81 F. 425 | U.S. Circuit Court for the District of Western Virginia | 1896
The Liberty Woolen Mills, a company incorporated under tlie laws of the state of Virginia, and a citizen of the state oí Virginia, and having its principal office at Bedford Oifcy (formally Liberty), wiihin the Western district of Virginia, purchased of M. A. Furbusli & Hon, citizens of Philadelphia, in tlie state of Pennsylvania, certain machinery, fixtures, and supplies, for which the said company was indebted to said M. A. Furbush & Son in the sum of 834,813.77, as of (lie--day of June, 1884. To secure the payment of this debt, the company executed a deed of trust on all the said machinery, fixtures, and supplies which it had purchased of M. A. Furbush & Hon, in which deed it was provided that the title to the said machinery, etc., should remain in saidM. A. Furbush & Son until all (he purchase price (hereof, interest, and insurance premiums had
1. All of the defendants except because the debt of the complainants for $4,201.97 is stall'd as the second lien on all of the property, whereas, in fact, it is a specific lien only on such of the property as was sold by complainants M. A. Furbush & Son to the Liberty Woolen Mills, and is not a lien on any of the real estate or other property of the defendants, or any of them. The complainants have a specific lien for said sum of $4,201.97 on the machinery, fixtures, and supplies sold by M. A. Furbush & Hon to the Liberty Woolen Mills, as shown by the mortgage of June 25, 1884, but they have no lien for said sum on any other property of the defendants. This exception will be sustained.
2. The Liberty Perpetual Building & Loan Company, a creditor of the Liberty Woolen Manufacturing Company, excepts “because the commissioner has failed to state its debt proven in this cause as a lien on the property sought to be subjected in the bill. It should be stated as the lien next after the taxes on all the real and personal estate iu the bill and proceedings mentioned.” It further excepts “because the $5,600 of bonds held by the complainant is stated as part of the $10,000 mortgage in the bill and proceedings mentioned. These bonds, if liens at all, are subsequent to the lien of this company. The bonds were acquired by the complainants long after the passage of the Code of 1887, which gave the complainants full knowledge of the right: of die laborers to claim liens on the property superior and paramount, to deeds of trust, mortgages, etc. In any view that could be taken of
“Sec. 2485. Lien of Employés, etc., of Transportation Companies, etc., on Franchises and Property of Company. All conductors, brakemen, engines drivers, firemen, captains, stewards, pilots, depot or office agents, storekeepers, mechanics, or laborers, and all persons furnishing necessary supplies to the operation of any railway, canal, or other transportation ebnipany, or of any mining or manufacturing company chartered under or by the laws of this state, or doing business within its limits, shall have a prior lien on the franchise, gross earnings, and on all the real and personal property of said company which is used in operating the same to the extent of the moneys due them by said company for such wages or supplies; and no mortgage, deed of trust, sale, hypothecation, or conveyance, executed since the twenty-first day of March, eighteen hundred and seventy-seven, shall defeat or take precedence over said lien: provided, that if any person entitled to a lien, as well under section twenty-four hundred and seventy-five as under this section, shall perfect his lien given by either section, he shall not be entitled to the benefit of the other.”
This provision of the Code, were it the original, would, in the opinion of the court, be clearly null and void, because of its retroactive character, and its consequent impairment of the obligation of contracts. It is in conflict with section 10 of article 1 of the constitution of the United States. A very able and elaborate argument has been made by counsel for tbe assignee of these labor claims, to, show that, though the provision of the Code (section 2485) might be null and void, yet the original act of the legislature, which is substantially the same as this provision of tbe Code, was passed March 21, 1877, and amended by act of April 2, 1879, and is valid. This court has passed upon the constitutionality of this act as to the wages due employés by manufacturing companies in Fidelity Insurance & Safe-Deposit Co. v. Shenandoah Iron Co., 42 Fed. 376. The court, after carefully considering tbe argument submitted in this case, finds no reason to change the view held by it in that decision. But a discussion of these questions seems scarcely necessary when we consider between what parties tbe contract was made out of which these claims grew, and against what property they are sought to be enforced, and out of what fund their payment is asked. This is a suit to foreclose two mortgages executed by the Liberty Woolen Mills, one dated on the 25th of June, 1884, and the other dated on the 1st day of June, 1885. In the year 1889 the mortgagor, the Liberty Woolen Mills, through its president and directors, sold the property at public auction, subject to these two mortgages, at the price of $17,000, with the privilege to the purchasers of using the purchase money, as far as it would go, in settling the mortgages. This was the consideration in the contract of sale between the vendor and vendees. The object of the sale was to realize a sufficient
