State v. Jacksonville, Pensacola & Mobile Railroad, 16 Fla. 708

16 Fla. 708 | Fla. | 1878

Mr. Justice Westcott

delivered the opinion of the court. -

This is a case under the laté Code.

Appeals from the judgment rendered herein are prosecuted by the Jacksonville, Pensacola and Mobile Railroad-* Company, and by Milton S. Littlefield.

The appeal of the Jacksonville, Pensacola and Mobile-Railroad Company is from the judgment rendered against it in behalf of the State, as well as that rendered against it in behalf of the Trustees of the Internal Improvement Fund. .The appeal of Milton' S. Littlefield is from the judgment rendered against him in behalf of the trustees.

We make no statement of the case in detail. Our views of the facts and of the case will appear as we treat and dispose of each appeal.

The decree in behalf of the State in this record is not by virtue of its relation of trustee for bona fide purchasers and. holders of the bonds of the State of Florida exchanged with this company for its bonds and sold,’biit it is based upon, the fact that the State of Florida has in possession the bond® of the Jacksonville, Pensacola and Mobile Railroad 'Company, upon which that company has failed to pay in rerest The right of the State as trustee can exist only upon clear proof oí the existence of bona fide purchasers of the State bonds. The State as the simple holder of the company bond is entitled to no judgment against the company. The fact which makes any equity operative in her behalf must exist in connection with the fact that the State holds the company bond. This court considered the general nature of the bonds which are the foundation of the State’s claim here in the cases of Holland vs. The State of Florida, IS Florida, 534, and the case of the State of Florida against The Florida Central Railroad Company, 15 Fla., 691.

In the case of Holland vs. The State of Florida we said, “A careful and strict examination of this statute will show that the State of Florida was to occupy two distinct and different relations to the holders of the' State bonds and to the company. The first relation was that of primary,debtor to the holder of the State bond under and by virtue of the obligation of this bond, and also of mortgage creditor of the company, under and by virtue of the bond of the company. The right of the State, viewed in this light, was to be simply that of a mortgage creditor of the road, and its liability to the holder of the State bond was that of a simple bond debtor. In this relation the holder of the State bond was to have no security for his protection and payment, except the liability of the State in its own right, and its good faith and capacity; the State, at the same time, as the result of this relation, being given for its own protection against this bond debt the right to become the purchaser at the sale of the road, and to pay for it in the bonds of the company. The other relation which it was to occupy was, in the language of the act, a trustee for the holders of the State bonds. In this relation the lien created by the statute was for the benefit of the holder of the State bonds. The lien of the statute and the company bond, viewed in this light, was for his benefit, and the property and franchises of the company were to be his security for payment; and as the company received his money and the State received nothing, the company was to be held to the obligation of common honesty in the matter of payment and satisfaction.” This court in that ease remarked further, “ That the Legislature could not, under the Constitution, create the first relation of primary debtor, and that it would seem to be a consequence that such part of the statute authorizing the bond as provided for the State’s protection against such liability as the Legislature presumed the State incurred, would fail and cease to be operative.” This, we think, was correct. The clear result of the views expressed in that case prohibits the State from occupying the relation of a simple mortgagee entitled to a decree in its favor in that relation. We re-affirm what was there said.

The State of Floi’ida in this case, in addition to its relar tion as trustee for the bona fide purchasers and holders of its bonds, has also a residuax’y interest in the Internal Improvement Fund, as well as an intex'est in its management and disposition through her agents, the Trustees.

