76 F. 838 | N.D. Cal. | 1896
The steamship Willamette Yalley was seized under process issuing from this court at the suit of the above-named libelant, to enforce a maritime lien for supplies far-; nished the vessel. Previous thereto she had been arrested upon the libel filed by one Patrick Gleeson, seeking to recover damages incurred while a passenger on hoard of said steamship, but had been released upon a bond given to the United States marshal under the provision of section 941 of the Revised Statutes. Other libels in rem were also thereafter filed against the vessel to satisfy various maritime liens, but she was not released upon these subsequent claims, nor upon the one involved in this case. During the pend-ency in this court of these claims the steamship was sold upon the petition of the libelant, and after a satisfactory showing had beeq duly made under general admiralty rules 10 and 11. The receiver* it appeared, could neither make a deposit nor give the required stipulation for the vessel’s release, and it further satisfactorily appeared that the machinery of the vessel, in her then idle and unused condition, was rusting, her woodwork drying and cracking, and every part showing general deterioration and decay. See opinion of court, 63 Fed. 130. All of the maritime liens originally entered against the vessel having been satisfied, the present proceedings aré
When the steamship Willamette Valley was first seized, and, in fact, also upon the subsequent seizures, the receiver of the Oregon •Pacific Railroad Company, appointed and acting under the authority of the .state court of Oregon, which had assumed jurisdiction and control of the property of the Oregon Pacific Railroad Company by virtue of certain foreclosure proceedings instituted against that corporation, - appeared;, and claimed the steamship as the property of the company. He excepted to the jurisdiction or right of the court to proceed against the vessel on the ground that she was under the management, control, and possession of the receiver of a foreign jurisdiction* viz. the state court of Oregon; that she was, therefore, in custodia legis, and that such possession could not be interfered with by this court, unless the consent of the state court of Oregon, whose officer the receiver. was, were first obtained. The same exception was raised to each iibel, and they were consolidated fdr decision on that question. After very full argument and thorough consideration, this court held that the admiralty law, in the enforcement of maritime liens, is paramount within its jurisdiction; that it was immaterial, so far as this, jurisdiction was concerned, whether the vessel was under the control and management and in the possession of a receiver appointed by the state court of Oregon; that admiralty liens would nevertheless attach; and that only considerations of comity will prevent a court of admiralty from maintaining its supremacy. It was further held that these principles of comity did not apply to the case at bar for the reasons: First, that the. cause pf action under consideration arose in this jurisdiction; second, that the vessel, at the time the liens were incurred, was engaged as a common carrier in trade and commerce; third, that the proceedings were in rem; and, fourth, that the state and federal courts were not, in this instance, of co-ordinate or concurrent territorial jurisdiction. 62 Fed. 293. An appeal was taken from this ruling to the circuit court of appeals, where the decision of this court was affirmed, and the case remanded for further proceedings upon the merits. 13 C. C. A. 635, 66 Fed. 565. Further proceedings were thereupon had, and, after satisfying all the maritime liens pending against the steamship, there now remains a surplus of $23,950.85 in the registry. Seven petitions or interventions against this surplus have been filed. They may be classed as follows': (1) That of Charles Clark, the present receiver of the Oregon Pacific Railroad Company in the state of Oregon. This petitioner Claims ¡all of the surplus on the ground that, as all the maritime liens have now been satisfied, this court has no further power or right, sitting as á; court of admiralty, to pay over the surplus to any one except the receiver himself. (2) That of Jacob Levi, Sr., and E. W. ÍFerguson, to.be:paid a certain sum which, as sureties for the release of the Willamette Valley upon the first libel filed against her in this court , by Patrick G-leeson, they were compelled to pay by virtud of th'é decree of this court duly entered in favor of the libelant G-leesohy — :the' sum of $300 and costs. The aggregate of the decree
The important question to he determined is whether this balance should be turned over to the receiver, as the representative of the owner, or whether any of the other petitioners or interveners have a superior right to be paid out of the surplus. This question depends, obviously, upon the character of the claims presented. But, in order to he entitled to recognition at all by a court of admiralty in distributing surplus proceeds derived from the sale of a vessel seized to satisfy maritime liens, these claims must possess certain qualities. In the first place, they must he vested interests in the fund. This is the meaning given by the supreme court to the language of the forty-third rule, which reads: “Any person having an interest in any proceeds in the registry of the court, sha.ll have a right by petition and summary proceeding