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SAGE ET AL. v. CENTRAL RAILROAD COMPANY OF IOWA ET AL.

October 1, 1876

SAGE ET AL.
v.
CENTRAL RAILROAD COMPANY OF IOWA ET AL.



MOTION, 1. To vacate a supersedeas; 2. Dismiss the appeal.

The opinion of the court was delivered by: Mr. Chief Justice Waite delivered the opinion of the court.

Mr. R. L. Ashhurst in support of the motions.

Mr. N. A. Cowdrey, contra.

The Farmers' Loan and Trust Company, trustee for the bondholders secured by a mortgage of the Central Railroad Company of Iowa, whose claims amounted in the aggregate to $3,700,000, exclusive of interest, commenced a suit in the Circuit Court of the United States for the District of Iowa, Oct. 14, 1874, to foreclose the mortgage for the benefit of all parties interested in the security.

This was done at the request of a large number of the bond-holders, and after much consultation between them in regard to their common interests. After the cause had been pending for nearly a year, and at some time between Oct. 1 and Oct. 22, 1875, Russell Sage, F. Leake, James Buell, and Edwin Parsons, presented a communication to the trustee, a copy of which is as follows:––

'To the Farmers' Loan and Trust Company, Trustee, &c., First Mortgage Bondholders.

'GENTLEMEN,–We are informed by your counsel, Grant and Smith, that they will ask the court, in the foreclosure suit now pending, to enter such decree as the majority of the bondholders desire. Believing that some of the bondholders have other interests to serve than to protect the first mortgage bondholders, and that large numbers of the bondholders, from want of proper information, have been induced to sign various reguests to the court for certain forms of decree injurious to us as bondholders, and being your cestui que trust to the amount set opposite our names of the first mortgage bonds, to secure the payment of which you hold the mortgage as trustee for ourselves and others similarly situated, this is to notify you of such interest on our part, and to request you to instruct your counsel to procure the ordinary decree of foreclosure and sale; and, failing to get this from the court, to take an appeal to the Supreme Court of the United States.

'If, for any reason, you decline to give your counsel such instructions, please inform us, that we may become a party to said proceedings, and take such course as we may be advised in the matter. We understood the trust-deed to require you to procure the ordinary decree of foreclosure and sale. If the bondholders, or a majority of them, request you to purchase the mortgaged premises, and to form a new company, that it is competent for you to do so, upon such terms and conditions as a majority of the bondholders desire; but, until you do so purchase, you are to do all you reasonably can be expected to do to protect the minority as well as the majority of your cestui que trust.

'Respectfully, your obedient servants,

'RUSSELL SAGE, $100,000.

'F. LEAKE, by Russell Sage, $25,000.

'JAMES BUELL, $10,000.

'EDWIN PARSONS, $13,500.

'NEW YORK, Oct. 1, ...


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