The subject-matter of this action, so far as it is common to the Trustees of the Internal Improvement Fund and the State of Florida, is a line .of railway extending from Quincy to Lake City, with a branch to Monticello, and the line of railroad extending from Tallahassee’^ to St. Marks. The Trustees claim a lien for balance of purchase money due upon a .sale of the road from Quincy to Lake City and branch to Monticello, under a statutory mortgage bond of the Pensacola and Georgia Railroad Company. They also claim a lien upon the road from Tallahassee to St. Marks for the balance of purchase money due upon a sale of that road, under a statutory mortgage bond of the Tallahassee Railroad Company. The State as trustee élaims in this suit only a subordinate lien upon these two lines of railroad, and, in addition thereto, the State claims a, primary and first lien upon the railroad from Quincy to Chattahoochee as a part of the Jacksonville, Pensacola and Mobile Railroad. The question as to the character and extent of the right of the Trusr tees of the Internal Improvement Fund, the right of the 'State as having a residuary interest in such fund, and the rights and remedies of holders of bonds issued under the internal improvement act of 1S55, were considered by the Supreme Court of the United States in the case of The State of Florida vs. Anderson, et al., 91 U. S., 667. The views there expressed are entirely applicable to the pleadings and proceedings iu this action. We will not here repeat them at length, but will state simply our entire acquiescence in the views there expressed. Under this decision the right of the Trustees of the Internal Improvement Fund, as vendors, is to a sale of the road from Quincy to Lake City, to satisfy the balance of the purchase money due them upon the sale of that property, and as to the balance due on the sale of the road from Tallahassee to St. Marks, they have a right of the same character against that road. The State’s right as trustee, in the event of proof ot bona fide purchasers and holders of State bonds, is to what remains after satisfaction of these several liens upon these several pieces of property, if that sum is necessary to the payment of what is found to be due the State as trustee after due process of judicial examination.

The r&m here in question, the property of the J., P. & M. Co., is not claimed by the plaintiff to embrace the line of. road extending from Jacksonville to Lake City. This being so, no part of the property is in the territorial jurisdiction of the Circuit Court of the Fourth Judicial Circuit. That court, under the Constitution of the State, has no power to decree a sale by its officers of property not within its territorial jurisdiction. . (15 Fla., 285.) The power of the Circuit Court, therefore, in this case did not extend beyond a decree establishing the rights and defining the liens of the State am. of the. Trustees, as we have stated them. That court should have adjudged two liens existing in behalf of the Trustees. One as to the road from Tallahassee to St. Marks for the balance of the purchase money due thereon, the other as to the road from Quincy to Lake City for balance of the purchase money due thereon. In such a ease the right of the vendor is to a sale of each road separately, on non-payment of what is due on it. lie cannot sell both estates on non-payment of the aggregate amount of the liens, and any decree establishing the lien of the State should conform to the law upon this subject. 8 Eng. L. & Eq., 46; 10 Met., 172.

As against the J., P. & M. Co., the State had a further lien of the character given by the statute as to the road from Quincy to Chattahoochee.

In the case of the State, if the relation of primary debtor had been constitutional, to conform to the statute the court would simply have passed a decree establishing the amount of principal and interest due on the company bonds ; the default of twelve months in the payment of interest; the amount of the State bonds outstanding, and would have made such decree as to sale as was authorized by the statute. When, however, the only right of the State is as trustee, the court should conform to the right of the State in' that relation as defined and fixed by the statute. This is a' right to sale of the entire property, limited by the right of' • the Trustees as vendors as before stated, and an establishment by decree of the debt for the payment of which it was-' to be sold. Under the terms of the statute, upon a sale the proceeds were to be applied promptly and exclusively to the-' payment and satisfaction of the bonds issued by the State of’ Florida under the act. The bonds were not valid as a primary obligation against the State, but they were effective when held by bona fide purchasers, as showing who were the cestuis que trust under the statute.

The decree now before us establishes the debt of the company to the State, and a default of twelve months in payment of the interest due thereon, and passes what is a judgment quod recuperet for the interest. For these reasons this ’ judgment in behalf the State must be reversed.

