BROWN
v.
XING.
529
personal and professional integrity, and following the same up with reckless evidence in support thereof, which the slightest investigation would have shown him to be wholly unfounded, presents himself as one more inclined to ask equity than to do equity, and one not in court with such clean hands as entitle him to demand of the court to consider favorably to him the partial equity suggested, even if it were otherwise well founded. Certainly, as the case was there presented, the decree of the circuit court dismissing the complainant out of court was properly given; and, even as the case is presented here, we see no sufficient reason to disturb the same. Affirmed. BROWN et al. v. KING et al. (two cases). (Circuit Court of Appeals, Pifth Circuit. May 29, 1894.) Nos. 224, 225. EQUITY PRACTICE-MASTER's FEES.
The permanent master appointed in two suits to foreclose mortgages on a railway was a young man, not a lawyer, and without experience in railway accounts. The suits were not contested, and no matter of importance was litigated before him. His office expenses had been paid, and he had received $6,000 on account of his compensation. The principal part of his work was done by the receiver's auditor, to whom was allOwed therefor more than $3,000. The master and the clerk of the court were appointed commissioners to sell the property, which was purchased at the upset price, $500,000, and each received $6,500 as commissions. His services extended very little over two years, during which he was absent five months or more; and he was also master in another railway foreclosure suit. Held, that his application for further compensation should be denied.
Appeal from the Circuit Court of the United States for the Northern District of Florida. This was a petition by John King, permanent master in two suits for foreclosure of mortgages against the Florida Southern Railway Company, for allowance of further compensation to him as such master. The circuit court made a decree allowing such further compensation. Brown and others, members of the committee who had purchased the property, appealed. T. M. Day, Jr., for appellants. E. P. Axtell, for appellee. Before PARDEE and McCORMICK, Circuit Judges, and LOCKE, District Judge. McCORMICK, Circuit Judge. On March 18, 1890, the New England Trust Company and the American Loan & 'Trust Company exhibited their respective separate bills against the Florida Southern Railway Company in the circuit court for the northern district of Florida, seeking to foreclose mortgages held by them on the properly of the railway company. A receiver was appointed to hold and operate the property, and the usual proceedings were had in the progress of the suits. On May 7, 1890, John King, the apv.62F.no.7-34
'I'EDERAL, BEPORTEB, .vol.
62.
wu':a.ppoiQted permanent 'in each, of the limits, "to ido<,andJperform all those things proper to be done bya master, to 'take, evidenee,and report on such q'u-estions and matters as should be referred to him." The suits were, not contested. Decrees pro eonfessowere taken. The permanent master seems to have in some way passed on, the reports' and vouchers of the receiver as the same were prepared by the receiver's auditor, J. E. Starke, and presented to the courl;and this auditor, besides his pay a,s auditor of the receiveJl', was allowed $125 a month for 26 months as an expert aceountant to assist the permanent master in passing on the receiver's accounts and vouchers. The permanent master's office expenses, including the services of a stenographer, seemed to have been paid by the receiver, on the proper decree of the court. No matters of great pith and moment appear to have been litigated before the permaneHt,:p1aster.. He was not a practicing, or licensed lawyer. He was 28 years old when appointed. Before his appointment his business was that of a civil He had never served as master, or been in any way connected with courts, nor, p.ad any -experience with rililwayaccount$ before his appointment. The final 'deqreesof foreclosure were .'entered December 9, 1891. The King, and Phillip Walter, the clerk of the court, were appointed; master commissioners to sell-the mortgaged property. It was sold ,on March 7, 1892, to the appellants, as a purchasing eon:i,Jilittee, for the upset price, to April 9, 1892, were cOnfh::tned, and, On the 30th April the proper deeds weI:e,delivered, and the property taken possession of. by the purehasers.' Final reports of the receiver wel'e ,filed September 1, 1892. 'Pending the proceedings, the appellee John King received on account of compensation as master the sum of $6,000, and received as hjs s]wq:l.of c.ommissi9ns for making sale of the mortgaged property $6,500, making, as his compensation for service rendered in the suits, $1,2,qOO. On April 23, 1893,he made application to the court praying fixing his fUrther compensation, which resulted :in the the decree appealed from, allowing him in ell;ch suit the' SBIDOf $1,250, jn ,addition to the amounts him., in equity the allowance of compensation to masters is so largely" a matter of discretion in the judge of the court of jurisdiction that courts of error are reluctant' to disturb such decl'e$ as those appealed from in these cases. The discretion, however, is a legal discretion, and it may be soiInprovidently exerciseddwtodevolve on the court of appeals the duty of reviewing it. Unpleasant as it must always be to reverse the decrees of the circuit courts in such matters, we have been constrained to doso:in,.: recent case/and feel compelled to the sattle course in tW,s calle., ,Uthe decl'ee$ appealed from are affirmed, this young, II).lln will receive from this trust fund $15,000 for a period very little over two During 26 montJ1,soflithat th;ne the principal Plll1t of his work appears to have been done'lJY al) assistant, who was an experienced miln in such work, Rlld for whose services there was paid out of this. trust more In the most responl'lible work the master did he was . . lCutting T. Tavares, O. & A. R. Co.. 9 C. C.
a.. 401. 61 Fed. 150.
