76 Vt. 42 | Vt. | 1903
The orators are preferred creditors, under Y. S. 3803 for services rendered and materials furnished to keep, the railroad now owned by the defendant in, repair, and to run the same, before and at the time it went into the hands of receivers on October 18, 1877. By their bill they seek to enforce payment of their several demands, out of the fund derived from a judicial sale of personal property on which creditors under said statute had a first lien* which sale was ordered and made under the cross-bill of Howe and others, creditors under said statute, filed in the case of Poland, trustee, v. The Lamoille Valley R. R. Co. and others, reported in 52 Vt. 144, to which reference is had; and failing this, they seek payment out- of the net earnings of the road while in the hands of the receivers.
The original bill, with amendments, was entered in the Caledonia County Court of Chancery at the June Term, 1880* when the orators asked to intervene in the Poland case, then pending in said court on remand from the Supreme Court, and to share in said fund with the orators in the Howe cross-bill, and in the personal property and net earnings of the road, on such terms and conditions as to the court should seem just and equitable. Such leave was denied, but the orators were permitted to file their bill as an' original bill, wihich they did, and the court proceeded with the Poland case in due course. Subsequently the orators filed their supplemental bill, to meet the changed condition of things since the original bill was filed; and as the St. Johnsbury & Lake Champlain Railroad Company had come to be the only necessary party defendant, the bill was dismissed as to all the other defendants, either by agreement or order of court.
And it was further ordered and decreed that said mort■gagees should have no right to take possession of said roads and property under the decree of foreclosure, nor to receive the earnings thereof, until said claims were fully paid, unless they should secure the payment thereof as therein provided, :in which case they could take possession.
The answer states the substance of the decree in favor' of the orators in the Howe cross-bill, and alleges the nonpayment of their claims and the failure to secure the same" within the time limited; the consequent sale of the property by' 'order of court for $57,450, the defendant being the purchaser; the confirmation of said sale; and that upon such confirmation the court ordered that if the deifendant should: within thirty days, file discharges of all the claims allowed’ under said cross-bill, the same should be received as full payment for said property; but on failure to procure and file such-discharges, said sale should be vacated, and the possession of said property restored to the receivers; that the defendant: did procure and file discharges of all of said claims, which amounted to about $106,000, and hlso paid a considerable sum in costs.
The answer denies the allegations of the bill concerning-net earnings of the roads and property while in the hands of the receivers, and that such earnings were expended in building new road and in permanent improvements on the line, and-alleges that all of the earnings during that time were very little if any more than enough to pay running expenses and such-repairs of the road as were necessary to keep it in safe condi
The answer admits that the receivers made some improvements on the roads of a permanent character, but alleges that whatever they expended in that behalf was mainly for repairs that were necessary to enable the roads to be safely run and the receivers to perform' their duty to the public; that at the expiration of the receivership', the receivers were indebted to divers persons to about the sum1 of $xoo,ooo, which the defendant had to pay or secure before it took possession of the roads, in addition toi what it had to pay the lien creditors ; that said debts of ttie receivers were more than all the -expenditures made by them upon the roads that could be ■called permanent; and SO' the defendant says that no net earnings made by the receivers ever came into its hands in any form-; but that whatever there might have been, have already ’been paid to the lien creditors in the sale of said personal prop•■erty.
The answer was traversed and testimony taken, and the -case heard on the pleadings and the testimony, and the bill •dismissed, with costs, and the orators appealed. The case was heard in the Supreme Court at the General Term, 1884, •and again at the General Term, 1885, when a mandate Was sent down, that as the personal property in the bill mentioned “that came into the hands of the receivers, to which the creditors had a right to resort, had been sold by order of court, and the avails thereof distributed and paid to- the creditors who came in and proved their claims in said cross cause of
Pursuant to said mandate, the case was referred to masters, who find and report that the net earnings of the road while in the hands of the receivers, namely, from October 18, 1877, to July 1, 1880, when the defendant took possession, were $39,496.78, subject, however, to such reduction as the court thinks ought to be made on the facts found; and it is •out of these earnings that the orators ask h> be paid.
