(dissenting). A large mass of evidence has been presented, and many points suggested, which, in the view I take of the case, are of little moment, so far as the principal controversy is concerned, viz. the right of the complainant to the foreclosure sought under the facts and cixcumstances developed.
As to the advisability of the plan adopted in October, 1S7G, with respect to payment of half interest, or the comparative merits of the various schemes suggested at that time, this court has nothing to do, further than they tend to show the nature and extent of the conclusion reached and its operative effect in law or equity. It may be that Allen and Marquand were too sanguine and the Wards too timid, but no comments upon that point are required. Parties interested in a common enterprise of great magnitude may fairly and justly differ as to the best plan for present and future operations, especially when their conclusions must be .based, • to a large extent, upon prospective earnings, etc. Such differences are natural, and are in no way censurable; for one important purpose in having a board of direction, instead of a single manager, is to secure the benefits resulting from the respective views of many minds. The then condition of the defendant, and its estimated income, justified an honest difference of opinion.
The following brief statement of facts, as established by the evidence, suggests the rules of law and equity by which the case should be controlled.
The defendant corporation came into existence by the consolidation of several distinct corporations, each of which owned some part of the main line, or some of the branches. Each of said distinct corporations owed bonded and other debts. To provide for those debts, this defendant formed the plan, sufficiently explained in the mortgage now made the basis of this suit, reciting the indebtedness of each of the prior corporations, and setting apart twenty-three of the twenty-eight millions of consolidated bonds for the redemption or exchange of divisional bonds. It seems to have been then supposed that the holders of the latter bonds could be induced to make the desired exchange. In that the defendant was disappointed, for only a few bonds were so exchanged. The five millions in consolidated bonds, not reserved out of the twenty-eight as just stated, would be needed to complete the work contemplated and pay the floating debt.
In that condition of affairs, the defendant, early in 1870, became unable to prosecute its work, pay the floating debt, and meet the interest on the consolidated and divisional bonds. To provide for the difficulty, it was agreed to fund coupons falling due prior to November, 1876, issuing therefor fund certificates running for several years and bearing semi-annual interest.
As early as September, 1876, the parties commenced suggesting plans with respect to the payment of interest falling due after October of that year. The prior funding plan embraced no coupons falling due after October. and evidently contemplated that subsequent thereto interest as it matured would be promptly paid in full.
The Wards represented large interests, and had caused Mr. Warren, and subsequently Mr. Morison, to make full and careful exami*719nations into the condition and prospects of the road. Before Mr. Morison had finished his work, Mr. George C. Ward had suggested the propriety of funding one more of each of the series of coupons. He was a director of the defendant, and also a member of the co-partnership of S. G. & G. 0. Ward. His suggestion received no support. Allen, the president of the defendant, H. G. Marquand, vice-president, and the majority of the directors, insisted upon full payment of all interest as it thereafter matured. To meet objections raised principally by the Wards, who were of opinion that payment in full could not be maintained, Allen and Marquand made many suggestions. The Wards, for themselves and the Barings, deemed it very important that the large floating debt should be reduced, and the needed betterments secured, which objects they supposed could not be effected if interest were paid in fuE. They preferred the plan of paying only half interest. On the return of Mr. Morison to New York, where the board was to meet, he made a full and careful report to Mr. S. G. Ward, who had the more immediate charge of the Barings’ interests. In that report half payments were suggested for at least two yeiars. with a certificate for the other half, bearing compound interest. The result of all the discussions was that Allen, Marquand, and the other members of the board (a majority aganist its expressed views), consented to the plan finally urged by S. G. Ward, which was the payment of half interest for an indefinite period of time, with the expectation that full resumption could be had late in 1878, but the defendant to be left free to resume in full at an earlier day if practicable.
