;REPORTER,. vol. 52.
aUYll.1Jtporities sustaining this snggestion,and is compelled totreat this certificate, indorsed in blank and stolen, as it would .any other stolen aside from strictly negotiable securities. Thete has been at times a disposition to lay down broadly rules touching negligence in cases analogous to this. In Bank v. StoweU, 123 Mass. 196, these rules were largely discussed. The opinion pointed out that they apply only when there is some special duty or confidential relation between the parties, as between a depositor and the bank; and it was held that the maker of a note was not liable for the increased amount by which it raised, J?otwithstanding the careless manner in which he had drawn it. ,The same. principle was also discussed in Baxendale v. ubi 8upraj where it was held that, although the defendant had a hlank acceptance, and left it in the drawer of his writing was unlocked, from which it was stolen, and afterwards filled 'up apd purchased by an innoc,ent party, yet he was not liable . lp,; Abbott v. Rose. Me. 194,204, the broader rule was witp but it'WaI3:not material to the case, and iahot har,theprincipIes of the later decisions,-Breckenridge v. Le:wis, an<i othercp.ses already cited. In aU the cases in any Perth'wnt relied on by the counsel of Mrs. Lee there was voluntary ,illtruB;ti9gof actual posaession by the holder. On the whole, the find any principle of tb.ecommon law which will procourt is te,ct :herj and, the, ;case, at. bar, though in equity, involves only commonlaw, rights." ·Let there be .adecree. that the blank transfer on the certificate of stock in question in this case, deposited in the registry of the court, be filled, up in favor of defendant Robinson, and that the plaintiff him a new certificate in exchange therefor,and that comcorporation one half. of their costs from defendant Robinson and plainants nqe half from defendant Lee.
FINANCE CO.'tiF PENNSYLVANIA '!J. C. & C. R. Co. f)t al., (POOAHONTASCOAL Co. et al., Interveners.)
(Oirimit Oourt, D. South Oarolina. November 4, 1892.)
R.4ILROAD COMPANIBS-RBOJIlIVlllBIl-CLAIIIIS OIl' MATERIAL MEN-DIVERTED EARNINGS.
. A .diversion by a raiLro.ad C(llJlpany of $2,809 from tbe paym.ent of claims for material used in keeping the road a going concern, to the permanent improvement of .: tile road, ot to the payment of interest on, bonds, must be made good by the bondholders, and is so made. goot! by the issue of. receiver's certificates and the applica.\ion of their proceeds to sllch'Olaims. and the material men are entitled to no fur. preference from. theploceells of the sale. Fosdick v. Sc1"a,Z1., 1111 U. S. 235. fol' ,,:lowed.
Tn Equity. Bill bY: the Finance Company of Pennsylvania against IS/; Chicago Railroad Company and others. the Charleston, D. H. Qhalllberlain appointed receiver. 45 Fed. Rep. 436. The Poca-
CHARLES'rON, C; & C. R. CO.
