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Supervisors v. Galbraith/Opinion of the Court

The question presented for our determination in the case is as to the validity of certain bonds issued and delivered by the board of supervisors of Calhoun County, in the State of Mississippi, in payment for stock of the Grenada, Houston, and Eastern Railroad Company, for which the supervisors subscribed in behalf of the county. In the court below they filed numerous pleas, presenting the points of defence upon which they relied. The pleas were all demurred to, the demurrers were sustained, and judgment was rendered for the plaintiff. Here the assignments of error are not numerous. We shall respond as far as we deem necessary without formally restating them.

The act of Feb. 10, 1860, authorized the subscription, provided a majority of the voters of the county signified their approval. That sanction was given, and the stock was subscribed. The amendatory act of March 25, 1871, declared that when bonds were issued in payment for such stock they should be 'signed by the president of the board of supervisors issuing the same, and be made payable to the president and directors of the Grenada, Houston, and Eastern Railroad Company, and their successors and assigns, and may be assigned, sold, and conveyed with or without guarantee of payment by said president and directors, or may be mortgaged in like manner, at their discretion, as they may deem best for the company.' The bonds here in question bore date Sept. 1, 1871, and were payable to 'the Grenada, Houston, and Eastern Railroad Company, or bearer, at the agency of said company in the city of New York, two years from date.' Each bond was for $500, with interest coupons attached, which matured half-yearly. On their face is this recital:--

'This bond is one of a series of bonds issued and delivered to the Grenada, Houston, and Eastern Railroad Company by Calhoun County, to meet and pay off the amount subscribed by said county to the capital stock of the railroad company aforesaid in pursuance of an act of the legislature of the State of Mississippi, entitled 'An Act to aid in the construction of the Grenada, Houston, and Eastern railroad,' approved Feb. 10, 1860, and of an act amendatory thereof, passed March 25, 1871, and in obedience to a vote of the people of said county at an election held in accordance with the provisions of said acts.'

An objection is made to the form of the bonds. It is said they should have been made payable to the railroad company and 'their successors and assigns,' and not to the company 'or bearer,' and it is insisted that this divergence from the prescribed formula is a fatal defect.

To this there are several answers. The statutory requirement in this particular is only directory. Indianapolis Railroad Co. v. Hurst, 93 U.S. 29; Township of Rock Creek v. Strong, 96 id. 271. The defect is one of form and not of substance. The irregularity was committed by the servants of the county, and the county is estopped to take advantage of it. Bargate v. Shortridge, 5 Clark, H. L. 297. The recital in the bonds of conformity to the statutes is also conclusive. A buyer was not bound to look further. Bigelow, Estoppel, 266; Commissioners of Knox County v. Aspinwall, 21 How. 539; Moran v. The Commissioners, 2 Black, 722. No place of payment of the bonds being designated by the statute, it was competent for the supervisors to make them payable in New York. Meyer v. Muscatine, 1 Wall. 384. The law of the place of performance governed the construction and effect of the contract. Brabston v. Gibson, 9 How. 263; Cook v. Moffat, 5 id. 295. By the law of New York such bonds may be assigned in blank, and any holder can fill the blank with his own name or otherwise. In the mean time, after such assignment in blank, they pass by delivery from hand to hand, and have all the properties of commercial paper. Hubbard v. The New York & Harlem Railroad Co., 36 Barb. (N. Y.) 286. The result is, therefore, the same that it would have been if they had been drawn in literal conformity to the statute.

The requirement of the statute in this particular is evidently the result of inadvertence. It applies to the securities spoken of the language necessary in a deed intended to vest in a corporation a fee-simple title to real estate. They were obviously intended to be made negotiable instruments. Mayor of Vicksburg v. Lombard, 51 Miss. 111.

It appears by the record that the proposition for subscription was twice submitted to the voters. The first time it was rejected; the second, it was approved by a majority. It is contended that the first submission exhausted the power to submit, and that the second was a nullity. We cannot concur in this view.

The first section of the act of 1860 gave ample power to the proper officers (then the board of police, afterwards the board of supervisors) to subscribe, upon conditions thus expressed:--

'Provided, however, that an election shall be held in the county for and on account of which stock is proposed to be subscribed by the qualified electors thereof, at the regular precincts of said county, twenty days' notice of the time of holding such election, and of the amount proposed to be subscribed, and in what number of instalments, being first given by the board of police; and if, at said election, a majority of the qualified electors voting shall be in favor of such subscription, then said board shall make such subscription for and in behalf of the county, for the amount specified, by the president of said board of police, subscribing the amount so specified, to the capital stock of said company, but if a majority of those voting shall be opposed to such subscription, the same shall not be made.'

The remaining sections provide for the collection of the amount subscribed, by taxation, the mode of collection, &c., if the subscription should be made.

There is no limitation as to the time when, or the number of times, the voters might be called upon to decide the question of subscription. We cannot recognize any restriction as to the latter, in this respect, without adding to the statute what it does not contain. Our duty is to execute the law, not to make it. Such an interpolation would involve the 'judge-made law' which Bentham so earnestly denounces. If authority be needed in support of our construction of the clause, it will be found in The Society, &c. v. New London, 29 Conn. 174.

The present Constitution of the State of Mississippi, ratified Dec. 1, 1869, declares:--

'SECT. 14. The legislature shall not authorize any county, city, or town to become a stockholder in, or to lend its credit to, any company, association, or corporation, unless two-thirds of the qualified voters of such county, city, or town, at a special election, or regular election, to be held therein, shall assent thereto.'

The learned counsel for the plaintiff in error insists that this section abrogated the act of 1860, and avoids the bonds.

It will be observed that the language of the section is wholly prospective. It is, in effect, that the legislature shall not, in the future, authorize any county, city, or town (without the consent of two-thirds of the legal voters) to do either of two things: 1. Become a stockholder in any company, association, or corporation. 2. Lend its credit to any company, association, or corporation.

The restraint is upon the legislature. It is forbidden to do thereafter either of the two prohibited things.

The act which authorized the subscription here in question, and under which it was made, was passed more than nine years before the Constitution took effect. As to this act there is no room for any doubt or question. It provided for the payment of the subscription by a tax equal to the amount subscribed.

The amendatory act of 1871, as regards the point under consideration, only changed the mode of payment for the stock. Instead of payment by a tax imposed for that purpose, it provides 'that it shall and may be lawful' for the supervisors to issue bonds for such sums as 'may be deemed necessary to meet, pay off, and discharge the subscriptions' made theretofore or thereafter under the prior act of 1860.

The eighth section requires the levy and collection of sufficient taxes to pay in due time the amount due upon such subscriptions, or upon the bonds given for their payment.

In neither case was there to be a loan of any kind to the railroad company, and certainly none of 'the credit of the county.' The constitutional prohibitions do not, therefore, apply in any wise to this case.

The act of 1871 recognizes the distinction between subscriptions made under it and those made under the act of 1860. The former permitted subscriptions by towns, which were not authorized by the latter. In relation to such subscriptions the constitutional majority of two-thirds of the voters was required.

Our construction of the clause here in question has been given to like language in constitutions elsewhere, under similar circumstances. There are several adjudications of this court exactly in point touching the Constitution of Missouri. County of Henry v. Nicolay, 95 U.S. 619; County of Callaway v. Foster, 93 id. 567; County of Scotland v. Thomas, 94 id. 682; County of Macon v. Shores, 97 id. 272. See also ''The State ex rel. Mo. & Miss. Railroad Co. v. Macon County Court'', 41 Mo. 453; State v. Greene County et al., 54 id. 540; Cass v. Dillon, 2 Ohio St. 607.

We find no error in the record.

Judgment affirmed.

MR. JUSTICE MILLER, MR. JUSTICE BRADLEY, and MR. JUSTICE HARLAN dissented.


text: Talk:Supervisors v. Galbraith/Opinion of the Court

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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Farrell v. United States (99 U.S. 221)

ERROR to the Circuit Court of the United States for the Northern District of Illinois.

This action was brought April 12, 1872, on a bond bearing date June 13, 1870, executed by De Witt C. Farrell as principal, and Andrew W. Pinkney and John B. Smith as sureties, to the United States in the penal sum of $33,000, with condition to be void if the obligors or either of them should well and truly pay or cause to be paid unto the collector of internal revenue for the fifth collection district of Illinois the amount of taxes due and owing on the following-described distilled spirits, to wit: four hundred and forty-nine barrels, numbered from 4,951 to 5,449, both numbers inclusive, containing 32,182 89/100 proof gallons, which were entered for deposit in the distillery warehouse, No. 6, of D. C. Farrell, at Peoria, in the fifth collection district of Illinois, on the tenth day of June, 1870, before such spirits should be removed from such warehouse, and within one year from the date of the bond. The bond was taken pursuant to sect. 23 of the act of July 20, 1868, entitled 'An Act imposing taxes on distilled spirits and tobacco.' 15 Stat. 135. The breach assigned was that the tax of $16,116.50, to which said spirits were subject, had never been paid.

The defendants pleaded non est factum, and that they did not owe any part of the sum demanded. It was stipulated that the defendants might give in evidence under those pleas any matter of defence. The court to which the issues were submitted for trial found them for the United States. Judgment was rendered against the defendants for the penalty of the bond, to be discharged on the payment of $15,502.27 and costs of suit.

It appears from a bill of exceptions that the court found as a matter of fact that the spirits were destroyed by fire July 27, 1870, without any fault, negligence, or carelessness on the part of said Farrell, or any person in charge of said distillery and bonded warehouse in his employment; that the spirits were so destroyed while in the bonded warehouse connected with his distillery, and that said warehouse was in the charge of an internal-revenue store-keeper.

The court ruled, as matter of law, that the defendants were liable for the tax.

The defendants, on the rendition of the judgment, sued out this writ. They assign for error that the court erred,--

1. In holding that the plaintiffs in error were liable for the tax mentioned in the bond sued on, notwithstanding the finding that, as matter of fact, the spirits upon which the tax was claimed were entirely destroyed by fire, without any fault, negligence, or carelessness on the part of said Farrell, or of any person in his employ in charge of the distillery and bonded warehouse in which they were stored.