It is unnecessary to enter upon a critical examination of the various plans suggested and of the modifications proposed from time to time. When a draft of the plan to be issued in the form of a circular to the bondholders was submitted by Mr. Allen to Mr. S. G. Ward, the latter caused to be erased all other provisions than what announced the proposed payment of only one-half interest, except on the Iron Mountain firsts and the funded certificates. What thus occurred is very significant. It is evident that Mr. Allen was anxious to the last to use some of the consolidated bonds, unissued, to meet the then condition of affairs; for he and Mar-quand had zealously urged that full payments would appreciate the securities, whereby the unissued bonds could be utilized.
Mr. Morison states what occurred at that interview, as to the draft of the circular, viz.: “Mr. Allen read the draft of a circular to be sent to the bondholders, and various changes were made in this draft as he read it; there were some small changes in some of the figures and estimates, though none that were material. The draft of the circular contained 'a clause providing that the bondholders, on presenting their coupons, would be .paid one-half in cash and be given for the unpaid half, at their option, interest-bearing certificates or consolidated mortgage bonds, or the coupons stamped as half paid; Mr. Ward objected to this provision, and it was stricken out from the draft. The draft also stated that the company would follow this course for two years, beginning with November 1st, 1876. This clause was also stricken out on Mr. Ward objecting to it; so that the draft, as finally amended, simply stated that the company would pay one-half of each coupon as presented, and fixed no time at which the company would pay its coupons in fuB.”
The conferences, correspondence, and expressed views of the several parties, before the defendant’s circular was issued, October 20th, 1870, as well as the apprehensions expressed by Allen and Marquand concerning the plan after its adoption, and S. G. Ward’s replies thereto, render the foregoing statement by Mr. Morison not only credible, but entirely consistent with the views and conduct of the negotiating parties.
It must be borne in mind that several of the sets of coupons under consideration were attached to securities prior in right to the consolidated mortgage, although they pertained to separate divisions of the road only. Hence, it might have weU been doubted whether the holders of those coupons, who had refused to exchange them and the bonds to which they were attached for consolidated bonds and coupons, would be content to have them put on a par with the consolidated coupons. Why should they receive half payments only, and the subsequent or consolidated security receive the same? Why not stand on their strict rights?
In that connection, it was promised by S. G. Ward that he would issue, simultaneously with the defendant’s circular, a circular signed by himself endorsing the plan, and that his recommendation as the representative of large interests, he declared, would probably induce general assent to the plan adopted. His circular was to be accompanied by an abstract- of Morison’s report: and was issued accordingly, and so accompanied.
Pursuant to that plan, the defendant paid one-half of each coupon up to April, 1877, stamping on each, as presented, half paid, and leaving the coupon so stamped in the hands of the holder. Instead of paying the other half, it applied the surplus funds to the reduction of the floating debt, etc.
Semi-annual coupons on the consolidated mortgage which fell due April 1st, 1877, so far as controlled by the Wards, were presented to defendant and full payment then demanded. The defendant offered to pay one-half, which offer was refused. Promptly thereafter, a bill to foreclose the consolidated mortgage was filed in this court, an application for receiver made and refused, and the suit left pending until August, 1S77. when it was dismissed and the present bill filed. In the meantime, the defendant failed to pay any sum on the divisional coupons maturing, *720but since this suit was brought, and before the hearing, paid one-half, which was received under protest, etc.
' These are the salient facts; and to my mind they establish not a contract between the defendant and the body of the bondholders to postpone half payment for two years, or for any specified time, but they do show an agreement or assent on the part of the defendant and the Wards, in behalf of those whom they represented, that they, at least, would' not interfere with defendant in consequence of its failure or refusal to pay more than one-half on maturing coupons, leaving the defendant to pay the other half as soon as it could justifiably do so, even within six months or a year, if it desired.
Hence the statute of frauds has no application to the case. The distinction is a clear one as to an agreement between defendant and the Wards, concerning their respective rights and obligations, inter sese, and an agreement between defendant and all the bondholders The Wards did not represent all bondholders, and could bind only those whom they did represent.
