Case ID: ohio-st_20/html/0401-01.html
Source: Caselaw Access Project
Author: {"author": "McIlvaine, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Dayton, Xenia and Belpre Railroad Company; The Columbus and Xenia Railroad Company; The Little Miami Railroad Company; and Charles W. Rockwell, Trustee, etc. v. Henry Lewton.
    1. L. agreed in writing with the D., X. & B. R. R, Co. “ to release the right, of way and the right to enter upon and construct its railroad ” through his lands. In consideration whereof the company agreed to pay a certain sum of moriey at a future day, and construct certain road-crossings and' cattle guards upon L.’s land. The company took possession, and constructed its road before receiving a deed for the right of way, and before-payment of the money or constructing the crossings or guards. Held, that L. is entitled to an equitable lien upon the property sold, as well for' the damages for not constructing the road in the manner provided for in. the contract, as for the unpaid purchase-money.
    2. The fact that L. retained the legal title is suhicient to put subsequent, mortgagees and purchasers of the road upon Inquiry as to the rights of L.
    
      3. In such case the seller may seek his remedy by either compelling specific performance of the contract or by enforcing his specific lien.
    4. Where the right of the public to maintain the continuity of a public highway (as well as the rights of other parties interested) precludes the right to sell a section of a railroad, a necessity arises to decree the sale of the whole road, in order that equity may be done.
    Error to the superior court of Montgomery county.
    The case is sufficiently stated in the opinion of the court.
    
      Goode & Bowman for plaintiff in error:
    1. The plaintiff, as a judgment creditor, had no lien upon the railroad. No levy had been made under his judgment. The lien of a judgment is the creature of statute law. The code (S. & C. 1064) prescribes that the lands and tenements of the debtor shall be bound, etc. Now a railroad, so far as it relates to real estate, is neither lands nor tenements. The fee-simple remains with the private owner. The company has merely an incorporeal hereditament — an easement which .secures to it a right exercisable within the land, but not the land itself. This easement is inseparably connected with a franchise to maintain and operate a railroad. To sell the easement without the franchise would be to destroy the right in the land, as in such case it would revert to the owner of the fee. 2 Redfield on Railways, 626, and cases there cited; Angel & Ames on Corporations, sec. 64; Coe v. C., P. & R. R. Co., 10 Ohio St. 372; Plymouth R. R. Co. v. Colwell, 39 Penn. St. 338; Ammant v. Turnpike Co., 13 Serg. & Rawle, 210.
    2. The fact that the judgment of the defendant in error was in part for unpaid purchase-money, for the right of way through his farm, did not give him a lien upon the railroad, or entitle him to a preference over any other creditor of the company. If a vendor’s lien is applicable to the sale of an easement in lands, still, under this contract, the defendant in error could retain no lien upon the right of way for the unpaid purchase-money.
    
