33 W. Va. 761 | W. Va. | 1890
These suits have been in this Court on appeals heretofore, and reports of decisions on such appeals will be found in 28 W. Va. 623, and 32 W. Va. 244 (9 S. E. Rep. 180) to which,
On April 29, 1878, an agreement was made between the Shenandoah Yalley Railroad Company and the Central Improvement Company reciting that, under contract theretofore made between said railroad company and said improvement company, the improvement company had agreed to build the road from Shepherdstown to the Chesapeake & Ohio Railroad, near Staunton — 133 miles — and had done a large amount of grading and masonry on the first seventy five miles south of Shepherdstown, and, by reason of the financial panic oí 1873, work had ceased up to the date of the agreement, and that it was the desire of both parties to the agreement that the bonds which had been paid to the Central Improvement Company, and by it pledged to other parties, be retired and canceled, in order that a new contract between John Satterlee & Co. and Alfred Creveling and the Shenandoah Yalley Railroad Company might be carried out for the completion of the road to the Chesapeake & Ohio Railroad; and, in order that the Central Improvement Company be released from all liability under its contracts to build the railroad, it was provided, first, that the securities deposited with the Pennsylvania Railroad Company for advances by it to the Central Improvement Company should be surrendered by the Pennsylvania Railroad Company, it agreeing to receive in exchange therefor $250,000.00 of an issue of $500,-000.00 six per cent, currency second mortgage bonds of the Shenandoah Valley Railroad Company, subject to a prior lien of $15,000.00 per mile of first mortgage six per cent, bonds, which second mortgage bonds the Shenandoah Yal-ley Railroad Company agreed to deliver to the Pennsylvania Railroad Company; and it provided, second, that the Central Improvement Company should deliver to the Shenandoah Yalley Railroad Company all its first mortgage bonds held
An appeal was taken to this Court; and on February 25, 1889, this Court decided that appeal, holding that the agreement of April 29,1878, was valid and binding on the Shenandoah Valley Railroad Company and the Central Improvement Company, and the release made by the trustee of the first mortgage, dated October 15, 1872, was valid, and that under the contract of April 29, 1878, on the cancellation of the $531,000.00 first mortgage bonds held by the Central Improvement Company, that company became at once entitled to the $250,000.00 second mortgage bonds, and the income bonds, as provided for in said agreement. (9 S. E. Rep. 180.) That agreement being executory, and said bonds not having been delivered under it, a question arose in this Court whether, as the said railroad company had subsequently made three mortgages to the Fidelity Insurance, Trust & Safe-Deposit Company, to secure large amounts of bonds, the said railroad company had disabled itself to perform said agreement; and that question turned upon whether or not the said Fidelity Insurance, Trust & Safe-Deposit Company had notice of the rights of the Central Improvement Company under said agreement when said mortgages were executed. This Court held that, as the said
The judge of the Circuit Court filed a written opinion, in which he expressed the opinion that there was no proper process by which to measure the compensation to be given the improvement company save that which he adopted, and that was to take the amount ascertained as the amount of capital stock of the Central Improvement Company which
How, as to the manner or form of relief to be given the Central Improvement Company. This Court did not expressly decide that matter, as appears from the above quotation from the opinion. While that opinion plainly expressed the conclusion that the Shenandoah Valley Railroad Company had not, by the mortgages it executed, disabled itself from specific execution of the agreement of April 29, 1878, it did not say that literal performance of it should be decreed, but expressly waived any decision in that respect. If literal specific performance were decreed, requiring the issue of the bonds nunc pro tunc, so to speak, it might be a question what would be the status of such bonds. There already have been issued second mortgage bonds, and this Court has said that this claim is paramount to that mortgage. If the status of these bonds, as compared with those under mortgages already issued, should be questionable, that would be a sufficient reason against that form of relief, and they would be of doubtful, if not dangerous, standing in the stock market. All parties being before the Court, it may be said that those bonds could be decreed their preference over other bonds. The corporation is insolvent. Another circumstance is that the $250,000.00 bonds which the improvement company was to get were to stand on the same plane with a like amount to go to the Pennsylvania Railroad Company, and they have been merged into a subsequent mortgage. But if issued they would participate in the distribution of the