When they induced and endorsed the plan, they purposely caused it, unlike the funding agreement of 1S75, not to depend, so far as they were concerned, on the assent of eighty per cent or of any specified number of bondholders. The vice of the argument, it seems to me, springs from a failure to observe the broad distinction mentioned.
Other bondholders did not enter into a specific agreement, oral or otherwise, to postpone full payment of their coupons, and hence, as to them, the doctrine of license or dispensation may have some force. When they become promoters of a suit, that question will arise and may have to be determined, for this suit is not based “on the option” of plaintiff as trustee, but on the request of the prescribed one-eighth of the bondholders.
But if the statute of frauds could be invoked, it would not apply, because: 1. The deferred payment was not necessarily for two years, but as the Wards compelled it to be made. viz., for an indefinite time, with leave to defendant to resume in full within one year. McPherson v. Cox, 96 U. S. 404; Walker v. Johnson, Id. 424. 2. There was assent in writing by S. G. Ward to the written circular of the defendant, as evidenced by his circular and many letters. There was a printed proposal by defendant, and a printed and published endorsement and assent by S. G. Ward, which would affect the interests represented by him.
If the statute of frauds, however, were applicable, the defence is complete on the ground of equitable estoppel; and all the elements of which appear from the foregoing statement of facts
This suit is based on the consolidated mortgage. and at the time it was brought only one set of coupons, that of April, 1S77, had matured. If a foreclosure were to be de creed it could be only for the amount of th< default in such payment. What may have beei the rights of the plaintiff (the trust company), if any, as to taking possession, etc., on breach of covenant to keep down prior incumbrances, such a breach cannot be ground for an independent suit for foreclosure under the consolidated mortgage; for the foreclosure would still leave outstanding all prior mortgages, which are respectively on separate divisions of the road and not on the whole road. Under those prior mortgages, then would have to be distinct suits as to each division, no one division being bound for a mortgage on another. The plaintiff in this suit is in no sense the assignee of the other mortgagees, nor has he been in any manner subrogated to their rights. And even if he were, he could not consolidate such rights, and bring one suit on all of the divisional mortgages against the whole road, instead of separate suits against each division. The plaintiff did not pay the coupons on the divisional mortgages, nor, as trustee unde)' the consolidated mortgage, had he power to do so. A failure to pay coupons on the divisional mortgages did not vest the trustee under the consolidated mortgage with a right to foreclose under the divisional mortgages. If no such right exists, then the basis of this suit was solely the non-payment in full of the April coupons on the consolidated mortgage and non-compliance with mortgage covenants. Payment ot one-half of the coupons under the consolidated mortgage was tendered and refused.
The plaintiff is m no better position under the present than under the former bill. The court should therefore eliminate from the case all other grounds of default; for parties in interest under the divisional mortgages are not here complaining. Looking, then, solely to that alleged default, and to what occurred in October, 1S7(3, between the Wai'ds and the defendant, and to the other evident fact that, omitting the Wards, the required one-eiglith have not promoted this suit, it must be decided whether the relief asked can be granted according to equitable rules. This is not a controversy between the Barings tor W’ards) and Allen and Mar-quand; but a suit between the trustee and the defendant corporation. There are larger interests at stake than are represented by those persons as private individuals. The directors of the defendant are trustees of the stockholders, all of whose rights are sought to be destroyed. If the right to foreclose exists, it must be enforced, even if so disastrous a result follows. But a court of equity should, when such a catastrophe is probable, and perhaps unnecessary, investigate most rigidly the ground' on which the alleged right is based sc that the enforcement of a pretended equitable right may not be productive of gi'oss inequity.
