CENTRAL TRUST CO. 11. WABASH, ST. L. 01: P. BY. CO.
tion of the by congress is binding on this court, and therefore I must refuse this injunction, and sustain the demurrer to the bill, and dismiss it; and it is so ordered.
Co. and another
tl. WABASH, ST.
L. & P. Ry. 00.
(Circuit Oowrt, E. D. Misaoun.
EQUITY PRACTICE-INTERVENING JUDGMENT CREDITORS.
Where a small judgment creditor of a railroad, whose judgment was recovered before the appointment of a receiver, and who lives at a distance from the place where court is held. intervenes ina foreclosure suit against the road, he should be given the fullest opportunity of a hearing, and technical rules should not be enforced against him.
In Equity. Motion to set aside order confirming report of master on intervening petition of George Hamilton. James Carr, for intervenor. Wells H. Blodgett, for receiver.
BREWER, J., (wrally.) In the intervention of George Hamilton in the Wabash Case, it appears that a. year ago a petition of intervention was filed, which was referred to the master, and by him reported upon. The intervention was on account of a judgment agaiust the Wabash road, in one of the outlying counties, a short time before the appointment of the receivers. The petition was filed by counselliving in such county. Upon the filing of the master's report, which was adverse to the claim, the matter passed along without action until the fifteenth of March of the present year, when, through new counsel, without leave of the court, an amended petition of inter· vention was filed. Four days thereafter the report of the master was confirmed. Now, a motion is made to set aside that order of confirmation, and refAr the matter back to the master. Upon the hearing of this motion there was little or no discussion as to whether, under the amended petition, the petitioner would have any lien upon the corpus of the property prior to the lien of the mortgages, or even upon the earnings of the road; and I express no opinion as to whether he would have any claim based upon the facts as stated in his amended petition. have no question but that, technically, he is entitled to no further hearing in this court. He neglected to file any exceptions to the master's report; and yet it must be remembered that this claim
1Reported by Benj. F. Rex, Esq., oCthe at. LouiB bar.
comes from an outlying county, which had been placed in judgment before the court through its receivers took possession of this large property; and the court, dealing equitably with such interests as that, ought to give to everyone, especially to those holding small claims, and living at a distance, the fullest opportunity of a hearing, and not rigidly enforce technical rules against them. So it seems to me that it would be fair to make an order like this: that upon the payment of all the costs which have accrued in this intervention since the filing of the original petition, the order of confirmation be set aside, and leave given to file the amended petition, and the whole matter referred back to the master; and it will be so ordered.
H. & K. R. Co. 1
(Oircuit Oourt, E. D. Missouri. April 2,1886.)
Where, in a foreclosure suit, a cross-bill is filed by ajudgment creditor, insisting that though he has a junior title of record he has a prior equity, he must allege all facts tending to show that the mortgagee had notice; and where he fails to do so. and simply charges notice. it is sufficient for the mortgagee to deny notice, without going into particulars.
Where a person finds a corporation, organized under the laws of the state, in possession of a railroad partially or fully completed, he is justified in assum· ing that the company in possession is the only one that ever was in possession, or that ever did any work thereon, Or had any rights thereto, unless the record shows something to the contrary.
In Equity. Cross-bill of Josiah Fogg. Petition for rehearing. For report of previous opinion, see 25 Fed. Rep. 684. Theodore G. Case, for complainant. James Carr and Geo. D. Reynolds, for Fogg.
In the case of Dewitt C. Blair v. · Josiah
Fogg a petition for rehearing was argued the other day, counsel
claiming that there were two or three matters which the court did not consider-which, indeed, were not suggested to the court-and which justified a different conclusion. Mr. Fogg had, away back in 1870, a good claim against the St. Louis & Keokuk Railroad. That company, organized under a special charter, and having done some work, transferred all its property to the St. Louis, Hannibal & Keokuk Railroad, a company organized under the General Statutes.. In the instrument making the transfer, there was a stipulation that the new company should assume and pay debts to the amount of $19,000, which it is conceded covered the claim of Mr. Fogg. That inlReported by Benj. F. Rex, Esq., of the St. Louis bar.