It only remains to consider what is the proper disposition1 to be made of the case of the State in view- of the pleadings' and proofs herein. Should the order be to dismiss absolutely or without prejudice to the right of the State as trustee, or should it be, as suggested by counsel, for the State, to remand, with direction to modify, the decree, and for further proceedings in the court below to enable it to give full relief to the holders of the State bonds? We cannot direct a modification of the decree, among other reasons, because that can be proper only in the event that the proof justifies such order, and there is no such satisfactory proof liere as • should be required. The only proof in this record that there is a bona fide purchaser of a State bond in existence ' is this sentence in the testimony of Milton S. Littlefield t “ I sold and delivered to S. W. Hopkins & Co. three thousand bonds of the State of Florida of $1,000 each, which were received in exchange for the railroad company’s bonds, numbering from No. 7 to No. 3,000 inclusive.” Under the circumstances of this case the least that should be required is the production of these bonds and full proof of tona fide purchase and ownership. The better practice, where a debt is evidenced by a note, bond or mortgage, is to produce such note, bond or mortgage, and while in some cases such strictness may not be required and a smaller degree of proof may suffice to make a prima facie case, yet here, where the State is a simple .trustee with a power of sale seeking a final decree, and where, if the bonds are in the hands of the J., P. & M. Co., never having been tona fide sold, they constitute no lien, (15 Fla., 725,) we cannot accept as proof upon which to base a decree the naked, statement of the president of that company that he sold those bonds to a party who, this record discloses, was- the agent of that company. There are also other suspicious circumstances which it is unnecessary to mention.

As to the suggestion in reference to calling in the holders of the State bonds. We have no satisfactory proof that there are such. We cannot, looking to this record, say that such is their wish, or a probability that such will be their act. These parties' may claim that they have the right to disavow the act of the State in this proceeding; that they are not bound thereby, and will seek their remedies, and assert their own rights as they view them, elsewhere. Again, this action has been pending for over six years, and this record discloses no attempt of such persons, if any such there be, to corhe into this suit. While all this is true, and the strict rule of practice would justify an order of dismissal absolute, still we think we are justified in doing no more than directing the bill on the part of the State as against the J., P. & M. Co., so far as it claims a lien against said road, to be dismissed without prejudice to the right of the State as trustee to assert in a new suit alien subordinate to the lien of the Trustees of the Internal Improvement Fund as to the several roads extending from Quincy to Lake City with branch to Monticello, and from Tallahassee to St. Marks, and without prejudice to the right toasseftin a new suit a general lien as trustee upon the other property of said company.

The State having joined as co-plaintiff with the Trustees in this suit, and having admitted their prior lien as to ‘the road from Tallahassee to St. Marks and from Quincy to Lake City and branch to Monticello, and such lien having been established by the judgment of the Circuit Court with its consent, the order dismissing the bill’should not leave that an open question.

The J., E. & M. E. E. Co. appeals also from that portion of the decree of August 20, 1875, wherein it is adjudged by the court that one hundred and three bonds, some of the Pensacola and Georgia Eailroad Company and some of the Tallahassee Eailroad Company, were the property of the Trustees of the Internal Improvement Fund as against said company, and that when recovered these bonds should be cancelled. • This record discloses that on the second day of April, A. D. 1874, there was a final judgment rendered against this company for $661,845.55-100.^* This judgment was based upon the case made by plaintiff in the complaint and amended complaint in this action. For this sum this final judgment declares that the Trustees have a lien on all the property of the company owned by it at the commencement of the suit, as well as a lien upon all the railroad “ situate between Lake City, Columbia county, Florida, and Quincy, in Gadsden county, and upon the branches thereof from Tallahassee, Leon county, to St. Marks, Florida, and to Monticello, in Jefferson county, and upon the iron, road-bed and depots thereon or connected therewith, from the 20th day of March, A. D. 1869.” This decree was final. It ad- », judicated the. rights of the parties; it embraced the one ¡.¡hundred and three bonds ; it provided that the defendant ¡¡¡company should have the right to credits upon the decree, and the Trustees should make credits to the amount of the ¡.principal of any of the bonds of the late Pensacola and ■¡(Georgia Railroad Company and of the late Tallahassee ■¡¡¡Railroad Company which the said defendant company may .(tender for cancellation, the acceptance and cancellation hewing made discretionary with the Trustees. Without opening this-judgment and without any additional pleadiugs by the Trustees in reference to the one hundred and three bonds; ¡.we find this decree of August, 1875, establishing the title ■.of the'Trustees to the one hundred and three bonds as .against this company. This decree, as it recites, is based -.upon an agreement by the company to purchase and deliver ■■¡the'bonds for cancellation. The prior final decree adjudged ,;.fchat the Trustees had a lien on all the -property of the com-i„pany for this sum. The question, therefore, is whether this ■-subsequent judgment of the court, inconsistent with a final ..Judgment before made based upon no new pleadings, is not erroneous, the prior final judgment not having been opened ■(Or in any manner set aside. Under these circumstances this «;¡last judgment must be reversed. The two cannot stand together. A judgment that the one hundred and three bonds . constitute, in the hand of the defendant company, no claim against the fund, is inconsistent with the judgment establishing a lien in favor of the Trustees for that sum, and from '¡¡that judgment there is no appeal here. As to the matter in .¡controversy, the judgment of April 2, 1874, was res adjudicada, until reversed or vacated. (35 Barb., 214.) There cannot be in the same proceedings two inconsistent final judgments against the same defendant, based upon the same pleadings by the same plaintiff. If, without opening or •setting aside the first final judgment, a second inconsistent one can be entered, why cannot a third and fourth inconsistent final judgment be entered ? With such a rule there would never be an end to litigation.