      Brown v. Gilman, 4 Wheaton, 290-1; Dunn v. North 
      
      Misso. R. R. Co., 24 Misso. 493; 1 Washburn on Real Property, 508, see. 16.
    The defendant in error having contracted that the easement which he sold might, before full compensation was made to him, be merged into a public work, which when completed became an entirety, can have no vendor’s lien. His equity, as the contributor of the land, is no.greater than that of those furnishing material or performing labor toward the construction of the road. If such a lien could exist, there would be no rule of determining the order of priority of different land-owners, and its enforcement would operate to destroy the value of these public works, by selling the right of way and superstructure separate from the franchise. It would be a mischievous encouragement to laches, and a dan gerous extension of a secret lien, the existence of which should never have been recognized in a country where any debt can, by judgment, be made a lien on land.
    The vendor’s lien being a mere equity, will necessarily be disproved or rebutted whenever the circumstances of the case are such as to show that it cannot be enforced without violence to the intention of the parties, or that it would be unfair and inequitable to do so. Leading Cases in Equity, 364, .and cases cited.
    If, therefore, no vendor’s lien existed upon the right of way sold, a lien cannot be worked out in his favor upon the railroad. Stevens’ Appeal, 27 Penn. St. 316.
    The rights of the land-owner are fully protected by the right to insist upon compensation before the corporation takes possession, and if he choose to waive it, there is no principle of eqrdty which secures to him a lien upon property which he never owned, and in which he has no greater equity than any other creditor, merely to preserve to him a vendor’s lien which he has lost by his own acquiescence.
    3. If, therefore, the plaintiff has neither lien, as a judgment creditor, nor as a vendor, he can only proceed against the corporation, in a court of equity, to have its property sold, upon the principle that the capital and property of a corporation is a trust fund for the payment of its debts. The amended petition describes the raihoad which it asks to be sold, as consisting of its right of way, road-bed, franchises,, etc. The decree orders the sale of these as a railroad.
    Now we submit that this franchise having been granted by the State, for public uses, can neither be alienated, nor subjected to the payment of the debts of the corporation, without the assent of the legislature. Coe v. C., P. & I. R. R. Co., 10 Ohio St. 378; Plymouth, R. R. Co. v. Colwell, 39 Penn. St. 339; 2 Redfield, 544, note; Susque. Canal Co. v. Bonham, 9 Watts & Serg. 27.
    The proceeding by the plaintiff is merely to enforce a specific lien, and relies wholly upon a claim of lien in virtue of the judgment and of the contract for the right of way upon which the judgment was obtained.
    The mode of enforcing a judgment against the railroad, seems to be through the appointment of a receiver, to collect the l’ents, issues and profits of the railway. Eedfield, 363-4,. and cases there cited.
    A receiver is not appointed, as a matter of course, even-when insolvency has been declared. Ibid. 538-9.
    4. At the time Rockwell obtained his mortgage the defendant in error had taken no steps to collect his unpaid purchase-money. What interest did Eockwell take under his mortgage % See 1 Washburn on Real Property, 300, sec. 4 ; L. M. R. R. Co. v. Whitacre, 8 Ohio, 590; B. & P. R. R. Co. v. Midland R. R. Co., 1 Gray, 360; McAuly v. Western R. R. Co., 33 Vermont, 311; Coe v. C., P. & I. R. R. Co., 10 Ohio St. 388; Goodin v. C. & W. Canal Co. et al., 18 Ohio St 179; Hunt v. Bay State R. R. Co., 97 Mass. 279.
    The defendant in error having surrendered his land, and agreed to postpone the time of his payment, and stipulated: that the easement in the land should be merged in the franchise of a public railroad, Eockwell, a bona-fide purchaser,, for value, of the railroad, when the company was in the full and peaceable possession, as the owner of it, without notice of any equity of the defendant in error, we submit, took a title' superior to and free from his claim for the deferred payments' •of his right of way. 2 Leading Oases in Equity, 60 et sec[., and cases there cited.
    If the defendant in error, as he claims, retained the legal title to the strip sold, as his security, then, of course, he can have no vendor’s lien, for it does not attach excepting the legal title be vested in the vendee. If he still holds the legal title as his security for the unpaid purchase-money, he can reclaim •the land and is not entitled to any relief in equity.
    Rockwell cannot be charged with laches. It is said he should have examined the records as to the state of the title. He was purchasing at the time he took his mortgage an entirety — a railroad, and he had a right to presume, from the possession of the corporation, that the compensation of the owner of the land liad been paid or secured to his satisfaction. The right to withhold possession is given by the constitution to the land-owner, for his security. Rockwell had a right to act oh this presumption. If the land-owner had taken and recorded a mortgage upon the railroad for his security, as he might have done, the purchaser would be bound to know it.. He is chargeable by our registry laws with notice of all liens upon the railroad, but to send him in search of equities and secret liens upon fragments of it, 'is to hold that he must examine for a class of liens which, in the very nature of the case, cannot exist. Cases already cited.
    Inquiry of the company is the only source of information that is open to him as to the state of the arrangements for the right of way. Even this inquiry it is not his duty to make. Wright v. Wood, 11 Harris, 120.
    