Bum t1. ST. LOUIS, II... X. B. CO.
strument of transfer was never recorded. The new company finished the road, placed its mortgage upon the property, which mortgage was foreclosed in this suit. After years had passed Mr. Fogg commenced an action at law against the St. Louis & Keokuk Railroad Company, and obtained judgment. He followed that by a proceeding in equity against the St. Louis, Hannibal & Keokuk Company, and obtained a decree, charging this judgment against the new company. He now claims that this judgment is a lien prior to the mortgage, and counsel in the argument before me, on the petition for rehearing, contended that the old company, under its charter. had no power to transfer; that the new company took the· property subject to the debts of the old; and that the creditors of the old company can follow that property wherever they find it. All that, or at least the substance of it, was adjudicated when the decree passed against the St. Louis, Hannibal & Keokuk RailroaiL Then, he contends that the conditions of the transfer which were ehown in the conveyance, although not of record, were conditions which every purchaser from the St. Louis, Hannibal & Keokuk Railroad Company was bound to take notice of. There is not a syllable of testimony showing that there was ever of record l+nything indicating tbat the St. Louis & Keokuk Company bad done a particle of work, obtained title to a foot of ground for right of way, or other purposes, or had anytbing to do with the building of the road. All that the record shows is that the St. Louis, Hannibal & Keokuk Company, a corporation organized under the generalla w of the state, was, at the time of the mortgage, in possession of a road partially completed. Now, I do not understand that a party is bound to take notice of matters which are simply floating,-resting in parol. It is a common thing for more than one corporation to be organized for the construction of roads between the same te1'lllini. There are to-day two roads running between here and Kansas City, and I believe it is true there are two or three more· corporations orgaitized with a view to the construction of other roads between the same termini. If a party finds a corporation organizec1 under the III w of the state, in the possession of a railroad partially or fully completed, he is not bound to assume that there may be some other corporation, having like powers, which, prior thereto, was in possession or had rights therein. Unless the record in some way notifies him of the title of that other corporation, he is justified in assuming that the company in possession is the only company that ever was in possession, or that ever had done any work thereon, or had any rights thereto; and that is the record in this case. The other proposition of counsel is that, by the equity rules of pleading, Mr. Fogg was entitled to a decree. He claims that Mr. Blair in his answer only denied notice, and that that was not sufficient. When he claimed to be an innocent purchaser for value, without no. tice, he should have stated in his answer the mortgage, its date, thE! purpose, the contents, and the consideration paid; that the consider. v.27F.no.2-12
ation was paid in good faith, and when it was paid. As he was spe.. cially charged with notice, he should deny the circumstances from which notice could be inferred. I do not so understand the rules of equity pleading. Prior record title was in the mortgagee. Mr. Fogg comes in by his cross-bill and insists that though he bas a junior title of record he has a prior equity. Now, under those circumstances, it seems to me that it is for him to allege all the facts tending to show that the party having the prior legal title had notice, etc., and when he has done this, it is sufficient in the answer to deny, and not necessary to go further, and specifically allege all the matters above stated. These being the only grounds, I am compelled to overrule the petition for rehearing.
CENTRAL TRUST Co. v.
& ST. L. By. Co. (BORDEN and another,
(Circuit Oourt, E. D. Miaaouri. April 2, 1886.)
RUJ,ROADs-LTENS FOR MATERIALS-SECTION
3200, REV. ST. Mo.. CONSTRUED. Where articles are furnished a railroad comrany which do not pass into the structure of its road, they are not "materials.' within the meaning of section 8200 of the Revised Statutes of Missouri, and parties furnishing them are not entitled to any statutory lien on the road therefor.
A creditor of a railroad compan;v whose claim arose out of the sale of personal property to the company claImed. after the road was placed in a receiver's hands in a foreclosure suit. that he was entitled to a lien on the road prior to that of mortgage creditors for the whole amount due him. because, under the laws of the state. if the property had not been placed in a receiver's hands he could have seized and sold it under execution. Held, that he is only entitled to a lien for the present value of the property sold to the company.
In Equity. Exceptions to master's report. The facts concerning the intervenor's claim are sufficiently stated in the opinion of the court. The order of the court referred to below is to the effect that all persons who furnished the railroad company with necessary supplies within six months prior to the appoimment of the receiver shall be allowed a lien prior in right to that of mortgage creditors. Default in the payment of interest took place September 1, 1883. A receiver was appointed January 12, 1884. Charles G. B. Drummond, for intervenor. Phillips et Steteart, for receiver.
BREWER, J., (orally.) In the Texas tt St. Louis Railway Oase, intervening petition by Borden, Sellick & Co., the claim was referred to
Reported by Benj. F. Rex, Esq., of the St. Louis bar.