2. In its application of the law to the facts, in this, in holding the plaintiffs in error to be liable, it clearly appearing that without their fault or negligence, from a period prior to the expiration of one year from the date of the bond sued on, it had not been, and at the time of the commencement of this suit it was not, in the power of the United States to deliver said spirits.

3. In finding the issues for the United States.

Mr. E. B. McCagg for the plaintiffs in error.

By the act of 1868, under which this bond was taken, the warehouse in which the spirits were stored was required to be, and the findings show that it was, a bonded warehouse of the United States, under the charge of a revenue store-keeper, assigned thereto by the commissioner of internal revenue. United States v. Tinger, 15 Wall. 111. It was, therefore, the duty of the government to safely keep the spirits thus in its exclusive custody until they were removed therefrom by the owner, on his paying the tax, at any time within twelve months from the execution of the bond. The obligation to pay does not arise until he removes them. The recital that the tax was due and owing at the date of the bond was an unwarranted interpolation in that instrument, officially extorted, and void. United States v. Tingey, 5 Pet. 114. It cannot work an estoppel, because it is not of the essence of the contract, but merely a mistaken construction of the statute. The United States could not, at that date, have maintained a suit against Farrel for the tax. It had no vested right, not even a right of action, until some breach of the bond had been committed. Badlam v. Tucker, 18 Mass. 284. No breach is committed if the tax be paid on the removal of the spirits; and this payment can only be made by purchasing stamps, each one of which must have a serial number, corresponding to that on the barrels. These stamps could not have been furnished after the destruction of the spirits.

Upon the payment of the tax the owner is entitled to an order for the delivery of the spirits. This is the provision of the statute; and the agreement of the government to deliver them on such payment will be inferred, although there be no express covenant to the effect. The government must therefore be in a condition to deliver before this action can be maintained. Having only the same rights and remedies, it incurs the same liabilities as a natural person. United States v. Tingey, supra; Same v. Bradley, 10 Pet. 343; Same v. Hodge, 6 How. 279; Neilson v. Lagow, 12 id. 98; Dugan et al. v. United States, 3 Wheat. 172; Dixon v. United States, 1 Brock. 177. To this contract there are reciprocal obligations. The government did not have the property in its possession for twelve months from the date of the bond. The plaintiffs in error were entitled to all that period before the right to the tax accrued, upon the delivery to them of the property; and having lost all the benefits of the contract, they are excused from performing their part of it. Badlam v. Tucker, supra; United States v. Dixey, 3 Wash. 15; Same v. Mitchell, id. 95; Mounsey v. Drake, 10 Johns. (N. Y.) 27; Baylies v. Fettyplace, 7 Mass. 325; Irion v. Hume, 50 Miss. 419.

Mr. Assistant Attorney-General Smith, contra.

MR. JUSTICE STRONG delivered the opinion of the court.

title: Farrell v. United States (99 U.S. 221)


text: Talk:Farrell v. United States (99 U.S. 221)


text:
Farrell v. United States (99 U.S. 221)/Opinion of the Court

The evidence given in the court below we cannot consider. It is improperly brought before us. The Circuit Court made no special finding of facts. All the finding it made was, that the high wines or distilled spirits mentioned in the distiller's warehousing bond were entirely destroyed by fire without any fault, negligence, or carelessness on the part of the distiller, or of any person in charge of the distillery and bonded warehouse in the employment of the distiller; that they were so destroyed while in the bonded warehouse connected with the distillery, and that the warehouse was in the charge of any internal-revenue store-keeper. The single question, therefore, is, whether these facts thus found relieve the obligors in the bond from liability to pay the government tax upon the liquors thus destroyed. We think they do not. The bond was dated on the 13th of June, 1870. It bound the obligors in a penal sum, conditioned to pay the taxes on the spirits deposited in the warehouse before their removal, and within one year from the date thereof. The obligation was unconditional, and it was exactly that which the distiller and his sureties were by the act of Congress required to assume. Act of July 20, 1868, sect. 23; 16 Stat. 135, 136. Depositing distilled spirits in a government warehouse did not make them the property of the government, or cause them to be held at the risk of the bailee. The property remained in the distiller, and the risk of loss by fire or any other casualty was consequently his. He and his sureties undertook to pay the government tax upon the spirits in the warehouse within one year, with no exception for any possible contingency. The judgment of the Circuit Court was, therefore, correct. The case of the distiller may be a hard one; but his misfortune is not the fault of the government. He might have protected himself by insurance, and possibly he did; or he might have obtained relief under the act of Congress of May 27, 1872, 17 Stat. 162. By that act Congress has provided a way in which a remission of the tax upon distilled liquors, casually destroyed while in the custody of a revenue officer in a bonded warehouse, may be obtained. The provision of such a mode of relief indicates a purpose to exclude any other.

Judgment affirmed.


text: Talk:Farrell v. United States (99 U.S. 221)/Opinion of the Court


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United States v. Glab

ERROR to the Circuit Court of the United States for the District of Iowa.

This was a civil action, brought Oct. 24, 1874, to recover the penalty imposed for carrying on the business of a brewer without having paid the special tax therefor required by the act of Congress. The case was submitted on an agreed statement of facts. On May 1, 1873, the defendant and his then partner paid their special tax for carrying on that business. The firm was dissolved August 1 of that year, by the defendant's purchasing the interest of his partner in the business; and he carried it on at the same place until the first day of May thereafter, without having paid any other tax therefor. The District Court gave judgment for the defendant, which was affirmed by the Circuit Court. The United States sued out this writ, and assigns for error the rendition of the judgment in favor of the defendant.

Mr. Assistant Attorney-General Smith for the United States.

The special-tax stamp issued to a firm looks to the transaction of the business by that firm only, and, in the absence of any statutory provision authorizing the use by its successor in business of the tax receipt, the stamp does not exempt from a special tax such successor, whether he is a former member of the firm or not; the stamp being a receipt merely, and not a license, as the court below erroneously regarded it.

There is no provision whereby one person can carry on business under a special-tax stamp issued to another, except in case of death or of removal, names in sect. 3241. The express mention of one thing is the exclusion of others. The specific provision for the cases named in that section may be justly considered as an intentional omission to provide for any other. The withdrawal of one partner operates as a dissolution of the original firm; and they who continue the business under a partnership subsequently formed constitute a new and different artificial person, subject to special tax from the time of commencing business. This view of the law is sustained by the last clause of sect. 3233, requiring the registration with the collector of the name, &c., of every person engaged in a business upon which a special tax is imposed, which clause provides that, 'in case of a firm or company, the names of the several persons constituting the same, and their places of residence, shall be registered.' A firm consisting of two persons pays no more special tax than an individual doing the same business; but when it is dissolved, such payment by it exempts neither partner who continues the business from liability to another tax, because each of them is a different 'person' from the firm.

Each separate legal entity must be taxed for a specified business conducted at a designated place.

Mr. Thomas S. Wilson, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

title: United States v. Glab


text: Talk:United States v. Glab

title: Talk:United States v. Glab


text:
United States v. Glab/Opinion of the Court

Brewers are properly regarded as included within the prohibition that no person, firm, company, or corporation shall be engaged in or carry on any trade, business, or profession until he or they shall have paid a special tax therefor in the manner provided in the act containing that prohibition. 14 Stat. 113; Rev. Stat., sect. 3232.

Persons engaged in business subject to such special tax are required to register with the collector of the district their names, style, place of residence, trade, or business, and the place where such trade or business is to be carried on; and the provision is that in case of a firm or company the names of the partners or persons constituting the same and their places of residence shall also be given, but that only one special tax shall be required of a partnership doing business at only one place.

By the record it appears that the suit in this case was commenced in the District Court, and that it was submitted and tried upon an agreed statement of facts, which is in substance and effect as follows: That the defendant was the senior member of the firm named in the record; that the firm, prior to May 1, 1873, had been engaged in the business of brewing, and that they on that day paid the special tax as brewers of the first class for one year from that date, and took the proper receipt for the payment of the same; that they continued to prosecute the business for about three months thereafter, when the firm dissolved, and the defendant, having purchased the interest of the junior partner in the business, carried on the same in his own name at the same place for the balance of the year covered by the receipt, without again paying a special tax. Hearing was had, and the District Court rendered judgment for the defendant; and the plaintiffs excepted to the ruling, and removed the cause into the Circuit Court, where the parties were again heard, and the Circuit Court affirmed the judgment of the District Court.

Cases of the kind do not require a new bill of exceptions in the Circuit Court, as the hearing in this court, when the cause is removed here, is upon the bill of exceptions filed in the District Court. Pursuant to that rule, the cause was removed into this court by the present writ of error, and the plaintiffs assign for error that the judgment which was for the defendant should have been in favor of the plaintiffs.

Licenses were granted in such cases by the prior act, which in substance and legal effect was the same as the act under consideration, except that the term 'special tax' is used in the place of the word 'license.' 13 Stat. 248; 14 id. 113; Rev. Stat., sect. 3232.

Persons, firms, companies, or corporations who manufacture fermented liquors of any name or description, for sale, from malt wholly or in part, or from any substitute therefor, shall be deemed brewers; and the provision is that brewers shall pay a special tax of $100, subject, of course, to the rule that no partnership doing business only at one place shall be required to pay more than one tax. When any person who has paid the special tax for any trade or business dies, his wife or child, or executors or administrators or other legal representatives, may occupy the house or premises and in like manner carry on, for the residue of the term for which the tax is paid, the same trade or business as the deceased before carried on in the same house and upon the same premises, without the payment of any additional tax.

Exemption from any additional tax is also allowed when any person removes from the house or premises, for which any trade or business was taxed, to any other place; and in such event the provision is that he may carry on the specified trade or business in the place to which he removes without paying any additional tax under the regulations set forth in the proviso to the same section. Id., sect. 3241.

Enough appears in those provisions to show beyond all controversy that it is not the policy of the legislative department of the government to require the honest manufacturer to pay the special tax twice. Concede that, and still it is contended that the case of the defendant is not within the words of those exemptions, which may be safely admitted; but it is equally clear that the words of the act do not provide that in a case where a firm consisting of two partners have paid the special tax, and one of the firm purchases the interest belonging to the other, that the one who becomes the sole and exclusive owner of the trade or business may not carry on the same trade or business at the same place for the balance of the term for which the tax is paid.

