,'.. I.'
:';t}"'.:
FE;J)ERAL R);jPORTER t vol.
42.
certHicates must take . They cannot be allowed ae claims against the receivers, alHl given them over the mortgage , bonds. Theppsitiou: ta]{en by counsel, that the claims for materials, supplies, and labor furnished the defendant company. before the appointment of receivem hll.ve, under ihegeneral principles of equity, a preference given them oyer .the lien of the mortgage ,cannot be sustained. This been :applied to mining or manufacturing companies. doctrine has It is, owing to the quasi publi(l such companies, confined to railroad corporations. 'rhis. question was thoroughly and ably argued before this court in the case of Seventh Nat. Bank v. Shenan'floah Iron 00., 35 Fed. Rep. 438, 439. The court has found no reason to change its decision rendered in that and deems it unnecessary to repeat the vieWill therein ,expressed. Adl;lcrl;le will be entered in accordance with the opinion qere expressed. ','
KNox etal.
tI. COLUMBIA. LIBERTY IRON Co.
(Circuit COUTti W. D. Virl11,n'la. July 19, 1889.) 1. J;tEREA,BlNa-FINli, DEOREE. I
2.
Where a decree declaring the lien of certain labor and supply claims to be superior to that.o.f .mortgage bondholders was. fOU. n.ded. upon Acts Va. March 21, 1877, and . April 2; 18711, which were in contravention of the common law and which have since beeu declared unconstitutional by the court of appeals of Virginia, (Fidelity Ins.· etc.. Co.·v. Shenandoah Val. R. Co.,.9 S. E. Rep. 759,) a rehearing will be ,granted., ita,ppears that no ftnaJ. decree has been entered. "
s: FINAi. DEoBEE. "
.. . "The existence of the above facts presents a question of error on the face of the record, and" w1J.ere a fl.nal dlloree has been, entel'ed the petition for rehearing will be treated as a bill of review. A decree.of sale entered by consent of parties pending,a reference to settle the '. reooiver'sSCCllQpts. while the priority of certJUn liens claimed were undetermined, . and before any'dtstributilln was ordered among ante-receivership creditors, was not a finaJ.decree. . '
a.UI:E-BI1.LOF REVIEW.
In, Equity. On, petition for rehearing. G.R. Cqlveriand E. S. Conrad, for petitioners. H. C. AUen"and .J. E. Rolter,for labor, supply, and other creditors. ! ! j:
. bill in this case was filed June 10,1886, praying the appointment ,of a receiver who should continue and operate the business of the defenda,nt, subject to a. mortgage executed November 1, 1884, to secure the paymE\nt of certajJ;l. bonds of the company which, the petition. erS allege, 'WeJle issued for tbepl.lrcbase price of the property in the bill .OQJune.lO, 1886, receivers were appointed. On, October l4, 1886, ,tbe'c8,use was referred .to a waster to ascertain and report, in their orller of priorities, the debts against said company. After anum· b,er of thereto, and recommittals, the court, by de-
K!wi fl.
COLUMBIA LIBERTY IROlt
co.
379
(}rees of Septeniber 8,1887, and October 14, 1887, confirmed the master's reports filed' Attgust 13, 1887, and September 24, 1887, overruled the exceptions filed by the bondhGlders to said reports, and by consent Df parties entered a decree'of sale, In the master's reports, as confirmed, priority is given to certain labor j;tnd supply claims, contracteu by the (lompany before the appointment of the receivers, over the bonds secured by the mortgage. This priority was, in accordance with the provisions ,of two acts of the general assembly of Virginia,approved, respectively, March 21, 1877, and April 2, 1879. Since the entry of the decrees of September 8 and October 14, 1887, in this cause, the Virginia Statutes giving labor and supply claims a priority over the liens of the mortgage bondholders have, as to supply claims against railroad corporations, been declared by the court of appeals of Virginia to be unconstitutional, as in violation of article 5, § 15, of the constitution of Virginia. Fidelity Ins., etc., 00; v. Shenandoah Vctl. R. Co., 9 S. E. Rep. 759. And this court has also, after full argument, in Fidelity Ins., etc., do. v. Shenandoah Iron Co., ante, 372, decided the act of April 2, 1879, to be unconstitutional as to both labor and supply claims against mining corporations. It is in vieW of these decisions that these petitioners ask leave to file their petition to have this cause reheard, and the decrees of September 8 andOetober 14,1887, reviewed and reversed. Objection to the filing of the petition is made by counsel of the holders of labor and supply clalins on the ground that the decree of sale entered October 14, 1887, under which decree a sale was made, and which sale has been confirmed, was a final decree, and that, under the provisions of rule 88, equity practice, a petition for a rehearing cannot be filed. If the decree of sale is to be regarded as a final decree, this position is correct. But is it a final decree? As clear a definition of a final decree as I have found is given in Scott v. Hore, 1 Hughes, (U. S.) 163-168. In that case, HUGHES, J. says: ..A final decree is one which fully adjudicates the questions of right and law involved in a cause, and proceeds to prOVide with reasonable completeness for the execution of such measures as may be necessary and proper for placing successful suitors in possession of the rights decreed to them." In the cause in hearing, the legal rights of all the suitors have not been adjudicated. There are pending and undetermined at least two petitions of creditors who claim that their debts are, under the 'Virginia statute, of superior dignity to the lien of the mortgage bondholders; and there is nothing in the proceedings in this cause barring their right to assert their claims. The decree confinning the sale of the property refers the cause to a master to settle the accounts of Jacob Whissler, the receiver in the cause. No order for distribution of the proceeds haB been made except as to the cash payment, out of which the receiver is directed to pay the costs of suit and sale, and a portion of the debts contracted during the receivership. No decree has been entered for distribution,among the autd-receivership creditors. The fund is under the control of the court. The special receiver is directed to collect the deferred payments, and hold the fund subject to the future order of the court. No final
FEDERAL REPORTER,
vol. 42.
