GEORGE V. ST. LOUIS CABLE &; W. RY. CO.
117
said date staying proceedings i,n said cause, so far as they should affect said Downs, be vacated, and that 'the said Downs be ordered to plead, answer, or demur to said bill of complainant within 20 days from this date.
GEORGE
et al. v. ST.
LoUIS CABLE
& W. Ry. 00.
(Oircuit Court, E. D. Missouri, E. D. September 28, 1890.)
1.
CREDITORS' BILL-DISTRIBUTION Oll' PROCEEDS-LIEN Oll' TAXES.
Where the federal courts have appointed a receiver of tho property of a judgment 4ebtor in Missouri, and have ordered the property sold, and the receiver has been in possession thereof during the time when a levy might have been made thereol!l ; for taxes on the personalty, the court will direct the payment of such taxes out of the proceeds of the sale in preference to all other claims, though the sale was ordered to be made "subject to all liens for taxes," as taxes on' personalty are not a lien thereon until levy under the tax-bill, in Missouri. But as the state has a paramount lien for taxes on realty, and the sale was subject thereto, such taxes will not be ordered paid out of the.proceeds.
2.
SAME.
8.
SAME-WHO MAY SHARE IN :PISTRIBUTION.
Where the proceeds of a sale of a debtor's property on judgment creditors' bill are insufficient to pay the judgment creditors, and there has previously been no application to the payment of judgment creditors of any of the debtor's property which should have been applied to the payment of open accounts, the holders of such accounts cannot participate in the proceeds of the sale. Where a bill to reach property which cannot be effectively reached at law is filed by certain judgment creditors for the benefit of all judgment creditors of defendant. and no order is made requiring others to intervene by a certain time or be barred of their rights, all judgmeut creditors who choose to intervene may share ratably with complainants in the proceeds of a sale of the property, even though some do not intervene until after the interlocutory decree ordering the sale. lt does not alfect the right of snch subsequent intervenors to share ratably that the bill prays that after a sale the proceeds may be distributed among the persons in whose behalf the suit is brought "according to their respective rights and equities, "where the original complainants and prior intervenors had no prior lien on' all the property sold when the bill was filed.
4.
SAME-INTERVENTION.
.5.
In Equity. On the 17th of October, 1889, three non-resident judgment creditors .of the St. Louis Cable & Western Railway Company filed a bill in behalf .of themselves and all other judgment creditors against the railway company, to obtain the appointment of a receiver of the judgment debtor's property, and a decree for the sale of the same for the payment of their debts, according to the respective rights of the several creditors, as they might be adjudged. The bill stated, in substance, that the defendant companyowned a railroad extending from a point within the city of St. Louis to Florissant, in the adjoining county of St. Louis; that it was largely in,debted and insolvent, owing, among other debts, a debt of $1,000,000, which was secured by a mortgage lien on all of the defendant company's rights, property, and franchises; that the complainants had no adequate Ie;gal remedy to reach and sell the property of the company, because its road, was located partly in the city and partly in the county of St. Louis, 81ld,
118;
DDERALItEPORTER,
vol. 44.
under th4daws ofthestate, could only be sold as an entiretY';and:that an execl1tion sale, if attempted,would not convey a valid title toa large portioiH:>f the property. A receiver Was appointed; as prayed for, to take possession of the property on the day the suit was filed. The case' was brought to a hearing on bill and answer at the last term of court, and on the 24th of April an interlocutory decree was entered, directing a sale of all the defendant's property, subject to the lien of all existing thereon" and also "subject to all liens for taxes." By the terms of the decree, judgments to the amount of $255,214.75 were duly the agestablished valid debts of the defendant company; that gregate amount of the claims of all creditors, including the original complainants, who had maje themselves parties· to the suit prior to the inwrlocutory decree. The court reserved to itself, however, the power, by further orders or decrees thereafter to be made, to determine all questions of priority, and all questions respecting the distribution of the fund that might be realized by the sale. The sale took place on the 20th of last June, and realized 8150,000. After the entry of the inter10cutQry decree direqtinga sale, other judgment creditors of the railway company, owning judgments to the amount of about $20,000, filed intervening petitions in, the cause, and asked to participate in the proceeds of the sale. Three of the petitions last mentioned were not filed until and the!>El represent judgments to the amount of $7,000. after In addition to the judgment debts heretofore mentioned, there are now on file a ,number of unliquidated demands against t)le defendant comsomething over $5,000. These demands, resting on pany, open a<lcounts against the company, were filed in this court, accompanied byintllrvening petitions praying an allowance and payment of the same, at various dates, both prior and subsequent to the interlocutory" ," The collector of the revenue for the city of St.Louis, on May' 6,1890, also presented an petition, founded upon two taxthe defendant company,for taxes assessed against it for the year 1S89. One bill is for taxes on personal property, and is for the sum of $2,138.82. The other bill is for taxes due on realty, and is for the sum of $1,430.06. Several questions touching the right of these several classes of claimants to participate in the distribution of the lund realized by the sale of the defendant's property have been heretofore ar, guedaud are now to be determined. Lee &- Ellia and SmiJ.h &- Hams(nl, for complainants. Laughlin <to Kern, for defendant. Hitchcock&- Pinkelnbutg, S. P. GaU, David Murphy, O. B. Givens, Ra8- . rieur cfcSchnurmacher, and E. a. Kehr, forintervenbrs.
