88 FEDERAL REPORTER.
give them the right of possession, as a security for their claim; and as they could not continue the use of the property without accounting to the lessor for the rental, if they did not wish to continue the use, as they declared, at the end of the ten-years term, it seems to me that they have a right to go into a court of equity, and tender possession to the lessor, and have their equitable lien thereon enforced, as a means of making their security .available. In this respect the right, in principle, differs little from., that of a vendee in possession of real property, the legal title to which is in the vendor, in which case, on default of payment by the vendee, the vendor has several remedies. He may sue on the contract, at law, to recover judgment for the purchase money, and levy the execution on the property and sell it; or he may bring ejectment for possessioI;l, in which case the vendee within proper time may go onto the equity side of the court, and tender the contract money and demand a deed; or the vendor may in the first instance, notwithstanding he holds the legal title, go into a court of equity and demand that the vendee come forward with the money, or be forever foreclosed. The vendor holds the legal title as mere security for the payment of the purchase money; and as said by the court in Hansbrough v. Peck, 5 Wall. 506:
"In case of persistent default, his better remedy, and, unller some circumstances. his only remedy, is to institute In the prop?r court to foreclose the equity, where partial payments or valuable improvements have been made. 'I'he court will usually give him a day to raise the· money,longer or shorter, depending upon the particular circumstances of the case,and to perform his part of the agreement."
So here the lessees are entitled to retain possession of this property, as security for their claim against it, until the lessor complies; and they ought not to be required by an action at law to surrender the advantage of this additional security, but ought to be permitted to call the lessor into a court of equity, where the rights of the parties can be determined according to the very justice of the case, and their equitable lien preserved by lis pendens against the lessor and all the world. See Allen v. Taylor, 96 N. C. 37, 1 S. E. 462. The demurrer to the bill is overruled.
ALESSANDRO IRR. DIST. v. SAVINGS & TRUST CO. OF CLEVELAND, OHIO, et at (Circuit Court, S. D. Oalifornia. June 29, 1898.)
LIEN ON INVALID CORPORATE BONDS:"-FoRECLOSURE-CROSS BILL.
Where corporate bonds recltet'heir Issue under a certain valid statute, and in pursuance of Its provisions, and nothing upon their face indicates their invalidity, a defendant to a bill, seeking their sale in part satisiactionof certain liens, may, by.cross bill, that they are in reality void, and thus prevent the court from decreeing a sale, whereby they may pass for value to Innocent J;mrchasers.
Wm. J. Hunsaker, for Savings,& Trust Co. of Cleveland, Ohio, and others. , F. W. Gregg, Geo. J, Denis, and Charles Wellborn, for Alessandro Irr.Dist.
ALESSANDRO IRR. mST. v. SAVINGS &: TRUST CO.
ROSS, Oircuit Judge. This cross bill, to which a demurrer haa been interposed, was filed by leave of the court, in the case of Savings & Trust Oompany of Oleveland, Ohio, against Bear Valley Irrigation Company and others, pending herein. It is conceded on behalf of the demurrants that the cross bill shows that the bonds thereby sought to be annulled are void, but it is contended that, as it shows upon its face that the bonds were sold or exchanged for purposes and pursuant to a pretended contract not authorized by law, they can be defended against in an action at law, and that, therefore, a court of equity will decline to give relief. It appears from the averments of the cross bill that the cross complainant is a corporation of the state of Oalifornia, organized and existing under and by virtue of the act entitled "An act to provide for the organization and government of irrigation districts and to provide for the acquisition of water and other property and for the distribution of water thereby for h'I'igation purposes," approved March 7, 1887 (St. Cal. 1887, p. 29). 