interest from the time of their issuance. The bill states the appointment of Forker as trustee, in the place of Fonda, deceased, and that Scribner, trustee,

was made a defendant because he had failed and neglected to join in the bringing of the suit when requested so to do. The bill prayed for an accounting of the amount due for principal and interest on the bonds; that the mortgage be decreed a lien upon the roadbed and franchises of the railway then in the possession of the St. Paul Company; that the mortgage might be foreclosed, and the order of its priority as a lien decreed; that the St. Paul Company might be decreed to have obtained its title to the railroad property and franchises subject to the mortgage; and that the complainants might have the right to foreclose their mortgage as if the decree upon the Cleveland judgment and the sale and deed thereunder had not been made, and as if the Minnesota Company were still an existing corporation; and that the railway and its appurtenances might be sold to pay the amount due, subject to such conditions as the court should see fit to impose upon the complainants' right to relief. The answer, inter alia, sets forth a voluntary surrender by the Minnesota Company prior to the year 1872 of its corporate franchises, which in that year was accepted by the state, and sets forth and pleads section 8, c. 78, of the Revised Statutes of Wisconsin for the year 1858, and that the trustee in the Fonda and Scribner mortgage brought no suit to foreclose the mortgage within three years from and after the surrender and acceptance, and did not, nor did any creditor or stockholder of that company, within three years in any manner apply to any court of Wisconsin or of the United States for the appointment of a receiver under the provisions of that statute, and that by failure so to do the debt evidenced by the bonds and mortgage became extinguished and the lien of the mortgage destroyed. The answer also pleads section 15 of chapter 138 of the Revised Statutes of Wisconsin for the year 1858, requiring civil actions to be commenced upon an instrument under seal, when the cause of action accrued within the state, within 20 years from the time of the accruing of the action, and that by the surrender of its franchises the Minnesota Company became disabled from the performance of the conditions of the bonds and mortgage, and its personal obligation became extinguished, and that upon the dissolution of the company the cause of action accrued by operation of law in the year 1875 and that this bill was not filed within 20 years from that date; and this is pleaded in bar of the maintenance of the suit. The answer also pleads that the bill was not filed within the time prescribed by subdivision 2 of section 15 of chapter 138 of the Revised Statutes of the State of Wisconsin of 1858, now known as subdivision 2 of section 4220 of the Revised Statutes of Wisconsin for the year 1878. The answer also asserts that the first installment of interest under the Scribner mortgage became due January 1, 1865, in the payment of which and of all succeeding installments of interest there was default; that by the terms of the mortgage, in case such default should exist for the space of 30 days, the trustees were authorized to take possession and sell the property conveyed by the mortgage. and to execute deeds to the purchasers; that after default Scribner, the then surviving trustee, exercised that discretion by the bill filed in January, 1868. hereinbefore stated, and that by the exercise at that time of such discretion the whole principal sum secured by the mortgage became due and payable, and that more than 20 years have elapsed since the principal so became due, and that this bill was not filed within 20 years from and after the accrued cause of action; and thereupon pleads, in bar of the maintenance of this suit, subdivision 2 of section 15 of chapter 138 of the Revised Statutes of Wisconsin for the year 1858. The answer further pleads that, by sections 4219 and 4221 of the Revised Statutes of Wisconsin for the year 1878, it was provided that an action which on or before February 28, 1857, was cognizable by the Court of Chancery, should be commenced within 10 years from and after the cause of action accrued; that this is a suit to redeem, cognizable by the Court of Chancery prior to February 28, 1857; that the St. Paul Company went into possession of the railway on March 6, 1867, as a purchaser under the Cleveland judgment, and has since continued in the actual, open, and notorious possession of the property, not recognizing in any way the Fonda and Scribner mortgage, or the debt secured thereby, as a lien upon the railway or the franchises in said mortgage mentioned, or recognizing the trustees, or those holding the bonds, as having any right by virtue thereof; that the cause of action to redeem, if any, arising to the complainants, accrued more than

10 years before the filing of the bill. The answer further asserted the proceedings under the Cleveland judgment, and the possession of the St. Paul Company thereunder; that the trustees and Gunnison and Bright had full knowledge of those proceedings and of the purchase of the railway by the St. Paul Company; and that, except by the filing of the trustees' bill on January 31, 1868, and of the bill in suit, none of them ever disclosed or made claim to the property by virtue of the mortgage; that they knew that the property could not be operated without the expenditure of large sums of money; that they knew of the prior incumbrances, which were equal to, if not in excess of, the actual value of the property, and which prior incumbrances had been paid by the St. Paul Company with the full knowledge of the trustees and of Gunnison and Bright; that the St. Paul Company, immediately following the purchase and possession of the railway, connected the same with its system of railroads, making the same a part thereof, and expended large sums of money in putting the railway into suitable condition for use, and in maintaining, bettering, and improving the property and connections thereunder, and in making it a part of its system of railways, without which the railroad could not have been operated profitably, and has so expended many millions of dollars, of which the trustees and Gunnison and Bright, and each of them, had knowledge; that notwithstanding the interest upon the mortgage matured semiannually since January 1, 1865, neither the trustee, nor Gunnison and Bright, ever disclosed to the St. Paul Company any claim against it, or against the property in its possession based on the bonds, or made any effort to assert any right or claim based upon the bonds or mortgage against the company; that by reason of the lapse of time, being more than 30 years, it has become impossible on account of the age, death, and removal of witnesses, the radical change in the condition of the railroad and property, the destruction and loss of evidence, records, and books of account, to make proof of the earnings of the railroad and property, and the expenditure laid out in its operation, maintenance, betterments, and improvements; that the mortgage was not made to secure any sum of money borrowed or owing by the Minnesota Company; that the bonds were not issued, negotiated, or sold, but were divided up among certain persons, and, among others, Gunnison, Bright, and one Fleming, who were directors of the Minnesota Company, and without any payment or consideration to the Minnesota Company; and that those facts were known by divers persons, and were capable of proof, but that, by reason of the lapse of time since said transactions, and the age, death, and removal of witnesses to the said facts, the loss and destruction of records and documents since that time, it is now difficult, if not impossible, of proof; and they assert that the lapse of time and laches on the part of the trustees and Gunnison and Bright was such that the complainant should have no standing in a court of equity and no right to the relief prayed. The answer further asserts that it entered into possession of the railway on the 6th of March, 1867, under claim of title, exclusive of any other right, founding such claim of title upon a written instrument, namely, the marshal's deed upon the sale under the Cleveland judgment and James decree, as being a conveyance of the premises in question; and that there has been a continual occupation and possession of the premises and property included in such instrument by the St. Paul Company under such claim for 30 years and upwards, prior to this suit, and that the premises and property during that period were, and still are, held adversely to the complainants and all the world; and that such possession and occupation has been open, notorious, exclusive, and adverse, and constitutes, under the statute of the state of Wisconsin, a bar to this suit.

There was evidence strongly relied upon as showing that the bonds under the Fonda and Scribner mortgage had not been issued for value; that Bright and Gunnison were officers and large stockholders in the Minnesota Company, and as such officers had the custody of these bonds for the company, and appropriated them to themselves without consideration, and that the bonds were in fact the property of the Minnesota Company, and that the small number of them claimed to be owned by the other individual complainants were received from Gunnison without consideration, and that the claimed ownership of them was pretentious. The decision of the court being rested upon other

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