Central Trust Co. of New York v. Marietta & N. G. Ry. Co.

48 F. 850 | 5th Cir. | 1891

Pardee, J.,

(after stating the case.) The decision in the court below on the intervention of the Hiawassee Company was a final decision upon the matter distinct from the general subject in litigation. Central Trust Co. v. Grant Locomotive Works, 135 U. S. 207, 10 Sup. Ct. Rep. 736. As a final decision, it comes directly within the jurisdiction given to the-' circuit courts of appeal in the sixth section of the act, approved March 3, 1891, entitled “An act to establish circuit courts of appeal,” etc. While perhaps the court may, for its own protection, hereafter be compelled to insist that causes pending in the circuit and district courts shall not be brought to this court for review piecemeal, we are not inclined to enforce such a rule in this case, even if we have authority so to do. The motion to dismiss the appeal will therefore be overruled.

The mortgage given by the Marietta & North Georgia Railwaj7 Company, suit for foreclosure of which is now pending in the court below, covers fully all after-acquired property appurtenant to the railway, and it contemplated that a fully constructed and equipped railroad should be provided with the proceeds of the bonds. Apparently, however, all the bonds, or the prpceeds thereof, under contracts thereto made, were to go to the contractor, who was not in terms, and perhaps not by implication, bound to equip the road. The Harnbro agreement more fully and explicitly provided for an equipped railroad. Apparently the process of issuing the bonds upon certificates of a completed road-way ready for the passage of trains was not satisfactory, and the agreement expressly recites:

“It lias been agreed for the purposes of this agreement completed sections shall consist of not less than live miles, with a corresponding proportion of rolling stock and equipment.”

—And then provides as follows:

“The Marietta & Xorth Georgia Kail way Company undertakes and agrees that on and from the date of this agreement every section of completed railway, the subject of every sworn certificate, as aforesaid, shall for the purpose of this agreement comprise not less than five miles of railway; and that no such sworn certificate shall be given unless and until there shall be delivered in good working order upon the said railway an amount of rolling stock and equipment bearing the same proportion to the whole rolling stock and equipment requisite for the proper and efficient working of the railway as the number of miles completed at the date of such certificate shall bear to the total mileage of said railway. ”

It is to be noticed hero that Eager acted for the companies in making the contract, and was a party himself thereto as the contractor.

The Marietta & North Georgia Railway Company had previously in the fullest manner authorized Eager to contract with Harnbro & Son for issue and sale of the bonds, — price, terms, and commissions at Eager's discretion; and the railway company immediately ratified the contract by directing that thereafter the form of certificate to the trust company, upon which bonds were to issue, should be as provided therein, and from that date every certificate upon which bonds were issued by the trust company to the contractor or his assigns, for constructing the railroad, contained the statement—

“That there bad been delivered, and in good working order, upon said railway an amount of rolling stock and equipment bearing the same proportion to the whole rolling stock and equipment requisite tor the proper and efficient working of the railway as the number of miles completed at the date of this certificate bears to the total mileage of said railway.”

The Harnbro contract tliat rolling stock and equipment should be delivered upon the road iu good working order and in requisite quantity for the proper and efficient working of the railway evidently contemplated that the rolling stock and equipment so delivered should be rolling stock and equipment belonging to the road by some title of ownership, so as to make the same a better security for the bonds than the railroad without rolling stock and equipment would be. Therefore, the agreement precluded a mere temporary gratuitous loan of the rolling stock for the purposes of the certificate. Eager was the contractor constructing the railroad, and, while he had not in terms bound himself as contractor to furnish the railway with rolling-stock equipment, (only the company so binding itself,) yet Eager, under the terms of the Hambro contract, could obtain no bonds for construction until the rolling stock should be delivered in good working order and in requisite quantity upon the road. The North Georgia Improvement Company, a New. Hampshire corporation, owning mining interests along the line of the-road, and to some extent a holder of the bonds of the railway, of which cofhpany Eager was president and general manager, through Eager, bought the rolling stock in question, and delivered it upon the railroad and had it marked in the name of the railway, as though it was the property of said railway, and the same went by consent of all parties into the custody and control of said railway.

