The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1879-03-21
iThe Powersor Recetvcrs OF Rniiroaas-'
I.abOrcrs, md Mechanics N"ses'.

OPINION OF TUE SUPREME Gouhi We inA
--, UNITED STATES
From fha Alexantria Gazcttc1 %s------a---
No, 63l-Appeai- from. the Circuit Court o.
he United States for the Northern Dls,
..t rict of ,Iainois-G Chicago, Danusl1e: ana
]. VincenneS Railroad. r,.yr.sE3s
Cbief-Justice Waite, in delivering the
oninion lin this case. says: The possession
taken by the receiver IS only that OF the
coI1rt whose officerfhe is, and adds nothing
to the MISUNDERSTANDING title OF the mort
cages: he holds pending the litigation LOT
the benefit OF whomsoever in the END IL
shall be found to concern, and in tbe mean
time the court proceeds to determine the
rights OF the parties upon the same prlncl-
pies it would il no change OF possession
had taken place.; ...I9,
Again he says: We have no doubt That
when court OF ichancery,is asked Dy ran;
road mortgages TO appoint receiver OF
railroad property pending. proceedings iol
foreclosure, the court, in the exercise Oh ,! u
sound judicial discretion, may. as conui.
ton OF issuing the, necessary order, IMPOSE
such terms in reference to the paymenI
from the income during the recelYefship Oh
outstanding debts for labor, supptseS' equip
n,ent, or, permanent Improvement OF Tue
mortganed property as may unaer the CT
cumstances OF the particular case appear 70
be reasonable. Railroad mortgages ana lie
rights of railroad mortgages arc coulpal-
ativeIy new in the history OF !ualc!al pro-
ceedinns They are peculiar in their chur-
acter. and affect peculiar interests. TIC
amounts involved are generally large,
and the rights OF the parties often
Times complicated and conflicting. 1t rarely
bappens that foreclosure is carried through
TO the end without some concessions by
some parties from their strict legal rights IN
order to secure advantages that could not
otherwise be obtained, and which it Is sup
posed will operate for the general good OF
all who are interested. This results almost
as q matter OF necessity from the peculiar
which surround such ltga-
ton. The business OF all railroad companies
IS done to a greater or less extent on credit.
This credit is longer or shorter, us the ne
cessities Of the case require; ana "hen
companies become pecuniarily embarrassed
it frequently happens that debts TOR tq0or,
and equipment and improvements
are pernited 10 accumulate IN 0Tder th0t
bonded interest may be paid ana deaaS-
tr0us foreclosure postponed, II not dHo-
gether avoided. In this WAY the daily ana
monthly earnings which ordinarily should
90 10 nav the daily and monthly expenses
are kent from those to whom in equity they
belong and used to paythe mortsaged deDt.
The income out of which the mortgage 8 10
he paid Is the net income obtained by de-
Quoting from the gross earnings what Is re-
uuired for necessary operating anu man
aging expenses, proper equipments, ana
useful improvements. Every railroad mort
Ja1ee in accepting his security implicitly |
Io, ,cs that the current debts made III the
ordinary course Of business shall be palu
from the current receipts before he has any |
claim upon the income. If for the con-
feIlience oil the moment something Is taken |
rom what may not improperly be called |
he current-debt fund, and put into that |
which belongs to the mortgage creditors,
t certainly is not ireqnitable for the |
.orrt, when asked by the mortgages to |
AXE possession OF the future income, and |
,old it for their hencit, to require as con-
lition CT such an order that what Is due |
rom the earnings to the current debt shall
)e paid by the court from the future cur
ent receipts before anything derived from
hat source goes to the mortgages. In this
yav the court will only do what, il re-
.ciycr should not he appointed. the COM
,any ought itself to do; for, even though |
he profits and income until possession OF
he mortgagcd premises Is actually taken or
omethlng equivalent, the whole earnings
,elong to the company, and arc subject to
IS control.
The mortgage has his strict rights, which
Ie may enforce in the ordinary way. III he
sks no favors, he need grant none; but If
lie calls upon a court Of chancery to put
orth its extraordinary powers and grant
llm purely equitable relief. he may with
1roprietv be required 10 submit to the ope-
ations of rule which always applies in
uch cases, and do equity in order 10 get
ouitu. The appointment Of receiver is
lot matter OF strict right. Such an appl-
.atlon always calls for the exercise OF iu-
licial discretion, and The chancellor should
10 mould bis order that while favoring one
INJUSTICE is not done to another. Ii this
,annot be accomplished, the application
should ordinarily be denied.
We think also that il no such order is
made when the receiver is appointed, and 1t
appears in the progress OF the cause that
bonded interest has been paid, additional
equipments provided, or lasting and valua-
Die improvements made out OF earnings |
which ought in equity to have been en-
D{oued 10 Keep dolcn debts for labor, sup
plies, and The like, it is within the power Of
he court to use the income OF the receiver
ship to discharge obligations achich, ont for
The diversion Of funds, ocouM haze been
ooia in the ordinary course of business.
This not because the creditors TO Wnom
such debts are due have In law lien upon
,he mortgaeed property OF the income,
but because in Il sense the officers |
of the company are trustees OF the earnings |
Tor the benefit OF the different class |
Of creditors and the stockholders, and If |
hey give 10 one class OF creditors that |
which properly belongs to another, the |
court may, on an adjustment Of the ac-
so use the income which comes into |
It's own hands as If practicable to restore |
he parties to their original equitable rights. |
w bile ordinarily this power is confined TO |
he appropriation of the income OF the re-
and the proceeds Of moneyed |
lssets that have been taken from the COM
1any, cases may arise where equity will re,
luire the use OF the proceeds OF the sale OF |
he mo1gaged property in the same way.
Thus it often happens that in the course OF |
he administration OF the cause the court is |
called upon 10 take income, which other |
wise would be applied to the payment OF |
I'D debts, for current expenses, and use it |
o make permanent improvements on the
liked property, or to buy additional equip |
nent. In this way the value OF the mort |
gagged property is not unfrequcntly materi- |
lilly increased.
Judge Nlacl< ON the RIves Outrage. !
t,,,,,, ,,o W,.bfpntnn Cnrresnoufrnt of rho New |