UNITE I) STATES V. SOUTHERN PAC·. R. CO.
531
assisted by the clerk of. the court as a c()-worker,who was paid out of the trust $6,500 for his assistance. It is shown that during this period of something over two years the appellee was absent from the state of Florida for five months or more, and that he was also master in another railway foreclosure suit. It is stated in the brief of counsel for appellants, and not controverted by the counsel for the appellee, that "after the date of the deeding of the properties to the purchasers, but during a considerable portion of the time in which Mr. King claimed to be rendering services in the cause, he was also acting as master in the case of The American Oonstruction Company v. The Jacksonville, Tampa & Key West Railway Company, and on May 1, 1893, he was appointed master in the case of The Pennsylvania Oompany for Insurance on Lives and Granting Annuities v. The Jacksonville, Tampa & Key "West Railway Company." We refrain from further comment. We conclude that the decrees appealed from must be reversed, and the appellee John King's application for additional compensation as such permanent master denied, and the application dismissed, at his cost in the circuit court and in this court; and it is so ordered. UNITED STATES v. SOUTHERN PAC. R. CO. et al. (CirCUit Court, S. D. California. June 25, 1894.) No. 184. PUBMC LANDS-PACIFIC RAlT,ROAD GRANTS-FoRFEITURE.
near the California boundary, and, to aid in the construction of a railroad from there to San Francisco, declared that it "shall have the same grants of land subject to all the conditions herein provided." Act March 3, 1871 (16 Stat. 573), provided for the organization of the T. P. R. Co., with a grant of certain lands, and author.ized (section 23) the S. P. R. Co. to construct a connecting railroad from a point on the Colorado river to San Francisco, "with the same rights, grants, and privileges," and subject to the same conditions, as were granted to it by Act July 27, 1866, § 18. Held, that the lands granted to the A. & P. R. Co. along the overlapping routes did not pass conditionally to the S. P. R. Co. by the act of 1871, though the A. & P. R. Co. had not complied with its grant at that time, but should be excepted from that grant; and the forfeiture by the A. & P. R. Co. (Act July 6, 188G) of such lands inmed to the benefit of the United States rather than to' that of the S. P. R. Co. and its grantees. U. S. v. Southern Pac. R. Co., 13 Sup. Ct. 152, 163, 146 U. S. 570, 615, followed.
Act July 27, 1866 (14. Stat. 292), provided for the organization of the A. & P. R. Co., and granted lands to it to aid in the construction of a railroad between a point in Missouri and the Pacific ocean. Section 18 autho·rized the S. P. It. Co., a California corporation, to l'Onnect with this railroad
Bill by the United States against the Southern Pacific Railroad Company and others to recover lands. Decree for complainant. H. Call, Sp. Asst. U. S. Atty., and the United States Attorney General, for the United States. Joseph D. Redding, for defendants. ROSS, District Judge. This is a suit in equity brought by the United States, the chief object of which is the, establishment of,
532
FEDERAL REPORTER, vol. 62.
