BILES V. CASE.
out of the same transactlOn. In this or some other way the statesmen of the two countries, whose interests and objects in this matter are identical, could surely devise means which, while the right of asylum would be sufficiently prote3ttld, would at the same time prevent that right from being so used as to afford immunity for crime. , Demurrer overruled.
and others v.
(Oircuit Oourt, E. D. Wi8con8zn.
RAILROADCOMPANy---DEFAULT IN PAYMENT OF MORTGAGE DEBT.
No relation of principal and agent,either in law or equity, is implied from the mere fact that the railroad company continues to operate its road after default in payment of the mortgall:e debt, nor from the further fact that the , bondholders did not take possession after such default, nor from both facts combined. 2. SAME-RECEIVER-PRIORITY OF' CLAm TO NET EARNINGS. A cause of action against a railroad company for damages for the destruction of property along the line of its road, by fire escaping, from defective locomotives, is in no proper sense to bfil considered such a claim as to constitnte part of the operating expenses of the road, and is wholly unlike claims for supplies, new equipment, right of way, and new construction, or any claim falling legitimately under the head of operating expenses, which are sometimes ordered paid from the net earnings in the hands ofa receiver, as presenting eqUities superior to those of the bond-holders.
George II. Noyes and G. C. Prentiss, for petitioners.
W. C. Larned and T. G. Case, for The petitioners above named have presented petitions for the allowance of claims to a large amount against the reoeiver of the Gl'eenBay& MiilDesota Railroad,who is operating the road undllr the direction of this court, pending the foreolosure of 'certain mortgages upon the property, which demands are for los:!! and dam-. ages claimed to have been sustained by the petitioners in the destruc.. tion of timber and cranberry marsh,along the line of the roltd, by.fire lllleged to have been set by sparks escaping from defective'locomotives. . By suitable and separate allegations it is charged tha,t the fires which caused the damage occurred on different days, in different years, and it is thus made' to appear, in eaohof the' petitions,that one, of these fires occurred on the seventh day,of September, 1877, which was more than four months before a foreclosure of the mortgage in suit was commenced, and before a receiver was.
DYER, D. J.
To such parts of the petitions as thUBj all,ege, as causes against the receiver, lOBS and damage by fire while the road was being operated by the railroad company, and before it passed into his hands, the receiver has demurred, and the demurrer raises the question whether such claims can be allowed or entertained against him or the property which he has in charge for the bondholders, or against any party other than the railroad company, by whose negligence it is alleged the loss and damage were occasioned. In Hale'v. Frost, 99, U. S. 389, it was held that the net earnings of a rai.lroad, while it is in the possession of a receiver appointed by the court, may be applied to the payment of claims having superior equities to those of the bondholders. To sustain the claims in question, it is therefore necessary that some equity be found in favor of the petitioners, and superior to that of the bondholders, upon which to base their allowance j and the supposed equity is that the fire in question occurred after default on the part of the railroad company in payment of the mortgage debt or interest; th"at thereafter the companyoperated the road as the agent or trustee in equity of the bondholders, and that the alleged liability sought to be enforced in the present proceeding arose from such operation of the road, and as an incident thereto j that therefore it be put under the head of operating expenses, and so acquire rank as, a claim enforceable against the earnings of the road in the hands of the receiver. There is some plausibility in the argum.ent, but it is unsound. No relation of principal and agent, either in law or equity, can be implied from the mere fact that the railroad company continued to operate the road after it was in default in payment of the. mortgage debt, nor from the further fact that the bondholders did not take possession of the property after such default, nor from both facts combined. The mortgages gave to tbe mortgagees the right to take possession after default, but they w&re not obliged to do so, nor was it necessary that they should take possession in order to avoi!'l such a liability as is here claimed. The railroad company was operating the. road when the alleged loss and damage occurred. The negligence of the company, if there was negligence at all, occasioned the loss. For that negligence it alone was responsible. To susta.in the position taken by the petitioners it must be held that.the bondholders llit least impliedly llissumed liability for the negligence· of the railroad c,ompany, and that by operation of law this mortgage security was subordinated to claims of the character of these. I cannot so bold. The alleged cause of action accrued after the company had given mortgages upon all its property, which were
RIGGlE V.JAMERWAN LLOYDS.
t!len sUbsisting liens, and before the receiver Was appointed. It can make no difference 'that they accrued-after the company was in default of payment of on its bonds. The road was still being operated by the company, and whatever liability existed must have been one against the company alone. In no just or proper sense could such olaims as these be oonsidered as part of the operating expenses upon whioh the petitioners could assert a. right prior to that of the mortgagees. They'are wholly. unlike claims for supplies, new equipment, right of way, and new oonstruction, or any claim falling legitimately under the head of operating expenses, whioh the court sometimes orders paid from net earnings in the hands of a reoeiver, as presenting equities superior to those of bondholders. If such claims as are here in question could be allowed, there would seem hardly to be a limit to the allowance of demands which it might be as foroibly argued were superior in their equities to those of the seoured oreditors, but which oouldnot be allowed upon any solind prinoiple of equity, nor without substantially impairing, and perhaps destroying, an otherwise valuable security. The demurrerto suoh parts of the petition as state causes ofaotion against the railroad oompany, accruing prior to,the appointment of the receiver, is sustained.
(District Court, N. D.lllinois., NovemberG,1882.)
MARINE INSURANCE-REPRESENTATJONS-As PART OF CONTRACT.
A positive representation as to a material fact is as essentially a part of contract as a warranty, and must be suhstantially true, or if untrue it will operate as a release of the obligor thereunder. . ..
MARINE RISK-POI.ICY, WHEN VOID.
On a voyage policy of insurance whereby the underwriters assumed to insure the freight list of a vessel" lost or not lost" for a voyage at sea, tbe condition of a vessel in respect to her seaworthiness; at the tillie of the commencement of the risk, is a material part 'of the contl'act, and a 'misrepresentation in this respect will reuder. the policy void.
There is an implied warranty of seaworthiness at the time of the inception of the risk in case of a marine insurance, and where a vessel encountered no extraordinary peril, and no gale or storm which would have imperiled a stanch, strong vessel, and she rolled heavily upon the waves produced merely by.trado at the commencement of the winds, and leaked badly, her voyage will be presumed, and unless rebutted by evidence the contract of insurance is void.