THIRD DEPARTMENT, JULY TERM, 1895.

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[Vol. 88. December, 1893, and put in issue the legality of the appointment of the trust company as successor trustee, and also put in issue the exercise of the option by the trust company to declare the whole amount of the principal of the bonds to be due, and asked that the order appointing the trust company as successor trustee be vacated and set aside, and that it be adjudged that the said trust company is not the trustee under the said mortgage.

On the 28th day of April, 1894, William V. Reynolds, as receiver, commenced an action against the New York Security and Trust Company and others, as defendants, alleging in his complaint the commencement of the action first entitled for the foreclosure of the mortgage, the dissolution of the American Loan and Trust Company, and the appointment of the New York Security and Trust Company as successor trustee to the American Loan and Trust Company, and alleging that no notice of any application for the appointment of the New York Security and Trust Company was given to any one, except to the Attorney-General and to the attorneys for the receiver of the American Loan and Trust Company, and alleging, upon information and belief, that Walter Stanton, upon whose petition such appointment was made, was not at that time the owner of any bonds issued by the Saratoga Gas and Electric Light Company, and did not have any in his possession nor under his control, and that the receiver of the American Loan and Trust Company, Simmons, did not, nor did the People of the State of New York, own any such bonds, and asked that the order appointing the New York Security and Trust Company, as successor trustee, "be reviewed, vacated, set aside and held for nothing," and also asked that the complaint in the foreclosure action, commenced by the New York Security and Trust Company, be dismissed.

Both actions, the one to foreclose the mortgage and the action of Reynolds, as receiver, to review the order appointing the trust company, as successor trustee, were by agreement tried at the same time, and resulted in a judgment dismissing the complaint in the action brought by Reynolds as plaintiff, and in a judgment and decree of foreclosure and sale in the action brought by the trust company to foreclose the mortgage. Separate decisions and separate judgments were rendered and entered in each. Final judg ment in the action wherein Reynolds was plaintiff, and an interlocu

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THIRD DEPARTMENT, JULY TERM, 1895.

tory judgment in the foreclosure action, was entered September 19, 1894, and final judgment of foreclosure and sale was entered in the foreclosure action November 19, 1894.

From each of these judgments appeals have been taken; from the judgment of foreclosure and sale, by the Saratoga National Bank, by Andrews and by Reynolds as receiver; and from the judg ment dismissing the complaint in the action brought by Reynolds an appeal has been taken by Reynolds, which appeals constitute the first and second-entitled appeals.

The appellant Reynolds made a motion to set the decision in each case aside, and, after judgment was entered upon such decisions, moved to set such judgment aside and to have one judgment entered upon the ground that the foreclosure action and the action by Reynolds to review the order appointing the trust company as trustee constituted but one cause and should end in but one judgment disposing of all the issues in both actions; both these motions were denied, and from the orders denying the same Reynolds appeals to this court, which appeals constitute the third and fourth above-entitled appeals.

Thereafter, and on the 27th day of April, 1895, the said Reynolds made a motion at a Special Term of the Supreme Court for an order directing Gleason, as receiver, to pay the coupons due February 1, 1894, and that upon the payment by him, said Reynolds, of the coupons due August 1, 1894, and on February 1, 1895, the said Gleason, as receiver, deliver the possession of the mortgaged property to said Reynolds, which motion was denied, and from the order denying the same Reynolds appeals to this court, which constitutes the fifth above-entitled appeal.

The history of the entire proceeding having been thus given, so that the situation of all the parties as to each appeal may be fully understood, we will now consider such appeals in their order. First, the appeal of Reynolds from the judgment in the foreclosure action and from the judgment in the action seeking to review the order by which the trust company was appointed the successor trustee.

No question was raised upon the trial but what default had been made in the payment of interest upon the bonds, and that such default had continued for a period of over sixty days before the commencement of this action. No question is raised but that the

THIRD DEPARTMENT, JULY TERM, 1895.

[Vol. 88.

trust company represents in fact a large majority of the bondholders, and it appears that upon the hearing before the referee appointed under the interlocutory judgment the plaintiff trust company produced before such referee and had in its custody 271 of the 300 mortgage bonds.

The only questions raised upon the trial and argued upon this appeal by the appellant Reynolds were as to the legality of the appointment of the trust company as successor trustee, which question is common to both actions, and which is the only question presented in the action wherein Reynolds, as receiver, is plaintiff; and as to whether the trust company did in fact legally exercise its option to declare the whole principal amount of the bonds immediately due and payable, pursuant to the terms of the mortgage, after the expiration of sixty days from the default in the payment of interest, which last question only enters into the action for foreclosure.

The plaintiff is properly acting as trustee of the gas company.