the 8.lleged title of the government to about 700,000 acres of land situated in Los- Angeles and Ventura counties, of this state, designated, according to the public surveys of the United States, as oddnumbered sections, and lying, within the primary or 20-mile limit of the grant of July 27, 1866, made by congress to the Atlantic & Pacific Raib;0ad Company,and also within the primary limits of the subsequent grant of March 3, 1871, made by congress to the Southern Pacific Railroad Company, and which lands are claimed by the last-named companY,and those holding under it, by virtue of its' grant. For nearly 100,000 acres of these lands the United States subsequently issued its patents to the Southern Pacific Railroad Company, a large part of which land, so patented, that' company conveyed, for a valuable consideration, to third persons, all of which 'patents and some of which conveyances were executed prior to the institution of this suit. The Southern Pacific Company also contracted iIi writing with various other persons to convey to them, severally, other portions of said patented lands, and still other of said lands embraced within the limits of its grant. These persons are also made parties defendant to the bill, the objects of which include the annulling of the said patents, and the quieting of the complainant's alleged title to the whole of the lands embraced by the suit. The bill also makes parties defendant D. O. Mills, Garrit L. Lansing, and Lloyd Tevis, as trustees of certain mortgages executed by the Southern Pacific Railroad Company upon the lands covered by its grant, to secure the payment of certain bonds issued by it. . By the first section of the act of July 27, 1866 (14 Stat. 292), congress incorporated the, Atlantic & Pacific Railroad Company, and authorized it to construct and operate a railroad from a point near the town of Springfield, in the state of Missouri, westward through Albuquerque, "and thence along the 35th parallel of latitude, as near as may be found most suitable for a railway route, to the Colorado river, at such point as may be selected by such company for crossing; thence, by the most practicable and eligible route, to the, Pacific" ocean. To aid in the construction of the road, there was granted to the Atlantic & Pacific Company, by the third section of the act, every alternate section of public land not mineral, designated by odd numbers, to the amount of 10 sections on each side, of the road whenever it passes through a state, "and whenever, on the line thereof, the United States have full title, not reserved, sold,granted, or otherwise appropriated, and free from pre-emption or other claims or rights at the time the line of said road is designated by a plat thereof filed in the office of the commissiOner of" the general land office, and whenever," etc. The of the act provided as follows: eighteenth "That the Southern Pabill.c Railroad, a company incorporated under the laws of the state of California, is hereby authorized to connect with the said Atlantic & Pacific Railroad formed under this act, ,at such point near the boundary line of the state of California as they shall deem most suitable for a raill:oad Une to San Francisco, and shall have a uniform gauge and rate of freight or :fare with said road: ,and, in tp.ereof, to aid In its cOnstruction, shall have the same grants of land,'.sUbject to all the conditions and
UNITED STATES V. SOUTHERN PAC. R. CO.
533
limitations herein provided, and shall be required to construct its road under the like regulations as to time and manner with the Atlantic & Pacific Railroad herein provided for."
On March 3, 1871, congress passed an act entitled "An act to incorporate the Texas Pacific Railroad Company, and to aid in the construction of its road, and for other purposes." 16 Stat. 573. By the twenty-third section of that act it was provided as follows: "That for the purpose of connecting the Texas Pacific Railroad with the city of San Francisco, the Southern Pacific Railroad Company of Calif()rnia is hereby authorized (SUbject to the laws of California) t() construct a line of railroad from a point at or near Tehachapa Pass, by way of Los Angeles to the Colorado river, with the same rights, grants and privileges, and subject to the same limitations, restrictions, and conditions, as were granted to said Southern Pacific Railroad Company of California by the act of July 27, 1866: provided, however, that this section shall in no way affect or impair the rights, present or prospective, of the Atlantic & Pacific Railroad Company, or any other railroad company."
These grants were the subject of full consideration in the cases entitled U. S. v. Southern Pac. R. Co. (Nos. 67-69, consolid.ated), Same v. Colton Marble & Lime Co. (No. 88), and U. S. v. Southern Pac. R. Co. (Nos. 177, 178), reported in 45 Fed. 596, and 46 Fed. 683. My views in regard to them, while meeting with the approval of two of the justices of the supreme court (Justices Field and Gray), were by a majority of the court overruled. The cases in the supreme court will be found reported in 146 U. S. 570, 615, 13 Sup. Ct. 152, 163. A careful examination of the opinions of the majority of the court in those cases shows that it decided, among other things, that it was not the intent of congress that any of the lands embraced by the grant of July 27, 1866, to the At· lantic & Pacific Company should pass conditionally to the Southern Pacific Company by the grant of March 3, 1871, but, on the contrary, that congress intended that all lands embraced by the. prior grant to the Atlantic & Pacific Company should be defi:r;J.itely excepted from the later grant to the Southern Pacific Company, and that the Atlantic & Pacific Company having forfeited the lands granted to it by the act of July 27, 1866, by reason of its failure to comply with the conditions upon which the grant was made, and congress having, by the act of July 6, 1886, declared the forfeiture, the latter resulted in restoring the lands to the government. "The forfeiture," said the court, "was not for the benefit of the S()uthern Pacific; it was not to enlarge its grant as it stood prior to the act of forfeiture. It had ,given to the Southern Pacific all that it had agreed to in Its original grant; and now, finding that the Atlantic & Pacific was, guilty of a breach of a condition SUbsequent, it elected to enforce a forfeiture for that breach, and a forfeiture for its own benefit."
The court further observed: "If the act' of forfeiture had not been passed by congress, the Atlantic & Pacific could yet construct its road, and that, constructing it, its title to these lands would become perfect."