Whatever view may be taken concerning *721the October plan and the course pursued thereunder, without objection and with the full assent, at least, of the Wards, their conduct in April involved, among other inequitable results, extreme injustice towards the holders of divisional coupons. The latter had a prior right to payment in full, but had been induced to forego that right for a time. Until full payment to them, in strict law there should have been no payment on the consolidated coupons. But when they had been induced — say, at the instance of the Wards — to postpone the assertion of their full rights, and the time had come, in April, 1S77, when the consolidated coupons could be presented for payment for the first time, is it not clear that if the demand of the Wards had been acceded to. and full payment made, an unjust and inequitable advantage would have been granted? ■ Suppose the arrangement had never been made, and yet only half payment had on the divisional coupons —and then suppose the holders of those coupons were lulled to sleep by a vague understanding or a positive statement that no more could be paid, consistently with the interests of all concerned — and then suppose the holders of the consolidated coupons in April demanded full payment of their coupons — what would, in strict justice, have been the duty of the defendant, if it had not ample funds to meet all of its bonded requirements? Should it not have replied that, before you are paid anything, we must pay in full the other and prior sets of coupons? If, on the other hand, it had acceded to the request of the Wards, would it not have enabled them to secure full payment at the expense of others, prior in right? If the defendant is unable to stagger, as is urged, under its bonded indebtedness and accruing interest, where were the fairness and honesty of absorbing its assets in the payment of interest on the last in right, and leaving the other, prior in right, unsatisfied? Certainly, it could not have been a part of the October plan to have such injustice wrought? If so, it fraudulently concealed such plan from the unsuspecting holders of divisional bonds, and the party thereto would be estop-ped. even under the narrowest rules on the subject.
The case, however, is one where the defendant was induced, by the persistent course of the promovents, to adopt a plan of action, in the pursuit of which it became unable to meet the changed course they required. They now seek to escape from their promises, and take advantage of what they caused to be done, to the probable ruin of the defendant corporation, and, possibly, the divisional interests.
There are many minor questions presented in the arguments which it is unnecessary to comment upon.
What was reasonable notice that the October agreement was at an end? Was it to demand full payment on the consolidated mortgage when the April coupons fell due in 1877, on the very day when they fell' due, although bondholders prior in right had by the promovents been induced to accept half payments? If no such practical fraud was permissible, how do these promovents better their standing by dismissing their original bill, and, when further payments on the divisional mortgages had not been made, and no further payment on the consolidated was due, by proceeding de |novo, on the ground that only half payments were made under the divisional mortgages, etc.?
Is the basis of the new right the demand in April for full payments of the sums due under the consolidated mortgage? That demand was not then enforceable. Since then, and prior to the filing of this bill, no interest had fallen due under that mortgage. But interest had fallen due under the divisional mortgages, and the covenants in the consolidated mortgage required that interest to be kept down. The failure to keep down that interest would, of course, have been a breach of the mortgage covenants, unless waived. Was it not waived under the facts in evidence?
It is not my purpose to go further into details. It seems to me that, under the recognized doctrine of equitable estoppel, this action cannot be maintained. If different views obtain, the practical workings of this suit under a decree, looking to all the legal and equitable rights involved, will only wreck the defendant, to the destruction of interests resting on the consolidated mortgage, and possibly the divisional mortgages. Well might this plaintiff, as trustee under the consolidated . mortgage, shrink from instituting this suit, on its own motion, and base its conduct on the request of the enumerated one-eighth in interest. True, courts do not fail to enforce the clear rights of parties because the course sought might not be the most prudent for them; but when the larger interests of many persons are involved in the fate of a common enterprise, they should carefully ascertain what are the rights of the contestants, and not decree forfeitures against the equities of the case, to the unnecessary destruction of interests not represented.
The value of the defendant’s enterprise evidently rests, to a large extent, upon the consolidation of the various parts or divisions.