to intervene pro interesse suo, for a delivery thereof to him.” Schuchardt v. Babbidge, 19 How. 239; The Lottawanna, 21 Wall. 558; The Albert Schultz, 12 Fed. 156. In the second place, as against the claim of the owner, contesting claimants must have a lien, legal or equitable. As said in The Albert Schultz, supra: “In the distribution of the funds which form a residuum in the registry, courts of admiralty recognize legal titles and legal and equitable liens.” In The Edith, 94 U. S. 523, it is said: “The court [of admiralty] can marshal the fund only between lienholders and owners.” In the third place, this lien must be specific, not general. See the cases cited above, particularly The Lottawanna, 21 Wall. 558; also, The Peerless, 45 Fed. 493; The Balize, 52 Fed. 414. All the maritime claims involved in this case and in the other libels filed against the Willamette Valley having been paid out of the proceeds of sale, the purposes for which the court originally assumed jurisdiction may be said to have been fully consummated. That the court, however, in having assumed jurisdiction for one purpose, has the inherent power to dispose of the case for all purposes connected with a rightful distribution of the fund in its possession, is well settled. “It must do something with the fund. It is absurd to suppose that it cannot.” The E.
“This court, as a court of admiralty, has no equitable jurisdiction. It is often said to be a court of equity. The meaning of that expression is that it is a court which is not governed by artificial or technical rules or mode of procedure, and therefore it acts with the spirit of the purest equity and good conscience; but it cannot change the legal relations of parties to property, as can a court of chancery.”
' Nor is it a court of bankruptcy, or a court endowed with power to apply the property of an owner to the payment of claims held by his general creditors. Those who petition for the surplus or a portion of it must show a “vested interest” in the fund, and this means, generally speaking, a title to it derived from the owner, or a specific lien, either legal or equitable, of such a character as to be deemed superior to the preferred right of the owner. That the owner of the surplus has a preferred right to it is distinctly recognized by the supreme court of the United States in The Lottawanna, 20 Wall. 201, 221, where the court clearly enunciated the doctrine of distribution to be followed toy courts of admiralty in distributing surplus proceeds. The opinion is written by Mr. Justice Clifford, and the language upon this proposition is as follows:
“Beyond doubt, maritime liens upon tbe property sold by tbe order of tbe admiralty court follow tbe proceeds, but the proceeds arising from such a sale, if tbe title of tbe owner is unincumbered, and not subject to any maritime lien of any kind, belong to tbe owner, as tbe admiralty courts are not courts of bankruptcy or of insolvency, nor are they invested with any jurisdiction, to distribute such property of tbe owner, any more than any other property 'belonging to him, among his creditors. Such proceeds, if unaffected by any lien, when all legal claims upon tbe fund are discharged, become, by operation of law, tbe absolute property of tbe owner. * * * Decided cases may be found which afford some support to tbe proposition that tbe proceeds in the registry of the court, if the lien claims are all discharged, may be distributed equitably among tbe intervening creditors of the owners; but the court is of the opinion that the rule that the proceeds in that state of the case belong to the owners is correct in principle, and that the weight of authority-is ’in its favoi-j notwithstanding those cases of which The John, 3 C. Bob. Adm. 290, is the one most frequently cited. But in that case there was no opposition by the owners, nor was the question much considered. Directly opposed to that case is the case of The Maitland, 2 Hagg. Adm. 253, in which the admiralty court refused to follow it, remarking that there is no solid distinction between original suits and suits against the proceeds, where there is •opposition. Mere remnants, if unclaimed by the owner, may stand upon a different footing, and it is upon that ground that the admiralty courts have sometimes decreed the payment of small unclaimed sums to a creditor of the owner bavin" a clear equity, to prevent the same from being indefinitely impounded in the registry of the court. Exactly the same point was decided in the same way in the case of The Neptune, 3 Knapp, 111, in which all of the authorities to that time were carefully examined. Where the ship is sold, the*843 proceeds are in the hands of the court, which holds the fund in trust; and the court in the following case added that the owner is in some sense entitled to the same, hut finally decided that, inasmuch as he cannot obtain the fund without the order of the court, that it cannot he attached under the garnishee process. The Wild Hanger, Brown. & D. 88. * * * Different views have in some few instances been adopted by the district courts, but the right of the court to decree that third persons who could not have proceeded against the property in rein may recover a proportion of the proceeds to satisfy their claims against the owner, in a case where the owner appears and opposes the application, seems to he repugnant to every sound principle of judicial proceeding, and it is certainly opposed to the great weight of authority.”
