251 F. 789 | 8th Cir. | 1918
The Missouri, Kansas & Texas Railway Company, a corporation of Kansas, is the owner of an extensive system of railroads stretching southwesterly from St. Louis, lying in Missouri, Kansas, and Oklahoma. There is a blanket mortgage upon the railroads constituting this system, and there are many divisional mortgages, which rest upon respective parts of the system. Under a creditors’ bill against the railway company the court below on September 27, 1915, appointed Charles E. Schafif receiver óf all its railroads and property, to take and hold possession of them and to apply their income and proceeds to the payment of the expenses of the operation of the railroad and to the payment of the just debts of the company
On November 13, 1915, the Central Trust Company of New York, as trustee in the consolidated mortgage of April 1, 1910, the blanket mortgage, filed its petition in the consolidated cause for leave to file its bill to foreclose its mortgage, and the court granted its prayer, ordered that the receivership of Mr. Schaff be extended to all the property covered by that mortgage, and that the suit to foreclose that mortgage, which hail been commenced, and the suits then pending for the sale and disposition of the property of the railway company, should be consolidated into and should proceed in one case under the title: ‘Central Trust Company of New York v. Missouri, Kansas & Texas Railway Company, Defendant. In Equity. No. 4564. Consolidated Cause.” This consolidated or blanket mortgage covered all the property of the railway company. Every other mortgage covered only a part of its property. On April 17, 1916, the Farmers’ Eoan & Trust Company, as trustee in the first and refunding mortgage of September 1, 1S04, and on June 27, 1916, the New York Trust Company and Benjamin F. Edwards, as trustees under the general mortgage of January 1, 1906, filed their petitions in the consolidated cause for leave to file their respective bills to foreclose their mortgages, and on June 27, 1916, the court granted their petition, ordered that the receivership of Schaff be extended over the property covered by their mortgages, and that their suits to foreclose be consolidated with the consolidated cause No. 4564.
On June 27, 1916, the. appellant, Bankers’ Trust Company, the trustee in1 the second mortgage dated June 1, 1890, filed its petition in the consolidated cause for leave to he made a party defendant therein, and the court ordered that it should henceforth be a defendant in that cause, with the opportunity to plead and he heard on all matters, and that it should be given notice of all proceedings therein. On November 17, 1916, the appellant filed a petition in the consolidated cause for leave to file a bill to foreclose its second mortgage, and the court granted it leave to do so. The appellant filed in the court below its complaint to foreclose this second mortgage, and thereafter, on December 11, 1916, it filed its petition for the appointment of a receiver of the property subject to the Hen of that mortgage, that, if Mr. Schaff or any other receiver should be appointed, he should be directed to keep separate accounts of his receipts from or on account of, and of his expenses paid and disbursements made from or on account of, the property covered by the lien of this second mortgage, and that he should apply such receipts for the benefit of the appellant and the holders of the bonds secured by that mortgage. On the sgme day the railway company and the complainants in the creditors’ bills, upon which Mr. Schaff had originally been appointed receiver of all the railways and property of the railway company, made a motion
After notice to all parties-in interest and a full hearing upon this petition and motion, the court below on June 14, 1917, made the order jf which the appellant Bankers’ Trust Company now complains. That wder consists of five paragraphs. By the first the foreclosure suits of the New York Trust Company and Benjamin F. Edwards, trustees in the general mortgage of January 1, 1916, and of the appellant trustee in the second mortgage of June 1, 1890, are consolidated with the consolidated cause No. 4564. By the second the receivership of Mr. Schaff in the consolidated cause No. 4564 is extended to all the property covered by the general mortgage and the second mortgage, and to the receipts from or on account of that property, the powers conferred upon Mr. Schaff in the original and subsequent orders of appointment in the consolidated and constituent causes, including those affecting the property and income covered by or embraced in the second mortgage and the general mortgage, were continued in full force and effect and made as binding upon the parties as though they were then entered; “but,” so reads the order, “the relative rights of all the parties to the properties covered by the various mortgages and the income therefrom are hereby reserved for future determination. The acceptance of the benefit of the consolidation, or of the extension of the receivership, by this order, shall be deemed a consent to all administrative orders heretofore made in the consolidated or constituent causes.” By the third the bond of the receiver was made to cover additional duties and responsibilities imposed by the order. The fourth and fifth paragraphs read in this way:
“4. The receiver is hereby directed to keep separate accounts of the earnings, tolls, revenues, rents, income, and profits of the railroads, properties, premises and franchises described in and covered by the lien of each of the • various mortgages involved in this consolidated cause including the second mortgage, and of the expenses of maintaining and operating the same. A more detailed direction in this matter of .separate accounts is reserved for further consideration.”