01 definite .location of
Tn those cases the defendant company contended that no map its line between the Colorado river and
J,mPORTlm,
vol. ,6,2·.
tb.ePaciftc ocean was ever filedbY'ithe Atlantie&,Pacific Compan;tor 'approved by the'secretaryof'1;he interior. The supreme court said that contention was based upon these 'facts: ,'iThEt &;: :raci.flc (lompany claimed that, under hs :chlti'ter, it. was authorize4 til build a road fJ;om the Colorado river to tbe Pacific ocean, and thence, along the coast, up to,J3an Francisco; and it filed, maps thereofin four ,'San" Buenaventura' was We 'point where the, westward line first touched,ine:Pacific ocean., ,One of these'maps was ofthiiilportion of the line extending t,;om, the westerpboundary of Los Angeles county, a point east of San ,and t4rough that plRceto Sl!lll Miguel)l{ission, in the direction Of, , Ip."otl;1er words, SaIl Buellaventura was not the terminus, of any line .of defl,i:tite location, from the Colorado river westward, whether byone or,more maps, but only aninterlJl,ediate point on one .,¢a,p., When the tlillf maps were filed, and in 1872, ,the land departAtlantic & Pacl1\c, Company was authorized to build, not only':trprq. the Colorado river directly to the Pacific pecan, but also thence ,tq SJI,Q.}j'rancisco,a,pproved them Q.!f {lstablis):ling tneline of definite 10catlbn. SuBsequently, and when Mr. Justice Lamar was secretary of the interior', the matter was re-examined, and it was properly held that, under the act of t.l;111 grant to :Atlantic& ;J;'aCUlc was exhausted when its line reached,thePacific ocean. San Buenaventura was therefore held to be the western and the location of the Une approved to that poin1;."
And
heldth,a't:
"The fact line located and m4ps filed thereof in sections is iril< material., sf," &; p; lit: ,Co. v. Northern Pac. J,l. Co., U. S. 1, 11 Sup. Ct. 389. Inetee,Q; all thetl'anscontinental'roads, it is filed their maps of route insactions, So tMquestlon is 'Whether the filing a map of definite loclltion river, througb San Buenaventura, to San Francisco, under a, a,, entir,e diS, t,aI1.ce, is good as a map of from, the ColQr/ido river to San, the· latter tlie'llmitofthe grant: We think, umluestionably, It 1& Of
In .the ,case ii. urged9u the part 'of. t,he defendants that In, .cases,tbe determmed the questo the locq,tion of ,the line ofifue Atlantic & Pations in, cific one that there were no issues of fact in eitber of t,b,Qse,cases in respect to the character, of the maps there, spoken of, or, of the upon whiqh they were based, whereas, in the, presept case, the pleadings tender issues ,of fact in respect to all of ,t,4oae matters, upon which a large amount of evidence has been introdllCed; thi.sevidence, the defendants contend, esPacific Company never did definitely tablishes that tbe locate its line bet-ween ,tl1eColorado river and the Pacific ocean, and that the pretended maps of definite location were but fraudulent atmost to but a general designatiQD.of its e{)Ji1te,mplated In my opinion, the evidence in the present case: shows that to be true. It is unnecessary, however, to analyze ;li!how the 'reasons for this conclttsion; bv-t it is as welltoslt\tetliat it finds strong support in the fact that if the· maps filed by the Atlantic & Pacific Company in 1872, of its route between the Colorado river and the Pacific oceain, were maps of of its NaG" it never did file any map or maps designating:,' its ,general 'lloute;for it is not pretended that the, Atlantic & Pacific Company made more than one designation of the lineinq-q,fSti()I,l" Xet tb,e court, in U.S. v, Southern Pac. R. Co., 146 in this very grant of<' i
535
July 27, 1866, as well as in the case of Buttz v. Railroad Co., 119 U. 8. 55, 7 Sup. Ct. 100, in speaking of the similar grant to the Northern Pacific Company, held that "congress provided for two separate mattera,-one, the fixing of the general route; and the other, the designation of the line of definite location." Nevertheless, in view of the rulings of the supreme court in the former cases regarding the grants in question, by which this court, of course, must be controlled, I do not see that it is essential to the government's case that the line of the Atlantic & Pacific Company should have been definitely located; for the surveys made opposite the lands in controversy, and maps thereof filed by it, constituted at least a designation of the general route of the road, upon which designation the law operated to withdraw all lands within the limits of the grant for the benefit of the grantee. Buttz' v. Railroad Co., 119 U. S. 55, 7 Sup. Ct. 100; St. Paul & P. R. Co. v. Northern Pac. R. 00., 139 U. S. 1, 11 Sup. Ct. 389. The facts that the Southern Paeific Company had previously, to wit, on the 3d day of April, 1871, filed in the office of the commissioner of the general land office a map designating the general route of the line it