This judgment of August 20, 1875, must be reversed as to the J., P. & M. Co., in so far as it adjudges the one hundred and three bonds to be the property of the Trustees of the Internal Improvement Eund, subject' to be cancelled. This, however, to be without prejudice to any right which said Trustees may have, or to any application they may make to reform or change, upon proper proceedings, the judgment of April 2, 1874.

We next examine the appeal of Milton S. Litttlefield. Plaintiffs allege in their original complaint that “ they have been informed and believe that Milton S. Littlefield has in his possession and control a lai;ge number of the first mortgage bonds of the said Pensacola and Georgia Eailroad Company, for the payment of which- the balance of said purchase money is, when collected, made applicable bylaw, and that the defendant, M. D. Papy, holds another large number of the last aforesaid bonds as the agent of the said Eailroad Company, or of the said defendant, George W. Swepson, all of which said last mentioned bonds equitably belong to the Trustees of the Internal Improvement Eund.”

The prayer of the original complaint was for judgment against the J., P. & M. E. E. Oo. for the sum of $572,000 and costs, and for ah injunction restraining M. D. Papy and Milton S. Littlefield from parting with the possession and from disposing of, or in any manner incumbering the bonds “ now in their possession, custody and control, either as trustee or otherwise,” until • the further order of the court. There was an injunction awarded against Papy and Little-field in accordance with the prayer of the bill, as to any of the “ bonds of the Pensacola and Georgia Eailroad Company.”

The summons issued upon the filing of this complaint was served upon Milton S. Littlefield on the 20th of March, 1872. There is no evidence in this record of any appearance by him. An amended complaint as called by the plaintiff,' an amended and supplemental complaint as named by the court, was filed June 22,1872. In this the Trustees alleged that the said Jacksonville, Pensacola and Mobile Railroad Company, or the said Littlefield, hold by purchase one hundred and three thousand dollars of the outstanding P. & G. & T. R. R. Oo. bonds, purchased under an agreement that the same should be surrendered for cancellation to and by the said Trustees, and that while the J., P. & M. Co-, is liable for the sinking fund, yet the said bonds, are valueless in its hands or in the hands of its assignees, hio notice of intention to file this complaint, or of an application for leave so to do, or of its being filed, was served upon the defendant Little-field.

The record contains an acknowledgement by M. S.. Little-field of service of notice-by the plaintiffs of their intention to apply for final judgment against him, and on the day named in this notice there was a final judgment, this final judgment reciting that defendant, Milton S. Littlefield, had been duly served with process in this action, had not interposed any defence thereto, adjudged as against him that the one hundred and three bonds of the. P. & G. & T. R. R„ Companies were the property of the Trustees, that the plaintiffs should cancel them upon receiving possession of them, and perpetually enjoining Littlefield from asserting any right or title to them.

From this statement of the case of appellant Littlefield, it appears that the judgment rendered against him was for default for want of “ defencethat the original complaint was filed March 22, 1872; that he was served with summons on the 20th of March, A. D. 1872; that on the22d of June, A. D. 1872, an amended complaint was filed of which no .notice was given him ; that he never entered an appearance in the canse, and that lie received notice of intention to apply for final judgment against him.

