Hay v. Alexandria & W. R.

| U.S. Circuit Court for the District of Eastern Virginia | Jul 1, 1884

Hughes, J.

The task of the court is to pass upon the relative priorities of the several deeds and judgments resting as liens upon the property of the Alexandria & Washington .Railroad Company, and ascertain the rights with reference to these liens of the Alexandria & Fredericksburg Railroad Company in respect to its claim for better-ments. The priority of the lien of the Bradley deed over the Kinzer deed is res judicata as between the two; and, as the former deed antedates all other liens by deed or judgment upon the property of the company, it must have precedence over them all, unless there be something in the objection, that the guarantee of the city of Washington to the holders of the bonds of the railroad company was ultra cires, as being in conflict with the tenth section of the city charter of 1848. On this subject it may be remarked that there has been a direct adjudication by the court of highest resort in "Virginia, where the property embraced in this deed lies, that notwithstanding this objection, the Bradley deed is a lien upon the property of the Alexandria & Washington Company as of the twenty-third of July, 1857. It is true that this decree does not, in a technical sense, conclude those who were not parties to the suit in ’which it was rendered; but it carries all the authority of a decision of the highest court of the state in which the .land affected by it lies, upon a question directly raised before it. Independently of these considerations, it may be added that the mortgage secured the bonds and created a valid lien on the property. When the city took up these bonds this lien was not vacated. The cancellation of the city’s signature on the bonds did not cancel the liability of the railroad company for their payment. The city might have contested her liability on the bonds, but the subsequent lienholders are in no condition to contest the title of the city to the bonds. It is a matter of no importance to them, whether the city gets the money, or some one else. The debt is still owing by the company, and the lien for its security is a valid one. So, the conclusion of the court is, that the Bradley deed is a first lien by deed or judgment upon the property of the Alexandria & Washington Company, dating as of the twenty-third of July, 1857, for the debt it secures, as reported by Commissioner Fowler.

The Lennox deed is really not disputed, and having been recorded on the twenty-fourth of July, 1857, antedates and ranks all deeds and judgments, except the Bradley deed. It is true that Lennox, the trustee, had personal notice of the execution; but this notice to him cannot bind the bondholders whom he represents, who took the bonds without notice. For all purposes of notice, the trust deed must, in this case, be treated as executed to the bondholders.

The Hay judgments and the claim of Fowle, Snowdon & Co., as this latter is represented by the Kinzer deed, and by the decree of the circuit court of Alexandria county, rendered on the twenty-fifth of May, 1859, must now be considered. Two of the Hay judgments antedated the decree; two of them were simultaneous with'the decree, (the two judgments and the decree having taken effect as of the first day of the same term of the court which rendered all of them, viz: the sixteenth of May, 1859;) and three of the judgements were subsequent to the decree.

It will be necessary to consider the objections urge'd respectively against the claim of Fowle, Snowden & Co., and the Hay judgments.

First,-of Fowle, Snowden & Co.’s claim. The circuit court of Alexandria county, in a case in which that question was directly presented before it, decided that the Kinzer deed was not legally recorded in pursuance of the registration laws of Virginia, and did not constitute a lien upon the property of the Alexandria &- Washington Company. Appeal was taken by Fowle, Snowden & Co., to the court of apjieals of Virginia; the appellants in their petition for the appeal assigning as a ground of error, that the court below pronounced the registration absolutely illegal, and not merely as it should have done, subordinate to the Bradley deed. The appellate court rendered a general decree of affinpanee, thereby establishing the validity and finality of the decree below. It is true that the judge who delivered the opinion discussed only the question whether Fowle, Snowden & Co. had notice of the previous execution of the Bradley deed when they took the Kinzei1 deed, but the decree itself, which was the act of the whole court, affirmed the decree below generally, and made no such limitation of affirmance in its decree as the individual judge had done of argument in his opinion. -In a very recent case, that of Davis v. Bcazlcy, 75 Va. 491" court="Va." date_filed="1881-04-28" href="https://app.midpage.ai/document/davis-v-beazley-6806793?utm_source=webapp" opinion_id="6806793">75 Va. 491, the supreme court of appeals has put the matter at rest in this state by holding that the grantee or beneficiary in a deed is not allowed, as an officer, to take an acknowledgment of the deed by the grantor, with a view to its registration; that the certificate of such’ acknowledgment is invalid, and hence a recordation of it based upon such certificate is without effect. Vv7e are therefore relieved of the necessity of considering whether this court, in an original case, would hold that a director of a corporation, which makes a trust deed preferring himself over other creditors, is incompetent to take and certify the acknowledgment of that deed for registration in the additional capacity of notary public; especially a deed which was agreed to be held for a time from registration.