In the ease oí The Lottawanna, 21 Wall. 558, which was another and a later, hut an entirely independent, proceeding in rem against that vessel, the question again came up. The vessel was again sold by order of court, and, the maritime liens for which she had been seized having all been satisfied, the question arose, among others, as to the priority oí claim to the surplus fund between the mortgagee and the owner of the vessel. Mr. Justice Bradley used the following language in this connection:
“But there is another mode in which the appellees, if they had a valid lien, could come into the district court, and claim the benefit thereof, namely, by a petition for the application of the surplus proceeds of the vessel to the payment of their debts, under the forty-third admiralty rule. The court has power to distribute surplus proceeds to all those who can show a vested interest therein, in the order of their several priorities, no matter how their claims originated. Schuchardt v. Babbidge, 19 How. 239. The propriety of such a distribution in the admiralty lias been questioned on the ground that the court would thereby draw to itself equity jurisdiction. The Neptune, 3 Knapp, 111. But it is a wholesome jurisdiction very commonly exercised by nearly all superior courts, to distribute a fund rightfully in its possession to those who are legally entitled to it, and there is no sound reason why admiralty courts should not do the same. If a case should be so complicated as to require the interposition of a court of equity, the district court could refuse to act, and refer the parties to a more competent tribunal. In this case the appellants themselves have no maritime lien, hut merely a mortgage to secure an ordinary debt not founded on a maritime contract. They therefore have no standing in court, except; under the forty-third admiralty rule, and in the maimer above indicated. Their libel was inadmissible, even under the admiralty rule as recently modified. The John Jay, 17 How. 399. But before the final decree they filed a petition for the surplus proceeds, and, as there is no question in the case about fraudulent preference under the bankrupt law, they are entitled to those proceeds towards satisfaction of their mortgage.”
The effect of the decision is to recognize that a mortgagee of a vessel' holds such a “vested interest” in the surplus proceeds to entitle him, as against the owner, to be paid out of the fund. In the case at bar, no mortgagee bas appeared to claim satisfaction of his mortgage out of the surplus. See, to same effect, The Advance, 63 Fed. 704; Henry, Adm. Jur. & Proc. 334-336. In a later case in the supreme court- — The Edith, 94 U. S. 523 — tills language is used:
“It need hardly be added that, though a proceeding in rom and a petition for payment of a claim out of proceeds of a sale remaining in the registry are distinct things — the former proceedings on the ground of a lien, — yet no one except an owner is entitled to payment out of the registry, unless he has a lien upon the fund thereon. The court can marshal the fund only between lienholders and owners.”
