FEP.EML ;REi>O:&TD,
voI.o2.
upon the taking of testimony under a stipulation, and to abandon the examination for any rea.sp:p., . Such l!<'C01;lrse of is not only irritating, but exceedingly expensive. On the other hand, they will be permitted to abandon, if.,rupon motion'. to compel,the;reproduction of the witness for examination, such abandonment is shown to have been reg occttsion. In this case, l' do notthink thattoe,dmendant's,counsqlhad,adequate reason for his dissatisfaction; bu,t this first,questi&#,pf tnekiridW,hich 'aris¢riFluder th'} new practice,aud, as CounseI'acted under both lack of knowledge and impatience', l'ani not disposed to be 'rigorous, hut, announcing what will be the course in the future, permit an additional cross-examination of the accor«lance with the original agreement. especially us he is in New York city, and can manifestly be produced without trouble or much expense.
, ;"
et al. v. CHARLESTON, '(SH:A.tw et al., Interveners.) " j
C.
& O. R. 00., ,
(OirCUit Court, D. South
CaroUn'a; October 28, 1892.)
to a railroad company in maintaininlt before the courts the aid bonds'$re not of a character to take precedence of the companyls mortglloge bonds" within tlle doptrine of Fosdick v. SchaU. 99 U. S. 285" and equity'ball" lid authoriti to give them such precedence, especially when the service' 'w.,eNften(j.ered tWQ ,,.ears before the appointment of the receiver. 'i,1'" .
1l.8A,ME.,
Tllefact tnat such !1ervlces resulted iii benefit to tlle bondholders will not justify dlsplaoing the tatters' lien, when they were not parties to the contract of empioyment. '
In against close a
qompany of Pennsylvania and otbers Chicago Railroad Company to fore. Heard, separateinterveniI1 gpetitions of Robert W. firm p(, & Bro., asserting claims for legal paY ... t prior to the aatiSfact,ion , the mortgage " For in thecQurse of see 45 4136", -48 .Fed. E;ep. 45, 188, 49 Fed. Rep. 693. Mitchell.,&?, Smith, for , Samuel Lord and A.. T. Smythe, for respondents.
by
Judge. These two petitions were heard together. Several ,townships in South Carolina had su bscribed to the capital stock of the Gincipnati & Chicago Railroad Company, the subscription,payablll, ,in coupon township bonds. The townships were created and given the power to subscribe in this way by the
FINANCE CO. V. CHARLES'rON, C. &: C: R.
co.
619
act chartering the railroad company.. This raiiroad company had contracted with the, Massachusetts & SOuthern Construction Company to build and equip their road. The township bonds were to be used in paying for such construction. In 1888, in a cause entitled Floydv. Perrin, 30 S. C. 2. 8 S. E. Rep. 14, the supreme court of South Carolina pronounced invalid the provisions of a railroad charter similar to that of the Charleston, Cincinnati & Chicago Railroad Company, and declared township bot;lds issued t.hereunder invalid. This question being of grave importance both to the railroad company and to the construction company, R. A. Johnson, who was the general manager of both companies, engaged the professional services of these petitioners, who are both excellent'lawy,ers, to devise and take such steps as would lead to the dation of the 'township bonds subscribedin aid of the railroad company. Although, patbing clearly definite appears in the correspondence and with J ahnson, both of these gentlemen believed that they were retained by and for the railroad company and by the construction company. They rendered important, .valuable, and successful service. The towl}ship bonds were validated by an act of the legislature, in the passage of which they were largely instrumental. 'rhesupreme court sustained the constitutionality of the act in a cause brought and argued by them. State v. Neely, 30 S. 0.598, 9 S. E. Rep. 664. The result is that the township bondS have been given value, and, as petitioners contend. have been largely used in the construction of the road. They now present their claim forservices,-$6.000, each,-and ask that it be allowed and paid in priority to the mortgage lien. The counsel for the the receiver and for the mortgage bondholders deny that these gentlemen were retained for the railroad company, or that their service benefited the railroad company. They insist that the retainer was for and on behalf of the construction company, to whom all these township bonds had been assign4ild. Be this as it may, and assuming, for the purposes of this case, that the facts are as stated by the petitioners, can we displace in their behalf the vested lien of the mortgage? F08dick v. Schall, 99 U. S. 235, led the way to the displacement of the mortgage lien, permitting certain favored claims to be paid before the mortgage debt, either out of the income or out of the proceeds of sale. But the courts have carefully guarded themselves from extending these claims, which were for materials, supplies, and labor necessary for keeping the railroad a going concern, and have expressly refused to consider any claim originating more than six months before the appointment of the receiver. The services in this case were rendered nearly, if not quite, two years before the appointment of a receiver. Indeed, the supreme court of the United States, in Kneeland v. Loan & T. Co., 136 U. S. 97, 10 Sup. C1. Rep. 950, have felt the necessity of warning the profession against erroneous views as to the effect of F'osdick v. Schall: "No one is bound to sell to a railroad company. or to work for it. and whoever has dealings with a company whose property i8 mortgaged must be as8umed to have dealt with it on tbe faith of its personal responsibility. and not in expectation of SUbsequently displacing the priority of the mortgage liens.