Difficulty undoubtedly would arise if the partner remaining should associate with him another in the place of the outgoing partner, or if any change should be made in the trade or business, or if any change should be made in the place or premises where the trade or business was carried on, or where there was any just ground to conclude that it would open the door to any fraud or imposition, or to any loss of revenue or inconvenience to the revenue officers.

Nothing of the kind is charged in this case, nor is there any ground to suspect any thing of the kind in view of the facts exhibited on the agreed statement. No new member was admitted into the firm when the junior partner went out, nor is it pretended that the retiring partner ever attempted to pursue the business or trade in any other place, which it seems to the court brings the case within the equity of the provision that the firm, though consisting of several members, may do business at one place without being required to pay more than one special tax.

Suppose the outgoing partner had died before the partnership had been dissolved, no one, it is supposed, would contend that the survivor would be required to pay another special tax for the balance of the term covered by the receipt held by the firm for the tax paid while both partners were in full life, and the court is of the opinion that the equity of the case disclosed in the record is equally strong in favor of the defendant.

Viewed in the light of these suggestions, it is clear that the United States lost nothing by the transaction, and the court is of the opinion that there is no error in the record.

Judgment affirmed.


text: Talk:United States v. Glab/Opinion of the Court


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King v. United States (99 U.S. 229)

ERROR to the Circuit Court of the United States for the Northern District of Ohio.

The facts are stated in the opinion of the court.

Mr. Edward Bissell for the plaintiffs in error.

Mr. Assistant Attorney-General Smith, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: King v. United States (99 U.S. 229)


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User:Geo Swan/Ebadullah Naqshbani

Senator Ebadullah Naqshbani, son of Ghulam Naqshband, was born in 1950 in the village of Gozar Damla Lashkari in Khulm district of Balkh Province. He completed his primary and secondary education in Balkh, and graduated in 1971 from the Balkh Teacher Training Institute. Subsequently, he worked at Ajani Malki School in Samangan.

In 1971, Sen. Naqshbandi moved to Darai Sof district and by 1974 he was working at Khwaja Burhan Intermediate School in Khulm. He taught in Dara-e Sof in 1979 and served as a headmaster of intermediate schools in Khulm. In 1980 he was headmaster of a Khulm boys' school and in 1985 he became a member of an oversight board in the education office of Khulm. He also taught in Khulm for a year.

In 2003, he was appointed manager of Amin Hussain Intermediate School. Following Sen. Naqshbandi's efforts, the school was upgraded to a high school. He is the recipient of several medals and certificates. Sen. Naqshbandi enjoys poetry. His poems have been published in magazines and daily newspapers. He has traveled to India on official trips for the Ministry of Education.

Sen. Naqshbandi speaks Dari and Pashto. He was appointed to the Meshrano Jirga by the President. He is married and has five children.

title: User:Geo Swan/Ebadullah Naqshbani


text: Talk:King v. United States (99 U.S. 229)


text:
King v. United States (99 U.S. 229)/Opinion of the Court

This is a writ of error to a judgment of the Circuit Court against Harry Chase and his sureties on his official bond as collector of internal revenue for the tenth district of Ohio.

King and his co-sureties alone join in the writ, and the case having been submitted to the court below without a jury, the principal error assigned is that on the facts found by that court the judgment should have been in their favor.

The substance of the facts so found is, that while Chase was in office as collector, and while the defendants were liable on his bond for his official acts, he received from the treasurer of the Toledo, Wabash, and Western Railroad Company, as and for the tax on interest paid on their mortgage bonds, the sum of $24,923.87, which he did not pay into the treasury of the United States, and of which he neglected to render any account to the government. As it is on the particular circumstances of this payment to Chase that the defendants rely, it is necessary to state them with some care as they appear in the findings of the court.

It thus appears that on the first day of June, 1868, the railroad company was indebted to the United States, for the five per cent tax on interest paid by it on its mortgage bonds, the sum of $112,778, which was on that day paid to Chase in three checks of the treasurer of the railroad company on two different banks of Toledo, on which the money was paid to Chase by the banks.

The taxes for which this sum was paid included the whole amount of the taxes for the years 1865, 1866, and 1867. Of this sum there was due—

This entire sum, as we have said, was paid at the same time by two different checks of that date.

At the time of this payment there was delivered to Chase six separate returns of the taxes so due in the form prescribed by law to be made to the assessor of taxes, which were subscribed by the treasurer of the company, but not sworn to, and which had not then been filed with or delivered to said assessor, but all of which were delivered by Chase to the assessor, except the returns for the months of August, September, and October, 1867, which were the latest returns so delivered to Chase at the time the money was paid. These returns he did not deliver to the assessor, nor did he make any mention of them in his report to the government at any time, and he retained the amount of them out of the money received from the treasurer of the company.

It was five years after this before the officers of the government discovered that he had received this sum above what he had accounted for, and in the mean time he had become insolvent.

The proposition of defendants' counsel is, that because this money was not received by Chase on any return made to the assessor, or on any assessment made by him or by the commissioner of internal revenue, for such taxes, and because the return delivered to Chase was not verified by oath, it was a voluntary deposit of the money in his hands by the treasurer of the company, and was not received by him in his official character. That it was not his duty to receive it for the government under such circumstances, and his sureties are not liable because it was an unofficial act. The argument has been pressed with great ingenuity and skill, and with many illustrations; but in all its forms it amounts to the averment that Chase had no legal authority as collector of internal revenue to receive the money for the government under the circumstances named, and the payment was not a lawful or valid payment.

There can be no question that Chase understood himself as receiving the money for the government, and in payment of the taxes due. Nor is there any question that the treasurer of the railroad company intended it as payment to Chase in his official character as collector, and supposed he had paid the taxes by so doing; for Chase gave him three separate receipts in which the taxes for each of the years we have mentioned are set out, and also the months of the year in which they accrued, which he signed officially as collector, and declared in each receipt that it was in full of the account. Nor can there be any doubt that these taxes were owing and them due to the United States; for the blank form used by the treasurer in making these returns shows that such returns were by law to be made to the assessor on or before the tenth day of the month following that in which the interest became due and payable, and were to be paid to the collector on or before the last day of that month. The latest of the taxes in the case before us had long been due. Part of them had been detained by the railroad company over two years. All of them over six months. The company, by the returns which were handed to the collector, acknowledged the sums therein stated to be due, and tendered him the money. There can be no question raised as to the validity of the tender (because it was in bank checks indorsed good by the bank instead of money), unless objection had been made to the character of the tender.

The narrow question then is, whether, when a corporation presents to the collector a statement of taxes long past due, which taxes must in the end be paid to him, and tenders him the full payment of said taxes, he may not receive them and give a valid acquittance for the amount so received.

It is not necessary to decide that such a transaction would bar a recovery by the United States of any sum in excess of that paid, which might afterwards be found to be owing for the same period and for the same tax. The simple question is, was it a valid payment for that amount, and to that extent, which the collector might lawfully receive and be bound to pay to the government.

To hold the contrary is to decide that a debt long past due and acknowledged to be due by the debtor cannot be paid, when he is willing to pay, and the proper officer of the government ready to receive it, because the debtor has neglected to report the same facts to some other officer, or that officer has neglected to make report of the facts. Of the duty of the railroad company to pay the money as speedily as possible there can be no doubt. When it admitted the obligation and offered to pay it, was there no one to whom it could pay it?

Sect. 3142, Revised Statutes, then in force, provides for the appointment of a collector of internal revenue for every collection district. Sect. 3143, in prescribing the conditions of his official bond, makes it his duty to account for and pay over to the United States all public money which may come into his hands or possession, and this condition is in the bond which is the foundation of the present suit. Money paid for taxes past due and received by the collector as such, and for which he gives a receipt as collector, specifying with precision the taxes for which it is paid, is public money. If it is not, whose money is it? The tax-payer has parted with it in voluntary payment of a debt due the United States. The collector appointed by the United States has received it as money paid to the United States on a debt due the United States. It is not, therefore, his money. It is the property of the United States, and within the meaning of the bond it is public money.

The answer made to this by counsel is that the debt was not due, or, at least, not payable, until the assessor has received and acted on the return made by the corporation. There is nothing in the statute which says this in terms. If it be sound it must be an implication, and we do not see how such an implication can arise. That such an assessment was not made long before was owing to the neglect of the company to make proper returns. Did that neglect make the taxes which should have been paid a year before any less a debt from that time? And can it be said they were not due at the time the statute says they should be paid, because the company failed to make the report which it was its duty to make?

If there could be any doubt upon this point, it was set at rest by the decision of this court in The Dollar Savings Bank v. United States (19 Wall. 227), where the same objection was taken to a suit to recover the tax. The court held explicitly that the obligation to pay the tax did not depend on an assessment made by any officer whatever, but that the facts being established on which the tax rested, the law made the assessment, and an action of debt could be maintained to recover it though no officer had made an assessment. So that, both on principle and authority, we are of opinion that the judgment for the sum received by the collector and not paid over, with interest, is right, and must be affirmed. See also United States v. Ferary, 93 U.S. 625.

Sect. 825, Revised Statutes, enacts that 'there shall be taxed and paid to every district attorney two per centum upon all moneys collected or realized in any suit or proceeding arising under the revenue laws, and conducted by him, in which the United States is a party, which shall be in lieu of all costs and fees in such proceeding.' The court in this case, after a motion for re-taxation, ordered that this two per cent on the sum recovered, amounting to $712.77, be taxed against defendants. In this we think there was error.

1. The section applies only to cases where the money is collected or realized. This cannot be told until it is done, and the sum cannot, therefore, be taxed in the judgment against defendant. Suppose in the present case half the judgment is realized and no more, then the sum taxed is twice as much as the law allows.

2. This two per cent is to be in lieu of all costs and fees in such proceeding. If it be costs taxable against defendants, then where, after a long litigation, the defendant is adjudged to pay ten dollars and costs, he escapes by paying ten dollars and twenty cents in full. This is obviously not the purpose of the statute, but must be its results if the word 'taxed' in the section means taxed in court against the defendant.

