9 Ga. 377 | Ga. | 1851
By the Court.
delivering the opinion.
In 1833, the Legislature granted a charter to the Monroe Railroad Company, to construct a railroad from Macon to Forsyth. In 1835, an Act was passed amending and reviving the Act of 1833, and in 1836, another Act was passed, amending and extending the provisions of the original charter. This last Act provides) that the company may increase their stock so as to ex
On the 2d of August, 1842, said company being greatly embarrassed and unable to proceed with their work, which was in a very imperfect and ruinous condition, even below Forsyth, entered into a contract with Robert Collins, Elam Alexander, John D. Gray & Co. Daniel McDougald and Arthur B. Davis, to build and equip the said road from and between Griffin and Atlanta;, and, among other things, it was stipulated, that the entire railroad with all its appurtenances, should be vested in the said contractors, until all the dues and payments to which they should be entitled under said contract should be fully met and satisfied.
In 1844, the Roswell Manufacturing Company and other creditors, having obtained judgments against the Monroe Railroad and Banking Company, sought to. subject said road to levy and sale, at law, by virtue of their executions.
To resume the narrative: the company obtained an injunction» and arrested the Common Law fi: fas. and at May Term, 1845, of the Superior Court of Bibb County, obtained a decree for the sale of the road and equipments,, together with all the rights, franchises and property therewith connected, and for a distribution of the proceeds among all the creditors, according to the priority of their claims — the said company having become entirely insolvent and unable to complete the road, or keep the same in operation, or to pay their debts.
The decree further found, that there were various descriptions! of creditors, viz : holders of the bank-notes issued by the company ; holders of bonds issued for work and materials for said road; judgment creditors; creditors holding certificates of de
David C. Campbell, Abner P. Powers, James A. Nisbet, Samuel B. Hunter and Thomas Hardeman, were appointed commissioners to sell the road, on the first Tuesday in August, 1845, after giving two months’ notice in the public gazettes of Macon, Griffin and Savannah, and the proceeds were directed to be paid into Court — public notice was to be given to the creditors of the company to file their claims or a schedule of them with the Clerk, by the first Monday in October next ensuing the sale; and in the event of any controversy, the creditors were authorized and directed to litigate among themselves, and their several and respective liens were tobe investigated and adjudicated.
It was further decreed, that the purchasers of the road should succeed to all the obligations of the company in regard to the completing, equipping and keeping the road in operation, as intended and designed by the Act of incorporation, but not to extend to any liability for debts contracted prior to the sale; and, finally, William B. Parker, the complainant in the bill, was appointed trustee in charge of the road, with its appurtenances, until the sale should be consummated; and it was made his duty to make monthly returns of the receipts and expenditures, and file the same with the Clerk of the Court, subject to the examination and approval of the Court.
In pursuance of this decree, the road was sold at the time and place designated, and bid off by Jerry Cowles, acting as the agent of Daniel Tyler, at and for the sum of $155,000, and a deed was executed by the commissioners. The whole amount brought into Court for distribution, including the price of some disconnected property, was $160,525 33.
To settle the difficulty as to the sale of a franchise, without the consent of the power which granted it, upon application to the Legislature, an Act was passed in 1847, creating Daniel Ty-lei’j the purchaser, and. his associatesj a body politic and eorpo
At the May Term, 1846, of the Superior Court of Bibb County, the question of the distribution of the fund arising from the sale of the road with its appendages, among the creditors, came up, when it was insisted, on the part of the Central Bank and others, bill-holders of the company, that the money in hand should be first applied in satisfaction of the bills, by virtue of the statutory lien, created by the 11th section of the charter. On the other hand, counsel for Robert Collins, one of the joint contractors under the agreement of 2d August, 1842, contended that he, as the holder of bonds and certificates, secured by mortgage on said road for work, labor and materials done and furnished subsequent to the execution of said mortgage, and on the faith thereof, was entitled to priority of payment out of said fund.
The presiding Judge ruled, that the lien of the bills of the company, under the 11th section of their charter, was paramount to and over-rode all others, and directed the money to be paid out accordingly. To this decision counsel for Collins excepted.
At August Term, 1846, at Decatur, this cause came up, on writ of error, to be heard before this Court, when it was adjudged, that the bill-holders had a paramount lien only on the fund raised from the sale of the railroad from Macon to Griffin, and so much of the road from Griffin to Atlanta as was built by the company prior to the contract of August, 1842, and that the contractors under the agreement of that date, had a prior and superior equity, to be paid out of said fund, in proportion to the relative value of the work done by them on said road, and materials and equipments furnished between Griffin and the upper terminus in DeKalb, and the Court below was instructed to appoint three commissioners to apportion the proceeds of the sale accordingly. So much for the previous history of this case.
William B. Parker, the individual designated as trustee under the decree for the purposes therein stated, now files his bill in
The specification of fraud and irregularity charged in the bill is this: That after the Jury had retired, the solicitor of the company went into their room, and counseled with the Jury concerning their finding; that Tyler was really agent for persons at the north — residing in New York and Massachusetts — who after-wards came forward as stockholders, and-that it was their money, and not his, that paid for the road; and. that he took the deed in his name in fraud, to have the apparent shield of the company of being bona fide purchasers.
The bill admits, that the contractors did not finish and furnish the road, nor does it aver any offer, on their part, to do so in terms of their agreement, before or since the public sale, but urges the failure of the old company as an excuse for this precedent duty, to foreclosing on the -road, and sets up 'their practical
1st. On the entire road and its receipts; or,
2d. On that part which was built by Gray and others, under the mortgage of 2d August, 1842, audits net receipts; or,
3d. Upon the net receipts alone of the part so built by the contractors between Griffin and Atlanta.