680 It placed." reason
REPORTER,
vol. 52.
and not the rule, that of liens can be disthis. fact of the sacredness of contract liens for the seems to be grpwing an idea that the chancellor, in the IlXhiB elthitable po wets, has unlimited discretion in this matter of the displalJ6n'lent of'vested liens."
9011rtserfo'rthe petitioners urge upon the court the considemtion of the vaiuer 'of these services in securi1lg the means for constructing the road. BhHhe services by the petitioners are not within that favored class protected in Fosdick v. Schall. Indeed, if they had obtained and supplied the money used in constructing the road, this would not 00., U. S. 416, 9 Sup. Ct. have helped thein. , Wood v. Trust, Rep. 131iOowdrey v. Railroad 00., 93 U. S. 352; Dunham v. Railway Co., 1 WaH. 267; Railroad QI. v. Wilson, 138 U. S. 501, 11 Sup. Ct. ' ' Rep. 405. Nor does it affect the question that their services incidentally benefited the mortgage creditors, and added to the value of the property covered by the mortgage. There Were, no contract relations with these creditors. In Htind'V;J;W,uroad 00., 21 S. C. 162, the law is clearly stated: : "No onecanlegaUy claim compensation for voluntary services to another,
etc.;
however behlidcial they may be, nor for incidental benefits and advantages to one floWing; to: him on account of services rendered to another by whom he may have been employed. 'Before a legal charge can be sustained. there must be a contract pfemployment, either expressly made or superindUced by the law or the '
See v.. Railway Co., 51 Fed. Rep.60. The petitions are dismissed.
GOUrJD'I1. LITTLE ROCK, M.'R. & T. Rv. Co. et al. (Qtrcuit Court, E. D. Arkansas. October 28, 1892.) No. 951. 1·.
Under tlle d,ecisionlill>,f Arkansas and at common law, an Insolvent corporation may rpake preferences among its creditors in good faith, so long as its right to do so is not res,wained by statute. Ex 'P'rll"te Conway, 4 Ark. 302, and Ringo v. Biscoe, 13 Ark. 563, followed. Rouse v. Bank, 22 N. E. Rep. 293,46 Ohio St. 493, questioned.· ' SAME-LoANS BY DIREOTORIiI.
.OF CREDITORS.
2.
Adval\QllS made in good faith by certain directors of a railroad, and used for legitimatl) corporate purposes. their inducement being to protect and give value to their own large interests as creditors and stockholders, but all other stockholders and cred,itore being' equally protected tllerllby, constitute a valid debt, enforceable by suit; and a deed of trust on certain lands 'thereafter executed by the direction of the stockholders and board of directors to secure it is as valid as if given to any other C1;editors. Trelitifng tlie directors as trustees, the payment of the deht is an essentialprerequillite 'to 'the avoidance of the deed of trust given to secure it, whether the 'debt was a or precedent, one. .' AliI 'rRtl'STEES.
"
.
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