This Court held in Wayt v. Carwithen, 21 W. Va. 516, that “auy deed or written contract used by the parties for the purpose of pledging real property, or some interest therein, as security for a debt or obligation, which is informal and insufficient as a common-law mortgage, but which by its terms shows that the parties intended that it should operate as a lien or charge upon specific property, will constitute an equitable mortgage, and may be enforced in a court of equity.” Also Knott v. Manufacturing Co., 30 W. Va. 790, (5 S. E. Rep. 266.) “An agreement to give a mortgage, not objectionable for want of consideration, is treated in equity as a mortgage, upon the principle that equity will treat that as done which by agreement is to be done. This doctrine has been asserted frequently both in this country and in England.” 1 Jones, Mortg. § 163. “An agreement, on a sufficient .consideration, to give a mortgage on specific property, creates an equitable lien upon such property which
This Court called the right of the Central Improvement Company in its former opinion an “equitable lien,” and such it is. Thus it is proper to decree, not specific performance, but compensation in money. The question has been raised, what sum shall be decreed ? It is proposed that not the full sums called for in the agreement shall be given, but that a valuation be put on the bonds which it required to be delivered upon some such process as that by which courts of law ascertain damages for breach of contracts to sell aud deliver property. Different processes are proposed. These bonds were never issued, never listed at the stock exchange; and we can not safely ascertain their market value, for they had none, This being so, it is proposed that
As to the income-bonds, they had no market value, and they were certainly not lawfully issued at that time; and this sale would furnish no safe basis. (See, further, as to this sale, what is said below.) A sale of its right to $250,-000.00 second mortgage bonds for $25,000.00 to Boyce, vice-president of the Shenandoah Yalley Railroad Company, by the Pennsylvania Railroad Company, can furnish no fair criterion of value. The Pennsylvania Railroad Company was fostering the new enterprise, the Shenandoah Yalley Railroad, as an important
As to the sale made by Jamison & Co. to Clark & Co., by agreement, July 12, 1879, for $25,168.85, the amount of the judgment of Jamison & Co. against the Central Improvement Company. It was a sale of such right as would be acquired under the sheriffs sale, under the attachment in Philadelphia, as the agreement provided that Jamison & Co. should buy the bonds under that sale, if they should not go at a price above their judgment, and turn them over to E. W. Clark & Co. This was a private sale. It was a sale of such right as the sheriff’s sale would confer, with the clouds and questions over it, as above stated, with the additional and strong reason against this, asa test, that Jamison & Co. only aimed to realize their debt. That attained, they were satisfied. A private sale, influenced by private considerations. The evidence of Kelly, a banker, shows that such second mortgage bonds as those called for by the contract would have been worth at least par in 1883. First mortgage bonds then for the first time came on the market, and commanded from $110.00 to $114.00.
But, in my opinion, all these suggested processes or stand, ards for the ascertainment of value are, if not irrelevant, inapplicable to this ease; and I refer to them only in deference to the fact that they are presented for our consideration by counsel. If a party covenant to deliver another’s stock or bonds, in an action for failure to do so, we would apply some principle to assess the damage. The general rule would seem to be the value at the time of the breach of the contract. 2 Suth. Bam. 382. The Court of Appeals of Virginia in Enders v. Board, 1 Gratt. 372, held that, where a person agreed to return stocks borrowed, the measure of
I come now to a question which seemsto have been greatly contested in the Circuit Court, and is so contested here, and without plausible ground, as it seems to me, in view of the opinion handed down February 26,1889. This question is this: Is the lien of the Central Improvement Company, for the compensation it is entitled to, prior or subsequent to the first mortgage to the Fidelity Insurance, Trust & Safe Deposit Company ? We answer that it is subsequent to that first mortgage, though that mortgage is subsequent in date— April 1, 1880 — to the agreement of April 29, 1878, to the extent of $15,000.00 per mile, with interest at six per cent. In delivering the opinion of this Court, Snydbe., P., said : “I am therefore of opinion that the Fidelity Company is not a purchaser without notice as to the said equitable lien of the improvement company. Having reached this conclusion, it is apparent there is no foundation for the contention of the improvement company that the railroad company has disabled