Spring Brook Railway Co. v. Lehigh Coal & Navigation Co.

Citations

• 181 Pa. 294
• 37 A. 525
• 1897 Pa. LEXIS 544

Syllabus

<p>Mortgage — Lease—Corporation—Accounting.</p> <p>A corporation mortgaged and also leased its property to another corporation which was to go into possession and to apply the gross receipts to the payment of taxes, certain liens and the mortgage debt of the lessor to the lessee. The lessee sublet the property to another company. The lessee did not keep a detailed and itemized account, such as the lessor was entitled to, but the sublessee did so in regard to nearly all essential matters. The lessor complained from time to time of the inadequacy of the accounts, but made no effort to get the details when they were current and accessible, and afterwards, when an opportunity was given to examine the lessee’s books, failed to take advantage of it. The lessor filed a bill in equity for an account and to prevent the lessee from proceeding upon its mortgage. Held, that as it was possible to state an account, the lessee was not entitled to an injunction to restrain proceedings upon the mortgage.</p> <p>Where a business is conducted by one who is not the exclusive owner, but is accountable in part as a quasi trustee to another, the business must be conducted with fair regard to the interests of both parties, and equity will scrutinize closely where there is any reason to suspect fraud, or even any opportunity for unfair advantage; but where the interests of both parties are the same, there is a presumption that the best was done by the party conducting the business which the circumstances permitted.</p> <p>A railroad company mortgaged and leased its property to another corporation under an agreement that the lessee “ may charge for transportation on the said railroad and its branches any such l’ates as may be lawful and as may seem best to it for its own interest,” and shall set aside twenty jDer cent of the gross receipts for payment of the taxes, liens, etc., and the reduction of the mortgaged debt. The lessee sublet the road to a lumber company, and instead of reserving r