THAYEfl.,J.,(ajterstaftirlgthejact8as above.) 1. The first question in order isw-he-ther the state should be allowed a priority for either or both It seems to be the law in Missouri that for taxes asof the sessed on personal property the state has no lien on the property until an actual levy has been made under the tax-bill. A sale made by an owner of personal propertyaIter taxes have been assessed against the same, and
GEORGE fl. ST. LOU,IS .CABLE .\ W.RY. CO.
119
prior to a levy, passes·" good title. to .the vendee, uninoumbered by lj. State v. Goodnow, 80 Mo. 271; Greeley v. BanJc, 98 Mo. 460, to taxation, 11 S. W. Rep. 980. Such being the local law with it follows that the provision of the interlocutory decree directing a sale to be made "subject to all liens for t.axes" is no, obstacle in the way of allowing the state a priority as to the, tax-bill against for as to fiuch property there was no lien at the time of the sale; ancI, because the purchaser took the personal property unincumbered by a tllx-lien, the state in all probability will lose the bill,uQless the court directs its out of the proceeds of the sale. Inasmuch as the rOO(liver appointed in this ('.ase had possession of the, property on account pfwhich the .was imposed during the period within which the coUec.tor might hayernade, and' p!,"Ohablywould have made, a le,vy but for the exist,ence ()fthueceivership, it is plainly the duty of court to see that the taxis paid in preference to all otherdernands. The billa-ga.inst appojptrnentofa receiver and sale pf property by a decreeo.f ;thiscourt, in a caeeof this character, will not be allowed to interfere with or to de.rea-tthe collection of the public revenUe. T1;le bill against personalprpperty will therefore be paid. ,, The..tQ-bill against real estate, as to which the f!tatt) has alien para,mount to all other liens, stands on a verydifferentfooting. 'l,'he ,property,:was sohi on the express conditiopstated in the decree,-thatpurtake "subject to aU tax.liens." Bids wel'ello withl'eference to that pt:ovisjon of the decree, and an order made. at this in questipn out pi the. pr()time; dirllcting the payment of the ceedsQf the sale, would, in effect, change the termljof the, ,sa,!e·... The proceedings in this court have not interfered with the <;qlleqtion of the bill by or in any manner impairedJts securitYJor the 'f,hich is stillample to insure payment.. Under the tionrests on the court to direct the payment of the tax-bill agaillstrealty out·ofthe proceeds of the sale, and the collector w.ill accordingly be left for that bill by. the usual to enforce t11.e lien of 2. Tbe next question to be answered is whether persons who have intervened on ,open .accounts against the railway company, either.prior or subsequent to the interlocutory decree, are entitled to participate in the distribution of the proceeds of sale, the fund being inadequate to pay even the judgment creditors in full. The bill. in this, .case must be classified as a judgment creditors' bill" to reach. property. that eitbElr could not be reached by execution at law, Qr that.could not be seized ancieold under such process, so as to realize the fullvalueofthe judgment debtors' interest. The fund in court, therefore, is not such a fund as is technically termed "equitable assets," and as to which the that uequality is equity." T'fUBt 0J. v. Earle, 110 U. S. 710-:717, 48up. Ct. Rep. 226. . '" '.' 1 understand the doctrine to be. well settled that the, holdElr of; an .unnot to:Judg. liquidated legal demand........that is to say., a ment.....-cannot maintain such .a bill as t4is, and in &ncb a,proc,eeding until hisdelUand is reduced .. , A: pq1,ut
120
FEDERAL REPORTER,
of equity requires the validity and amount of a purely legal demand to be established by a suit at law, before lending its aid to reach property of the debtor; that cannot be effectually reached by execution or attachment. Martin v. Michael, 23 Mo. 50; Dunlevy v. Tallmadge, 32 N. Y. 459; Turner v. Adams, 46 Mo. 95; Webster v. Clark, 25 Me. 314; Dodd v. Levy, 10 Mo. App. 122,123; McDermutt v. 