itself by subsequent mortgages from performing its part of the said agreement of April 29, 1878. All these mortgages are subordinate to the claim of the improvement company under said agreement; and said claim may be enforced, not only against the railroad company, but against those claiming under said mortgages.” It is urged that this language subordinates the first mortgage of the Fidelity Company to the lien of the improvement company. It would be to no purpose to refer in lengthy detail to the elaborate and able arguments made to sustain this claim of priority for the improvement company. Language used in the Court’s opinion to the effect that the mortgage trustee could only do what the mortgage authorized him to do, and that his release could not prejudice rights of bondholders whose bonds were unpaid, and that the Fidelity Company had notice of the rights of the improvement company, is referred to as countenancing the proposition that the first mortgage to J. Edgar Thomp
The result of our former decision is that said agreement of April 29, 1878, is binding on railroad company, on improvement company, and on the Fidelity Company. It ex-preessly says that after the improvement company had failed to go on with the work of constructing the railroad, and it had long been suspended, both parties desired thatthe bonds held by the improvement company should be retired and canceled in order that a new contract between John Satterlee & Co. and Alfred Creveling and the railroad company might be carried out for the completion of the road ; and it provides in clause 1 that the securities deposited with the Pennsylvania Railroad Company for the amount advanced to the Central Improvent Company be surrendered by the Pennsylvania Railroad Company to the Shenandoah Yalley Railroad
Here observe that the agreement refers to the new contract for the completion of the road made by the Shenandoah Valley Railroad Company with Satterloe & Co. and Creveling, and makes concessions in order that it might be carried out; and thus both parties know of and approve it, and desire it to be carried out, and it becomes a part and parcel of the. agreement. What is that contract ? It bears date April 3, 1878, shortly before the agreement of April 29th, and provides that John Satterlee & Co. and Alfred Creveling shall complete the railroad and receive as payment certain stock and “also first mortgage bonds to the amount of fourteen thousand dollars per mile of completed road out of the total issue of fifteen thousand dollars per mile.” It provides, also, that “one thousand dollars per mile of first mortgage bonds shall be retained by the party of the first part for the exclusive purpose of settling for the right of way, and for any claim that may now be due against said railroad company.” It also recites that “the party of the first part agrees to issue the first mortgage bonds to the fixed limit of fifteen thousand
A theory proposed in behalf of the improvement company, based on a somewhat different line of argument from that resting on a misconstruction of the opinion of this Court, is that when the agreement of April 29, 1878, was made that company held said first mortgage bonds, and that agreement was executory, and said company bound itself to surrender such bonds only provided that the second mortgage bonds should be delivered to it, and that it can be deprived of its lien only in that way, and none other, in which it agreed to be deprived of it, and that no release can affect that lien until the compensation to be fixed under said agreement shall be paid ft, inasmuch as no second mortgage bonds were de
Another contention presented in argument is that if the Shenandoah Valley Railroad Company had complied with said agreement when it should have done so, when it canceled the first mortgage bonds held by the improvement company —say April 1, 1879 — and delivered the bonds it had stipulated to deliver, they could have been sold years ago, at, or nearly at, par, and that the improvement company is entitled to the highest market price which could have been realized between that date and the decree in the cause, and that the improvement company has been thus damaged, and is entitled to damages on that score, and that, as the railroad coni' pany so failed to deliver when it should have delivered the bonds, whereby the improvement company lost the highest market price, a court of equity should accord to the compensation it is to receive a priority over the Fidelity Company mortgage, and not give it a second place, whereby it may realize much less for its bonds than it would have realized from a sale in the market. Now, an answer to this theory which at once prominently presents itself is that until since the decision of this Court in February, 1889, that company repudiated, antagonized as not binding on it, the agreement of April 29, 1878, and claimed the full amount of $531,000.00 first mortgage bonds; and, so far as its conduct shows, it would not have received the bonds under said agreement had they been tendered.
