71 F. 776 | 5th Cir. | 1896
On August BO, 1888, the Texas Trunk Railway Company executed to the Central Trust Company of New York, as trustee, a mortgage of all its property, rights, and franchises to secure an issue of $1,000,000 of bonds, with interest payable semiannually. On the 4th of September, 1891, the said raihvay company having defaulted in payment of interest on its bonds, the Central Trust Company, trustee, filed in theUnited States circuit court for the Northern district of Texas a bill for the fore closure of the said mortgage, and thereupon a receiver, Charles Dillingham, was appointed, and the court continued to administer the property, through him and his successors in office, until February 25, 1895, when a final decree of foreclosure was made, decreeing a sale and distributing the proceeds thereof. On September 25, 1889, John C. Traylor, in a quo warranto proceeding instituted hv the state of Texas, in the courts thereof, against the Texas Trunk Railway Company, to forfeit the charter, was appointed receiver. On the 5th day of October, 1889, Joseph Foreman, the appellant herein, while traveling as a passenger on the said trunk railway, received a personal injury. On the 20th of October, 1889, on further prosecution of the quo warranto suit, at the instance of defendants, the order appointing John Traylor receiver was vacated by decree of the said state court. In the vacating decree the court held that the appointment of Traylor was not void, but that it was improvideutly made. No sale of said property having been made, the court ordered that Die same, in the hands of the said Traylor, receiver, should be returned to the said company, and shall be chargeable with all proper expenses and lawful liabilities incurred by said receiver in operating the said railroad. It was ordered, further, that “the charges upon the property in the hands of said receiver are hereby made a lien upon said property, and the possession of defendant, restored by this order, is subject to all the said charges.” The appointment having been vacated, tbe property, on 26th of Oct ober, 1889, was all turned back to the said company. On the 18th of October, 1890, Joseph Foreman, the appellant herein, filed his suit in the state court against the said railway company and John Traylor, as receiver, for the recovery of damages against said company for his personal injuries, received as before stated. On the. —-—— of January, 1892, appellant caused Charles Dillingham to be made a. party to his said suit in the state court. In June, 1892, Dillingham, appearing as a defendant, pleaded in this official capacity as receiver in said cause; and the said cause, having been tried on the 20th of February, 1898, resulted in a judgment for Foreman in tbe sum of $3,500, with interest, against the said Texas Trunk Railway Company and against Charles Dillingham, receiver. It does not appear from the record that the United Htates circuit
On the 2áth of July, 1893, Joseph Foreman filed his plea of intervention, upon his said judgment, in the United States circuit court for the Northern district of Texas, where it -was referred to a master, as it appears, on an agreed statement of facts. Later, the special master reported in favor of the intervener, entitling him to recover $3,500 with interest, “and a lien for the payment thereof, superior to the lien of the Central Trust Company; and the master recommended that the receiver be directed to pay the said amount, out of such of the current earnings and revenues derived by him from the property of the defendant railway company, as may now or hereafter be in his possession, after the payment of all expenses necessary for the proper operation and maintenance of said property during his receivership, including all the expenses which have heretofore been or may hereafter be incurred by the receiver or allowed by the court as a prior lien upon said property, and if there be no such surplus earnings, then this claim is hereby declared a lien on all the property of the defendant railway company, prior to the lien of the claim of complainant herein, together with the costs of the intervention.” On hearing the master’s report, the intervener excepted thereto, and prayed for, not only a prior lien on all the property of the said railway company, superior to the complainant’s mortgage lien, but for a lien superior to all other subsequent liens and claims arising since the date of the accrual of appellant’s claim, except the operating expenses and costs of this receivership and taxes. The Central Trust Company also filed a series of exceptions, attacking Foreman’s judgment, etc., in the state court. On the hearing of the master’s report, contradictorily with the Central Trust Company, the circuit court directed that the said report should be changed and reformed so that Foreman shall be entitled to a decree against the said trunk railway company and Atkins, Dillingham’s successor, as receiver, for the sum of $3,500, with interest, and the receiver shall pay said amount out of the current earnings- and revenues derived by him from the operation of the railway, in custody of the court, as shall remain, if any, after the payment of all expenses for the proper operation and maintenance of said railway and property during this receivership, including all expenses and costs prior to other liens of complainant herein, together with
Tim appellant’s counsel discusses, contradictorily with the appellees, the merits of the several exceptions filed, as it appears, in the court below; but there seems to be a difference of opinion between the counsel as to what disposition was made of the exceptions on the hearing. There is some contention, i.oo, as to whether the transcript shows a correct copy of the final decree reforming the master's report. In consequence of such differences, the appellees, on the hearing in this court, filed a motion for writ of certiorari. An agreement between the counsel amending the record having been filed, the motion was not pressed. The amendments, together with the record, show enough, of the issuable matters of fact and law to enable us to satisfactorily dispose of appellant’s objections to the final decree of the circuit court. Under the view we take of the issues, it is not necessary for us to decide the differences of counsel as to the disposition made of the exceptions, or to discuss the merits of them. The assignment of errors presented by the appellant, on behalf of his objections to the decree reforming the master’s report, are, substantially, as follows: That the evidence upon which the report was founded shows that the appointment of Traylor, receiver, wras legally made in the quo warranto proceedings in the slate court; that Foreman’s claim for damages, having accrued while Traylor was operating said railroad, constituted a part of the charges for operating his receivership; that by the operation of the final decree therein vacating the said receivership and returning all the property subjected thereto, without sale being made1 thereof, the claim of Foreman was preserved to him, as a lien, on the corpus of all the property which had been under Traylor’s receivership; that the judgment which he finally obtained in the state court on his said claim, vested, and recognized in him, a lien on Hie corpus of said property superior to the mortgage and bondholders (hereunder for any deficiency after- exhausting the earnings. On this statement of issues, which we have summarized from liie pleadings and evidence, the appellant contends, in behalf of Ids exceptions to the final decree reforming the master’s report, for two propositions: First, that by the terms of Hie final decree of the stare court, passed in the quo waiTanto proceedings against the said company, vacating the receivership of Traylor, his claim for damages, constituting, as it did, a part of the charges incurred in the operation of said receivership, having been vindicated by the said judgment, became a lien on the corpus of the property, which took eifect at a period during the receivership of Traylor; second, ihat by the operation and five legal effect of the said judgment, under the statutes of Texas passed in March, 1889, anterior to the date on which his cause of action arose, known as article 14G6 et seq., Ilev. Bt. Tex., he became the beneficiary of a lien on the corpus of all the property which was in Traylor’s hands at the time his cause of action accrued, superior to the lien of the bondholders in whos<> foreclosure suit he became an intervener.
In considering appellant’s second proposition, it will be seen that the mortgage in favor of the bondholders was executed and became •operative August 30, 1888, and that the statute (article 1466. et seq.)
Appellant, having recited at length article 1466 et seq., familiarly known as the “Texas Receivers Act,” says that its provisions are