'Strong, 4 Johns. Ch. 687. There are one or two exceptions to the rule, covering cases where a creditor for any reason cannot sue at law; but the exceptions to the rule are unimportant so far as the case at bar is concerned. It is not· apparent to the court that the claims now under consideration derive any support from the doctrine announced by the supreme court of the United States ina series of cases beginning with Fosdick v. SchaU, 99 U. S. 253, and ending with Kneeland v. Trust Co., 136 U. S. 89, 10 Sup. Ct. Rep. 950. As already appears, this is not a bill by bondholders to foreclose a mortgage covering the entire property of a railroad company,and all of its future acquisitions of property, as well as the net income of the company. The case shows no application of earnings by the defendant company to the payment of claims of judgment creditors, that should of right have been otherwise applied to the payment of the demands now on file. There has been no diversion of funds, such as a court of equity can remedy by using the funds in its hands to pay such demands. The fact seems to be that all the claimants stand on the same plane, save that some have been more expeditious in reducing their claims to judgment. All the that are liquidated and those that are for money or materials supplied to the railway company to enable it to operate its road and discharge its duties to the public. IIi cases like the one at bar, where the aid of a court of equity is sought by judgment creditors to reach property that cannot be reachect by execution, the court does not proceed, when the property is in its hands, to distribute it ratallly among all classes of creditors. On the contrary, it follows the law, and recognizes the priority that those judgment creditors who have moved in the cause would have obtained by the levy of an execution at the time of filing the bill, if no obstacles had stood in the way of the levy of such process. The filing of a bill by judgment creditors has often been termed an "equitable levy," entitling those who file the bill to priority. Trust Co. v. Earle, supra; Pullis v. Robison, 73 Mo. 201; Rappleye v. Bank, 93 Ill. 396; Gordon v. Lowell, 21 Me. 251; Miers v. Turnpike Co., 13 Ohio, 197; Jones v. Arkansas, etc., Co., 38 Ark. 17; Edmeston v. liyde, 1 Paige, 637; Sage v. Railroad Co., 125 U. S.379, 8 Sup. Ct. Rep. 887. I conclude, therefore, that the claimants on open account are not entitled to participate in the proceeds of the sale, inasmuch as the fund is insufficient to pay the judgment creditors. 3. The remaining question to be disposed of is one that arises between the judgment creditors themselves.. The original complainants concede, or rather consent, that all judgment creditors who came in prior to the interlocutory decree, and whose judgments were established by that de-
GEORGE 'lJ. ST. I,OUIS CABLE & W. RY. CO.
121
cree, ma.y participate pro rata in the distribution to beorderedj but they contest the right of those judgment creditors to participate in the distribution who did not come forward until the right to relief had been established by the interlocutory decree. In the case of Trust Co. v. Earle, supra, a judgment creditor filed a bill to obtain a sale of the judgment debtors' equity of redemption in certain land, which, by the law of Maryland, could not be levied upon or sold under execution. Subsequently, and after an interlocutory decree had been entered, another judgment creditor intervened in the cause, and claimed the right to an equal participation in the proceeds of the sale. The right in question was denied, the court holding, after a very full review of the authorities, that the first creditor was entitled to priority. This case fully sustains the contention that those judgment creditors who did not come forward until a decree was entered cannot share ratably in the distribution of the fund with those creditors whose judgments were established by the decree. It is true that the bill recites that it is filed in behalf of the three original complainants, and all other judgment creditors, but this recital cannot be fairly construed as a consent that parties may come in at any stage of the proceedings, even after a decree establishing the complainants' rights, and share equally in the fruits of the litigation. Edmeston v. Lyde, supra. Upon the whole, I conclude that those creditors whose judgments were established by the decree are entitled to a priority. From what bas been heretofore said, it follows, also, that the St. Louis Ore & Steel Company is not entitled to any preference over other judgment creditors whose demands were established by the decree. An order of distribution may be prepared, in accordance with these views, and, if deemed necessary, a reference may be made to a master to apportion the fund, and compute how much is due to each creditor after payment of all costs.
ON REARGUMENT.