From the above language of the supreme court in the several cases quoted from it is apparent that, in the distribution of surplus pro-
• Taking up the petition of W. A. Swinerton first, for the amount of a judgment recovered by Mm in the state court within this district, and consisting of $15,368.78 principal and interest and $1,-115.95 coáts, I am of the opinion that he has no lien which this court can recognize. His claim is really a judgment upon a judgment. The original judgment was recovered in the circuit court of the United States for the district of Oregon against the Oregon Pacific •Railroad Company. The property of that corporation having been placed in the hands of a receiver by reason of the foreclosure proceedings instituted against it, and being insufficient to satisfy this judgment, with the numerous other claims pending, an assignment of the judgment was made to the petitioner as a citizen of this state, who thereupon brought suit and obtained judgment upon the judgment recovered in the state of Oregon, with the object in view of levying execution upon the proceeds of sale of the Willamette Valley as the property of the insolvent corporation, after all maritime liens had been satisfied. Execution process was duly issued and served upon the marshal of tbis court, purporting to levy upon the steamship Willamette Valley, as property belonging to the Oregon Pacific Railroad Company. Petitioner Swinerton claims that his judgment and execution constitute a lien, or at least a quasi lien, on the surplus proceeds. But the contrary is well established. It was authoritatively settled so long ago as Taylor v. Carryl, 20 How. 583, that property in the custody of an officer of a federal court is exempt from process or interference by authority of a state court of the same co-ordinate or concurrent territorial jurisdiction. It is claimed, however, that the levy was not strictly upon the vessel itself, but upon all the right, title, and interest of the owner of the vessel, and that this interest was not capable of manual delivery; that, therefore, subdivision 3 of section 542 of the Code of Civil Procedure of California, which requires that attachments of personal property shall be effected by taking the same into custody,
“It is contended that the appellees acquired the right of preference in the fund by virtue of the proceedings under the garnishee process, as more fully set forth in the record; hut the court is entirely of a different opinion, for several reasons: (1) Because the fund, from its very nature, is not subject to attachment either by the process of foreign attachment or of garnishment, as it is held in trust by the court, to be delivered to whom it may belong, after hearing and adjudication by the court. The Albert Crosby, 1 Lush. 101; The Wild Hanger, Browning & L. 84; 1 Chit. Archb. (11th Ed.) 702. (2) Because the proceeds in sqch a case are not by law in the hands of the clerk nor of the judge, nor is the fund subject to the control of the clerk. Moneys in the registry of the federal courts are required by the act of congress to he deposited with the treasurer of the United States, or an assistant treasurer or designated depositary, in the name or to the credit of such court; and the provision is that no money deposited as aforesaid shall be withdrawn except by the order of the judge or judges of said courts respectively, in term time or vacation, to he signed by such judge or judges, and to be entered and certified of record by the clerk. 17 Stat. 1. Regulations substantially to the same effect have existed in the acts of congress for more than half a century, and within that period it is presumed that no proceeding to attacli such a fund by a creditor of the owner has ever been sustained. 3 Stat. 395. (3) Judgments were never a lien upon personal property, unless made so by attachment under mesne process, which is all that need he said in respect to the proposition that the appellees acquired a right of preference to the proceeds in the registry of the court by virtue of their judgment against the owners.”
The second reason assigned — that the- clerk has no control of the fund in the registry of the court — is directly applicable to the position of the marshal. While it is true that he has the physical control and possession of the vessel, still such custody is simply by virtue of the fact that he is the ministerial officer of the court, and such custody is none the less the court’s. Furthermore, the tMrd reason given, viz. that “judgments were never a lien upon personal property, unless made so by attachment under mesne process,” is conclusive against the attempted garnishment in this case. In The Balize, 52 Fed. 414,
“The Judgments which the several masters have obtained against the Detroit Tug & Transit Company in personam, the issuance of executions, and returns of nulla bona thereon, created no lien on said surplus. The suits and judgments in personam conferred no vested right to a specific interest in said surplus, such as the forty-third admiralty rule contemplates. The creditor who claims satisfaction out of surplus proceeds in such cases must come into court with an existing specific lien. He cannot invoke the aid of a court of admiralty to create such lien by attaching or impounding the fund. The admiralty court can only enforce or give effect to subsisting liens created by statute or contract as against the owner of surplus proceeds.”
Counsel for petitioner rely particularly upon the case of The Daniel Kaine, 35 Fed. 785, 787. That authority does support their contention that petitioner Swmerton has a lien on the surplus by virtue of his judgment and execution issuing from the state court. But I cannot recognize that case as binding authority in the face of the decision of the supreme court in The Lottawanna, supra. The petition of Swinerton will, therefore, be dismissed.