The section was no doubt intended to establish a rule of compensation as between the government and its attorney, by which, when he has been successful, he gets a commission of two per cent for collection, but leaves him his ordinary statutory fee where nothing is realized.

So much of the judgment, therefore, as relates to this sum taxes in the costs will be reversed, and the remainder of the judgment affirmed; and it is

So ordered.

MR. CHIEF JUDTICE WAITE did not sit in the case, nor take any part in deciding it.


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Page:Decline and Fall of the Roman Empire vol 1 (1897).djvu/243

Rh About thirty-two years before that event, the emperor  Severus, returning from an Eastern expedition, halted in Thrace, to celebrate, with military games, the birthday of his younger son, Geta. The country flocked in crowds to behold their sovereign, and a young barbarian of gigantic stature earnestly solicited, in his rude dialect, that he might be allowed to contend for the prize of wrestling. As the pride of discipline would have been disgraced in the overthrow of a Roman soldier by a Thracian peasant, he was matched with the stoutest followers of the camp, sixteen of whom he successively laid on the ground. His victory was rewarded by some trifling gifts, and a permission to enlist in the troops. The next day the happy barbarian was distinguished above a crowd of recruits, dancing and exulting after the fashion of his country. As soon as he perceived that he had attracted the emperor's notice, he instantly ran up to his horse, and followed him on foot, without the least appearance of fatigue, in a long and rapid career. "Thracian," said Severus, with astonishment, "art thou disposed to wrestle after thy race?" "Most willingly, Sir," replied the unwearied youth, and, almost in a breath, overthrew seven of the strongest soldiers in the army. A gold collar was the prize of his matchless vigour and activity, and he was immediately appointed to serve in the horse-guards who always attended on the person of the sovereign. Maximin, for that was his name, though born on the territories of the empire, descended from a mixed race of barbarians. His father was a Goth, and his mother of the nation of the Alani. He displayed on every occasion a valour equal to his strength; and his native fierceness was soon tempered or disguised by the knowledge of the world. Under the reign of Severus and his son, he obtained the rank of centurion, with the favour and esteem of both those princes, the former of whom was an excellent judge of merit. Gratitude forbade Maximin to serve under the assassin of Caracalla. Honour taught him to decline the effeminate insults of Elagabalus. On the accession of Alexander he returned to court, and was placed by that prince in a station useful to the service and honourable to himself. The fourth legion, to which he was appointed tribune, soon became, under his care, the best disciplined of the whole army. With the general applause of the soldiers, who bestowed on their favourite hero the names of Ajax and Hercules, he was


text: Talk:King v. United States (99 U.S. 229)/Opinion of the Court


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Fosdick v. Schall

APPEAL from the Circuit Court of the United States for the Northern District of Illinois.

The Chicago, Danville, and Vincennes Railroad Company, an Illinois corporation, on the 10th of March, 1869, executed a mortgage to William R. Fosdick and James D. Fish, trustees, to secure an issue of $2,500,000 of bonds. This mortgage covered all the franchises, issues, and profits of the company, and all the property it then owned or possessed, or might thereafter acquire, either in law or equity. Provision was made to the effect that, in case of default in the payment of interest on the bonds continuing for six months, the trustees in the mortgage, on demand of the holders of at least one-half the bonds then outstanding and unpaid, might take possession of all the mortgaged property, together with all the books, records, papers, accounts, and money of the company, and enter into the management and control thereof, paying all the expenses of taking, holding, managing, and operating the property from the income and profits thereof, or, if the property should be sold, from the sale thereof. The property might be sold as an entirety, and the proceeds, after deducting the expenses of sale, applied to the payment of the interest and principal of the bonds.

On the 12th of March, 1872, a second mortgage was executed to the same trustees, to secure a further issue of bonds to the amount of $1,500,000.

On the 1st of February, 1873, after both these mortgages were executed, the railroad company and Michael Schall entered into a contract in writing, a copy of which is as follows:--

'NEW YORK, Feb 1, 1873.

'Sold this day for account of Mr. Michael Schall, of York, Penn.,

'To the Chicago, Danville, and Vincennes Railroad Co.

'Office 38 Pine Street, New York:

'Two hundred (200) eight-wheel gondola coal-cars, as per specifications and agreement made by J. E. Young, and herewith attached.

'Price, delivered on the track at Pittsburg, at adpot of P. C. & St. L. R. R., seven hundred dollars per car. Cars to remain the property of Michael Schall until paid for.

'Delivery to commence, and cars to be taken, on or before March 1, and at least twenty-five (25) cars in each week thereafter until all are delivered, the seller having the option of increasing the number of cars to be delivered per week, if desired.

'Settlement to be made on delivery of each twenty-five (25) cars or more, at the opinion of sellers, with the notes of the Chicago, Danville, and Vincennes Railroad Company, payable in the city of New York, and adding interest at the rate of ten per cent per annum. The first notes are to be drawn at sixty days from date of delivery, and for twenty (20) dollars on each car, and the balance for a like amount and payable monthly thereafter.

'Cars to be lettered and numbered as per directions of Mr. Young.

'Invoice and shipping receipts to be sent to the railroad company's office, No 38 Pine Street, New York.

'It is understood the sellers shall not be responsible for the acts of Providence, strikes of workmen, or other causes beyond their control, which may retard and delay the manufacturing and delivery of the said cars as above stated.

'Shipping receipts to be evidence of delivery.

'(Signed) MICHAEL SCHALL.

'I hereby accept the above proposition for the R. R. Co.

'(Signed) J. E. YOUNG, Gen. Manager.'

Under this contract two hundred and twenty-five cars were delivered into the possession of the railroad company by Schall, numbered from 0141 to 0365, both inclusive, and lettered, 'This car is the property of Michael Schall, York, Pa.' Notes were executed by the company, according to agreement, for the price of the cars as they were delivered. Of these notes $44,323.43 have been paid by the company, and $110,334.04 are outstanding. The cars were used by the company in the usual course of business.

On the 22d of February, 1875, Stephen Osgood, who held $9,000 of the bonds secured by the mortgage of 1869, and $2,000 of those secured by that of 1872, filed a bill in chancery in the Circuit Court of Will County, Illinois, against the railroad company and Fosdick and Fish, trustees, with others, for a foreclosure of the two mortgages and a sale of the mortgaged property for the benefit of the bondholders, according to their respective priorities; and on the same day the court appointed Henry B. Hammond and John B. Brown receivers in the cause, with authority to take the moneys, property, and effects of the company into their possession, and run and operate the railroad under the orders of the court until discharged. In the order making the appointment it was specially provided that out of the moneys which should come into the hands of the receivers by reason of the operation of the road, the collection of debts, or the sale of the property, they should pay without further order as to particular demands—

1. The necessary current expenses of carrying out the duties of the trust;

2. 'All debts now [then] due and owing by said railroad company for labor and services rendered in operating the railroad within the [then] last three months, and all indebtedness for engines, iron, wood, supplies, cars, or other property purchased within said period of three months for the use of the company;'

3. Taxes, insurance, and charges of litigation; and,

4. Liabilities for animals killed by engines or cars upon the line of the road.

On the 5th of May, 1875, the cause was removed to the Circuit Court of the United States for the Northern District of Illinois on the application of Fosdick and Fish, trustees, two of the defendants, and on the 17th of the same month the receivers appointed by the State court filed in the Circuit Court an account of their receivership for the months of February, March, and April.

On the 20th of May, Fosdick and Fish, as trustees, filed in the same Circuit Court of the United States their bill against the railroad company and certain other defendants, for the foreclosure of the two mortgages of which they were trustees; and on the same day an order was entered in that court appointing Adna Anderson receiver, with authority to take possession of all the books, papers, vouchers, and evidence of indebtedness, moneys, and assets of the company, and all other effects of every kind, name, and nature which belonged to the company, or were held for its use and benefit, or in which it had any beneficial interest. He was also authorized to run, operate, and manage the road and pay the expenses thereof, and manage and control all the property and affairs of the company. Authority was also given him to use the moneys of the company for any and all the purposes specified in the order, and he was required, as speedily as possible, to examine into the condition of the property and assets of the company, its contracts, leases, running arrangements, its business affairs, and take an inventory of its movable property and make a schedule of its floating indebtedness for labor and supplies, and report the same, as soon as might be, with his recommendation as to the proper disposition of the same and payment thereof. Under this order Anderson took possession of the property, and on the 11th of June the receivers appointed by the State court filed their final accounts, and asked to be discharged from their trust.

The cars delivered under the Schall contract were in use by the company when the receivers appointed by the State court took possession. Those receivers also continued to use the cars during all the time they operated the road, and Anderson took the possession of them when he entered upon his receivership. On the 27th of November, 1875, Anderson having ascertained what the claim of Schall was, and finding that they were necessary for the use of the road, entered into an arrangement with him, subject to the approval of the court, by which they were valued at $420 each; and it was agreed that Schall should be paid seven dollars a month for each car as rent. The aggregate of payments at this rate for five years would equal the value of the cars; and it was further agreed that if the rent was paid promptly, and in addition an amount which would be equal to interest at the rate of seven per cent per annum on the deferred instalments, the cars should, at the end of that time, become the property of the company.

On the 19th of July, 1875, the Circuit Court denied a motion of Osgood to consolidate his suit removed from the State court with that of Fosdick and Fish, but made an order allowing him and his associates to intervene in the latter suit for the protection of their respective interests, upon taking the necessary steps therefor. Accordingly, on the 6th of January, 1876, Stephen Osgood, Frederick W. Huidekoper, Thomas W. Shannon, John M. Dennison, George W. Gill, Alanson A. Sumner, Chandler Robbins, and William T. Hickok, owners and holders of a large amount of bonds secured by the several mortgages which were in the process of foreclosure, filed, with the permission of the court, their petition of intervention.