was authorized to bnild, and did build, under and by virtue of the act of March 3, 1871, and that thereafter, to wit, on the 21st of April, 1871, an order was made by the commissioner of the general land office withdrawing all lands within the primary as well as the indemnity limits of that grant from sale, location, pre-emption, or homestead entry, could not, under the rulings of the supreme court in the former cases, in any way affect the prior grant, which up to the time of its forfeiture, on July 6, 1886, remained effective and paramount. While, up to the time of the withdrawal for the benefit of the Southern Pacific Company, and for nearly one year thereafter, the Atlantic & Pacific Company had not filed any map indicating its line of road between the Oolorado river and the Pacific ocean, still, when it did do so, in 1872, by maps showing, if not the definite location of its line, at least its general route (its right under its grant being, as decided by the supreme court, wholly unaffected by the subsequent grant to the Southern Pacific Company, and consequently by the proceedings had and taken thereunder), the law itself operated to withdraw all public lands within the limits of the grant to the Atlantic & Pacific Company for the benefit of the grantee (cases supra); and, the rights of that company continuing, as held by the supreme court, until the act of forfeiture passed by congress July 6, 1886, and the forfeiture being for the benefit of the United States, the necessary result is that, when it occurred, the lands were restored to the government, and did not pass to the Southern Pacific Company, or to its grantees, who necessarily took with notice of the grants, for such grants are laws as well as contracts. Missouri, K. & T. Ry. Co. v. Kansas Pac. Ry. Co., 97 U. S. 491; U. S. v. Southern Pac. R. Co., 146 U. R. 598, 13 Sup. Ct. 152. It results, I think, that there be a decree for the government; and it is so ordered.
636
DDERAL RE'POBTER,vol.
62. Ex parte W A.LKER.
BOUND T. SOUTH OAROLINA R. 00. et aI. parte CALDER. (Olrcuit Court, D. South Carollna. L
mx
May 19, 1894.)
RAILROAD COMPANIES-1t!ORTGAGES-1'RUSTEEs-COMPENSATION.
had been retired, and the holders of nearly all outstanding had agreed . .to an extension of·time, the trustee of the mortgage, on his own motion, and
On maturity of bonds secured by a railroad mortgage after most
of them
Without request by the bondholders, brought suit to foreclose. The suit was never prosecuted to a decree, proceedings on a second mortgage being afterwards Instituted In the federal court. Held, that the suit by the trustee was unnecessary, and he should not be allowed compensation or counsel feell .therefor. of the fil'st mortgage was not questioned.
L
SAME.
In foreclosure proceedings on a second mortgage of a railroad, the llen The holders of the bonds secured thereby had consented to an extension of time. Held, that the sole duty of the trustee under the first mortgage was to see that the amount due thereunder was determined, and a decree made conserving the interests of.· the bondholders; and for anything further he should not be allowed compensation or counsel fees.
This was a suit by Frederick W. Bound against the South Carolina Railway Company and others to foreclose a second mortgage on said company's railroad. H. Pinckney Walker and James M. Calder, trustees in the first mortgage of said railroad, filed petitions for compensfltionand counsel fees. Mcqradys & Bacot and E. W. Hughes, for petitioners. J. W. Barnwell and Mitchell & Smith, for respondent. SIMONTON, Circuit. Judge. The petitions are on behalf of two trustees of what is known in this case as the "old first mortgage" of the South Carolina Railroad Oompany. The petitions seek compensation to the trustees, including remuneration of .the counsel employed by them. 'J:he two trustees did not act together, and their cases will be separately considered. H. P. Walker, Trustee. The old first mortgage of the South Carolina Railroad Company was executed· in 1868, for the purpose of securing· certain bonds of that company issued for taking up, by exchange or otherwise, certain bonds of the Louisville, Cincinnati & Charleston Railroad Company, for which the company was liable, guarantied by the state ot South Carolina. The bonds aggregated $3,000,000 in all, and sQme of them were payable in sterling, and some in money of the United States. They were used as designed, and nearly every guarantied bond was retired. The trustees of this mortgage were Henry Gourdin, H. Pinckney and James M. Calder. The mortgage is an ordinary railroad mortgage. No special provision is made in it for compensation to the trustees, aQd such compensation must depend on the law and practice' of this court. Dodge v. Tulleys, 144 U. S. 451,12 Sup. Ct. 728. Under a mortgage of this character, the duties of the trustees are usually dormant until and unless