Does an appeal lie from such a judgment in this State 1 Under the original text of the Code, as interpreted by the courts of New York, an appeal did not lie from a judgment by default. (4 Com., 315; 8 Barb., 351; Voorhee’s Cod,e 668; ib., 665d.) Under the English system an appeal did not lie from a decree pro confesso, and such was the rule in New York, Maryland, New Jersey, and Vermont. (2’ Smith’s Chy. Practice; 54 N. Y., 27; 8 Wend., 219 ; 25 Wend., 245 ; 12 John., 493 ; 1 Beas., 353 ; 1 Bland, 12-35 ; 15 Vermont, 378.) In this State-a defendant anterior to the Code could appeal from a decree pro confesso, and in one case-it was held that the appeal would’only bring up for review the proceedings prior to the default. (4 Fla., 11.) The difference in the rule as stated by the court was occasioned by the fact that in England and New York an appeal might have been taken from interlocutory orders and decrees, while in this State no such appeal could be taken. Having, failed to take an appeal from an interlocutory order when it could be done, the party in the English courts was considered as acquiescing in the propriety of the decree, and a subsequent default would debar him from bringing any question in the cause before the appellate tribunal. Under our first statute, however,, an appeal could only be taken from a final decree, and for this reason the court, contrary to the rule in England and New York, held that an appeal^ could be taken and that every question passed upon by the Chancellor, and the regularity of the proceedings therein, prior to the default, could be reviewed. (4 Fla., 14.) This statute was afterwards modified (A. D. 1853,) and appeals from interlocutory orders wore allowed. This court, in the .case of Freeman vs. Timanus,. (12 Fla., 403,) held that this-last statute did not change the rule, as it provided that & postponement of the appeal until- final decree should not be* held to be an acquiescence, and in that case the decree was reversed and the case remanded with directions to dismiss the bill. In that case also we held that under the statute regulating decrees upon bills taken for confessed, the court could not grant the decree asked unless such decree under the statute was proper and consequent from the matter of the bill. We also held that in making a decree in conformity with our statutes there was necessarily the exercise of judicial judgment, the plaintiff not being allowed to take such decree as he could abide by. (12 Fla., 403; Thomp. Dig., 457.) Section 202 of the Code, as amended by the act of January 27, 1871, provides that appeals may be taken “from all such interlocutory as well as final orders and judgments in like cases as appeals could bo taken before the passage” of the act establishing the Code practice; and as an appeal could have been taken from a decree fro cortfesso before the Codo, so now it can be taken from a like judgment since its enactment.

Upon such appeal we do not think that the appellant can do more than question the sufficiency of the case made by the plaintiff of which he has had notice. To this extent he has made default and to such extent must he suffer, but the plaintiff cannot take a,ny judgment he pleases. The judgment must conform to the cause of action stated against him. (22 Wis., 438 ; 14 Wis., 16; 1 Cal., 97; 3 Scam., 349 ; 1 C. Green, 271 ; 6 Mass., 499 ; 1 Morris, 290 ; 4 R. I., 114 ; 3 Rev., 385 ; 9 Iowa, 201 ; 30 Ga., 503 ; 9 Paige, 322 ; 148 Ark., 209; 2 Ark., 26.) In this case the defendant Littlefield received notice of the original complaint; he did not receive notice of the amended complaint. If the original complaint sets up a cause of action, then a judgment conforming thereto will not be disturbed here. If, however, the original complaint sets up no cause of action, and the judgment is based upon the amended complaint of which he received no notice, it is. error and must be re■•versed.