The debt of Fowle, Snowden & Co. therefore having no footing as a lien by virtue of the Kinzer deed, stands exclusively upon the decree of the twenty-seventh of May, 1859, establishing it. It is stated by opposing counsel that no execution was ever taken out on this decree. It does not seem to be pretended by any one that execution was ever issued. The record does not show that it ever was. Not only have ten years elapsed since the decree, but 20 years. As to adverse lien creditors, the right to sue out a writ of scire facias upon the decree is lost, and the right to bring an action upon it is gone. What, then, isfthe status of the lien oí the decree ? A Virginia text-writer of eminence, Prof. Minor, lays it down that the lien of a judgment is suspended when the right to revive it by scire facias or action is lost. 2 Minor, Inst. 272. And Mr. Barton, another text-writer, has this passage, referring to the twelfth section of chapter 182, Code 1873 :

“Tho right to enforce the lien o£ a judgment, although tho statute (in section 9) dolares that it may always be enforced in a court of equity, is confined to the time that an action may be brought, or scire facias sued out thereon, and after that time tho lien ceases to exist.” See 1 Barton, Ch. Pr. 109.

The debt of Fowlo, Snowden & Co. is bottomed therefore on no lien, and is to be treated in this suit as an unsecured claim against which a plea of the statute of limitations has not been interposed.

Coming now to a consideration of the Hay judgments. Four of them had been assigned to Hay by the original plaintiffs after they had been recovered. The plaintiffs in two of the four suits were citizens of Massachusetts, and the judgments assigned were rendered respectively on the twenty-fifth of November, 1857, and on the ninth of February, 1858. The other two of these four judgments were re-covered by residents of Virginia, and assigned to Hay, bearing date on the twenty-seventh of May, 1859, but taking effect as of the sixteenth of May, 1859. On these four judgments Hay brought an equity suit in this court in 1875, in which he prayed that the satisfactions which he had caused to be marked on these judgments in 18(50 might be set aside, and the liens which had originally attached to the judgments might be restored. Decree was obtained in this court in 1881. It is objected to the validity of the decree that this court had not jurisdiction as to two of the judgments, to entertain a suit brought by Hay on them, inasmuch as the second clause of section first of the judiciary act of 1855 (Supp. Rev. St. p. 174, c. 137) declares that the circuit courts of the United States shall not have cognizance of suits brought by assignees of causes of action, where their assignors could not sue. Waiving the question whether the decree under consideration can be assailed collaterally, it is to be remarked, that the object of tho equity suit brought by Hay in this court was to set aside “satisfactions” which had been marked upon the judgments at a time when they had become the property of Hay. Tlie consideration for which they liad been so marked had proved null and void. The satisfactions had been executed on an implied promise of the company, to Hay himself, that if the consideration should fail, the company would make good the judgments. This obligation, arising ex eqao et bono, from the company to Hay.himself, was the cause of action on which the equity suit was founded. It was a cause of action arising directly in favor of Hay, irrespectively of the manner in which he had acquired this property, and the jurisdiction of this court to entertain a suit by Hay, a non-resident, against the Alexandria & Washington Company, a resident of Virginia, upon this cause of action which had accrued to himself was complete-But even assuming, what is not true, that the original causes of action on which the judgments had been obtained in the state court were still the basis of the equity suit brought in this court, even in that case the jurisdiction of 'this court was good. Two of the judgments had been recovered by citizens of Massachusetts, the other two by citizens of Virginia. As to the first two, the jurisdiction was undoubted. The owner of these brought the suit; and the only question is, whether he had a right to join in his suit two judgments against the same defendant which had been assigned to him with no purpose or intention of evading the jurisdiction of the state court. This question would seem to be settled by the first clause of the first section of the act of 1875, which provides in substance that the circuit courts of the United States “shall have cognizance of all suits, etc., in which there shall be a controversy between citizens of different states, etc.” The controversy of Hay respecting the judgments as to which the jurisdiction was undoubted, gave under this clause jurisdiction of the suit which embraced two other controversies which were not between citizens of different states. It is true that the clause of the act of 1875, on which this objection is based, would not authorize causes of controversy to be embraced iú a suit which had been assigned for the purpose of having them sued upon in a United States court. Section five of the same act forbids assignments for such a purpose; but this very section, by forbidding the joining of causes of action assigned for this purpose, impliedly authorizes causes of action not assigned for such purpose to be so embraced. If a suit is found to embrace causes of action assigned for this-purpose, the court will dismiss it as to such causes of action, retaining it as to the others, as was done by the supreme court of the United States in Inhab. of the Township of Bernards v. Stebbins, decided at the present term and reported in 109 U.S. 341" court="SCOTUS" date_filed="1883-11-26" href="https://app.midpage.ai/document/bernards-township-v-stebbins-90943?utm_source=webapp" opinion_id="90943">109 U. S. 341, and also in 3 Sup. Ct. Rep. 272. This principle has been frequently applied as to parties by the supreme court, in suits in which the court has held that though all the plaintiffs and all the defendants marshaled on opposite sides of a cause, were not residents of different states, yet if there be a separable controversy between citizens of different states, that fact may of itself give jurisdiction of the whole suit. ' If a separable controversy as to parties can bring a suit into a federal court, there would seem to be n,o reason why a separable controversy as to causes of action should not do so; except, indeed, in suits where a fraud upon jurisdiction is attempted, as contemplated by section 5 of the act of 1875. These four judgments having therefore been legally relieved of the “satisfactions” that were marked upon them, and the liens which they created having been legally restored, must take rank as of the twenty-fifth of November, 1857, the ninth of February, 1858, and the sixteenth of May, 1859, respectively; and must be given precedence over the debt of Fowle, Snowden & Co.