The Court of Chancery had jurisdiction of trusts and trustees and had power, independent of any statute, to remove a trustee on good cause shown, and to appoint another in his place.

The Supreme Court has succeeded to the jurisdiction and power of the Court of Chancery, and it seems to me unnecessary to cite authorities to prove its jurisdiction and power to appoint one trustee in the place and stead of another.

The original trustee under the mortgage becoming insolvent, the Supreme Court had jurisdiction to appoint a successor trustee; its order making such appointment was, therefore, not a void order, but may have been, under the circumstances, irregular.

Without discussing the question as to the power and authority of the court in a proceeding pending before it for the dissolution of a corporation, which is acting as a trustee, to appoint a successor trustee, as a part of the proceeding pending before it, I will assume that the original appointment of the New York Security and Trust Company, as successor trustee to the American Loan and Trust Company, was irregular. The orderly and ordinary course of proceeding to dispose of such an order is to appeal from it, or, if the facts upon which it was obtained were falsely stated to the court, to move for a rehearing.

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As we have heretofore seen, a motion to vacate the order appointing the trust company as successor trustee was made in another district from that in which such order was granted, and was denied, which denial was affirmed upon appeal to this court.

That was the only proceeding taken by any bondholder to vacate or set aside the appointment of the trust company as successor trustee. From that time forward no bondholder has appeared in these proceedings to contest the appointment of the trust company, or to contest the foreclosure proceedings.

After the commencement of the foreclosure action a motion was made at a Special Term, before the same justice who had appointed the trust company as successor trustee, to vacate such appoint-' ment, which motion was denied, and no appeal was taken therefrom. This ordinarily would conclude the matter. But assuming the right in a proper case to have reviewed by action a judgment, decree or order obtained by fraud, in what position does the appellant then stand?

He alleges as his cause of action that the person upon whose petition such appointment was made falsely represented himself as the owner, or in possession of, or having under his control, bonds of the gas company, and claims that at that time such petitioner neither owned, possessed nor controlled any of such bonds.

In my view of this case, as it now stands, it is a matter of absolutely no importance whether such petitioner owned, possessed or controlled at that time any bonds or not.

The action to vacate the appointment of the plaintiff as successor trustee is one in equity; to sustain it the plaintiff must show some equity existing in his favor. The only persons interested in the question of who shall be trustee under the mortgage are the bondholders and the gas company, all of whom have recognized, acquiesced in and requested such appointment.

The gas company, first, by its officers, the president and treasurer, executing to the trust company the so-called supplemental mortgage; secondly, by its board of trustees adopting the resolution, heretofore set forth, designating the trust company as the successor trustee; and thirdly, by paying over to it, from time to time, money to pay the interest upon its bonds. The bondholders, by requesting the trust company to exercise its option and declare the whole principal sum due, and commence foreclosure proceedings upon the mortgage. HUN-VOL. LXXXVIII.

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[Vol. 88.

Again, in the agreement of the bondholders constituting a committee to act for them, heretofore referred to, wherein the trust company was designated as their trustee, and in pursuance thereof depositing a large majority of the bonds with it; and still again, upon the motion made at Special Term to vacate and set aside the order appointing the trust company as successor trustee, when the entire committee of bondholders, by separate affidavits, requested the Special Term to deny such motion, and to continue the trust company as successor trustee.

Upon the trial, as we have seen, the trust company produced before the court 271 of the 300 bonds issued under the mortgage, and under such circumstances, where it is so evident that the plaintiff is acting for and on behalf of a vast majority of the bondholders, I do not think that a court of equity will, at the instance of one who represents neither the mortgagor nor the mortgagee, nor any of the bondholders under the mortgage, interfere because of any alleged irregularity in its appointment of a trustee which is acting at the request and by the consent of all the parties interested.

A stranger not interested cannot raise any question as to the want of jurisdiction of the court appointing a trustee or as to the regularity of the proceedings. (People v. Norton, 9 N. Y. 176; Matter of Livingston, 34 id. 555-570.)

As to the exercise of the option to declare the principal sum due, the majority of the bondholders requested the trust company to exercise such option. The contention is made that the trust company did not legally comply with that request; that the notice sent by the secretary of the company to the gas company was not sufficient, it not appearing that he was authorized so to do by a resolution of the board of directors of the trust company. I am inclined to think that no such resolution was necessary, that it was a matter that called for no deliberation or action upon the part of the directors, but that it was a mere executive duty which the executive officers of the trust company could perform in the ordinary discharge of their duty. By the terms of the mortgage the request of the bondholders was conclusive and mandatory; but, be that as it may, the bringing of the suit itself was a sufficient declaration of its intention to exercise such option. (Northampton National Bank v. Kidder, 106 N. Y. 221.)