On the 27th of January, 1876, Schall filed an intervening petition, in which, after setting forth the facts of his claim substantially as they have already been given, and averring that he had been paid at the rate of seven dollars a month as rent during all the time the cars had been in use by the present receiver, he asked that the balance, his due, might be paid him out of any funds to the credit of the cause not otherwise appropriated, and that the cars might be returned to him.

Fosdick and Fish and the intervening bondholders answered this petition, claiming that the title of the cars had passed to the company under its contract with Schall, and that consequently the lien of the mortgages had attached to the cars as after-acquired property. They denied his right to payment for the cars out of the income of the road or out of the proceeds of the sale, and they denied his right to a return of the cars.

On the 5th of December, 1876, the court entered a decree in the suit of Fosdick and Fish for a sale of the mortgaged property, not, however, including the cars of Schall; and on the 7th of February, 1877, the property was sold in accordance with the provisions of the decree to Huidekoper, Shannon, and Dennison for $1,450,000. On the 12th of April the sale was approved by the court, and the master ordered to convey the property to the purchasers.

On the 28th of April, 1877, the master, to whom the matter of the intervening petition of Schall had been referred, reported the facts as they have already been stated, and also that the cars were necessary for the use of the road, and that the arrangement which had been made by the receiver was a beneficial one, whether the road remained in the hands of the receiver or passed into the possession of other parties.

To this report Fosdick and Fish and the intervening bondholders excepted, in substance, because the master found the title to the cars to be in Schall, and not in the company. Upon the final hearing, the court held that Schall had not parted with his title to the cars, and was entitled to the possession. Accordingly it was ordered that the receiver, if in possession, or the purchasers at the sale, should restore the cars to Schall, and that the clerk of the court, out of the funds standing to the credit of the cause, should pay him the sum of $9,450, as rent for the cars, at the rate of seven dollars each per month for the six months preceding the 22d of February, 1875, the date when the receivers of the State court were appointed and took possession, and the further sum of $5,118.75, for a like rent during the time the cars were used by the receivers of the State court. It nowhere appears from the record that there are any funds in court to the credit of the cause except such as arose from the sale of the mortgaged property.

From this decree Fosdick and Fish and the intervening bondholders have appealed.

Mr. Henry Crawford and Mr. Ashbel Green for the appellant.

Even should it finally be decided that the title to the cars has always been in Schall, the court below could not appropriate any part of the proceeds of sale to discharge a liability for the rent of the cars incurred by the mortgagor, years after the lien of the mortgage had become fixed and paramount.

The lien of the appellants by the recorded mortgage became effective March 10, 1869, and a subsequent creditor of the company, who claims under a contract into which he entered without privity of the mortgagee, must hold his rights subject in all things to that mortgage. Rogers v. Humphreys, 4 Ad. & El. 299; Haven v. Adams, 4 Allen (Mass.), 80; Crosby v. Harlow, 21 Me. 499; Ellis v. B. H. & E. Railroad, 107 Mass. 1. The Statute of Illinois is express. Gross, Stat., c. 24, sect. 19. The judicial construction of it has with unvarying strictness charged him with full notice of the rights of the holders of the first recorded lien, and ruled that it was impossible for him to acquire any greater interest or equities in the incumbered estate than the mortgagor possessed. Warner v. Helen, 1 Gilm. (Ill.) 220; Kruse v. Scripps, 11 Ill. 98.

The lien given to a mechanic by express enactment is treated as an in invitum hypothecation of the premises on which the work is done or materials are delivered; and if it be subsequent in date to duly recorded incumbrances, he accepts it with full notice. He cannot recoup the improvements incorporated in the mortgaged premises, nor postpone the claim of the mortgagees.

The action of the court below in repudiating this doctrine is contrary to all the authorities. Reed v. Bank of Tennessee, 1 Sneed (Tenn.), 262; Jesup v. Stone, 13 Wis. 466; Otley v. Haviland, 36 Miss. 19; Prior v. Munn, 4 Cal. 175; Hughes v. Edwards, 9 Wheat. 500; Minnesota Company v. St. Paul Company, 2 Wall. 609; Butt v. Ellett, 19 id. 544; Getchell v. Allen, 34 Iowa, 562.

The governing principles upon which priority of lien is based are that the vested rights of purchasers or incumbrancers cannot in any manner or to any degree be impaired or displaced, when once attached, by any rights subsequently accruing to mechanics. Williams v. Chapman, 17 Ill. 423; McLagen v. Brown, 11 id. 519.

In an ordinary foreclosure, it would be conceded that these principles control, and that the statutory priority of the bondholders cannot be defeated by devoting any part of the proceeds of the sale to the payment of any junior liability or contract of the mortgagor.

The only claim to exempt this case from the control of the rules applicable to real-estate mortgages must be based upon the exploded hypothesis that mortgages upon railways are in this respect exceptional in their character. The legislature gave this corporation power to 'mortgage' its property to secure its bonds. The mortgage, as to its execution, acknowledgment, record, and effect, was determined by those laws and statutes applicable to mortgages made by natural persons. On default, it is enforceable by chancery, and the rights of the creditors secured thereby are protected by the same principles as to registry and priority which preserve the vested rights of other mortgagees. The attempt to make a distinction to the prejudice of the mortgagees of a railroad was repudiated by this court at a very early period in the history of this class of securities. Dunham v. Railway Company, 1 Wall. 268. See also Palmer v. Forbes, 23 Ill. 248.

The bondholders' right grows out of their lien upon the entire railroad and appurtenances whose sale produced the fund. According to fundamental principles, Schall's claim, arising years later, is subordinate, and therefore not entitled to any share of the fund until full payment of the bonds.

No warrant can be found in the legislation of Illinois for a preference to the car manufacturer. A railroad being a quasi public work, owned and operated by an artificial person, having only such capacity as the legislature choose to grant, it is usual, by express statute, to vest borrowing powers and the authority to create even an express contract lien. In the absence of positive enactment, a railroad company cannot create a statutory charge upon its road by incurring a liability for improvements. Dunn v. North Missouri Railroad, 24 Mo. 493; McAuley v. West Vermont Railroad, 33 Vt. 323. The only statute of Illinois purporting to cover this class of liabilities and authorize a lien upon railroads is that of July 1, 1872 (Rev. Stat. Ill. (1874), p. 671, sect. 51), which embraces, inter alia, fuel, ties, material, supplies, or any other article or thing necessary for the operation of the road. We do not ask any narrow construction of the statute as to the class of claims included in it. Cars are necessary for the operation of a railroad; should an owner of them, by a contract for rent, lease his equipment to an Illinois railroad corporation, he might, under a fair construction of the law, be considered as furnishing a supply or an article or a thing necessary for the operation of the road, and as entitled to the precise rights and remedies of the statute.

The nature and extent of this statutory right, and especially when invoked as against prior and fixed incumbrances, are not matters of doubtful construction.

In determining whether such a construction is to be put upon the statutes as would overreach prior incumbrances, very strict canons of construction are adopted by the courts. Morgan v. Cincinnati, 3 Wall. 275; Davis v. Alvord, 94 U.S. 545; Cook v. Heald, 21 Ill. 425; Brady v. Anderson, 24 id. 112; Stephens v. Holmes, 64 id. 336.

This construction given to the local statute by the highest judicial authority of the State is controlling on the Federal courts. Leffingwell v. Warren, 2 Black, 599; Nichols v. Levy, 5 Wall. 433; Railroad Tax Cases, 92 U.S. 575.

The statute, instead of displacing prior liens to any extent whatever, has been cautiously framed to protect them, in precise harmony with the correct principles which we have noted, and most explicitly defines and bounds the lien. It is 'upon all the property, real, personal, and mixed, of said railroad corporation, as against such railroad, and as against all mortgages or other liens which shall accrue after the commencement of the delivery of said articles,' &c. Prior mortgages or other liens are left wholly untouched. Their priorities, already assured by the registry laws, were further designed to be protected by express legislation, and as against them the material-man has no lien. His only claim is to take his incumbrance as of the date when his supplies were first delivered; and, if any surplus is left after full payment of the precedent mortgages, to assert it upon that, as against the liens which accrued after his had become vested.

Davis v. Bilsland (18 Wall. 659) and Fox v. Seal (22 id. 424) were decided upon statutes whose provisions are directly the reverse of those which apply to this case.

The first mortgage which the Circuit Court displaced by this decree did not accrue after, but five years before, the sale of the cars or their delivery to the company, and Schall's statutory charge was wholly inoperative. If he had, in apt time, instituted an equitable action in his own name, to enforce his lien on the railroad property by reason of his claim, he could only have obtained a decree limited to the company's title, and to that of such mortgagees as had accrued after the date when the delivery of his cars began. His rights cannot be amplified because he seeks to enforce them as an intervener in a pending foreclosure case. The statute only fixes the lien 'provided suit shall be commenced within six months after such material shall have been furnished.' When Schall filed his petition the bar of the statute was complete. Green v. Jackson Water Co., 10 Cal. 374; Green v. Ely, 2 Greene (Iowa), 508; Lunt v. Stephens, 75 Ill. 512; Arbuckle v. Illinois Midland Railway, 81 id. 431; Pryor v. White, 16 B. Mon. (Ky.) 605; Phillips, Mech. Liens, sect. 281.

The mechanic's lien derives its existence and efficacy from positive legislation, and not by reason of any superior natural equity. It can never be enforced, unless he brings himself within the provisions of the statute.

The whole doctrine was summed up in Ellison v. Jackson Water Co., 12 Cal. 554. 'The plaintiff cannot, therefore, maintain the lien he asserts under the statute, and outside of the statute there is no lien which can be enforced. Equity raises no lien in relation to real estate except that of a vendor for purchase-money.' See also Spencer v. Barnett, 35 N. Y. 94; McNeil v. Borland, 23 Cal. 144; McCoy v. Quick, 30 Wis. 521; Clark v. Moore, 64 Ill. 275; Croskey v. N. W. M. Co., 48 id. 480; Brady v. Anderson, 24 id. 112; Stephens v. Holmes, 64 id. 336; Rothgerber v. Dupy, id. 452; Phillips v. Stone, 25 id. 80; Cook v. Heald, 21 id. 425; Canal Company v. Gordon, 6 Wall. 561; Fountain v. Reneval, 17 How. 384.