CENTRAL TRUST CO. tI. TEXAS & ST. L. BY. 00.
the master, by him reported, and exceptions to his report were presented. The claim amounted to $2,205.75. It was for scales, trucks, letter-presses, and things of that kind, which were sold and delivered to the road during the period between August 1, 1882, and January 4, 1884. The master reported in favor of the entire amount as a general claim against the road, and gave a lien prior to the lien of the mortgagees for $1,541.60, the price of the goods delivered after September 1, 1883; but declined to award a lien for the balance, $654.15, which was sold and delivered between August 1, 1882, and September 1, 1883, holding that it did not come within the orders of the court respecting claims for materials furnished; and the question nowl.ll'esented is whether the master erred in rejecting the claim for a prior lien for that balance. Two questions are presented. First. It is claimed that the goods thus delivered were lienable goods, and that under the railroad lien law of your state, although the goods, the trucks, scales, and letter.presses did not pass into the structure, yet, as they became a part of the permltnent equipment. they were within the scope of that act. The only difference of moment between the railroad lien law and the general mechanic's lien law is that in the former the word "fuel" is used, giving to those who sell fuel, as well as to those who do labor and furnish materials, a lien. Of course, fuel does not pass into the structure of the road, and, by reason of the use of that word "fuel," it is claimed that the intent of the legislature was to enlarge the scope of the word "material," and make it include anything and everything which passed, not merely into the structure, but into the permanent equipment. In the intervention of the Waters·Pierce Oil Company, in this same case of Central Trust Co. v. TexlJs « St. L. R. Co., reported in 23 Fed. Rep. 703, we examined that statute, and were of the opinion that such was not a fair construction; that although "fuel" was named in the statute as a matter in respect to which a lien might be claimed, yet it was not the intent of the legislature, by the use of that word, to enlarge the scope of the word "material," as used in ordinary lien laws. It is true that oil does not pa,8s into the permanent equipment, but is a matter for daily consumption; and counsel seek to distinguish this case from that, in that these matters pass into the permanent equipment. I do not think there is any reason to depart from the construction we then placed upon the statute, and must hold that the word "material" in the railroad lien law has no broader or other signification than in ordinary lien laws, and in them it is unquestioned that it includes only those things which pass into the permanent structure. Second. The other question is this: These articles were articles of personal property that passed into the permanent equipment. Section 16 of article 12 of your constitutwn ptovides that the rolling stock, and all other movable property, of railroads shall be consid-
ered personal property. Section 2353 of the Revised Statutes provides that personal property shall, in all cases, be subject to execution upon judgment against the purchasers for the purchase price, and shall not be exempt except in the hands of bona fide purchasers for value; and the argument which is made by counsel is very plausibly and forcibly pnt: That this personal property passed into the hands of the railroad company. It did not pass into the structure, but remained personal property. But for the action of this court in taking possession by its receivers, it could have been seized and sold on execution upon judgment rendered for this claim against the railroad company; and that as the court, by its action in seizing the property, has intercepted that remedy, equitably, it should now order payment out of the assets. Whatever force there might be to that proposition in some cases, I think here it is not applicable. All that could be claimed under those provisions, giving them full force, is that the specific property which passed into the hands of the railroad company should be liable to seizure and sale. For instance, if a locomotive was sold, that specific locomotive might be seized and sold in satisfaction of a judgment for the price, but no other permnal property could also, by virtue of these provisiqns, be seized and sold. Now, the testimony fails to show that this specific personal property remained in possession of the railroad company, and passed into the hands of the receiver. All that the testimony discloses is that whatever personal property the company then had did pass into the hands of the receiver. This property, as against which the master refused a lien, was sold and delivered months before. Knowing well the hard usage-the wear and tear-which such property in the hands of a railroad compauy receives, can it be said that we are to presume that all that property remained in existence, and all of it passed into the hands of a receiver? Further, property which is once used deteriorates in value; and, subjected to the hard usage which such property would receive in railroad use, would largely and rapidly deteriorate. If we look upon this as a claim for the en· tire $2,200, is it not fair to say that the value of the property remaining in the hands of the company, if it did remain, was not in excess of this $1,541 which was allowed as a prior lien? Would it be just to the other claimants-to others having secured liens or equitable liens-to give to this party, out of the assets of the company, Iull payment for their entire claim, as though that property still remained in the hands of the company in its original perfect condition, unworn and not deteriorated in value? I think not. It seems to me that all that equitably could be claimed, giving full force to the argument which counsel have made, is to sustain the award of a lien for over two-thirds, as has been given by the master; and that the exceptions to the report of the master should be overruled, and the report c·onfirmed.