Birmingham state herald. (Birmingham, Ala.) 1895-1897, 1897-01-31


GRITTY of the claim was denied. What was
said in the opinion as to extending the
rule of Fosdick VS.. Schall to manufac-
turing enterprises, was merely dictum.
1t will also be seen that the court placed
the power of the court to grant the re-
lief not upon any abstract right or equity
of claimants, but its authority to require
a concession, as a condition precedent to
granting relief In the carefully consid-
cred case of Meyer VS.. Johnston, So Ala.
237, many of the principles involved in
this discussion arose. On page 323, the
rights and property embraced In the
mortgage were considered. The mort
gage conveyed all property, real and per-
sonal, then owned or which might there
after be owned, and all tolls, incomes and
profits" This court reaffirmed the va
lidity of such conveyances, and declared
that the rights of the mortgages were
superior to subsequent claims for inn
provements and even for the conStruc-
ton and completion of the railroad it
self. Extensive quotations were made
from the cases of Durham VS.. Railway,
/ Wall. 254. and Railway Company VS..
Cowdrey, II Wall. 4S1, which are directly
in point, and many other authorities were
cited. In the case of Cowdrey II Wall.
supra, the claims rested upon the fact
that 1t was for iron laid upon the road
and capital applied to the road, without
which the road could not have been
operated. The court held the claim SUBJ
ordinate to that of the MORTGAGE AS a
conclusion the court used the following
language: IF the railroad company it
self, the corporation created by the state
to build, equip and operate work use
full to the public though belonging to the
company, cannot when its enterprise is
about to fail and its labor and expendi-
ture to be lost give to those who shall
come to its aid, and help to complete it
obligations which should
have priority over others previously con-
fra ptnd what Of of
equity entities the chancellor to step
in and do so, instead of the company?
The company may not do so, because
holding that contracts should be inviola-
BILE the law will not permit the obliga-
tons of them to be impaired" On page
252 this court expressly repudiated the
doctrine that the mortgage could be
charged with improvements put upon the
mortgaged property. The opinion as a
whole is in direct conflict with the prin-
ciple now being asserted. 1t Is clear
from the authorities of this state and
elsewhere, that when the Mary Lee Coal
and Railway company executed it's mort
gage to the Mercantile Trust and De-
post company, its mortgage was valid
as conveyance upon all its property,
and upon Income and tolls" and that
this principle OF law entered into as a
constituent of that contract. That this
prior right acquired by a solemn con-
tract, cannot be displaced in favor of
Tile CidiIuS "a pcllllOHtT subsequently dC-
cruing, and which in the absence of
agreement must be presumed to have
been rendered upon the personal obli-
cation of the mortgagor, without i'm
pairing the obligation of the mortgage
contract, is too clear to admit of con-
troversy 1t is the doctrine of all the
courts Even in the cases where the
rule has been enforced against a prior
mortgage, the courts concede that the
effect of the application of the rule is to
''displace" prior liens and the "displace-
ment" Is justified solely upon the ground.
that courts of equity may demand from
the mortgage as a condition precedent
to relief, either IN the appointment of a
receiver or foreclosure, that he concede
or consent to the final payment of the
claim of the laborer and material, al
though by virtue of the mortgage, the
lien, in fact and in law is prior and SUI
perior to any claim for labor or supplies,
realizing that the priority could not be
adjudicated upon any principle of ''ab-
stract equity" So apparent was it, that
the innovation impaired the obligation
of contracts, the courts limited the ap-
plication of the condition precedent" to
railroads because of their public charac-
ter and to going railroads." and where
there was division of income. How
1t can be, that the application of assets,
whether money or property, to the salts
faction of mortgage which by valid con-
tract known to all parties is first lien
upon IT. is a diversion OIL assets, re-
mains yet to be sustained.
There is much force in the position, that
the public have great interest in rail-
roads, and that no one should be al
lowed to strike down without warning the
public interest This question Is one not
simply of debtor and creditor growing
out of contract, but of commerce itself.
Many states have provided for these con-
ditions by statute, and saved their courts
from the imputation of court made law"
Central Trust Co: VS.. Thurman, 20 S. e.
Rep. (94 Ga) 141. Whether the same
results as to impairing the obligations
of contracts would follow as to railroad
mortgages executed since the promulga-
ton of the rule of Fosdick vs. Schall, we
need not now consider. We have no such
case before us. In the case of Meyer
VS.. Johnston, the same distinction was
drawn as to railrtoad corporations on
| the ground that the public were interest
| ed in such enterprises, as that drawn in
| Fosdick VS.. Schal1 and upon this ground
| the giving of prior lien to receivers GER
| tficates was upheld. 1t is said that when
| Meyer VS.. Johnston was rendered, the
| case of Foslick VS.. Schall had not been
| established. That is no argument The
| same equity existed then, and II was di-
| rectly repudiateed. But that argument
| is further stripped of all force. when we
| consider the final determination Of the
| case. The law of this state at that time
| required this court on second appeal
| 10 render judgment without being DOund
| by the first appeal. When the case of
Meyer VS.. Johnston came up on a second
| appeal, GA Ala 603) it seems that the
| opinion in the case of Fosdick vs.. Schall
| had been delivered. We cannot doubt
| that the learned counsel representing the
! interest which had been adversely decid-
| ed. would have awaited themselves of the
| new doctrine had it been supposed to
| have been so far reaching. The same
members of the court presided on the
first appeal as ON the second, and also
when the case of in re Tallassee GA Ala.
was decided.
What the attitude of this court should
be when case like that of Fosdick VS..
Schall comes before it, need not now be
considered, but in my opinion the rule.
cannot be extended to cases like that
before us without violating the sacred
ness of contracts. The rule declared in
Bank VS.. Moore. II So. Rep, which strict
~ followed the decision OF Meyer VS..
Johnston, ought TO be adhered to. Ger
tanly If there was any conflict between
the case of the Bank VS.. Moore, ct al, and
the case of in re Tallassee. the same con-
flict exists between the latter case and