“5. Except as granted herein, the above-mentioned petition of the Bankers’ Trust Company is denied. Said trust company excepts to such denial and to this order.”
The appellant prayed in its petition that the receiver be directed forthwith, first; to keep separate.accounts of the earnings, tolls, revenues, receipts, income, and proceeds of the property covered by the lien of the second mortgage and of the expenses and disbursements therefrom; and, second, that he be directed “to set apart, use, and apply such earnings, tolls, revenues, receipts, income, and profits for the benefit of your petitioner, as such successor trustee, and the holders of the bonds issued under and secured by the mortgage.” The court ordered the receiver to keep separate accounts of the earnings, -tolls, revenues, rents, income, and profits of the property described in and covered by each of the various mortgages involved in the consolidated cause, including the properties covered by the second mortgage, and of the expenses of maintaining and operating the same, stated in the fourth paragraph of the order that “a more detailed direction in this matter of separate accounts is reserved for further consideration,” and in the second paragraph that “the relative rights of all parties to the properties covered by the various mortgages and the income therefrom are hereby reserved for future determination.” In effect the court granted the first prayer of the appellant regarding the separate accounting and reserved the second to enable it to make directions in greater detail after further consideration.
Administrative orders, made in the operation of a great railroad system, may, and they frequently do, determine or substantially affect the rank, the amount, and the value of the rights and Hens of mortgage bondholders and others holding liens upon the railroad property. For example, courts sometimes make administrative orders for the borrowing of money by receivers on their certificates, which the courts order to be secured on the railroad by lien superior to those of all mortgage and other lienholders. Bibber-White Co. v. White River Val. Electric R. Co., 115 Fed. 786, 53 C. C. A. 282. The compensation of receivers is usually fixed by administrative orders, and those orders are reviewable by the appellate courts generally as interlocutory, but sometimes, as final orders. Ruggles v. Patton, 143 Fed. 312, 314, 315, 74 C. C. A. 450, 452, 453. The general rule is that, upon an appeal
The conclusion is that, as the appellant was entitled to both the right of review of the administrative orders in question by an appeal from the final order or decree that shall be made in the causes, and also to the receiver and the impounding of the income for the benefit of its bondholders, and as the clause of the order under discussion completely deprived it of one of these rights, it was a final decision affecting a substantial right of the appellant and the bondholders he represents, and it made the order which contained it appealable. A decision which completely deprives a party in a pending proceeding who> is not jointly liable with others of a substantial right or equity is a final decision, and reviewable by appeal or writ of error under section 128 of the Judicial Code. Standley v. Roberts, 59 Fed. 836, 839, 8 C. C. A. 305, 30S; Morrison v. Burnette, 154 Fed. 617, 622, 83 C. C. A. 391, 396; Williams v. Morgan, 111 U. S. 684, 4 Sup. Ct. 638, 28 L. Ed. 559; Hill v. Chicago & Evanston R. Co., 140 U. S. 52, 11 Sup. Ct. 690, 35 L. Ed. 331; Grant v. East & West R. Co., 50 Fed. 795, 1 C. C. A. 681.
In other words, they have failed to show that the order from which thej'- have appealed was either erroneous or prejudicial to the appellant, or the bondholders it represents, and therefore upon this record it is not reversible, and it is affirmed, with costs against the appellant.