National Bank v. Wilmington, New Castle & Southern Railway Co.

Citations

• 9 Del. Ch. 258
• 81 A. 70
• 1911 Del. Ch. LEXIS 21

Syllabus

<p>Where a mortgage upon the property of a railroad company was foreclosed by action, and it was not contended that the descriptive clause of the mortgage did not cover freight cars, and the decree of foreclosure included rolling stock, that decree precluded receivers of the mortgagor company from contending later that freight cars were not covered by the mortgage.</p> <p>To secure an issue of bonds a corporation may include in a mortgage upon its railway, rights and franchises, property that was clearly personal in its character, though the mortgage does not comply with the requirements of a chattel mortgage.</p> <p>The general corporation law (22 Del. Laws, c. 392) § 123, authorizes the consolidation of railroad companies; and section 60 provides that when the agreement required by section 59 is signed and filed the separate existence of the constituent corporations shall cease, and the consolidated corporation shall become a single corporation, with all the rights, powers and privileges of the constituent companies, providing that all rights of creditors and liens upon the property of the original companies shall remain unimpaired, and all their debts, liabilities and duties shall attach to the consolidated corporation. The entire property, including the rolling stock, of one of the constituent companies of a consolidated railroad was mortgaged, and the mortgage also provided that equipment, replacing old and useless equipment, should be subject to its lien. Held, that a car purchased to replace one owned by the constituent company was subject to the ben of the mortgage, even though purchased by the receiver of the consolidated company, and with its funds. .</p> <p>A mortgage upon the rolling stock of a railroad provided that new equipment purchased to replace that which was worn out and unfit for use should be subject to the mortgage. A receiver having been appointed, he petitioned for permission to purchase a new freight car, alleging that the one now in use co