      We submit that Rockwell not only holds the legal title, but also an equity superior to the claim of the defendant in error. When the holder of the antecedent equity has been guilty of laches which have facilitated the commission of a deceit or fraud on a subsequent purchaser, the rule requires that the loss should be thrown on him by whom it has been occasioned, in exoneration of others who are free from blame. Garland v. Harrison, 17 Misso. 282; Judson v. Corcoran, 17 How. 605-614.
    If a lien can, by any possibility, be reasoned out in favor of the defendant in error, upon the railroad, by reason of his unpaid purchase-money, for the small strip occupied by the road, it must be by analogy to the vendor’s lien. The estate conveyed to Rockwell, as a bonafide purchaser, without notice, upon well-settled principles, must prevail over such a lien Dunham v. The C. & C. R. R. Co., 1 Wallace (U. S.), 254; Coe v. C., P. & I. R. R. Co., 10 Ohio St. 411.
    We claim, therefore, that the rights of the defendant in error are no greater than any other judgment creditor. His-proceeding is one to enforce the payment of his judgment merely. The judgment being a personal one merely, established no lien in his favor.
    5. If, then, the title to the railroad passed to Rockwell, by his deed of trust, free and clear of any equity of the defendant in error, the latter was not a necessary party to the proceedings to foreclose the Rockwell mortgage, under which the plaintiffs in error, the L. M. & O. & X. R. R. Cos. acquired their title. 2 Leading Cases in Equity, 68-9, and cases there cited; Morris v. Way, 16 Ohio St. 418.
    6. The court erred in including the judgment rendered in favor of the defendant in error for damages by reason of the failure of the company to complete the work according to the-contract, in the relief granted the defendant in error. There is no vendor’s lien for unliquidated damages. Leading Cases-in Equity, 364; McKillip v. McKillip, 8 Barb. 552.
    It is difficult to perceive the superior virtue of a judgment obtained for the failure of the company to build a cattle-guard upon the land of the defendant in error, over that of any other class of creditors.
    
      7. The court erred in declining to determine the priority between the judgment of the defendant in error and the Rockwell mortgage.
    
      P. P. Lowe for defendant in error ;
    The written agreement between Lewton and the railroad company does not, itself, grant the right of way, though possession was -taken for the purpose of construction, because: (1) The writing contemplates a future release. (2).It is not in due form to pass title (Richardson v. Bates, 8 Ohio St. 257). (8) Possession was for a specific purpose, to wit, construction.
    Lewton waived payment before possession was delivered to the company, and the company waived legal title by condem nation. Both parties, and all claiming under them, must stand where they have placed themselves, with all then rights unimpaired and subordinate only to public convenience.
    Lewton still holds legal title to back up his vendor’s lien for the purchase-money: and he has a right to enforce it in equity by a sale of the road.
    Eockwell’s mortgage is subordinate to the lien of Lewton,. because it is subsequent. Eockwell was bound to know the coudition of the recorder’s record as to title before he took his mortgage. The record of deeds shows title in Lewton;. the probate court office showed there was no condemnation. It was carelessness and negligence in Eockwell to rely on the mere possession of the “ right of way ” as evidence of title in the company.
    It is claimed that what the railroad company acquired' from Lewton has ceased to be land, and cannot be sold on process, and has become a species of property of which Lewton was never the owner.
    The thing these railroads are withholding from Lewton never was land; it was an interest in land, an easement, an incorporeal hereditament, the same that was mortgaged toEockwell, but which requires all the formalities to divest title in it or acquire title to it as land, as it did to secure bondholders in the execution of the mortgage to Eockwell, and is-just as valuable.
    A claim for the purchase-money of the right of way is as-sacred as any claim can be.
    Public policy might require the whole finished portion of’ the road to be sold together, and the franchise of the whole-road. It could not be sold, perhaps, on execution, because-such sale might not pass the franchise of the company; but on an order of sale, which embraces the franchise, preserves the; oneness of the road, and protects the creditor. The vendor’s interest reached the road-bed as it is, in order to compensate for damages, as well as purchase-money, now in judgment.
   McIlvaine, J.

The defendant in error contracted with the Dayton, Xenia & Belpre Eailroad Company, plaintiff in error, in writing as follows:

“ This memorandum witnesseth that Henry Lewton, of Montgomery county, Ohio, agrees to release to the Dayton, Xenia & Belpre Eailroad Company the right of way and the right to enter upon and construct their road through the following lands owned by the said Lewton and occupied by him as a home farm. Said lands being situate in sec. 21, town 2, range 7 Mad Eiver township, Montgomery county, Ohio. Said road to be made on the west line by Mr. Pomeroy previous to this date; said right of way on an average of fifty feet in width through said farm. The said Henry Lewton agrees to make and keep up good and lawful fences on each side of said roadway : said fences to be made as soon as possible after the completion of said road.
“ For and in consideration of the right of way, and the right to enter upon and construct said Dayton, Xenia & Belpre Eailroad, the said Dayton, Xenia and Belpre Eailroad Company agree to pay the said Henry Lewton the sum of fifteen hundred dollars, as follows, viz.: one-third, five hundred dollars ($500), on or before commencing work on said lands; one-third, five hundred dollars ($500), in one year; and one-third, five hundred dollars ($500), in two years after the payment of the first payment with interest; and also to make a road crossing and two cattle guards at or near station 600, and one cattle guard at the west end of said farm, and also to make a culvert or bridge crossing at a branch at station 615 large enough for a wagon track. It is understood that Mr. Lewton’s grain fields are not to be disturbed until after harvest.
“ Henry Lewton.”
“May 2, 1853.