'l'he validity of that statute was sustained by the supreme court of the United States in the case of Irrigation Dist. v. Bradley, 164 U. S. 112, 17 Sup. Ct. 56. By that act, as amended by the acts of March 20, 1891 (St. Cal. 1891, pp. 142, 147), the cross complainant was, among other things, authorized to acquire, either by purchase or condemnation or other legal means, all lands, waters, water rig-hts, and other property necessary for the construction, use, supply, maintenance, repair, and improvements of reservoirs, canals, and other waterworks, and, sub· ject to certain prescribed conditions, was authorized to issue its bonds and to dispose of them in two ways: In case of the purchase of property necessary for the purposes of the district, to pay for the same in bonds at their par value; or to sell the bonds for not less than 90 per cent. of their face value, from time to time, and in such quantities as should be necessary and most advantageous, to raise money for the acquisition of the necessary property and water rights, and the construction, etc., of the necessary canals and waterworks. While counsel for the demurrants, one of whom is the Savings & Trust Oompany of Oleveland, Ohio, concede that the cross bill alleges facts showing the invalidity of the bonds in question, it is not claimed that the bonds themselves show upon their face such invalidity. They recite upon their face that they were issued under and by virtue of the provisions of the state statute referred to, and in pursuance of its provisions. The cross bill shows that one of the purposes of the original bill is the sale of these bonds, therein alleged to be held, among other property, as security for the payment of certain receiver's certificates, alleged to be held and owned by the complainant Savings & Trust Oompany, and sought to be foreclosed, among other liens, by the original bill herein. As the bonds do not show upon their face that they are invalid, and the cross complainant is a defendant to the bill which seeks their sale in part satisfaction ot certain liens, it is, I think, entitled to show by cross bill Ute illvalidity of the bonds; to the end that this court be not called Qpon to decree the sale of bonds fair upon their face, but in reality void, and which may thereby pass for value into the hands of many diffe,\'ent
purchasers, and result in'a.:multiplicity Of suits to enforce'their payment.' , :' '.';' <An will therefore be 'entered overruling the demurrer, with leave to the defendants 'to answer within 20 days.
BOYLE'·· FARMERS' LOAN & TRUST CO. (two caselJ). HUNTINGTON
' May 31, 1898.)
(Oircuit' Court ot Appeals, Fifth OIrcult. Nos. 661, 662,663.
RAtLROADS-S,\,LIl ON FORECLOSURE__RIGHTS
The of railroad property at foreclosure sale,11J not entitled to theeal'Jilngs Of the l'olfd after confirmation, where he has persistently delayed compliance with his bid, and has not paid the purchase money.
Appeals from the Circuit Court of tpe United States for the Eastern District of
, ', ,No.
J. A. Baker and R. S. Lovett, for appellant. L. W. Campbell, M. F. Mott, and J. P. Blair, for appellee.
J. P. Bll;lir, J. A. Baker, and R. So Lovett, for appellant. L. W. Campbell and M. F. Mott, for appellee.
" J.P. Blair, for 'appellant L. W. Campbell and M. F. Mott, for appellee. BeforePARDEE, Circuit Judge, and SWAYNE and P ARLANGE, District JUdges. ", PER CURIAM. The record s1?-ows that the Pacific Improvement Oompany is the real party in interest represented in these several appeals,that company being the purchaser represented by Wilbur F. Boyle, and owner of the 614 bonds;' which said Boyle represents, and the owner of the Lackawanna cla]in set up as a lien prior to that of the first mortgage bonds; that the purchaser atthe sale under the 'decree,' and' as a part of the' consideration, and in addition,' to the sum l:!id, took the property upon the express condition that he would payoff and satisfy, among others, the Lackawanna claim; and that the reserc 'Vation of the of $187,000 out of the earnings Of the road to await of the supreme court of the Lackawanna claim is in the llirect'tntei'est of the appellants., Neither in law nor in equity is the purchaser under the foreclosure sale entitled to the earnings of the property slncil the decree of' confirmation, because,' among other things, he' has persistently delayed complying with his hid. There is merin* any' The effect of the ap' within'wllich the'pnrchaser was ori-ered b:r th'e!circuit court to complY' With his bid. We notice, in the terms (}f under which the sale was made, the court reserved the right to resell the property upon the failure of the