The next petition to be considered is that of A. J. Storrs, who claims for services rendered as master and pilot of the Willamette Valley. The commissioner reports that there is owing this petitioner, as master and pilot, the sum of $400, — $200 for the month of December, 1898, and $200 for the month of January, 1894, — and he refers the question of law to the court as to whether the petitioner has a lien upon the vessel, or the fund derived from its sale, as pilot and not as master. That the petitioner has no lien as master is well established. The Orleans v. Phoebus, 11 Pet. 175; Willard v. Dorr, 3 Mason, 91, Fed. Cas. No. 17,679; The Grand Turk, 1 Paine, 73, Fed. Cas. No. 5,683; The Imogene M. Terry, 19 Fed. 463; Fisher v. Willing, 8 Serg. & R. 118;. The Favourite, 2 C. Rob. Adm. 232. See, also, in the circuit court of appeals for this circuit, The Louis Olsen, 6 C. C. A. 608, 57 Fed. 845. It appears from the testimony taken before the commissioner that the petitioner acted in the dual capacity of master and pilot for the bars of San Francisco and Yaquina Bay. The general superintendent of the Oregon Pacific Railroad Company, the corporation to which the Willamette Valley formerly belonged, testified that he made the petitioner master of that vessel principally for the reason that he was a licensed pilot for San Francisco bar, and could, in that capacity, save to the steamship $520 per month; and he also stated that the amount of wages agreed to be paid, — i. e. $200 per month, — was in excess of what would have been paid to a master who held only a master’s license, and not, also, a pilot’s license. But can a master of a vessel, who holds a pilot’s license, and renders services as such, claim a lien for his entire wages as master on the theory that he has a lien as pilot? I hardly think such a claim will avail to nullify.the strict and- old doctrine.of admiralty law that the master'
“After a careful examination of the questions presented by the appeal, I am satisfied, contrary to my first impressions, that the action of the district court in allowing and directing the debt of Ames, the master of the Balize, to be paid out of the surplus, is erroneous. This allowance was no doubt made upon the authority of The Santa Anna, Blatchf. & H. 80, 81, Fed. Cas. No. 12,325, where it was held that the master, as against the owner, was entitled to payment out of a surplus remaining in court. But that case has been practically overruled by the supreme court of the United States in the case of The Lottawanna, 20 Wall. 201, 21 Wall. 559, which hold that surplus proceeds, in such cases as the present, must be paid over to the owner, unless claimed by a creditor having a specific lien thereon, either by contract or statute. 5; * * Neither the master of the Balize nor any of the other petitioning creditors had any specific lien upon the Balize or its proceeds, either by statute or contract.”
A rid the learned judge thus concludes:
•‘It may he, and doubtless is, inequitable for the owner to assert its right to this surplus, and leave bona fide debts unpaid; but a court of admiralty has no suc-h equitable jurisdiction as will enable it to correct such a wrong. The claim of the master of the Balize cannot he distinguished from that of other creditors. and the decree of the district court allowing and directing its payment is reversed.”
The petition of Storrs will be dismissed.
“Said, bond or undertaking was executed by tbe said Messrs. Levi and Ferguson at the request of the receiver of the defendant properties, so that the said S. S. Willamette Valley should not be tied up, and her services lost to the receiver; and that the said S. S. Willamette Valley is very necessary in the operation of the defendant properties in carry in;.; the grain and merchandise to and from San Francisco, California, and is producing more revenue than any other branch or part of the defendant’s system.”
The sureties, it seems, employed an attorney to resist said claim, who ably contested it. Largely through his efforts, the claim for damages was considerably reduced, this court finally allowing the sum of §300 to the libelant, Gleeson. See opinion of court, 71 Fed. 712. This decree the sureties paid, amounting, with costs, to §437.88. They now petition to be reimbursed for this sum; and also ask for the additional sum of §400 as counsel fees for the attorney who represented the company. It seems that they have already petitioned the state court of Oregon, where the foreclosure proceedings were pending, for the allowance of these amounts. The final report, and the decree of that court of February 20, 1896, confirming the report, at. pages 165, 166, shows that the sureties did present their claim for judgment, costs, and counsel fees to that court, and that the same was allowed and ordered paid in the sum of §463.35, this being fixed as the amount of decree and costs; but the sum of §579, claimed for counsel fees, witness’ fe.es on the part of the defendant, and the taking of depositions of witnesses, was disallowed. It further appears, from said final report and the order confirming the same, that the claim of the sureties, to the extent allowed, was made a preferred claim, even over the receiver’s certificates, and that there were then sufficient funds to pay ihe same. But the sureties, desiring their claim to be allowed in full, including the counsel fees, witness fees, etc., have petitioned this court to be paid from the surplus proceeds in the registry. That their claim does not constitute a lien, and consists simply of a personal claim against the claimant, is well settled. Carroll v. The Leathers, 1 Newb. Adm. 432, Fed. Cas. No. 2,455; Roberts v. The Huntsville, 3 Woods, 386, Fed. Cas. No. 11,904; The Madgie, 31 Fed. 928. In the first of these cases, McCaleb, district judge, used the following significant language:
“The surely, therefore, can only be regarded in the light of an ordinary creditor of his principal, upon whose personal credit he relied when he bound himself for the payment of the bond. His light to be paid out of the proceeds of the boat which has been sold under his execution must .be regarded as subordinate to the claims of the interveners who have established their liens. .If any injury shall eventually accrue to him in this case, the court can only express regret at its in*849 ability to relieve him. It is his own fault if he has failed to exact of his principal a separate stipulation to indemnify him against all loss. And although the rules are silent with regard to this form of stipulation, yet, as a familiar and well-established part of the civil law and general admiralty practice, the court would not have hesitated, upon his application, to direct it to be given. Conk. Adm. 462, 463. He has the same night to proceed against the boat which has been seized and sold in this case as against any other property belonging to his principal; but it is the right of an ordinary, and not of a privileged, creditor holding a lien.”