The question for our determination is whether the transfer of the rolling stock, made as aforesaid, was a mere temporary gratuitous loan or sale. As Eager negotiated the whole business for the improvement company, and was the ¡^resident of the improvement company and the apparent controller of the railway company, the question is reduced to this: Did Eager intend a temporary gratuitous loan or a sale? The elements of a sale — the thing, the price, delivery — are there; and the sale was complete if there was the necessary consent. As recited in the statement of facts, Eager testifies in relation to this matter:

“Our plan was when we got the road fully completed it would improve our mines, and we bought as much rolling stock as we should want for the immediate present; that we would endeavor to arrange equipment and issue equipment bonds for sufficient amount to cover all the rolling stock, and secure all the rolling stock we thought it would be necessary to have.”

Again:

“The rolling stock was sent down there with the idea that the railway company very soon would be done, and would make a car trust, — get somebody to let them have money, and make a car trust.”

This evidence shows that it was contemplated by Eager that the Marietta & North Georgia Railway Company was to have and keep the rolling stock, and was to pay for it thereafter either by raising money on equipment bonds or through a car trust. The destination and the future use and control of the rolling stock was thus fixed in the Marietta & North Georgia Railway Company, and that by the consent of all the parties. When, in addition to this, it is considered that upon a delivery with apparent title in the railway company of such rolling stock, the bonds of the railway company were to be and were issued, of which Eager was a beneficiary, in the light of honest dealing can any other conclusion be reached than that Eager, acting for all partiesy (himself included,) intended a salo of the rolling stock to the railway company, rather than a temporary gratuitous loan, which would have operated a fraud upon the persons dealing in bonds on the faitli of the Hambro agreement?

Counsel for appellee urges several points in this connection, — that, as under the Hambro agreement, the rolling stock was only to be delivered upon the railroad, and was not required to be owned bjr the railway company, and as llambro & Son knew that Eager was not bound under his contract for construction to furnish equipment, and understood that the money from the bonds would not pay for equipment, therefore it was not contemplated that the railway company should be tho owner of the rolling stock, but that it had the right to furnish equipment through a car trust.

The answer to ibis seems plain, so far as rolling stock in issue in this intervention is concerned. The railway company did not create a car trust, but it took the property as apparent owner. It is further urged that, when the receiver was appointed in the main suit, in his first report he declared this rolling stock to he owned by the persons now claiming it, and that subsequently to such report the bondholders held a meeting, and elected a committee of five to represent them in connection with the management of the road; and that this committee reported “with regard to the loth item, rolling stock now in nse, your committee recommend this payment, with the remark that special caro be taken that the railway shall acquire a perfect title to property,” and that this recommendation was subsequently reported hack to a meeting of the bondholders, who indorsed it.

Counsel states, although it does not appear in the evidence, that a representative of llambro & Son constituted one of the committee, and that on the subsequent vote all of llambro & Son’s bonds were voted in favor of the resolution. It does appear that Eager was one of the committee, and one of the bondholders voting in the affirmative. There is nothing to show that the bondholders were fully advised of the actual state of the rolling stock, and the presumption naturally is raised that they acted in the light of Eager's statement and explanations. Besides this, it is to be noticed that the recommendation of the bondholders is for payment as though tho contract of purchase had been completed. It is not to be presumed from wliat the bondholders did do that there was any intention to subordinate tlio lieu of the mortgage to any claim for equipment.

The case, however, as we understand it, does not require that wo should find that there was an actual sale of the rolling stock to the ra il-way company. Under the circumstances, as to tho placing of the rolling stock on the railway for use by the railway company apparently as owner, the issuance of bonds by the trust company on certificates, in accordance with the llambro contract, based upon this rolling stock and the beneficiary result thereof to Eager, both Eager and the North Georgia Improvement Company are estopped in equity from attacking the railway company’s title to the rolling stock in question as against the interest of the bondholders. As to Eager, this estoppel ought not to be questioned, and we are of opinion that it is equally clear as to the North Georgia Improvement Company, for it was charged with full notice of all the circumstances as fully as Eager himself was informed, and yet, as a volunteer, aided Eager in obtaining the rolling stock, and in delivering it upon the railroad, which otherwise he might not have been able to do, and thereby obtained the issuance of bonds based on delivery of the rolling stock on the railroad in good working order, etc. Tbe improvement company occupies the same position as the owner who stands by in silence while another sells his property.

It is conceded that the intervener, the Hiawassee Company, stands in the shoes of the North Georgia Improvement Company, so far as the rolling stock is concerned, and can assert no better title thereto than the improvement company could have asserted had no transfer been made.

These views require the reversal of the decree appealed from, and the remanding of the case to the circuit court, with instructions to dismiss the intervention of the Hiawassee Company, with costs. And it is so ordered.