The decree of the Circuit Court is erroneous in giving the compensation decreed to the Central Improvement Company preference and priority as a lien on the railroad property over
It is contended by the Shenandoah Valley Railroad Company and the Fidelity Company that all right of the Central Improvement Company to equitable compensation has been extinguished by an attachment proceeding in Philadelphia at the suit of B. EL Jamison & Co. against Milnes. Jamison & Co. had recovered judgment against the Central Improvement Company for $25,168.85 on July 10,1877. On July 5, 1879, an attachment issued for the amount of said judgment; and it commanded that “William Milnes, president Shenandoah Valley Railroad Company, garnishee,” be summoned to show cause why said judgment should not be levied on the effects of the Central Improvement Company in the hands of the garnishee. On July 25, 1879, Milnes, for himself, and as president of the Shenandoah Valley Railroad Company, hied answers to interrogatories as to effects of the improvement company or railroad company in his hands, stating : “I have $250,000.00 of the second mortgage bonds of the Shenandoah Valley Railroad Company now in course of preparation. Also, income bonds of said railroad now in course of preparation, to an amount not less than $178,000.00. I hold these securities as the property of the Central Improvement Company or their assigns. I hold these securities as president of the Shenandoah Valley Railroad Company. I hold nothing individually.” On September 11, 1879, a rule issued against the garnishee to show cause why judgment should not be entered against him upon his answers, which was served on Milnes September 12,1879, and onMcNeeban, secretary of Central Improvement Company, 13th September 1879. On September 15, 1879, judgment was entered that “plaintiff recover of William Milnes, J r., president of the Shenandoah Valley Railroad Company, garnishee of the Central Improvement Company,” certain sums. On September 18,
Tt is claimed that, under the Pennsylvania statute, property not in the garnishee’s hands when he is summoned, but coming to him before judgment, is liable to the attachment. Silverwood v. Bellas, 8 Watts, 420, is cited for this position. It was a case where after garnishment the garnishee received money of the debtor to send to him. The Court says this became a debt due from him, and held it bound by the attachment. But in the later case of Railroad Co. v. Pennock, 51 Pa. St. 244, it is held that “goods, coming into the hands of the .garnishee after the service of the attachment are not bound by it.” The opinion explicitly draws a distinction between “attachments of debts, and the like, or money passing through the hands of the garnishee,” and goods, and says that in the former case money coming into the garnishee’s hands after service of attachment would be bound, while goods would not be. These bonds were seized and sold as goods and chattels. So that proceeding does not bar the right of the improvement company.
I do not regard it necessary to say much as to the conten*tion that there is an equitable estoppel against the demand of the Central Improvement Company arising out of the said attachment proceeding on the theory that a rule to show cause why a judgment againstthe garnishee was served on the secretary of the improvement company, and the company stood by, and allowed the bonds to be turned over to the sheriff and sold, without resisting. It is not perceived how a compulsory proceeding in indium, and under the circumstances stated above, could be construed as done with the consent of the defendant. The improvement company entered no appearance, it is true, but gave no show of consent; and its mere inaction could not constitute such estoppel.
As to the matter of pleading, the Circuit Court did not require the improvement company to file pleading to assert its
Ret earnings while a railroad is in the hands of a receiver appointed by the court may be applied to the payment of claims having superior equities to that of bond-holders. These claims are confined to outstanding debts for labor, supplies, equipments, or permanent improvement of the mortgaged property as may, under the circumstances of the particular case, appear to be reasonable. Fosdick v. Schall, 99 U. S. 235; Addison v. Lewis, 75 Va. 701. Under certain circumstances, and for proper purposes, receiver’s certificates may be accorded priority over debts secured by mortgage. Jones Ry. Secur. § 542; Beach Rec. § 379 et seq.; Wallace v. Loomis, 97 U. S. 146; Union Trust Co. v. Illinois M. Ry. Co., 117 U. S. 434; 6 Sup. Ct. Rep. 809; Miltenburger v. Railroad Co., 106 U. S. 286, 1 Sup. Ct. Rep. 140.
In any decree hereafter entered in these causes, it must be provided that the charges and liens on the railroad franchise and property stand, and out of its sale shall be paid as follows: (1) The proper costs of plaintiff in these causes; (2) proper receiver’s certificates, or charges under the receivership ; (3) the first mortgage bonds, with interest thereon at six per cent, per annum, to the extent of $15,000.00 per mile of'the railroad, which bonds are secured by the mortgage dated April 1, 1880, given by the Shenandoah Valley Ruilroad Company to the Fidelity Insurance, Trust & Safe Deposit Company, deducting such interest as may have been paid on the said bonds; (4) to the-Central Im
For these reasons the decree of the Circuit Court of Jefferson County in these causes is reversed, with costs to appellant, and the causes remanded to that court for further proceedings therein according to the principles announced and directions given in this opinion.
Reversed. Remanded.