It appears that the amount of the claims allowed in the Howe cross cause, with costs, was $103,081.30, and that the defendant paid the same in full before taking possession of the road, thereby paying $45,631.30 more than the price at which it bid off the personal property. Therefore the defendant says, that as it was decreed that if the avails of that sale were not enough to pay said claims, the unpaid balance
But it is to be noticed that the answer does not present the case in,that way. It denies that there were any net earnings of any amount, if indeed there were any at all, which
In view of all this, the mandate is not fairly capable of the construction contended for by the defendant. If the court meant, “net earnings, if any, in excess of what the defendant had already paid to Howe and others,” it is reasonable to’ suppose it would have said so. But it did not. That idea is not gatherable from the mandate read by itself, nor when read in the light of the case. On the contrary it would seem that the court regarded the amount paid to Howe and others as paid for the property rather than to have the sale of it set aside, and it go back intoi the hands of the receivers. And
We bold, therefore, that the right of the orators in the mandate mentioned to maintain this bill to reach the net earnings, is adjudged and determined by the mandate, and that the ca$e as now presented is merely one of accounting under the mandate.
According to the mandate, only the orators who' had no notice of the pendency of the Poland case and the cross cause of Plowe and others, are entitled to maintain this bill. The defendant contends that this does not necessarily mean notice by order of court, either by the service of process or publication, but that knowledge as distinguished from, such notice is sufficient, and refers to 2 Pom. Eq. 8th ed. § 592, and Story’s Eq. § 396, in support of the claim'. But we cannot adopt this construction in the absence of laches on the part of the orators. These authors are speaking of what notice will make one a malOrfide purchaser, and of cases of contest for precedence among holders of different interests in, or claims upon, the same subject-matter, and not of what is sufficient notice to bar a creditor in cases of this kind. We think the court did not intend to take this case out of the general rule, and that the mandate means, notice according to the practice and usage of the court of chancery in such cases, which is this: When a bill is brought by a part of the creditors, not
Although a master was appointed toi take an account of the debts due to Howe and others, orators in said cross cause, and to. all other creditors whose debts were like theirs, yet no debts were proved before the master except those of the orators in that cause. The order of reference is not before us, but we infer that it contained no direction for notice to creditors to come in, and no declaration of exclusion if they did not come in, for the master gave no such notice, as sufficiently appears, though more by implication than by direct finding. The solicitors for the orators in the cross cause, of their own motion, and without an order of court or of the master,
The claim1 of M. B„ Warren for stationery and printing, allowed at $856.82, cannot be recovered here, as it is not within the statute. It makes no difference that it was allowed without objection, especially as the masters allowed it subject to the opinion of the court on the facts found. With this claim out, the aggregate amount of the claims allowed is $19,001.13, which amount is recoverable here if the net earnings are sufficient, with interest on the principal thereof from June 7, 1892, the date to which the masters computed interest.
The net earnings reported are the excess of gross earnings are sufficient, with interest on the principal thereof from accounts were kept by the receivers. There are sixteen items, aggregating $111,805.78, that were not treated by the receivers as operating expenses, but were classed by them as “expenses in addition to1 operating expenses.” The defendant claims that $4,551.08 of No. 4 of these items, which is $5,864.23 for “new fences built during the receivership,” and all of items 5, 9, and 16, amounting in the whole to $14,-797-75)should be deducted from gross earnings, thereby making the net earnings $24,699.75.
As to item1 4 the masters find that when the receivers- took possession of the road, seventy miles of it had no- fence; that
But we cannot hold' this, for no actual expenditure was made for such repairs, and only such expenditures as are actually made can with any propriety be deducted from gross earnings. United States v. Kansas Pacific Railway Co., 99 U. S. 455, 459.
Item' 5, $2,433.28 for interest, and item 9, $1,500 for extraordinary repairs on locomotives, must, on the findings, be deducted from, net earnings.
As to item1 19, $6,313.39 for litigation, the masters find in their supplemental: report that the litigation arose in matters anterior to the appointment of the receivers, and with which they had nothing to' do as such, and that the expenditure did not accrue in any manner in their operation of the road, except as to matters stated in their original report. But those matters do not militate against this finding, under which this item cannot be deducted. Thus, by deducting $3,933.28, the amount of items 5 and 9, the net earnings are reduced to $35,563.50, at which sum they are adjudged and established.