44 Minn. 115 | Minn. | 1890
This is an appeal by the above-named petitioner, the Manchester Locomotive Works, from an order of the district court denying its application for an order directing the receiver of the Minneapolis & St. Louis Railway Company to pay a balance remaining unpaid of the purchase price of a locomotive sold by the locomotive works to the railway company on the 22d day of December, 1887. Although the price ($6,800) was to be paid on the delivery of the locomotive, it was not so paid, and in May, 1888, the petitioner commenced an action in the district court against the railway company for the recovery of the debt, and in that action garnished certain money belonging to the corporation in the hands of other persons. In that action the locomotive works recovered judgment in November, 1888, against the railway company, and secured satisfaction of a part of the same through the garnishee proceedings. While that action waB pending, and on the 28th of June, 1888, a little more than six months after the sale and delivery of the locomotive, the respondent Truesdale was appointed receiver of the railway company, the corporation being insolvent, in an action in the district court to foreclose certain trust-deeds or mortgages which had been given by the railway company long before the sale of the locomotive, to secure its bonded indebtedness of more than $9,000,000. These mortgages in terms covered all the property of the railway company, including all locomotives then held or which should thereafter be acquired, and
Accepting what séems to be the now more generally declared doctrine in such cases, as illustrated in Fosdick v. Schall, it would not be easy to define a rule of general application which could be said to be in accordance with all the decisions which may be deemed to recognize the right of the court to require payment, out of the earnings of a receivership, of prior debts of the corporation, in preference
In view of all the authorities, we are of the opinion that if, either from lapse of time or from other circumstances, the debt for equipment or labor sought to be preferred by order of the court, and to be paid out of the earnings of the receivership, is more properly to be classed with the general debts of the corporation than with those incurred for current expenses proximately connected with the possession and operation of the road by the receiver, it is at least a proper exercise of the discretion of the court to disallow the application. The application of that test to the circumstances of this case justifies the order appealed from. The petitioner’s debt constituted no lien or charge upon any of the property of the corporation, while the funds sought to be appropriated were legally and equitably charged for the payment of the mortgage bonds and interest. The legal rights of the vendor of this locomotive were the same as those of any creditor. It resorted to the ordinary legal remedies to enforce payment of the debt; and after the appointment of the receiver the prosecution of its legal remedies was continued, and satisfaction of the greater part of its demand was thus secured. The sale was completed, absolutely and without condition, more than six months before the appointment of the receiver. It was about eleven months after that appointment, and seventeen months after the debt was incurred, before this application was made. The debt was no more closely related to the operation of the road by the receiver than any debt that might have been incurred for the ordinary permanent equipment of the road at any time past, where the property, with other property of the road covered by the lien of the mortgage, had passed into the hands of the receiver. There was no greater necessity or reason, from considerations affecting either the public interest, the interest of the mortgagees, or the rights of the creditor, for preferring this
Order affirmed.