On the 11th of June, 1853, said Dayton, Xenia & Belpra .Railroad Company paid $500, took possession of the right of way, and constructed its road from Dayton to Xenia, partly over said lands, and the same has been used as a public highway, or railroad, ever since.

In November, 1857, the defendant in error recovered a judgment against said railroad company for a balance of the purchase-money. And in March, 1858, in the same action, a further judgment for $500, as damages for the failure of said company to construct its road in the manner provided in the contract.

These judgments have never been paid. And said right of way has not been conveyed, otherwise than by said instrument.

In January, 1855, said railroad company executed a mortgage on said railroad to plaintiff in error Charles W. Rockwell, trustee, to secure the payment of five hundred bonds for $1,000 each. Rockwell at the time had no actual notice that plaintiff’s claim had not been paid.

In October, 1865, Rockwell obtained a decree upon said mortgage for the sale of the railroad ; and in January, 1866, the same was sold on said decree to The Little Miami and Columbus and Xenia Railroad Companies (also plaintiffs in error) for a sum of money insufficient to discharge the mortgage lien. This sale was confirmed and the purchasers put in possession.

The defendant in error was not a party to said action to foreclose, nor had he any actual knowledge of the pendency of the action.

In April, 1868, the defendant in error obtained a decree in the superior court of Montgomery county, for the payment .of the amount due him on said judgment, and, in default of such payment, for the Bale of said railroad, with its rights, privileges, and franchises, for the purpose of satisfying said judgments. In this decree, or prior thereto, the court did not find the amount due on said mortgage, nor settle any questions of priority, etc.

This is the judgment or decree sought to be reversed is this proceeding.

The several errors assigned by plaintiffs in error may be embraced in this general question — Did the court below erx in rendering said decree upon the foregoing state of facts %

Several propositions, however, are embraced and must be answered sepai’ately.

1. Was the defendant in error entitled to the relief decreed to him ?

What is the natui-e of the case made by him ? The pi’operty ordered to be sold includes an easement of the right of way of the Dayton, Xenia & Belpre Railroad, over the lands of the defendant in error; and his claim, in part at least, was for unpaid purchase-money for that easement. A purchaser of realty ought not to enjoy the estate purchased without paying for it; thei-efore, in equity, the vendor has a lien upon the propei’ty sold, for the payment of the purchase-money. It may be that this equity of the defendant in error' is not, technically, what is commonly called a “vendor’s lien,” inasmuch as the legal title has not been conveyed by him to the purchaser. It is, howevei-, at least as strong a hold upon the pi’operty sold as the lien of a vendor after title conveyed; for here not only is an equity retained by the vendoi’, in the pi’operty sold, to the extent of the unpaid purchase-money, but the legal title is also retained by him as additional security.

It cannot be said in this case, “ that, from the nature and objects of this sale, the vendor did xiot intend to rely upon the thing sold as security for his payment.” Retaining the legal title is very sti’ong, if not conclusive evidence that he did intend to rely upon it as security. The presumption, however, in all cases, even where the vendor conveys the legal title, is, that he intends to rely upon the property sold,, as security. And before his abandonment or waiver of such security can be found, it must be shown that he did not intend to rely upon it.

Nor will it do to say that “the difficulty in detennining the priorities of such liens, or in executing decrees in sxxch cases,” is evidence of an intention of the vendor to waive his lien. If such a lien can be enforced at all, the presumption that the vendor intended to rely upon it is not weakened by the difficulties in the way, and if a court of chancery could' find no means of adjusting co-existing liens or equities of this kind, or of enforcing the sale of such property to satisfy them, the only inference would be, that the vendor has been, disappointed in his expectations.

Biit whether a court of equity has power to decree and means to execute its decrees in such cases, are the ultimate questions in this case, and not preliminary ones, the solution of which may aid us in working out a conclusion.

We can see no insurmountable difficulties in sustaining and executing the decree in this case, whether it be regarded as a decree enforcing a specific lien upon property, or a decree compelling the specific performance of the contract.

2. That a vendor’s lien is applicable to the sale of an'easement in land is not in terms denied by counsel for plaintiffs in error, and we see no good reason why such a lien may not attach against an easement as well as any other interest in land.