The case was affirmed on appeal to the circuit court. See note to the case in Fed. Cas. No. 2,455, supra. In the case at bar the sureties were indemnified with a written guaranty that they should be saved harmless and be protected. That they have an equitable claim as against these proceeds derived from the sale of the vessel whose release they secured when she was first libeled, and that their equity in this respect is of a high character, cannot be doubted. They did a meritorious act, and should be reimbursed for all reasonable and legitimate expenditures made by them in that behalf. Much as I should like to allow their claim as against the surplus, I feel constrained under the peculiar circumstances of this case, 1 hough with considerable reluctance and much against my own personal wishes, to deny their petition, and advise them that it be presented to the state court of Oregon, where, 1 have no doubt, the matter, if properly presented, will be justly dealt with. The sureties certainly deserve to be paid, but, under the circumstances of this case, and in view of the other claims pending against this fund, 1 do not feel that the equitable powers of this court can bo stretched far enough to allow this claim; particularly that, part which relates to counsel fees. The whole matter, it seems to me, properly belongs to the state court of Oregon, under whose authority the receiver of that court gave these sureties an indemnity guaranty. Counsel for the sureties relies greatly on The Menominie, 36 Fed. 197. There the facts were that the petitioner advanced money at the request of the master to relieve the boat from an actual seizure then existing, and to prevent the loss and damage that would have been occasioned to all bad the boat been detained in tbe custody of the marshal. The vessel was in a foreign port, and she was seized for supplies (coal) furnished her. The court held that, under the peculiar circumstances of that case, and in view of the very strong equities that attached to the intervener’s claim, he was entitled to a lien. The general language used and the equitable principle applied in that case is, undoubtedly, strong authority for tbe allowance of tbe claim to the sureties made in this case, but there is a distinguishing feature between the cases, which is conclusive against the sureties in the case at bar. In The Menominie money was advanced to release the vessel; in other words, the claim for the coal was satisfied. By the admiralty law, money advanced to a master to enable Mm to purchase supplies at a foreign port gives one a lien therefor upon the vessel. Thomas v. Osborn, 19 How. 22; The Emily Souder, 17 Wall. 666; The Lulu, 10 Wall. 192; The Neversink, 5 Blatchf. 539, Fed. Cas. No. 10,133; The Mary, 1 Paine, 671, Fed. Cas. No. 9,187; The Ole Olesen, 20 Fed. 384. Henry, in Ms work on Admiralty, thus states the rule:
*850 •‘The lender of money, or the person making advances to the master to supply the ship’s necessities in a foreign port, has the benefit of the same lien which would attach for the supplies furnished and paid for through the money raised for that purpose, and with the same rank. The privilege of the material man who supplies a foreign ship extends to the creditor who advances money for the purchase of necessaries and to advances for the payment of an already existing debt for necessaries,” — citing The Tangier, 2 Low. 7, Fed. Cas. No. 13,744; The Thomas Sherlock, 22 Fed. 253.
Again, the author says:
“All advances of money made to pay off claims of a maritime nature upon the credit of the vessel, which are liens in the admiralty, have the benefit of the lien with the same rank as the original claims, and it has been extended to subsequent loans to pay off previous advances for such purposes.”