The contention here is that, no matter when or by whom a mortgage or deed of trust is executed on property held by a manufacturing company, such mortgage or deed of trust can be invaded by the statutory lien for wages, made subsequent thereto, and the creditor deprived of a security taken from an entirely different company from that contracting for the labor, and against which the labor claim is asserted. This was not the intention of the legislature. The destruction of property rights here contended for was not contemplated by the passage of the law for the protection of laborers. In this state it is frequently the case, where a party sells land, instead or reserving a lien iu the deed of conveyance, to secure the deferred payments of purchase money, he makes a conveyance with
It is contended on the part of the First National Bank of Bed-ford City that the master erred in reporting as a lien $10,000, the amount of the coupon bonds issued by the Liberty Woolen Mills and secured by the mortgage of the 1st day of June, 1885. It is claimed that he should have reported $4,400 of bonds held by the First National Bank of Bedford City as constituting a lien under the mortgage on the whole plant of the Liberty Woolen Manufacturing Company, and that, if the $5,600 of coupon bonds held by the Furbush & Son Machine Company constitute a lien at all under said mortgage, it is a lien subordinate to that of the First National Bank of Bedford City for $4,400. The evidence show's that, at the time McGhee and others purchased the property of the Liberty Woolen Mills, $5,600 of the coupon bonds issued by this company, and secured by the mortgage of June 1, 1885, were held by the People’s National Bank of Lynchburg, as collateral security for the payment of a debt due said bank by the Liberty Woolen Mills. It was stated in the argument that the five purchasers of the property, McGhee and others, or some of them, were indorsers on the note held by the bank for which the $5,600 of coupon bonds were deposited as collateral security. A witness, T. D. Berry, one of the five purchasers of the property, says they were deposited as a pledge to secure the payment of a debt due the bank. The five purchasers, McGhee and others, made an agreement April 12, 1889, with Fur-bush & Son that the said five purchasers would redeem the $5,600 of coupon bonds held by the People’s National Bank of Lynchburg, and turn the same over to M. A. Furbush & Son, who w'ere to credit the same as cash on their debt of $11,059.52, secured by the mortgage executed by the Liberty Woolen Mills, June 25, 1884. The Liberty Woolen Mills concurred in this agreement. The bonds were redeemed by the five purchasers paying the debt for which they were held by the bank as collateral security, and were delivered to M. A. Furbush & Son. The contention on the part of the First National Bank of Bedford City is that the five purchasers of the property of the Liberty Woolen Mills became, as between the Liberty Woolen Mills and themselves, primary debtors, and as between the holders of the coupon bonds and themselves they became sureties,
“The surely who has paid or satisfied the principal’s debt or obligation is entitled to be subrogated to, and to have the benefit of, all securities which may at any time have been put into the creditor’s linntins by the principal debtor, or which the creditor may have obtained from the principal debtor. By the fact of payment, the surety becomes an equitable assignee of all such securities, and is entitled to have them assigned and delivered up to him by the «•editor, in order that he may enforce them for his own reimbursement and exoneration.”
If McGhee and others, who paid off the debt due to the bank by the Liberty Woolen Mills, were not sureties thereon, then they were purchasers for value of the coupon bonds held as collateral security by the bank, and had a right to dispose of the same. This they did by paying off $5,600 of tlie mortgage held by Furbush & Ron, and have received credit for this amount on the $17,000 of purchase money which they agreed to pay the Liberty Woolen Mills. The coupon bonds for $5,600, and the coupon bonds for $4,400, secured by the mortgage, occupy the same position as liens, and are properly so reported by the master.
3. “The defendants Griffin, Berry, McGhee, Bolling, and Campbell except because the commissioner has stated that there is a personal liability upon them, or any or either of them. The original purchase price of the property was $17,000, and whenever this amount is paid, either by the purchasers or by the sale of their property, there could, in the nature of things, he left no further liability on them. It is shown (on page 16 of the report) that $10,640.27 of this amount has been paid, and it is admitted that the property is liable for the residue, and is amply good for it. When this residue is paid there will he nothing due by the purchasers to the Liberty Woolen Mills, and it was error in the commissioner to state a possible liability for a deficiency which will never exist, as part of the assets of the Liberty Woolen Manufacturing Company.” These defendants, Griffin and others, are properly credited by the master with the sum of $10,640.27 as the amount paid by them of the purchase money of $17,000. If, upon a sale of the property, the amount realized from such sale he not sufficient to pay -off the liens which incumbered the
The court cannot, at this time, fix the amount of the personal liability, if any, of the five purchasers of the property from the Liberty Woolen Mills, because it does not know what amount may be realized from the sale of the property. A decree will be entered directing the sale of the property, and the application of the proceeds to the payment of the liens as reported by the master, except so far as the said report is modified by the views of the court as herein stated.