That I may be clearly understood, let it be borne in mind that, despite the arrangement in 1876, the bill filed in April, 1877, proceeded on the ground that only half interest had been paid on the divisional coupons, and only half tendered on the April coupons under the consolidated mortgage. The parties to the divisional mortgages had' made no complaint, and were not before the court complaining of what had not been done at the instance of their promovents. Hence, the doctrine of waiver applies to them. As *722stated in the opinion of my brother judge, it was doubtful if these promovents could have maintained the bill filed in April (and I doubt not that it could not have been maintained) — how, then, is their position improved under this bill? The promovents had, in April, 1877, instituted proceedings for foreclosure on the ground of only half payments on divisional coupons, and. substantially, on consolidated coupons due in April; consequently, the defendant was, by such suit, put in the embarrassing condition to pay thereafter, in violation of the understanding, no coupon falling due until the litigation was ended, or of paying half interest according to the understanding, or of paying full interest. It stood still, waiting the action and orders of .the court.
After this new suit, it did pay the half interest without waiting for the orders of the court; thus preserving its original status or rights under the agreement of 187C.. If the relationship of the parties under the divisional mortgages and the consolidated mortgage are observed (the former waiving or not complaining), then the action of these promovents under the latter mortgage, seeking mainly, from non-payment of divisional coupons, to enforce their subsequent mortgage, we will have a clearer view of the supposed equities on which this bill is based. True, it was important to the bondholders under the consolidated mortgage that the interest on the divisional mortgages should be paid at maturity; and it is equally true that to give value to the former, under this uncompleted enterprise, the payment in full under the latter should be delayed. Where that delay was caused by the former (so far as these promovents are concerned), for their special benefit, why should they be heard to assert in a court of equity that what was done at their special instance and request, for their alleged benefit, gave them a right to take advantage of their own wrong, to the destruction, it may be. not of the interests of the stockholders alone, but also of the holders of other bonds. 1 refrain from amplifying further. My opinion is that the bill should be dismissed.
Interlocutory decree.
NOTE. The following decree was entered, in accordance with the opinion of the circuit judge:
“It is found that the equities in this case are with the complainant, and that the defendant is in default of the interest coupons upon the bonds secured by the consolidated mortgage described in the bill, which coupons matured and fell due on the 1st of April. 1877. and that the complainant is entitled to recover the amount thereof.
“And it is furthei adjudged and decreed that it be referred to a master, to inquire, compute, and report to the court what amount is due and unpaid on such of said "oupons as matured on the 1st day of April. A. D. 1877.
“And it is furthe ordered that said master do compute ana repon tc the court what amount is due and unpaid on such of said coupons as shall have manned after the 1st day ot April, 1S77, and which '•emain unpaid to the date of the filing of the report of said master; and that the said master, in computing the amounts of such coupons as aforesaid, do separately compute the amounts of all such of said coupons, if any, whereof the ownership or the title thereto may be contested before him; also that the said master ascertain and report what persons were, at the date of filing said bill, and also what persons now are, the bona fide holders and owners of all outstanding bonds claimed to be secured by said consolidated mortgage, and that the complainant have leave to contest before the master the right of any person claiming to be a bona fide holder of any of such bonds.
“And it is further ordered that any person whd may. be a bona fide holder and entitled to any of the bonds or coupons secured by said consolidated mortgage, be permitted to intervene and contest before the master any claim of any other person to be the bona fide holder of any of such bonds or coupons, claimed to be outstanding, and that the master take proof and report as to the ownership of any bonds so contested before him, and also as to the ownership of any coupons which may bs or may have been attached to any of said bonds secured, or claimed to be secured, by said consolidated mortgage, of which coupons the ownership maj be contested before him. And for the better discovery of the matters aforesaid. the parties are to produce before the said master, upon oath, all deeds, books, papers, and writings in their custody or power relating thereto, and are to be examined, etc., as the said master shall direct.
“And the consideration of all further questions in the cause is «eserved; and it is further ordered that the complainant shall be at liberty to apply. to this court, ir to either of the judges at chambers, at any time as it may be advised, for any further order in the premises.”
The cause was soon afterwards settled by the parties, and the bill voluntarily dismissed by the complainant.