3. The judgment for damages for not constructing the-road in the manner provided for in the contract, is as much the price of the interest sold to the railroad company, as was the $1,500 agreed to be paid in money. The only difference is that the amount of cash was ascertained and agreed upon by the parties, while the amount of the damages was not ascertained till judgment. Both sums arose in contract,, and constituted the compensation the vendee was to return to the vendor for the interest purchased.

4. Having found the amount of purchase-money due the plaintiff below, as a predicate for the decree of sale, in default of the payment thereof, it was not error in the court below to decree the sale before finding the amount due upon the mortgage lien of Rockwell and determining the priority of the liens. In such matters there is a discretion in the court. And we cannot say that such discretion was abused in this case.

5. The defence by Rockwell, the Little Miami and Columbus and Nenia Railroad Companies, that they are innocent purchasers, for a valuable consideration and without notice of the right of defendant in error, cannot avail them.

The fact that defendant in error retained the legal title to the right of way sold, was sufficient to put them upon inquiry. They and each of them had constructive notice of the condition of the legal title. And had they, as prudent persons, made the inquiry suggested by the state of the legal title, they would have come to the knowledge of the rights of the -defendant in error.

6. The defendant in error was in nowise affected by the sale under the mortgage. He was not a party to that suit.

7. The last question we propose to consider is one of greater difficulty.

The court below decreed the sale of the whole of the Dayton, Xenia and Belpre Railroad (which at the time was being used as a public highway), to satisfy a specific lien of the defendant in error upon a section of the right of way. Is such decree erroneous ?

The rights of the public most not be ignored; and it is the right of the public that this highway be maintained. It was by and through the exercise of its power of eminent domain •that it was established. And we take it, that the right of the public to maintain the highway is paramount to the right of -the defendant in error to destroy it. To sell the section of the right of way over the lands of the defendant in error, and .separate its use from the line of the road, would destroy the highway. Hence to have decreed a sale of this fraction of the road, or right of way, would have been erroneous. The public having delegated to the Dayton, Xenia and Belpre Railroad Company the power to exercise the right of eminent domain in the establishment of this highway, the company had power to obtain the right of way for its road in two modes — by condemnation and prepayment of compensation under the right of eminent domain, or by contract with the owners of land, upon such terms as might be agreed upon. In Lewton’s case the latter mode was resorted to, and, by the terms of the contract, a right to enter upon the land and construct the road before the payment of compensation was se cured; and yet that compensation was secured to Lewtonby an equitable lien upon the easement thus obtained by the-company. And justice requires that this security shall be applied to the satisfaction of Lewton’s claim. Can it be done?' The difficulty is apparent rather than real. The public has and can have no right which springs from an act of injustice to the defendant in error. Its only right is to preserve the continuity of the road, of the line of public travel and transportation. And this right is as well subserved, if the ownership and management of the highway be in the hands of one-party as another. Hence the public has no interest impaired by a sale of the whole line.

We have seen that the Little Miami, and Columbus and-Xenia Railroad Companies and Rockwell stand in the shoes of the Dayton, Xenia and Belpre Railroad Company. And what shall be said of the rights of the latter ? Has it a right to retain the properly of the defendant in error without paying for it ?

Having obtained the possession of this property from the-defendant in error, under a promise to pay for it, the Dayton,. Xenia & Belpre Railroad Company may not so blend and’ mix it with other property of its own, as to constitute a great and indivisible highway, and then be permitted to say in equity, to the defendant in error, This property, upon-which you had and have a specific lien, had become,, by my act, a part of a highway which the public has an interest in maintaining, and because the withdrawal of your part from the-common use would defeat the public right, therefore you may not enforce your lien.

On the other hand, because a part may not be sold on account of the paramount right of the public to keep the highway intact, a necessity arises, in order that justice may be done to the defendant in error, to decree the sale of the whole line of the road to satisfy his lien. And this is the only mode in which the rights and interests of other parties, either as owners or lien-holders upon the road, can be protected, and ¡ their property or security saved from absolute destruction.

The doctrine of this case is supported by Walker v. Ware, , Hadham & Buntingford Railway Company, 12 Jurist N. S. pt. 1, p. 18. See also 2 Story’s Eq. Jur. by Redfield, 460, rand 33 Vermont, 311.

Judgment affirmed.

Soott, C.J., and Welch, White, and Day, JJ., concurred