The charter of the company authorized it to mortgage all its then existing or after-acquired property. The lien was thus to be paramount, continuous, and effectual. The power of sale in that instrument was a part of the security which mortgage creditors had the right to have enforced. Shaw et al. v. Norfolk County Railroad Co. et al., 5 Gray (Mass.), 162; American Bridge Co. v. Heidelbach, 94 U.S. 798; Dows v. Muller, id. 444; Gilman et al. v. Illinois & Mississippi Telegraph Co., 91 id. 603.

The appointment of a receiver in such cases is equivalent to an entry by the mortgagees, and thereafter the income of the property is theirs. American Bridge Co. v. Heidelbach, supra; Gilman v. Illinois & Mississippi Telegraph Co., supra; Galveston Railroad v. Cowdrey, 11 Wall. 482; Noyes v. Rich, 52 Me. 116; Boyd v. Burke, 8 I. R. Eq. 660; Howell v. Ripley, 10 Paige (N. Y.), Ch. 43; Ellis v. Boston, Hartford, & Erie Railroad Co., 107 Mass. 1.

The Circuit Court had no more authority to take a portion of the mortgage security and devote it to subsequent creditors, than to order it paid over to the corporation itself, and then let it pay its own floating debts. Douglass v. Cline, 3 Cent. Law J. 659.

An exceptional case of hardship or equity does not authorize a court to disregard the legal priority of the mortgages. Denniston v. Chicago, Alton, & St. Louis Railroad Co., 4 Biss. 415; Ellis v. Boston, Hartford, & Erie Railroad Co., supra; Galveston Railroad Co. v. Cowdrey, supra; Duncan v. Mobile & Ohio Railroad, 2 Woods, 545; Coe v. Columbus, Peoria, & Indiana Railroad Co., 10 Ohio St. 404; Dillon v. Barnard, 1 Holmes, 394; Dunham v. Railway Company, 1 Wall. 268; Nelson v. Iowa Eastern Railway Co., 2 Cent. Law J. 741.

Schall cannot lawfully recover possession of the cars, nor compensation for their use by a receiver, in the foreclosure suit, because the trust-deed became a subsisting and paramount lien thereon, as soon as they were purchased by and delivered to the company, and the written contract under which Schall claims title is, as against the appellants, void under the laws of Illinois. Pennock v. Coe, 23 How. 117; Minnesota Company v. St. Paul Company, 2 Wall. 609; Shaw v. Bill, 95 U.S. 10; Galveston Railroad v. Cowdrey, supra.

The Supreme Court of Illinois, in Palmer v. Forbes (23 Ill. 248), announced the same view, holding that engines and cars were in the nature of chattels real, and, whenever they came into the possession of the company by purchase, became immediately subject to the mortgage.

This construction of the mortgage was, therefore, at its date, a fixed rule of property.

The bondholders' title to the cars is based on the fact that they are described in the mortgage, and that their lien has been still further ripened and enforced by an actual possession taken in their interest.

Schall sold the cars to the company. The sale was perfected by actual delivery, and part payment was made. The title was attempted to be retained in him, but solely by way of security for the unpaid portion of the contract price. He had no right of possession, use, or disposition of them, and the risk of the property was with the company.

The exact legal character of the contract is thus defined by the Supreme Court of Illinois: 'It was a conditional sale with a right of rescission on the part of the vendor in case the purchaser should fail in payment of his instalments. A contract legal and valid as between the parties, but made with the risk on the part of the vendor of losing his lien in case the property should be levied upon by creditors of the purchaser while in possession of the latter.' Murch v. Wright, 46 Ill. 488.

The transaction is precisely as though the petitioner had executed a formal bill of sale for the cars, and taken back an unrecorded chattel mortgage for the deferred payments.

The invalidity of such an unrecorded and unacknowledged contract for a lien is settled by the Supreme Court of Illinois interpreting the statute. Ketchum v. Watson, 24 Ill. 591; Forest v. Tinkham, 29 id. 141; McCormick v. Hadden, 37 id. 371; Sage v. Browning, 51 id. 217; Frank v. Miner, 50 id. 444.

The whole subject has been recently adjudged by this court in Hervey et al. v. Rhode Island Locomotive Works, 93 U.S. 664.

Mr. R. Biddle Roberts, contra.

The cars furnished by Schall being in the nature of supplies, within the meaning of the Illinois statute of July 1, 1872, entitled him to a lien upon all the personal property of the company for the amount due him. That lien was not lost by the delay in filing his petition. The possession of the receiver was for the benefit of all parties who might at the termination of the suit be found to be entitled to the property, and it prevented the lapsing of the lien by limitation. Wrixon v. Vize, 3 Dr. & War. 104.

A contract of conditional sale of cars to a railway company by the terms of which the company takes possession, and the vendor retains the title to and the ownership of them until full payment for them is made-is, even in Illinois, a valid contract, without recording it as a chattel mortgage, and is binding upon the company and its receiver. Under it, as between the company and its privies and the vendor, the title to the cars does not pass to or vest in the company until full payment is made. 1 Parsons, Contr., p. 449; Benjamin, Sales, sect. 320; Story, Sales, sect. 313; Hilliard, Sales, p. 61; 2 Kent, Com., p. 497; 2 Schouler, Pers. Prop., p. 292; Murch v. Wright, 46 Ill. 487; Gibbs v. Jones, id. 319; Fawcett, Isham, & Co. v. Osborn, Adams, & Co., 32 id. 11.

That such a contract is valid and binding against everybody, and under it the vendor holds his title absolutely against not only the vendee and his privies, attaching creditors of the vendee, and sales on execution levied by them, but even against bona fide purchasers without notice, is sustained by the weight of authority. Copland v. Bosquet, 4 Wash. 588; Rogers Locomotive Works v. Lewis, 4 Dill. 158; Tibbetts v. Towle, 12 Me. 341; Hotchkiss v. Hunt, 49 id. 213; Edwards v. Grand Trunk Railway of Canada, 54 id. 105; Crocker v. Gullifer, 44 id. 491; Luey v. Bundy, 9 N. H. 298; Porter v. Pettengill, 12 id. 299; Kimball v. Jackman, 42 id. 242; McFarland v. Farmer, id. 386; West v. Bolton, 4 Vt. 558; Manwell v. Briggs, 17 id. 176; Bradley v. Arnold, 16 id. 382; Root v. Lord, 23 id. 568; Davis v. Bradley, 24 id. 55; Clark v. Wells, 45 id. 4; Armington v. Houston, 38 id. 448; Coggill v. Hartford & New Haven Railroad Co., 3 Gray (Mass.), 545; Sargent v. Metcalf, 5 id. 306; Burbank v. Crooker, 7 id. 158; Deshon v. Bigelow, 8 id. 159; Hirschorn v. Canney, 98 Mass. 149; Day v. Bassett, 102 id. 445; Crompton v. Pratt, 105 id. 255; Barrett v. Pritchard, 2 Pick. (Mass.) 512; Hussey v. Thornton, 4 Mass. 405; Marston v. Baldwin, 17 id. 606; Ballard v. Burgett, 40 N. Y. 314; Keeler v. Field, 1 Paige (N. Y.), 312; Herring v. Hoppock, 15 N. Y. 409; Forbes v. Marsh, 15 Conn. 384; Hart v. Carpenter, 24 id. 427; Rose v. Story, 1 Pa. St. 190; Agnew v. Johnson, 22 id. 471; Lehigh Company v. Field, 8 Watts & S. (Pa.) 232; Sage v. Sleutz, 23 Ohio St. 1; Roland v. Gundy, 5 Ohio, 202; Carmack v. Gordon, 2 Cin. (Ohio) 408; Thomas v. Winters, 12 Ind. 322; Shireman v. Jackson, 14 id. 459; Plummer v. Shirley, 16 id. 380; Hanway v. Wallace, 18 id. 377; Dunbar v. Rawles, 28 id. 225; Bradshaw v. Warner et al., 54 id. 58; Parmlee v. Catherwood, 36 Mo. 479; Griffin v. Pugh, 44 id. 326; Little v. Page, id. 412; Ridgeway et al. v. Kennedy et al., 52 id. 24; Bailey v. Harris, 8 Iowa, 331; Robinson v. Chapline, 9 id. 91; Baker v. Hall, 15 id. 277; Owens v. Hastings & Sexton, 18 Kan. 446; Sumner v. McFarland, 15 id. 600; Hallowell v. Milne, 16 id. 65; Couse v. Tregent, 11 Mich. 65; Fifield v. Elmer, 25 id. 48; Hunter v. Warner, 1 Wis. 126; Goldsmith v. Bryant, 26 id. 34; Bradshaw v. Thomas, 7 Yerg. (Tenn.) 497; Gambling v. Read, 1 Meigs (Tenn.), 281; Buson v. Dougherty, 11 Humph. (Tenn.) 50; Ellison v. Jones, 4 Ired. (N. C.) 48; Parris v. Roberts, 12 id. 268; Patton v. McCane, 15 B. Mon. (Ky.) 555; Chism v. Woods, Hard. (Ky.) 531; Goodwin v. May, 23 Ga. 205; McBride v. Whitehead, 1 Ga. Dec. 165; Thompson v. Ray, 46 Ala. 224; Mount v. Harris, 1 Smed. & M. (Miss.) Ch. 185; Williams v. Connoway, 3 Houst. (Del.) 63.

The possession of a railroad and its equipments, which is taken by a receiver under an appointment by a court, changes no right of ownership of any part of the property, perfects no title to any part, gives no new or added right to any part, changes no contract regarding the ownership of any part; but is merely a holding by the same title, subject to the same contracts, limitations, and conditions under which the railroad company held the property, at the time of such appointment. Edwards, Receivers, pp. 3, 4, 4, 12, 165; 2 Dan. Ch., 28, sect. 3; Field, Corp., sects. 419, 420; High, Receivers, sects. 5, 318, 319; Hide v. Lynde, 4 Comst. (N. Y.) 387; Curtis v. Leavitt, 15 N. Y. 1; Skip v. Harwood, 3 Atk. 564; Portman v. Mill, 8 Law J. N. S. 165; Delany v. Mansfield, 1 Hog., 235; Receivers v. The Paterson Gas Light Co., 3 Zab. (N. J.) 283; In re Colvin, 3 Md. Ch. 280; Williamson v. Wilson, 1 Bland (Md.), 418; H. K. Chase's Case, id. 206; Ellicott v. Warford, 4 Md. 80; Ellis v. Boston & Hartford Railroad Co., 107 Mass. 1; Lincoln v. Fitch, 42 Me. 469; Devendorf v. Beardsley, 23 Barb. (N. Y.) 656; Williams v. Babcock, 25 id. 109.

