
    The Central Trust Company of New York, Plaintiff, v. The Unadilla Valley Railway Company et al., Defendants. Matter of the Application of Frederick De Coppet and Others to Intervene in the Above-Entitled Action.
    (Supreme Court, Onondaga Special Term,
    July, 1901.)
    Foreclosure — Default caused by alleged tort of those controlling the (railroad) property — Protesting bondholders, not parties, permitted proof before a referee to compute.
    Allegations upon the part of holders of railroad bonds, secured by a trust mortgage in process of foreclosure, to the effect that foreclosure was made necessary because persons, controlling the road and substantially all the other bonds, failed to pay the interest and that they had so failed because they had improperly diverted the funds of the road, are insufficient to prevent a reference to compute the amount due, on default made, but the court permitted such holders, although not parties, to appear on such reference and give evidence in support of their contentions and also directed the referee to report whether, in his opinion, a wrongful diversion of the funds of the road had caused the foreclosure.
    Morrow for an order of reference upon default, to compute amount due upon the bonds. Application by petitioners for leave to intervene and defend.
    Butler, Notman, Joline & Mynderse, for plaintiff.
    H. V. N. Philip, for petitioner de Coppet.
    Edward M. Wells, for petitioner Henry H. Cooper.
   Hiscock, J.

This is an action to foreclose a mortgage made to secure certain bonds of the above-named defendant. Two motions are before me. One is by the plaintiff for an order of reference upon default to compute the amount due upon the bonds, etc. The other is an application in behalf of the above-named petitioners for leave to intervene and defend in this action. Various grounds have been urged why the latter motion should be granted. One of the petitioners owns a large amount of the bonds secured by the mortgage of which foreclosure is sought. The other petitioner owns a substantial amount of the income bonds issued by the above-named defendant. The only proposed defense in regard to which, in my judgment, it can be said that any substantial or definite evidence has been given upon this motion is the one that the people. in control of the affairs of the defendant railroad, and who own substantially all of the other mortgage bonds, have improperly diverted the funds of said road, which should have been applied to-the payment, of installments of interest, thereby causing the default and foreclosure in question. I do not intend to indicate that any such condition of affairs has been established to my satisfaction upon this motion. I have concluded, however, as a condition of denying the motion of petitioners for leave to intervene and defend herein, to grant then? the right to appear by counsel upon the reference to compute the amount due upon said bonds, etc., herein asked for, and give evidence upon said subject, and to have the referee appointed to compute the amount due, take such evidence and any offered in opposition thereto, and report, with his opinion, whether there has been any such diversion of funds which is responsible for the default complained of herein. The motion of plaintiff for an order of reference, therefore, is granted, and the application by petitioners for leave to intervene and defend herein is denied upon such condition, that said petitioners have leave to so appear upon said reference and that said referee be authorized and empowered, under the order, to take evidence upon such issue and ■ report thereon, with his opinion. In case the parties opposing the application of the petitioners for leave to intervene herein, who are not in default, refuse to consent to such condition, then the motion' for an order of reference is denied and the application of petitioners foi leave to intervene and answer herein is granted.

In case the parties are unable to agree upon thfe form of order herein, it may be settled upon one day’s notice, at any time on or before July 11, at my chambers.

Ordered accordingly.  