Bachrach v. Huntingdon & Broad Top Mountain R. R. & Coal Co.

133 A. 641 | Pa. | 1926

While these two cases are not in all respects alike, they are sufficiently so to call for but a single opinion.

Each of the plaintiffs is the owner of a few of the $1,500,000 of bonds issued under and secured by defendant's consolidated mortgage, which was given to certain trustees for the protection of the bondholders as a class. When the bonds fell due, plaintiffs demanded payment of them, and, this having been refused, they each brought suit and recovered a judgment, which, by agreement, expressly limited the right of execution upon it to "property which is not subject legally to the lien" of said mortgage. One of plaintiffs issued an attachment execution on his judgment, naming the Pennsylvania Railroad Company as garnishee, and sought thereby to attach defendant's share of certain passenger, freight and car service rates, which had been paid to the garnishee in consideration of continuous service over the lines of the two railroads; each company being entitled to a specified part thereof. The other plaintiff issued a fieri facias on his judgment, and, under it, a levy was made on defendant's office furniture and equipment, at the place where the clerical and executive part of its business is transacted. The court below decided that the assets referred to were not liable to the executions, and each plaintiff appeals from the order in his case.

The $1,500,000 mortgage expressly covers, inter alia, "all the tolls, issues, income and profits hereafter derived" by reason of the operation of the railroad; a provision for security therein, operating in futuro, which the legislature had power to authorize: The Phila., Wilmington Baltimore R. R. Co. v. Woelpper, 64 Pa. 366; Collins's App., 107 Pa. 590. By the mortgage, the trustees became the repository of the title to the corporate franchise and the property mortgaged, in trust for all the bondholders: Com. v. Susquehanna Delaware River R. R. Co., 122 Pa. 306. The collections made by the garnishee are none the less "tolls, issues, income and profits" because they are still in its hands. They belong to the trustees because they are of the character stated. So, also, it is of no consequence to plaintiff that defendant, if and when it receives the money, may use part of it in paying operating and office expenses. If the mortgage expressly or impliedly authorizes such expenditures, no one can complain of that use; if it does not, the entire body of bondholders are the only ones who can be injured thereby, if indeed they can, since such use directly inures to their benefit, by enabling the railroad to function as a going concern. Certainly plaintiff, by virtue of his judgment, had no legal right to enforce an attachment against this money, which equitably belongs to the trustees, for the benefit of all the bondholders.

Plaintiff also contends that, even if the mortgage be so construed as to include the sums in the hands of the garnishee, as we have shown it should be, still it fails of its intended purpose since no statute authorized defendant to issue a mortgage covering those items. To this also we cannot agree. Without stopping to consider the other objections to this contention (see Com. v. Susquehanna Delaware River R. R. Co.,122 Pa. 306; Manhattan Hardware Co. v. Phalen, 128 Pa. 110; Mechanics' Building Savings Assn., No. 2's Assigned Est., 202 Pa. 589), it is sufficient to say that defendant had ample statutory power to insert that clause in the mortgage. The incorporating Act of May 6, 1852, P. L. 614, expressly gave to it the same powers as are specified in the General Railroad Act of February 19, 1849, P. L. 79, section 2 of which authorized corporations chartered under it, "to purchase, receive, have, hold, use, and enjoy to them and their successors, goods, chattels and estate, real and personal, of what kind and nature soever, and the same from time to time, to sell, exchange, mortgage, grant, alien or otherwise dispose of . . . . . . and generally to do all and singular, the matters and things which to them it shall lawfully appertain to do for the well-being of said corporation, and the due ordering and management of the affairs thereof." As shown in Philadelphia, Wilmington Baltimore R. R. Co. v. Woelpper, supra, this is broad enough to authorize a mortgaging of future "tolls, issues, income and profits"; and it is clear the right so to do is in no way affected by the limiting proviso, to which plaintiff calls our attention, that the powers authorized shall not "be construed as in any way giving, to such corporation, any banking privileges whatever."

That the furniture and equipment in defendant's business office are exempt from sale on the fi. fa. is also clear. In order to reasonably and effectively carry on its business, defendant must have an office, and furniture and equipment therein. This being so, such property cannot be sold separately, but only with the franchise and the other property reasonably necessary for the due exercise of the franchise: Margo v. Penna. R. R. Co. (No. 2), 213 Pa. 468; McNulty Bros. Co. v. Penna. R. R. Co., 272 Pa. 442. That requirement is founded on a broad public policy, which keeps all such assets intact in order that defendant, or any purchaser of the franchise and those assets, may be able to properly perform the public duties specified in the charter of incorporation. This being so, the exemption from a separate sale cannot be limited to the locomotives, cars, rails, fuel and similar assets, but must include all property used or to be used in, and reasonably necessary for carrying on, the chartered business of the company. Surely a place to keep its records, and to carry on its clerical and executive business, is reasonably necessary for the purpose stated.

In each case, the order of the court below is affirmed.