96 Kan. 577 | Kan. | 1915
The opinion of the court was delivered by
The principal question involved is whether the trial court erred in allowing the plaintiff a lien against a railroad for the value of ties furnished by the plaintiff for its construction.
The S. H. Chatten Lumber Company sold the ties, which were used in building a railroad from Scott City to Winona. The total charge was about $43,000, on which it received payments of about $36,000. The road was built by the Kansas Construction & Irrigation Company, under contract with the Scott City Northern Railroad Company, the owner of the road. The railroad company, as part payment to the construction company, issued to it first mortgage bonds to the amount of $825,000, the mortgage covering all the property of the company, including that subsequently acquired and the road when built. These bonds were used by the construction company as security for a loan of $600,000, for use in building the road. The Commonwealth Trust Company, of St. Louis, furnished a
The contract for the ties was made between the lumber company and the Garden City, Gulf & Northern Railroad Company. That railroad company, promoted by B. M. McCue and E. A. Tennis, had constructed and was operating a road from Garden City to Scott City, and the purpose at the time was to extend this road to the north, the ties being designed for use in that connection. Afterwards it was determined by the same promoters to organize a new corporation to build the road between Scott City and Winona, and the Scott City Northern Railroad Company was the result. McCue and Tennis guaranteed the payment of the accounts to be incurred in filling the contract. • The lumber company charged the ties on its books to the Garden City & Northern Railroad Company, and McCue and Tennis, president and vice president. They were shipped to that company and the construction company. Payments were made from time to time by the construction company out of the funds provided by the trust company, sometimes by drafts upon that company. On September 12, 1911, McCue and Tennis, as president and vice president, exe-' cuted in the name of the Scott City Northern Railroad Company a note for the unpaid balance, amounting to $8662.97.
The statute authorizes railway corporations to mortgage
The rule “giving priority to the last creditor for aiding to conserve the thing . . . has never been introduced into our laws except in maritime cases, which stand on a particular reason.” (Galveston Railroad v. Cowdrey, 78 U. S. 459, 482.) Unpaid claims for right of way are made a charge against the road, but in the case of condemnation proceedings this is because the title only passes subject to payment (Trust Co. v. Railroad Co., 93 Kan. 340, 144 Pac. 210), and in the case of purchase because of a vendor’s lien (34 Cyc. 60), which ordinarily is not recognized in this state (Simpson v. Mundee and Broiun, 3 Kan. 172). The power of a court to postpone prior mortgage creditors of an insolvent corporation, in the hands of a receiver, to those by whose contributions it has been maintained as a going concern, is limited to making such preferred claims a charge against the earnings, or against the corporate property where the earnings have been wrongfully applied elsewhere. (33 Cyc. 529, 531; Porter v. Pittsburg Bessemer Steel Co., 120 U. S. 649, 671.) That situation was not pleaded
A lien for the cost of bridges built for the same railroad has heretofore been sustained. (Bridge Co. v. Railroad Co., 91 Kan. 887, 139 Pac. 357.) That decision was based upon the particular facts there presented, which in many respects are quite different from those of the present case. The bridges were built under contract with the railroad company, and the trust company was held to be interested in the enterprise jointly or in common with the railroad company, the construction company and the promoters, and to have undertaken the responsibility of seeing that the proceeds of the mortgage reached the materialmen. These issues were presented by the pleadings and-evidence in this case. It was shown, however, that before the ties were shipped the trust company, in response to an inquiry, had written to the lumber company that it believed the funds supplied to the construction company were sufficient to construct the road, and that no unusual business risk would be assumed in furnishing the ties, but that it did not know whether the construction company intended to use all of the money for that purpose, and that it (the trust company) had made no arrangements to pay invoices for material, and that matters of this character would have to be arranged directly with the construction company; and the jury specifically found that the trust company had no connection with or interest in the enterprise of building the road outside of agreeing for a stated consideration to loan or secure a loan or loans of money to be used by the construction company in building it. Under the findings the trust company furnished money, for which it took security, and the lumber company furnished material, for which it took none.- The part of the judgment giving the plaintiff a preferential lien must be set aside.
Errors assigned with regard to the personal judgment are not thought to require discussion. The note executed by McCue and Tennis is binding on the Scott City Northern Railroad Company. The judgment against the receivers of that
The cause is remanded with directions to modify the judgment by eliminating that part giving the plaintiff a lien.