
    Central Trust Company, Plaintiff, v. Pittsburgh, Shawmut and Northern Railroad Company et al., Defendants.
    (Supreme Court, Allegany Special Term,
    January, 1916.)
    Parties — who should he made — in action to foreclose railroad mortgage— receivers — when petition may be amended nunc pro tunc.
    Where, in an action to foreclose a railroad mortgage given to plaintiff as trustee to secure certain bonds of a railroad company, a receiver was appointed to take possession of and to operate its property under the order of the court, and all parties connected with the property understood that certain receiver’s certificates were a first and superior lien on all the property in the hands of the receiver, and it appears that the petitions for authority to issue said certificates made no mention of a certain bonded indebtedness secured by a mortgage given to plaintiff as trustee by a railroad company which had been consolidated with and its property acquired by defendant, a motion by the receiver that the petitions be amended nunc pro tunc by inserting therein appropriate-reference to such mortgage and bonded indebtedness will be granted.
    
      Plaintiff, as trustee of the mortgagor under the mortgage of which no mention was made in the original petition, should be made a party defendant in the instant action.
    Motion to amend petitions for leave to issue receiver’s certificates.
    Alton B. Parker, for motion.
    Arthur H. Van Brunt, opposed.
   Brown, J.

In this action to foreclose a mortgage executed by defendant railroad company to the plaintiff, as trustee, to secure certain bonds of the railroad company, a receiver was appointed to take possession of the railroad property and operate it under the order of the court. By petitions, verified March 30, 1909, June 18, 1910, and June 21, 1915, respectively, application was made to the court for authority to issue certain receiver’s certificates. In such petitions no mention was made of. certain bonded indebtedness of the Central New York and Western Eailroad Company secured by a mortgage theretofore executed by the Central New York and Western Eailroad Company to the plaintiff as trustee, the Central New York and Western Eailroad Company having theretofore been consolidated with and its property acquired by the defendant Pittsburgh, Shawmut and Northern Eailroad Company; By reason of the failure to mention such outstanding bonded indebtedness in such petitions it is now claimed by the plaintiff, as trustee under the mortgage of the Central New York and Western Eailroad Company, that such bonded indebtedness of the Central New York and Western Eailroad Company is a lien upon the railroad property ahead of and superior to the certificates of the receiver issued in pursuance of orders granted upon such petitions. It is contended by the receiver that his certificates were issued with the knowledge and consent of the holders of the bonded indebtedness of the Central New York and Western Eailroad Company; that such certificates should be issued for the benefit of the Central New York and Western Eailroad property; that a portion of the avails thereof should be used for the benefit of such property, and that in fact the pro rata proportion of such avails of such certificates has been used for the benefit of such railroad property; that it was intended that such certificates should be a first lien upon all the railroad property in the hands of the receiver, ahead of and superior to the mortgage and bonded indebtedness of the Pittsburgh, Shawmut and Northern Eailroad Company, and also ahead of and superior to the mortgage and bonded indebtedness of any and all companies that have been consolidated with, and whose properties have been acquired by, the Pittsburgh, Shawmut and Northern Eailroad Company; and that the omission to refer in the said petitions to the mortgage and bonded indebtedness of the Central New York and Western Eailroad' Company was an inadvertence on his part. This motion is made by the receiver to amend such petitions nunc pro tunc by inserting therein appropriate reference to such mortgage and bonded indebtedness. The motion is opposed upon the ground that the mortgage and bonded indebtedness of the Central New York and Western Eailroad Company is, and of right ought to be, a prior and superior lien on the railroad property, ahead of the lien of the receiver’s certificates.

It is believed that these receiver’s certificates were issued upon the credit of the entire property in the hands of the receiver, and with the consent or acquiescence of all parties interested in the entire railroad property. In general such certificates are usually paid out of the proceeds of foreclosure, and upon distribution take precedence over all other debts. Their integrity cannot be too rigidly observed. If it be true that the insertion of the reference to the bonded indebtedness of the Central New York and Western Railroad Company, in the petitions, will give these certificates the verity and standing that their issue purports — that is, that all parties connected with the railroad property understood them to be a first and superior lien on all the property in the hands of the receiver — the motion ought to be granted. The plaintiff, as trustee of the Central New York and Western Railroad mortgage, should be made a party to this action.

Motion granted.  