for a distribution of the fund until the rights of all the claimants thereto are heard and determined. Under this condition of the record, the court is of opinion that no final decree has been en· tered in the cause, and that all the orders and decrees entered are interlocutory. But, ifit could be conceded that the decrees of September 8, and of October 14, 1887, are final decrees, the court is of opinion that the petition can be treated as, and in fact is, a bill of review for errors apparent on the face of the record, and might be filed as such. The recent de,cisions referred to as deciding that the statute giving labor and supply claims the priority over the lien oCthe mortgage bondholder is unconclearly present a question of error on the of the record. Another question arising upon the record, and one not heretofore argued before this court, is the of the vendor's lien ,claimed by the mortgage bondholders upon the furnace property, and that the provisions of the Virginia statute, giving priority to labor and supply claims callnot impair the security given by a vendor's lien for purchase money. If the court should refuse to allow the filing of the paper offered as a petition for a rehearing, it could certainly be filed as a bill of review, and the samequestions would come before the court that are now presented if considered as a petition to rehear. The limitation for filing a bill of review has been fixed ,. at two years, by analogy to the time allowed for an appeal. Ensminger v. Powers, 108 U. S. 292, 2 Sup. Ct. Rep. 643 t Clark v. Killian, 103 U. S. 766. The proceedings in this case are all interlocutory. The lien of the labor and supply creditors exists, if at all, under a special statute at ,:variance witp the common law, and upon the validity of which the cOurt must, directly or by implication, pass, in the final decree. Since the Jendition of the decrees complained of, the highest state court haA declared the statute upon which the lien rests, or out of which it arises, to I>e invalid because unconstitutiopal,and federal courts will judicially notkeand accept such decision. Town of South Ottawa v. Perkins, 94 U. S. 264:; State Railroad Tax Cases, 92 U. S. 575; Randnll v. Brigham, 7 Wall. 523. In this stage of this case, the question of the constitutionality of the state statutebeinp; squarely raised in the paper, leave to file which is asked, whether treated as a simple petition to rehear, or as a bill of review, the court, being unable to find anything in the interlocutory proceedings heretofore had which should compel it, in the final decree to be hereafter rendered, to withhold the fund from those entitled, or to give it to those who are not entitled, will consider the constitutional question. The petition to rehear will be filed, and an order entered a.warding process requiring the proper parties to answer it.
BAY 11. HALLENBECX.
881
RAY'. HALLENBECK
et aZ. '
(OirC'Uft Oourt, E. D. New York. April Term, 1890)
L
:MORTGAGES-CONSIDERATION-RELATIONSHIP.
The relationship exil:Sting between father and daughter is su1ncient to uphold a mortgage given by her to him as security for her deceased husband's debts, though they could not have been enforced as against her. On foreclosure proceedings, testimony by the daughter that she handed the mortgage to her mother, who occupied rooms in her house with the father, and that she afterwards saw it in a bureau drawer in their room, shows that she intended the mortgage for the father; and, as it reached and was accepted by him, the transac· tion constitutes a delivery to the father. The mortgage, though unrecorded when the daughter made a voluntary convey. ance of the premises to her second husband, who had, however, theretofore discharged an attachment against them, is entitled to priority over the conveyance, but subject to the amount paid on the attachment.
S.
BUI'Jl-DELIVERY.
I.
SAME-PRIORITIES-RECORDING.
In Equity. On bill to foreclose. W. M. Safford, for complainant. Joseph A. Burr, for defendants. WHEELER, J. This suit is brought to foreclose a mortgage of $4,825 made by the defendant Annette M. Hallenbeck, daughter of the oralor and wife of the other defendant, November 16, 1882, and recorded June 17, 1887, on a house and lot in Brooklyn conveyed to the other defendant April 23, 1883, by deeds recorded May 5, 1883. The defendants deny consideration for, and delivery of, the mortgage, and validity of it against the prior recorded conveyances.' A former husband of Annette M. Hallenbeqk owned the premises, and conveyed them to her. He owed the orator $3,000 or $4,000 in notes, and another debt of about $1,200, and died leaving Httle personal estate. She was administratrix. The orator insists that she promised to pay his debt if he would not pursue the estate; that she has paid many small sums upon it; and that this mortgage waS! given for the balance, and he supposed recorded at the time, and soon after was delivered to him. The premises were attached in a suit upon her notes given for the other debt. She insists that the small Bums were filial gifts for the comfort of her parents, and that the mortgage was suggested by the attachment as a security for their support, and was given for that purpose only. Letters from her, sent with money, show it was paid under what she deemed to bean obligation, rather than sent as a free gift. The orator's testimony, with these letters, and the fact of the making of the mortgage, overcome the answers, and make out satisfactorily that the debt of the former husband, and her situation in respect to it, were the consideration of the mortgage, which the attachment of the premises prompted at that time. The counsel for the defendant argues that the mortgage would be mere security for a debt; that she would be under no obligation to pay the debts of her former husband; and that her promise to. pay it, or note or for them, would be without consideration and void, leaving bond