(November 24, 1890.) THAYER,
foregoing opinion has been reargued. In behalf of those judgment creditors who did not intervene until after the interlocutory decree had been entered, it is strenuously contended that they have the right to share in the distribution of the fund on an equality with those who intervened prior to the decree. Many authorities are cited and relied upon, particularly Jones v. Davenport, 19 Atl. Rep. 22, and Johnson v. Waters, 111 U. 8.640,4 Sup. Ct. Rep. 619. Both of the cases last mentioned were bills filed by creditors of a deceased person against his executor, to obtain payment of their debts out of the estate of the deceased. Incidentally, the bills prayed to have certain fraudulent conveyances set aside that had been made by the deceased in his life-time, or by the executor subsequent to his death. But in both cases the object of the complainants was to obtain an account and dif:;tribution among creditors of
J. The question considered in the third paragraph of the
propE1l1i 'properly belonging to ,a dead man's esta,te, anel liable for the, payment of his debts; hence, each proceeding was a 'fcreditors' bill," termed, and was so treated by the court. 1 Story , Eq. Jur. §§ 546,547. When an estate is administered in chancery, as they were formerJyvery frequently administered by means of a "creditors' bill," creditors uhdoubtedly had the right to come in after decree, and prove their demands, and share ratably in the distribution of the fund. The usualfol.'I)'J of decree in such, cases required the master "to take an account :ofall al;1sets, (quod computet,) and give notice to all creditors to comeirlllrid prove their claims,"(Id. §548; 2 Daniell,Ch. Pr.1203, 1204;} andiilsuchcases all creditors proving their claims were paid ratably out 6f the discovered and taken into the account,after prior judgment \tete satisfied. The decree in such suits was regarded as a decree for the: benefit of all creditors, and in the nature of a judgment for all who subsequently proved their debts before the master. Vide TlwmpsCYn v. Johns. Ch. 620, where this subject is fully discllssed. In that clli.Ss of c,ases it sometimes happened that creditors not guilty of negligenbe or laches were allowed to come in and prove their demands; evenaftet the' time limited by the notice to prove claims had expired, if any part of the fund for distribution remained in the custody of the Alexander, 3 Russ. 130; 2 Daniell, Ch. Pr.1205. Counsel for intervenors also cite and appear to rely upon the cases of WiUiams v. Gibbe.a, 17 How. 239;andhl re Howa1'd, 9 Wall. 175.' In the first of these (}ases, neither of which were oreditors' bills, it was held, in substance,that after a court of equity by final decree has apportioned a. fund belonging to several persons in common, among those supposed to be entitl,ed to it, other persons having an interest in the fund, who were not parties to the original suit, l'.nd havanot beE:n guilty of negligence ox: laches, 'may maintain a bill against those who have received the fund, to recover their share; and in Re Howard, where a fund had Leen apportioned by a final decree, and other persons then filed a bill claiming a share of the fund, it was held that, inasmuch as the fund had not been actually distributed prior to the second suit, the court might properly suspenqthe execution of the first decree, although it had become final, until the sedond suit had been determined, and the right of the complainants 'therein had been adjudicated. Some other cases have been cited, thatarose under acts for liquidating the affairs of insolvent banks and insurance companies, which are not deemed important. Now it is true, as has been urged, that the suit at bar is not a crE:ditors' bill, but is a proceeding by judgment creditors to reach property that either could not be reached at all, or that could not be effectively reached by execution at law; and, in such cases as is sufficiently shown by autnbritiesheretofore cited, the filing of a bill is an equitable levy, and entitles the complainants in whose behalf such a bill is first filed to a priority. I have no doubt that the three complainants by whom the bill in this'· case, was filed might have ,secured a priority by filing the same for theli'own benefit; but they did not do so. By the very terms of the 'bill, they professed to be acting, not only for themselves, but "in
GEORGE 'D. ST. LOUIS CABLE &: W. BY. CO.
