236 F. Supp. 106 | E.D.N.Y | 1964
This is an action to recover a penalty of $250 for violation of the Safety Appliance Act, 45 U.S.C.A. §§ 1-16.
At the trial the Trustees moved for a summary judgment or a judgment upon the pleadings upon the ground that they were not liable for acts of the Debtor committed prior to their appointment and, further, that The New York, New Haven & Hartford Railroad Company should have been named as a defendant.
It becomes necessary, therefore, to examine the position occupied by the Trustees under Section 77 of the Act. They have all the powers of a trustee appointed pursuant to Section 44 of the Act as well as all the powers of a receiver in an equity proceeding, which include title to and possession of the Debtor’s properties with full authority to exercise its rights and franchises to run the railroad and to represent all creditors and claimants with respect thereto.
Applying the principles of the above cases concerning statutory receivers, the Trustees are liable for acts committed before as well as after their appointment. A judgment against a debtor in a suit instituted against the debtor alone after the appointment of trustees in which the' latter were not joined as parties would not be binding upon the trustees and hence would not be a burden upon them or a lien against the estate. Such a judgment would be of no value to the plaintiff. Cf., In re Chicago & E. I. Ry. Co., supra. Such trustees are indispensable parties in any suit to enforce such liability. But liability is not synonymous with sueability. It is a question of classification and preferential status. Consequently, the determination that the trustees are liable is indecisive. More important is the determination of the nature of the liability, the date of its creation and its classification. With certain exceptions, liabilities created by and inherited from the Debtor are stayed, while liabilities created by the Trustees in the operation of the railroad are enforceable. Paragraph (8) of the Bankruptcy Court’s order of July 7, 1961, as extended to the Trustees by the order of July 26, 1961, specifically stayed and enjoined all persons “from commencing or continuing any suits against the Debtor” and the Trustees appointed in
While it has been held that a judgment for a violation of the Safety Appliance Act obtained before the appointment of trustees is a provable and preferred claim despite the provisions of Section 57 (j) of the Act,
Settle order within ten (10) days on two (2) days’ notice.
. Authority for the suit is found in 45 U.S.C.A. § 18, requiring the United States Attorney to bring the suit in the district where the violation occurred. This does not, however, exempt him from compliance with the general principles applicable to debtors and trustees operating under Section 77 of the Bankruptcy Act.
. Section 77, sub. j of the Act provides “That suits or claims for damages caused by the operation of trains, busses, or other means of transportation may be filed and prosecuted to judgment in any court of competent jurisdiction and any order staying the prosecution of any such cause of action or appeal shall be vacated.”
. § 77, sub. i of the Act; ¶ (2), Court’s Order dated July 7, 1961; U 2, Court’s Order dated July 26, 1961; see Central Hanover Bank & Trust Co. v. President and Directors of Manhattan Co., 2 Cir. 1939, 105 F.2d 130; Home Trust Co. v. Miller Petroleum Co., D.C.Kan.1928, 27 F.2d 748.
. §§11 and 77, sub. j of the Act.
. § 77, sub. j of the Act.
. § 77, sub. c of the Act.
. § 77, sub. a of the Act
. In re Chicago, M., St. P. & Pac. R. Co., D.C.Ill.1939, 27 F.Supp. 685, where the court held:
“When the purpose of the legislation and the exact nature of the proceeding under it ax-e considered, we cannot impute to Congress the intention that a railroad corporation should escape through a petition for reorganization penalties incurred for violating laws of the United States — penalties which it will be obliged to pay if the reorganization fails and the suit is dismissed.” (p. 688)