Plaintiffs in the original complaint alleged “ that defendant Littlefield had in his possession and control a large number of the first mortgage bonds of the said Pensacola and Georgia Railroad Company, for the payment of which :the balance of said purchase-money is, when collected, made ¡applicable by law.” This allegation, instead of making a •case against defendant Littlefield, sets forth plainly that he ■.is entitled to a part of the moneys which the plaintiffs seek ■ to recover. In the amended colnplaint, of which Littlefield •received no notice, the plaintiffs alleged that the J., P. & .M. Co. or Littlefield held by purchase one hundred and three of the outstanding P. &"G. R. R. Company bonds, purchased under an agreement that the same should be sur,-rendered for cancellation to said trustees. Upon this allegation the final judgment was based. Of this claim Littlefield .¡received no’ notice. The amended complaint making it was •filed three months after the original, without notice or with-cut leave of the court. Under these circumstances this judgment must be reversed. Unless this is the rule, the plaintiff in a bill seeking a specific performance of some ..simple contract might, by an amendment without notice and without leave, change the bill into one seeking a foreclosure of a mortgage and have a decree for the sale of the ■entire estate of the defendant. It cannot be said that defendant has confessed a claim of which the record discloses ■no notice to him. His only protection in such cases is notice of the claim for which judgment is demanded, and the court-should only grant a judgment when -the record discloses this fact affirmatively. We do not think that either party should be prejudiced by this proceeding. While we doubt whether an order directing the bill to be dismissed as ;to defendant Littlefield would prejudice any right of the ¡trustees ¡against him, still to avoid any difficulty the order will be for a dismissal without prejudice to any right which the trustees or the State may see proper to assert against him in any other proceeding. The following judgment will be entered in this ca.se:

This cause having been submitted at a previous term of this court, after argument by counsel for the State of Florida and for the Trustees of the Internal Improvement Fund,, the plaintiffs, as well as after argument by counsel for defendants, the Jacksonville, Pensacola and Mobile Railroad Company and Milton S. Littlefield, and the transcript of the record of the judgement aforesaid having been seen and inspected, it is considered by the court that there is error in said judgment as to the Jacksonville, Pensacola and Mobile Railroad Company, and as to the said Milton S. Littlefield wherefore it is ordered, adjudged and decreed that said judgment be reversed as to each of said defendants, and that the case be remanded with directions to dismiss the bill so far as in behalf of the State as a holder of the bonds of the Jacksonville, Pensacola and Mobile Railroad Company as to said defendant, the Jacksonville, Pensacola and Mobile Railroad Company, without prejudice to the right of the State of Florida as trustee to assert in another proceeding against said defendants, or either of them, a lien subordinate to the lien of the Trustees of the Internal Improvement Fund as to the several roads extending from Quincy to Lake City, with branch to Monticello, and from Tallahassee to St. Marks, and without prejudice to the right of the State of Florida to assert in a new proceeding a general liep as trustee upon all other property of the Jacksonville, Pensacola and Mobile Railroad Company, and without prejudice to the right of the plaintiffs, or either of them, to reform or change, upon proper proceedings, the judgment entered in this case on the second day of April, in the year of our Lord one thousand eight hundred and seventy-four, and without prejudice to any right which the plaintiffs, or-either of them, may see proper-to assert against the defendant, Milton S. Littlefield, in this or any other proceeding; and for such other proceedings as are conformable to law and consistent with the opinion and judgment of this court in this cause. It is further considered that defendants recover of the plaintiffs, the Trustees of the. Internal Improvement Fund, the costs of their proceedings by them expended in the Circuit Court of Duval county and in this court subsequent to the judgment of April second, in the year of our Lord one thousand eight hundred and seventy-four, so far as they arise out of the claim of the plaintiffs, Trustees of the Internal Improvement Fund, of and to the one hundred .and three bonds of the Pensacola and Georgia and Tallahassee Eailroad Companies taxed at the sum of--dollars and-cents in favor of the defendant, the Jacksonville, Pensacola and Mobile Eailroad Company, and at the sum of--dollars and- cents- in favor of defendant, Milton S. Littlefield. It is further considered that the costs expended by the defendant, the Jacksonville, Pensacola and Mobile Eailroad Company, in this behalf, in connection with the claim of the State of Florida, be taxed by the' Clerk of this court as against the.State of Florida, and that a statement thereof be filed in the papers in this cause.

* The J., P. & M. Company appealed in this case from this judgment, and the appeal was dismissed by the Supreme Court on motion of the Trustees of the Internal Improvement Fund, at January Term, A. D. 1878. —Refoetee.