So much for the case, as made by the bill. Has the complainant any equity which entitles him to the relief which he seeks ?
One of the grounds upon which- this doctrine is based is, that the executor or administrator may not be harrassed by a multiplicity of suits, or a race of diligence be encouraged between different creditors, each striving for an undue mastery and preference. Jeremy on Eq. Jur. h. 3, pt. 2, ch. 5, p. 538 to 543.
Again: no other Court but that of Chancery possesses any adequate jurisdiction to reach or dispose of the entire merits. 1 Story Eq. Jur. §550.
The Chancellor, then, in taking this matter in hand and directing a sale of the entire interest for the benefit of all concerned, was but invoking the powers of Equity to aid the defects of the Law, and applying analogous principles to the existing emergency ; and so far from transcending his authority, he is entitled to the thanks of the parties and the country, for the correct and enlightened policy which he adopted. Had he faltered or shunned the responsibility thus cast upon him, he would have shown himself unworthy of the high office which he filled. As it is, this precedent will stand out in bold relief, as a landmark for future adjudications.
The bill admits,, that “ The officers of the Monroe Railroad and Banking Company believed that the contractors would not be materially injured by their proceeding, and that they were acting toward them in good faith; that the mortgage contract was a lien better and higher than all others, and that out of the proceeds of the sale, their lien would be first satisfied, for all labor bestowed and materials furnished under the contract of August, 1842; but that it had been decided by the Supreme Court, that the lien of the bill-holders over-rode said mortgage lien, as to all the road except that part above Griffin, which was not sufficient to satisfy all the mortgage contracts, or even those held by complainant.”
Or, to use the more forcible language of counsel for the contractors, when this case was first before this Court, “ It is obvious that the complainants in the original bill acted as far as they were able, and as far as they knew how, in good faith toward the contractors. Their object was to give the laborer his hire. Will any one do them the injustice — will any one so pervert the reading of the record — as to say that the object of the complainants in that bill was to sell the road and give the moiiey to the bill-holders, and exclude the contractors from even a participation in the fund? Although, by so doing, they would relieve the stockholders of a heavy liability, we believe they acted in good faith, and that it does them gross injustice to suppose that they were using- the Judiciary as an instrument to perpetrate a most iniquitous fraud. Indeed, the decree speaks for itself.” Col. Bailey’s Argument, 1 Kelly, 446, 447.
If, then, as the bill admits, the proceeding under which thjs road was sold, not only originated in, but was conducted to its
The bill charges, that it was supposed, that out of the proceeds of the sale, the contractors’ lien would be first satisfied, but that the lien of the bill-holders was decided, by this Court, to over-ride the mortgage lien, except to that part of the road above Griffin, which was built by the contractors ; and that this portion of the fund was not sufficient to discharge all the mortgage contracts, or even the $47,500, held by the complainant.
Surely, this assignee does not come into Equity to get more than the laws of the land will award to him ? Under this judicial sale, every dollar which that portion of the road brought, built by the contractors, to the extent of the work they performed and the materials they furnished, has gone into their pockets; and' because it fell short of extinguishing their demand, and the balance of the money arising from the sale of that part of the road constructed by the company previous to its insolvency, and to the contract of 1842, has been distributed to the bill-holders, by virtue of their statutory lien — is this a ground for cancelling Tyler’s title ?
Mr. Parker complains that the property did not sell for its full value, but for much less, owing to the public notice that was given of these liens. If this vast interest, costing as it is charged, nearly $2,000,000, was thus sacrificed, who is to blame ? It was not only the most advantageous, but the only possible mode of bringing it into market, to make it command a fair price. Cut up into an indefinite number of small parts, it would have brought nothing, besides thwarting the whole design of the charter, by these fragments being bought by individuals or sepa
The bill admits, that the whole amount divided among all the contractors, was not enough to- satisfy the complainant’s debt.What a singular proposition then to maintain, that although the whole were only entitled, in Law, to a less sum than this individual claims, out of the entire proceeds, yet that this and every other creditor of the same grade, by standing out and standing, off, and pursuing his remedy separately, would realize the sum total of his claim! And if such a procedure were permitted,, when and where would these successive foreclosures- and sales: or sequestrations terminate ?
There are other interesting aspects in which this question-might be presented, but for our dread of being tedious. One view and a controlling one with the Court was this: it is conceded that if the sale had been made under the highest hen, that the title of the company would have been divested, and that the purchaser would have taken the property, discharged of all incumbrances. The record shows-that such was the fact. The Central Bank and other bill-holders, and Robert Collins, one of the joint contractors, came in under the decree,; and made their claim to the fund. If not parties to the suit before, they became so in fact by thus presenting their demands- and submitting themselves to the jurisdiction of the Court. Here, then, were the two highest liens known, to the law, upon the entire property— that of the bill-holders, created by the Statute, on that part of the road built by the company,, and that of the contractors, secured by the agreement of August,. 1842,. on- that part of the road they built, and the materials they furnished. How,, then,, can creditors of equal or inferior grade disturb this-transaction ? If they have failed to participate in the fund thus raised,, it is their own fault. Equity would restrain them from proceeding at Law to enforce their claims — much more will it refuse to sanction the effort now making.
Again: the bill admits that the agreement was not performed