hontas Coal Company and others intervene by petition to assert claims for materials furnished. Reference to a master ordered. 48 Fed. Rep. 188. Heard on master's report. B. A.. Hagood, Hugh Sinkler, A.. M. Lee, Buist & Buist, and Ingle8by & Miller, for petitioners. S. Lord and A.. T. Smythe, for respondent. SIMONTON, District Judge. These are claims by material men, proved and allowed in this court. The petitioners prayed an order for payment out of funds in the hands of the receiver; failing these, that provision be made for them out of the proceeds of the sale of the road, when such sale be ordered. The cases were heard and considered. The opinion of the court can be found in 48 Fed. Rep. 188. The court held that the petitioners had established their equity. A reference was ordered to ascertain whether the Charleston, Cincinnati & Chicago Railroad ever earned any income. Was any portion of it applied to the payment of interest or to any permanent improvement of the property, or in any way for the benefit of the bondholders? How much? The master has made his report, which shows that there was no payment of interest by the road, bnt that the sum of $2,300 was taken from cash in the hands of Receiver Lord,derived from earnings, and applied to the construction of the road at and near Marion, N. C. Mr. Lord, temporary receiver, turned over to Mr. Chamberlain, his successor, permanent receiver, $4,000. derived from earnings. Shortly after his appointment, Mr. Chamberlain filed a petition for leave to issue receiver's certificates to meet certain pressing claims. Mr. Lord had had leave to issue such certificates, but had not used the privilege. In his petition, Mr. Chamberlain sets out the claims to be paid, aggregating $48,854.81. He estimates that with $30,000 in certificates and his earnings he can get along comfortably, and he obtained leave to issue the $30,000 in certificates. The expenditure for the road to Marion is not in his list of claims to be paid. These were: For taxes, - $12.605 90 Freight balances, 19.136 33 Cross-ties, 7.567 47 Pay rolls, 9.59333
The larger part of these were due before any receiver was appointed. Neither under Mr. Lord nor under Mr. Chamberlain has the railroad company been able to earn its rumiing e:ipenses, and keep down the payment of taxes. It thus appears that when Mr. Lord used $2,300 in building the Marion connection he borrowed that sum from moneys urgently needed for pressing demands, and that these demands were met by the issue of receiver's certificates, displacing the lien of the bondholders to the extent of $30,000. The underlying principle of v.SchaU, \)9 U. S. 235, and the cases following it is this: The earnings of the railroad must first be applied to meet the outlays necessary to
the bondclaim: ,¥:earnings have bello diverted from this primary purpose, and used for the advantage of, t4e bondholders, of interest or ip permanent improvenlents which tend to enhance the value of the property, the sums thus, ,divert",d must be restored. This restoration mlJ,Y Ql'l [mm theincorne. If this fail, then the diversion must be met out of the proceeds of sale. There was in this .case a: diversion of some $2,,309. : This the bondholders must rehave, in fact, by consenting to the displacement store. of theirJitW by the issue of certificates to the amount of $30.000. Thesll must be paid out of tij.e ,proceeds of sale. The money they furnish lll¥ti'bet:n applied to claims of the same rank as those held by the this exonerates the.ppndholders from any further assesE',. . . thus appears that the petitioners have no equity which can lien qf the bondholders. The prayer for preference proceeds of sale is
fUi'ANQJl:Co. OF PENNSYLVANIA
CO. tit al., (MdciN, Intervener.)
C. & O. R.
:(Circuit Oourt" D. BouthQaTolina. November8,lSoo.)
A lawyer, drnployed tiyal'ailroad company at a fixed salary tn a state where the road. is 'in 'course Of constrUction, but, yet in operation; is, not' entitled, on the appeintmept of a, receiver in pJ::OllE\edings, to receive p"yment out of the proceeds of tb.e sale; prior to the satisfactIon of the mortgage bonds, even though earnings of:the:road have been imp1'0petly:diverted from current expenses for the 1;Ienefit of bon,4h0I<lell',8 ; for the a return of diverted eannings applies only in favor of those wbohave helped to Keep the road a goiilg concern. FosrUck v. , " An order appointing a receiver authorized him to payout of income, besides the current eXflenses and charges, all wages due to employes at the date of the order for ,serVices Within 90 Wlys Held, that a lawyel' at a fixed salary per month came within the terms of the order. '
LIEN. . . ' , ,
.....REOBIVER"":'LABOB AND SUPPLY CLAI.PRIORITIES.
2. ltECEIVBRS-ORDERFOR PAYMENT 011' EMPLOyES-SALARIBD I4WYBR.
A lawyer who renders legal services to a railroad company at'a fixed slliary, and Wh,O advances money for the company's purposes, is entitled to a lien for the retention of papers for the whole amount of his claim.
InEquity. Company and others Cinciomiti &, Ohicago, RailrOad Company and agaipst the A was ,4p, Fed. Rep. 436. ' Heard 00 the i,otervening petitioll ofJohn B. Moon. Decree for intervener. HagoofI,}orpetitioner. ' Sam'iJ,el Lord ,and'."; T. Smythe, for respondents. A. <.,,'1. . , ",., ."
:'; ,. '",l
SIMONTON, District Jpdge. This case comes upon the report of the special master. The petitioner, a memher of t?e bar of Virginia, Qf