The company not having acquired the title to the cars, they never became subject to the lien of the mortgage, and cannot be held by the receiver or the mortgagees, except upon complying with the conditions of the contract of sale. If he uses the cars in operating the railroad, and does not comply with that contract by paying for them, the owner has a just claim for the use of them, which should be paid out of the earnings of the trust property while in the hands of the receiver, or out of the proceeds of the sale of it, if the earnings have been applied to the benefit of it. United States v. New Orleans Railroad, 12 Wall. 362; State of Florida v. Anderson et al., 91 U.S. 667; Williamson v. New Jersey Southern Railway Co., 28 N. J. Eq. 277; Ellis v. Boston, Hartford, & Erie Railroad Co., 107 Mass. 1.

The railroad company never having acquired the title to the cars, the decree below ordering their delivery to the appellee, and the payment to him of the $14,568.75 as rent, was proper, and should be affirmed.

MR. CHIEF JUSTICE WAITE, after stating the facts, delivered the opinion of the court.

title: Fosdick v. Schall


text: Talk:Fosdick v. Schall

title: Talk:Fosdick v. Schall


text:
Fosdick v. Schall/Opinion of the Court

Two questions are presented by the assignment of errors in this case:--

1. Did the lien of the mortgages attach to the cars of Schall on their delivery to the company under his contract, so as to prevent their reclamation as against the mortgagees if the price was not paid according to agreement?

2. Was the order for the payment out of the fund in court of the rent of the cars, during the time they were used by the receivers appointed by the State court and for six months before, justifiable under the circumstances of this case?

As to the first question, it is contended that the mortgage created a subsisting and paramount lien on the cars as soon as they were put into the possession of the railroad company under the contract, and that the reservation of the title was void under the laws of Illinois, because the contract was not recorded.

It must be conceded that contracts like this are held by the courts of Illinois to be in effect, so far as the chattel mortgage act of that State is concerned, the same as though a formal bill of sale had been executed and a mortgage given back to secure the price. We had occasion to consider that question in Hervey et al. v. Rhode Island Locomotive Works (93 U.S. 664), and there held, following the Illinois decisions, that if such an instrument was not recorded in accordance with the provisions of the chattel mortgage act (R. S. Ill., 1874, 711, 712), a lien like that of Schall would have no validity as against third persons. Whatever may be the rule in other States, this is undoubtedly the effect of the Illinois statute as construed by the courts of that State. In Green v. Van Buskirk (5 Wall. 307), this court also held that 'where personal property is seized and sold under an attachment, or other writ issuing from a court of the State where the property is, the question of the liability of the property to be sold under the writ must be determined by the law of that State, notwithstanding the domicile of all the claimants to the property may be in another State.' Hervey v. Rhode Island Locomotive Works (supra), was also a case of seizure and sale under judicial process; and the language of the court, as expressed in its opinion delivered by Mr. Justice Davis, is to be construed in connection with that fact.

As between the parties, notwithstanding the Illinois statute, the transaction is just what, on its face, it purports to be, 'a conditional sale, with a right of rescission on the part of the vendor, in case the purchaser shall fail in payment of his instalments,-a contract legal and valid as between the parties, but made with the risk, on the part of the vendor, of his losing his lien' if it works a legal wrong to third parties. Murch v. Wright, 46 Ill. 488. The question, then, is whether these mortgagees occupy the position of third parties within the meaning of that term as used in this statute.

They are in no sense purchasers of the cars. The mortgage attaches to the cars, if it attaches at all, because they are 'after-acquired' property of the company; but as to that class of property it is well settled that the lien attaches subject to all the conditions with which it is incumbered when it comes into the hands of the mortgagor. The mortgagees take just such an interest in the property as the mortgagor acquired; no more, no less. These cars were 'loose property susceptible of separate ownership and separate liens,' and 'such liens, if binding on the railroad company itself, are unaffected by a prior general mortgage given by the company and paramount thereto.' United States v. New Orleans Railroad, 12 Wall. 362. The title of the mortgagees in this case, therefore, is subject to all the rights of Schall under his contract.

The possession taken by the receiver is only that of the court, whose officer he is, and adds nothing to the previously existing title of the mortgagees. He holds, pending the litigation, for the benefit of whomsoever in the end it shall be found to concern, and in the mean time the court proceeds to determine the rights of the parties upon the same principles it would if no change of possession had taken place.

It follows that the decree ordering a return of the cars to Schall was right. Whether, if the property is worth more than is due upon the contract of purchase, the mortgagees can obtain the benefit of the overplus, is a question we are not called upon to consider.

As to the second question, we have no doubt that when a court of chancery is asked by railroad mortgagees to appoint a receiver of railroad property, pending proceedings for foreclosure, the court, in the exercise of a sound judicial discretion, may, as a condition of issuing the necessary order, impose such terms in reference to the payment from the income during the receivership of outstanding debts for labor, supplies, equipment, or permanent improvement of the mortgaged property as may, under the circumstances of the particular case, appear to be reasonable. Railroad mortgages and the rights of railroad mortgagees are comparatively new in the history of judicial proceedings. They are peculiar in their character and affect peculiar interests. The amounts involved are generally large, and the rights of the parties oftentimes complicated and conflicting. It rarely happens that a foreclosure is carried through to the end without some concessions by some parties from their strict legal rights, in order to secure advantages that could not otherwise be attained, and which it is supposed will operate for the general good of all who are interested. This results almost as a matter of necessity from the peculiar circumstances which surround such litigation.

The business of all railroad companies is done to a greater or less extent on credit. This credit is longer or shorter, as the necessities of the case require; and when companies become pecuniarily embarrassed, it frequently happens that debts for labor, supplies, equipment, and improvements are permitted to accumulate, in order that bonded interest may be paid and a disastrous foreclosure postponed, if not altogether avoided. In this way the daily and monthly earnings, which ordinarily should go to pay the daily and monthly expenses, are kept from those to whom in equity they belong, and used to pay the mortgage debt. The income out of which the mortgagee is to be paid is the net income obtained by deducting from the gross earnings what is required for necessary operating and managing expenses, proper equipment, and useful improvements. Every railroad mortgagee in accepting his security impliedly agrees that the current debts made in the ordinary course of business shall be paid from the current receipts before he has any claim upon the income. If for the convenience of the moment something is taken from what may not improperly be called the current debt fund, and put into that which belongs to the mortgage creditors, it certainly is not inequitable for the court, when asked by the mortgagees to take possession of the future income and hold it for their benefit, to require as a condition of such an order that what is due from the earnings to the current debt shall be paid by the court from the future current receipts before any thing derived from that source goes to the mortgagees. In this way the court will only do what, if a receiver should not be appointed, the company ought itself to do. For even though the mortgage may in terms give a lien upon the profits and income, until possession of the mortgaged premises is actually taken or something equivalent done, the whole earnings belong to the company and are subject to its control. Galveston Railroad v. Cowdrey, 11 Wall. 459; Gilman et al. v. Illinois & Mississippi Telegraph Co., 91 U.S. 603; American Bridge Co. v. Heidelbach, 94 id. 798.

The mortgagee has his strict rights which he may enforce in the ordinary way. If he asks no favors, he need grant none. But if he calls upon a court of chancery to put forth its extraordinary powers and grant him purely equitable relief, he may with propriety be required to submit to the operation of a rule which always applies in such cases, and do equity in order to get equity. The appointment of a receiver is not a matter of strict right. Such an application always calls for the exercise of judicial discretion; and the Chancellor should so mould his order that while favoring one, injustice is not done to another. If this cannot be accomplished, the application should ordinarily be denied.

We think, also, that if no such order is made when the receiver is appointed, and it appears in the progress of the cause that bonded interest has been paid, additional equipment provided, or lasting and valuable improvements made out of earnings which ought in equity to have been employed to keep down debts for labor, supplies, and the like, it is within the power of the court to use the income of the receivership to discharge obligations which, but for the diversion of funds, would have been paid in the ordinary course of business. This, not because the creditors to whom such debts are due have in law a lien upon the mortgaged property or the income, but because, in a sense, the officers of the company are trustees of the earnings for the benefit of the different classes of creditors and the stockholders; and if they give to one class of creditors that which properly belongs to another, the court may, upon an adjustment of the accounts, so use the income which comes into its own hands as, if practicable, to restore the parties to their original equitable rights. While, ordinarily, this power is confined to the appropriation of the income of the receivership and the proceeds of moneyed assets that have been taken from the company, cases may arise where equity will require the use of the proceeds of the sale of the mortgaged property in the same way. Thus it often happens that, in the course of the administration of the cause, the court is called upon to take income which would otherwise be applied to the payment of old debts for current expenses, and use it to make permanent improvements on the fixed property, or to buy additional equipment. In this way the value of the mortgaged property is not unfrequently materially increased. It is not to be supposed that any such use of the income will be directed by the court, without giving the parties in interest an opportunity to be heard against it. Generally, as we know both from observation and experience, all such orders are made at the request of the parties or with their consent. Under such circumstances, it is easy to see that there may sometimes be a propriety in paying back to the income from the proceeds of the sale what is thus again diverted from the current debt fund in order to increase the value of the property sold. The same may sometimes be true in respect to expenditures before the receivership. No fixed and inflexible rule can be laid down for the government of the courts in all cases. Each case will necessarily have its own peculiarities, which must to a greater or less extent influence the Chancellor when he comes to act. The power rests upon the fact, that in the administration of the affairs of the company the mortgage creditors have got possession of that which in equity belonged to the whole or a part of the general creditors. Whatever is done, therefore, must be with a view to a restoration by the mortgage creditors of that which they have thus inequitably obtained. It follows that if there has been in reality no diversion, there can be no restoration; and that the amount of restoration should be made to depend upon the amount of the diversion. If in the exercise of this power errors are committed, they, like others, are open to correction on appeal. All depends upon a proper application of well-settled rules of equity jurisprudence to the facts of the case, as established by the evidence.

