IN RE DEX'l'ERVILLE MANUF'G & BOOM 00.
8'73
bound to use proper means and efforts to protect himself from unnecessary loss or damage, and can charge the,patty only for such damages as by reasonable endeavors and. expense he could not prevent. Walker v. Ellis, 1 Sneed, 514. Where there was a stipulation to keep a dam in repair, the cost of repairs is the only measure of damages, not damages for the mill lying idle. Fort v. Orndoff, 7 Heisk·. 167. There is nothing in the principle adopt.ed in Dnsh v. Fitzhugh, 2 Lea, 307, to change the rule above laid down on the subject of contributory negligence. The proximate cause of the injury to the petitioner's crops was her negligence in turning her hogs out when she knew they were destroying her crop, or failing to put them up after she saw them in the fields, or otherwise protecting her crops; and the negligence of the defendants was only remote. I do not overlook the fact that there were some other animals than her own with hers; but, as to these, she could have kept them out in many ways, and she should have done it. Petition dismissed at costs of petitioner.
in re
DEX'l'ERVILLE MANUF'a
& BOOM Co.,
SCRANT0l! MANuF'a
& BOOM Co., and another, v. CASE, Receiver, etc. (Cirouit Oourt, E. D. Wisconsin. L RECEIVER -
December 10, 1880.)
CLAIM FOR D.BBGES AGAINST A RAILROAD COMPA),'Y_
CoMPANY IN DEFAULT FOR INTEREST.-The net earnings of a rail. road, while in the possession of a receiver appointed by the court, pending the foreclosure of certain mortgages upon the property, calinot be applied to the payment of claims for damages which during the operation of the road by the company, although sllchcompany was then in default for the non-pllJ"ment of interest upon thomortgage bonds .
Demurrer. Geo. H. Noyes and G. C. Prentiss, for petitioners. E. C. et W. C. Larned, fotreceiver.
814
REPOR1ER.
DYER, D. J. The peUioners above nallled have presentec1 petitions for the allowance of claims to a large amount against the receiver of the Green Bay & Minnesota Railroad, who is operating the road under the direction of this court, pending the foreclosure of certain mortgages upon the property, which demands are for loss and damages claimed to have been sustained by the petitioners in the destruction of timber and cranberry marsh along the line of the road by fire, alleged to have been set by sparks escaping from defective locomotives. By suitable and separate allegations it is charged that the fires which caused the damage occurred on different days in different years, and it is thus made to appear in each of the petitions that one of these fires occurred on the seventh day of September, 1877, which was more than four months before a foreclosure of the mortgages in suit was commenced, and before a receiver was appointed. To such parts of the petitions as thus allege, as causes of action against the receiver, loss and damage by fire while the road was yet being operated by the railroad company, and before it passed into his hands, the receiver has demurred, and the demurrer raises the question whether such claims can be allowed or entertained against him or the property which he has in charge for the bondholders, or against any party other than the railroad company by whose negligence it is alleged the loss and damage were occasioned. In Hale v. H'ost, 99 U. S. 389, it was held that the net earnings of a railroad while it is in possession of a receiver, appointed by the court, may be applied to the payment of claims having superior equities to that of the bondholders. To sustain the claims in question, it is therefore necessary that some equity be found in favor of the petitioners and superior to that of the bondholders, upon which to base the:ir allowance. And the supposed equity urged is that the fire in question occurred after default on the part of the railroad ·company in payment of the mortgage debt or interest; that thereafter the company operated the road as the agent or trustee in equity of the bondholders, and that the alleged lia·
IN BE DEXTERVILLE IUNUF'a & BOOM CO.
875
bility sought to be enforced in the present proceeding arose from such operation of the road and as an incident thereto; that, therefore, it may be put under the head of operating expenses, and so acquire rank as a claim having equities' enforceable against the net earnings of the l'oad in the hands of the receiver. There is some plausibility in the argument, but it is unsound. No relation of principal and agent, either in law or equity, can be implied from the mere fact that the railroad company continued to operate the road after it was in default in payment of the mortgage debt, nor from the further fact that the bondholders did not take possession oftha property after such default, nor from both facts combined. The mortgages gave to the mortgagees the right to take possession after default, but they were not obliRed to do so, nor was it necessary that they should take possession in order to avoid such a liability as is here claimed. The railroad company was operating the road when the alleged loss and damage occurred. The negligence of the company, if there was negligence at all, occasioned the loss. For that negligence it alone was responsible. To sustain the position taken by the petitioners, it must be held that the bondholders at least impliedly assumed lia.bility for the negligence of the railroad company, and that by operation of law their mortgage security was subordinated to claims of the of these. I cannot so hold. The alleged causes of action accrued after the company had given mortgages upon aU its property, which were then subsisting liens, and before the receiver was appointed. It can make no difference that they accrued after the company was in default in payment of interest on its' bonds. The road was still being operated by the company, and whatever liability existed must have been one against the company alone. In no just or proper sense could such claims as these be considered as part of the operating expenses upon which the petitioners could assert a right prior to that of the mortgagees. They are wholly unlike claims for supplies, new equipment, right of way, and new construction, or any claim falling legitimately under the head of operating expenses, which the C0urts sometimes order paid fronlnet earnings in
S:76
¥EDERAL REPORTER.
the hands of a receiver as having equities superior to those of bondholders. If such claims as are here in question could be allowed, there would seem hardly to be a limit to the allowance of demands which it might be as forcibly urged were superior in their equities to those of the secured creditors, but which could not be allowed upon any sound principle of equity, nor without substll,ntially impairing and perhaps destroying an otherwise valuable security. The demurrer to such pa:rts of the petitions as state causes of action against the railroad company accruing prior to the appointment of the receiver, is sustained. And it is not improper. to add that this ruling is supported by the practice of the learned circuit judge of this circuit, who has uniformly .disallowed claims against a receiver of the character of these.
.NAT. BANK
THOMPSON.
(Circuit Court, D. Ma88achuseUs. Dccember'22, 1880.)
1875, § 2.-Suit was brovght by the lIferchants' National Bank of Boston to foreclose equity of redemption of thedefendant, Edward 'rhompson, of Charlestown, New Hampshire, in five shares of trust property held by the plaintiff as collateral security for the payment of the defendant's bond. The defendant Bv'erred in his answer that he had sold one of the shares to Henry M. Clarke, of Boston. The plaintiff thereupon amended its bill, and made Clarke a party defendant, who subsequently entered an appearance. Held, that such cause could not be removed under the second clause of section 2 of the act of 1875. 2,' SA.."'E-JuRIsDICTION-PRooF.-Held, f1trther, that it would be pre. sumed that Clarke was a citizen of Massachusetts. in the absence of any proof to the contrary. REMOVAL-AcT OF
1.
In Equity. Russell Gray, for plaintiff. Jabez Fox, for defendant Thompson. LOWELL, C. J. This is a motion to dismiss or remand. The National Bank of Boston brought a bill in equity in the supreme judicial court of Massachusetts to foreclose