As to the objection that these four judgments, and the three others that were sued over in this court by Hay, and judgment anew obtained upon them in 1881, were merged in the new decree aud judgment, it is to be remarked that one of the objects of section 12 of the 182d chapter of the Code of Virginia, in inquiring judgments to be kept alive by soke facias, or new action, within 10 or 20 years, according as the issuing and return of executions on them might determine, was to provide a means of keeping alive judgments and their liens; and of quieting titles where judgment creditors slept too long on their rights. It is therefore a very strange pretension that the pursuit of the very remedies given by the state to keep alive judgments, and their liens, merges and extinguishes them. Although executions had been taken out on the original judgments owned by Hay, much time had elapsed when his suits were brought upon them in this court in 1875. Doubtless the provisions of section 12 of the 182d chapter of the Code suggested and induced those actions; and this courtXis unwilling to hold, in view of these statutory requirements, that the plaintiff in those suits, by complying with those requirements, lost the very rights which he was seeking to perpetuate. Whatever maybe the general doctrine in other jurisdictions, as to the merger of one judgment into another, it cannot be so applied in Virginia as to convert the statutory provisions that have been alluded to into a delusion and a snare. Besides, it is to be observed, as to the four judgments which were the subject of the equity suit, that suit was brought, not to obtain a new judgment upon the old ones, but to strike from the old ones an inscription which rendered them practically valueless, and to restore to them their original force and attributes. The object was the opposite of merging them, if that were the necessary effect of obtaining a new judgment on an old one. It was to place them in statu, quo as of the dates on which they were originally recovered, divested of the satisfactions which had been improvidently put upon them. The doctrine of merger, therefore, whatever it may be in ordinary cases, does not apply to these four judgments.

Summing up what has boon said, the several debts stand as to each other in the following order: (1) the debt due the city of Washington; (2) the bonds held under the Lennox deed; (3) the Hay judgments, seven in number; and (4) the unsecured claim of Fowle, Snowden & Co.

It remains to be considered how these several claims stand in respect to the claim for betterments put upon the western 18J feet of the roadway of the Alexandria & Washington Company while in possession of the Alexandria & Fredricksburg Railway Company under the proceedings taken in the county court of Alexandria county. It is clear that this claim can only affect the western strip of roadway that lias been mentioned; and the conditions prescribed by statute entitling the Alexandria & Fredricksburg Company to compensation for betterments seem to exist here. It is true that there is a profuse ascription of fraud against this company in the briefs of adverse counsel; but no proof has been made in the evidence establishing that fraudulent means were used by the company to secure the condemnation of the ground in question, or to obtain control of the Alexandria & Washington Railroad Company and its property. We have only to consider what and how allowance is to be made to this company for its betterments. The control of this road from Alexandria to the Long bridge must have been of much greater importance, and the use of it of much greater value, to the Alexandria & Fred-ricksburg Company, and its associate companies north and south, than could be measured by the pro rata receipts of net earnings in money, which accrued to it from that short section of road, especially if no account is taken of the five years’ rent, which the Alexandria & Washington Company might be entitled to as a credit under the statute of Virginia relating to betterments. It will be safe to assume that the Alexandria & Fredricksburg Company’s use and^eontrol of the road for 10 years have abundantly compensated it for all outlays it may have made for repairs, taxes, and other incidental charges. Its original outlay of $59,610.07 in constructing the road-bed and track on the western strip is all, therefore, that we think ought to be allowed as a first lien on that strip to the Alexandria & Fredricksburg Company. ' As to the manner of providing that amount for this claimant, if it cannot be agreed by the parties in interest what proportion the value of this 18|- feet shall bear to that of the whole 50 feet of road, it must be referred to the master to determine that proportion. The road must then be sold as a whole, and the purchase money be separated into two portions to represent respectively the proceeds of the sale of the old part and of the new, and the respective funds applied as has been indicated in this decision.

Waite, C. L, concurs.1