In this case no special conditions were attached to the order appointing a receiver in the Circuit Court of the United States; and it is not contended that the intervener has brought himself within the rule fixed by the State court, in respect to the payment of general creditors. He asks to be paid a rent for his cars; but he entered into no express contract with the company which requires such a payment, and there is nowhere to be found any proof of an implied obligation to make such compensation. Two years and more before the appointment of a receiver by the State court, he contracted to sell his cars to the company at an agreed price, payable in instalments, secured by what was in legal effect a paramount lien upon the cars. Payments were made according to the contract until October, 1874, when they stopped. The cars remained in use after that, not under a new contract of lease, but under the old contract of sale. The price agreed upon not having been paid in full, the power of reclamation, which was reserved, has been exercised and sustained. The cars were not included in what was sold at the foreclosure sale, and consequently have contributed nothing directly to the fund now in court for distribution. So far as appears, no moneys growing out of the receivership remain to be applied on the bonded debt; and, if there did, through the rent already paid by receiver Anderson, full compensation has been made for all additions to that fund by means of the use of the cars. There is nothing to show that the current income of the receivership or of the company has been in any manner employed so as to deprive this creditor of any of his equitable rights. In short, as the case stands, no equitable claim whatever has been established upon the fund in court. Prima facie that fund belongs to the mortgage creditors, and the presumption which thus arises has not been overcome. Schall, for the balance, his due, after his own security has been exhausted, occupied the position of a general creditor only.

The decree of the Circuit Court will be reversed so far as it directs the payment of the sum of $14,568.75 to Schall, the appellee, from the fund in court; but in all other respects it is affirmed, and the cause remanded with instructions to so modify the decree as to make it conform hereto. The costs of the appeal must be paid by the appellee; and it is

So ordered.

title: Fosdick v. Schall/Opinion of the Court


text: Talk:Fosdick v. Schall/Opinion of the Court


text:
Fosdick v. Car Company

APPEAL from the Circuit Court of the United States for the Northern District of Illinois.

The facts are stated in the opinion of the court.

Mr. Henry Crawford and Mr. Ashbel Green for the appellants.

Mr. R. Biddle Roberts, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Fosdick v. Car Company


text: Talk:Fosdick v. Car Company

title: Talk:Fosdick v. Car Company


text:
Fosdick v. Car Company/Opinion of the Court

This appeal presents another petition of intervention filed in the suit of Fosdick & Fish v. The Chicago, Danville, & Vincennes Railroad Company. The general facts appearing in that suit are stated in the case of Fosdick v. Schall, supra, p. 235.

The claim of this intervener, the Southwestern Car Company, like that of Schall, arises out of a contract for the sale of cars, made with the railroad company on the 10th of January, 1875, a few days before the appointment of the receivers in the State court. The price was secured by the notes of the company on long time, but the title of the cars was to remain in the vendor until the notes were paid. The cars all had upon them marks indicating the ownership of the intervener.

The petition of intervention was filed Jan. 27, 1876. It set out the particulars of the contract, and asked that the receiver might be authorized to pay the price and keep the cars, as they were necessary for the profitable equipment of the road. Fosdick and Fish and the intervening bondholders answered, and without denying the material averments in the petition, claimed that notwithstanding the conditions of the sale the lien of the mortgages was paramount to the title of the intervener. The petition was referred to a master to take testimony and report; but before any report was brought to the attention of the court, if indeed any had been filed, a decree of sale was entered in the principal cause in such form as to direct a sale of the cars in question as part of the railroad. After the sale had been made and confirmed, a report under the order of reference in the petition of intervention was filed. This report was to the effect that the title of the cars had never passed out of the vendor; that the price agreed to be paid, $12,750, was reasonable; that no part of it had been paid; that the cars had been in use on the road since January, 1875, for which no compensation had been made; and that these cars or similar ones were needed for the business of the railroad.

Fosdick and Fish and the intervening bondholders excepted, on the ground that the lien of the mortgages was paramount to the title of the intervener. Upon the hearing the exceptions were overruled; and as the cars had been included in the foreclosure sale, the clerk was directed to pay the purchase price to the intervener from the fund in court. From this decree the present appeal has been taken.

According to the decision in Fosdick v. Schall, the lien of the mortgages upon the cars now in question was subject to the paramount claim of the car company for the price. The intervening petition on file when the foreclosure sale was made was notice to the purchasers that the rights they acquired under the sale would be subject to the claim of the car company, as finally determined in the further progress of the cause. A restoration of the cars might, therefore, have been decreed to the intervener notwithstanding the sale. Instead of that, the payment of the price from the fund in court has been ordered. We do not understand that objection is made to this if the claim of the intervener is superior to that of the mortgages, as we hold it to be.

Decree affirmed.


text: Talk:Fosdick v. Car Company/Opinion of the Court


text:
Huidekoper v. Locomotive Works

APPEAL from the Circuit Court of the United States for the Northern District of Illinois.

The facts are stated in the opinion of the court.

Mr. Henry Crawford and Mr. Ashbel Green for the appellants.

Mr. R. Biddle Roberts, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Huidekoper v. Locomotive Works


text: Talk:Huidekoper v. Locomotive Works

title: Talk:Huidekoper v. Locomotive Works


text:
Huidekoper v. Locomotive Works/Opinion of the Court

This is also an appeal from a decree upon a petition of intervention filed in the case of Fosdick and Fish against the Chicago, Danville, and Vincennes Railroad Company. On the 1st of September, 1873, the Hinckley Locomotive Works entered into a contract with the railroad company for the sale of three locomotive engines, and on the 8th of October, 1873, for the sale of two more. By the terms of these contracts, notes were to be given for the price, payable at stated periods, which might be renewed if required. The title to the locomotives was to remain in the vendors until the notes were paid.

On the 8th of October, 1875, Anderson, the receiver in the cause, filed his petition in court, setting forth the contracts between the railroad company and the locomotive works, with a statement of the notes for the price then outstanding and unpaid; that on account of the peculiar construction of the engines they were not adapted to the business of the road, and could not be economically used, and that the locomotive company claimed title to the engines under their contract. He therefore asked authority from the court to surrender the engines to the locomotive company, and to adjust, settle, and pay for their use during and from the date of the receivership. On the same day the necessary authority for the restoration of the engines was granted, and the receiver was instructed, if it was done, to receive the outstanding notes given for the price, and deposit them with the clerk, subject to the further order of the court.

On the 25th of October, the locomotive company filed its petition in the cause, setting forth that the engines had been taken back and the notes deposited with the clerk, in accordance with the instructions which had been given the receiver. It then asked that the contracts and notes be referred to a master to ascertain and report the balance due upon them. On the same day the reference was made as asked, and on the 29th of November, 1876, the master reported that the engines were accepted by the railroad company under the contracts, and used continuously until the fall of 1875, when they were returned to the locomotive company in an injured condition; that they had since been sold to other companies at reduced rates, and were worth when surrendered about one-half what they were when put into the possession of the company. He also stated his inability to ascertain definitely the amount to which the locomotive company was entitled, except upon the basis of a suggestion made by the receiver, that a payment should be made by way of compromise of an amount which would be fifty per cent of the original contract price after deducting the amount received from the sale of the engines to other parties. He thereupon recommended the payment of $18,000 as a compromise settlement of the claim.

On the 14th of December, 1876, which was subsequent to the decree of foreclosure, but before the sale, after reading the report of the master, on motion of the solicitor of the locomotive company, and with the consent of Fodick and Fish and the railroad company, the court found due from the railroad company, 'for the use of and repairs to locomotives, the sum of $15,793.75,' and ordered the receiver to pay it to the locomotive company out of the moneys in his hands as soon as it could be done consistently with the operation of the road and the payment of claims theretofore ordered. At the time this order was made the intervening bondholders had been admitted as parties to the cause, and it does not appear that their consent was obtained. On the 5th of January, 1877, they filed objections to the allowance of the claim on the ground that it was in the nature of a mere claim for money due on an account closed before the appointment of a receiver for the railroad company, and that the bondholders had a paramount lien on the earnings of the road and the proceeds of the sale. At the same time they filed a motion to set aside the order made December 14, for the payment of the claim. No payment was made by the receiver under the order, and on the 28th of April, after the sale under the foreclosure and its confirmation, the matter came on again for hearing upon the motion to set aside. This motion was overruled, and a further order made for the payment of the amount which had been found due 'out of the proceeds in. . . court.' From this last and final decree the intervening bondholders took this appeal.

We think this case is settled by that of Fosdick v. Schall, supra, p. 235. The amount found due the locomotive company is not in reality for the use and repairs of the engines, but on account of what was agreed to be paid for the purchase. The railroad company contracted to buy the engines and pay a certain price. The locomotive company retained a paramount lien to secure the sum to be paid. The debt so incurred was not paid. The lien of the locomotive company has been in effect foreclosed, and a balance of the debt still remains due. Whatever may have been the form of the transaction, this is its substance. So far as we can see, no equitable claim upon any fund in court has been established as security for this debt. The locomotive company occupies the position of a general creditor with no special equities in its favor. As no question is presented for our consideration except that arising upon the payment of the money decree, that decree will be reversed and the cause remanded for such further proceedings, not inconsistent with this opinion, as may seem to be proper; and it is

So ordered.


text: Talk:Huidekoper v. Locomotive Works/Opinion of the Court


text:
Campbell v. Rankin

ERROR to the Supreme Court of the Territory of Montana.

The facts are stated in the opinion of the court.

Mr. J. Hubley Ashton and Mr. Nathaniel Wilson for the plaintiffs in error.

Mr. Richard T. Merrick, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Campbell v. Rankin


text: Talk:Campbell v. Rankin

title: Talk:Campbell v. Rankin