In the case at bar the sureties became obligated on a bond for the release of tbe steamship, receiving an indemnity bond from the receiver therefor. They advanced no money. The same observation is true with respect to The Thomas Sherlock, 22 Fed. 253, also cited by counsel. There money was actually advanced at the outset. I do not wish to be understood as laying down a general rule that under no circumstances can sureties recover from the surplus proceeds, but I think that under the peculiar circumstances of this case, the court in Oregon should pass upon the claim, and I shall, therefore, dismiss the petition of the sureties.
We come now to the three petitions for the allowance of receiver’s certificates. These can be considered together. I am asked by the petitioners to allow these certificates, as against the opposition of the receiver; and, further, I am requested to marshal them between the several petitioners, those held by the various insurance companies being claimed to constitute a prior lien to those held by the other petitioners. Petitioner William L. Law presents 14 receiver’s certificates for allowance, amounting to $28,000, with inter- • est from the 1st day of March, 1891, at the rate of 8 per cent, per annum. Petitioner G-eorge F. Lowrie presents four receiver’s certificates, aggregating the sum of $40,000, comprising part of the same issue to which Law’s certificates belong. He also claims interest at the rate of 8 per cent, per annum from March 1, 1891. The certificates held by both these petitioners were issued under the following circumstances, as appears from the orders and proceedings of the state court of Oregon in the foreclosure of the mortgage held by the Farmers’ Loan & Trust Company, which were introduced in evidence: Upon the institution of the proceedings to foreclose, T. E. Hogg was appointed receiver by the court, and took possession and control, subject to the orders of the court, of all the property and business of the insolvent railroad corporation. During the pendency of these proceedings, and before a sale of the mortgaged property, the receiver, who was also the owner of the steamship Willamette Valley, sold her to the corporation, the purchase being authorized by the court. It appears that the vessel was one of the principal sources of revenue to the corporation, connecting with the railroad at Yaquina, and making trips backward and forward between the latter place and San Francisco. In order to pay for said vessel, the court, by its order and decree of February 12, 1891>
The position of the various insurance companies holding receiver’s certificates is as follows: On April 26, 1893, the court made an order authorizing the then acting receiver, E. W. Hadley, to issue receiver’s certificates to the amount of $15,100 for the purpose of paying premiums upon insurance then placed upon the properties of the defendant corporation, including the steamship. The order, recites that the certificates issued should have priority over all eer-/ tificates theretofore issued, of whatever nature or kind, and that the said certificates recite such priority upon their face. As the-aggregate of all the receiver’s certificates presented by these sev-; eral petitioners for allowance, and claimed to constitute liens upon,
“Except as to'the surplus fund, realized from the sale of the steamer Willamette Valley, now in the United States district court for the Northern district of California, and as to such fund his receivership is continued; and his bondsmen are hereby released and exonerated from- all liabilities by and on account of being parties to the bond of the said receiver, Chas. Clark, to-wit, it. E. Gibson and P. Avery, and the other bondsmen, except as to any funds that may be hereafter realized by said receiver from said surplus fund aforesaid.”
There is, therefore, a court of competent jurisdiction, fully adapted to meet and finally dispose of the intricate and complex questions connected with the marshaling of rival liens and claims, which are rendered more embarrassing in this case because the fund on hand is insufficient to meet all demands in full. It must not be forgotten, moreover, that it was that court which first obtained legal possession of the Willamette Valley as the property of the insolvent corporations proceeded against. The fact that this court took possession of the vessel while she was engaged in commerce between the state of Oregon and the state of California, being operated as a part of the road of the corporation, to satisfy maritime liens incurred by said vessel, and that in enforcing the same it sold her to pay them, did not affect or impair the prior equitable right of the state court of Oregon to the surplus proceeds. The proceedings in admiralty in this court simply operated to suspend, not to divest, the action or control of that court as to the surplus. This court assumed jurisdiction for the sole purpose of satisfying the paramount maritime liens, and to distribute the surplus to him.to whom it rightfully and properly belonged. The purposes of admiralty jurisdiction having been consummated, the receiver, as the officer of the court of Oregon, now claims said surplus on behalf of that court. It is claimed that the receiver has no standing in this court, because he is without the territorial jurisdiction of the court wMch appointed him. Booth v. Clark, 17 How. 322; Br