123
behalf of, all the other judgment creditors of the respondent." The effect was to waive the advantage they might have obtained by in their own behalf. The result is that the suit, in contemplation oflaw, has from the beginning been prosecuted by the original complainants in hehalf of aUjudgmentcreditors who might elect to come in and take advantugeof what had been done in their behalf. The sale ordered by the court under the interlocutory decree was likewise a sale for the benefit of pendente all judgment creditors; it was in the nature of a sale of We, for the benefit of a given class of creditors; and, while the. interloc.utory decree determined that the original complainants, and some others who had intervened, belonged to that class, it did not undertake to determine that they were the sole beneficiaries,and that there were no other creditors belonging to the class in whose favor the suit was instituted. Another matter that cannot be overlooked is· the fact that no order had been made, prior to the interlocutory decree, requiring persons in whose behalf the bill was filed to intervene by a given day, or be barred of their rights. Under all these circumstances, and in view of the strong disposition invariably shown by courts of equity to preserve the rights of parties rather than to forfeit them, unless there has been gross negligence or laches, I am compelled to hold that those judgment creditors of the defendant, who have intervened since the 24th of April last, when the interlocutory decree was entered, are entitled to a ratable share of the proceeds of the sale, if on an examination of their judgments before the master they are found to be valid. After a more thorough consideration of the question, I am convinced that the former ruling isindefensible. The case of Trust Co. Earle, supra, does not sustain the former ruling, because the bill in that case was filed in behalf of the complainant alone, in consequence of which he secured a priority. It is suggested by complainants' counsel that, although the bill in this case was filed in behalf of all judgment creditors, yet the prayer of the bill is, that after the sale the fund realized may be distributed among the parties in whose behalf the suit was brought, "according to their respective rights and equities." By reason of the form of the prayer for relief, it is suggested that the original complainants did not waive any of their rights; and, as the original complainants and those who intervened prior to the decree aU hold judgments rendered at the October term, 1889, of the St. Louis circuit court, whereas the other judgment creditors hold judgments recovered at a subsequent term, it is argued that the former are entitled/to priority on that ground. This suggestion would have some weight if it appeared that complainants, when the bill was filed, had, by virtue of their judgments, a lien under the statutes of Missouri on all of the property sold by order of this court, out of which the fund for distribution arises. But such is not the fact. The bill in this case did not allege the existence of such a lien, nor has the court by its previous decree so determined. According to the averments of were not entitled, under the laws of the state, the bill, the to sell the defendant's railroad by execution under a judgment at law.
124
"
And on that ground they applied to this court for equitable aid. Now, conceding for the purposes of this case, but without deciding, that the complainants did have a judgment lien on the defendant's railroad, notwithstanding the fact that they could not sell it under execution, yet the fact remains that, by virtue of the decree obtained. in this court, the defendant's franchises, and much other personal property of the judgment debtor, were sold, to which the lien of the judgments certainly did not extend. Furthermore, the fund in court which is to be distributed is made up in part of the earnings of the railroad while it was in the hands of the receiver. In view of these facts, there appears to be nothing in the suggestion last mentioned entitling the complainants, and those who intervened prior to April 24, 1890, to priority. They had no well-established legal lien when the bill was filed, affecting all of the property ultimately 801d, which entitles them to any priority over subsequent judgment creditors, even though the prayer of the bill is so framed as to protect such a lien. The previous order of distribution, made on the 23d of September, must be modified in accordance with these views.
ANDERSON 'lJ. THE ASHEBROOKE el
01.
(Oircuit Court, E. V; Texas. December 1. 1890.) L INJURY TO EMPLOYE-CONTRIBUTORY NEGLIGENCE.
The only way for getting into the hold of the vessel which libelant was employed in loading was by a ladder, so placed in a hatch that to reach it one was obliged first to step'onto the steam-winch used in lowering the freight. The winch was out of repair, so that it would not quickly obey the lever, and was unreliable in holding a suspended load. Libelant, without giving any notice, or makir.g any inquiry, stepped on the wincb while a load was suspended on the tackle. His stepping on the winch, together with the suspended load, set it in motion, from which he received severe injuries. Libelant knew, or should have known, that it was customary to lower the freight part way. and then hold it until those below were ready for it. HeLd that, though it would not have started. had it not been out of repair, libelaut was still guilty of contributory negligence.
SAME-DEFECTIVE ApPLIANCES-LIABILITY OF VESSEL.
Though the ship had been chartered for a lump sum, and by the charter-party, the charterers were to pay the stevedoring and the loading', still the owners of the vessel, having by the charter-part.y contracted to furnish the use of tackle in loading. and to afford charterers the same accommodation as if the ship had been loaded bv the pound, were bound to the charterers, and the charterers' agents, the,stevedore and his employes, to furnish proper machinery and tac!rle, and to use proper care to keep it in order. In admiralty, contributory negligence on the part of libelant is not a bar to his recovery for personal injuries, but both parties being at fault the damages are apportioned. The fact that libelant's fellow-servants were negligent, will not prevent recov-
3. SAME-CONTllIBUTORY NEGLIGENCE-DIVISION OF DAMAGES.
4. SAME-NEGLIGENCE OF FELLOW-SERVANTS.
ery, there having been negligence on the part of the ship.
In Admiralty. James B. Charles B. St:u1Jbs, for libelant. McLemore Campbell, for claimant.
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