The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1906-03-05
is NOT PREFERRED
Judge Pollock Decides Santa Fe
Devlin Case.
Asked to Have Claim of S57 .OOO
Given Precedence.
WAS TO PAY MINERS.
Money Advanced Only Short
Time Before Crash.
Company COntended 1t Was Ad-
vance Payment on Coal.

In the United States district court this
afternoon, Judge Pollock sustained the
decision Of Referee N. H Loomis, that
the Santa Fe does not have a preferred
claim against the estate Of c. J. Dew
lin. for s57, 600 which the road advanced
to the dead millionaire to pay his miners
at the Mt. Carmel Coal company. a
short while before his financial failure
last July.
The Santa Fe oontended that the
money was not loan to Mr.. Devlin.
but was to be repaid in coal, and that
this contract still holds good and should
be so acted upon. The Santa Fe for
some years held a written contract with
the Mt. Carmel Coal company by which
it was furnished with coal at a stipula-
ted price. When this loan of s57, 600
was made, a verbal contract was estab-
1ished between the Santa Fe and Mr..
Devlin, by which It was to be paid back
in coal. The Santa F'e therefore argued
that the sum should not be considered
as a loan but rather pay for coal in ad-
vance.
Referee Loomis denied the Santa Fe
the right Of preference and Judge Pol
lock sustained him. A vital portion Of
the text of Judge PoIlocks decision fol-
lows;
ord In this matter and consideration
of the briefs and argument Of solicit
ors, in my judgment the conclusion
reached by the referee is right and
/ should be confirmed, and this for
many reasons. First I am OF the
/ opinion the transa action by which the
4 money was advanced by the treas
/ urer of the railway company to the
bankrupt were complete transactions,
/ by reason of which the bankrupt be
! came Indebted to the railway com
pany for SO much money, and that
1 such transactions are wholly inde-
! pendent Of separate and apart from
the original contract between the par
| ties. True, at the time the sums of
money were advanced It was no doubt
contemplated and agreed by the par
Z ties that the bankrupt would repay the
| money by furnishing coal, at the price
/ OF the coal measured in money by the
terms of the contract, and would fur
nish such coal in the months of July
and August as claimed But at the
the coal remained in the ground un-
mined. None has been raised and
I none set apart as a fund to pay the
l debt. The contracts under which the
/ money was advanced created no lien
upon any property for its repayment.
The railway company simply advanced
to the bankrupt company money to
meet its engagements arising out OF
/ interest thereon to be settled and paid
in coal at future date and at a fxed
price. It is not contended any agree
ment was made by which the railway
company bound itself to make like ad-
vances should occasion arise. The
transaction in its legal significance is
not different from that had a bank or
other person furnished the money and
/ taken the obligation of the bankrupt
to repay at a certain time with in
terest
In such case the bank would have a
! perfect legal demand for repayment OF
the money but would be simply a con-
| tract creditor of the bank holding a
| general unsecured claim against the
estate in the hands Of the receiver or
| trustees The order appoint
ing receivers in this case authorized
them to borrow SUFFICIENT sums to meet
| the pay rolls of miners wages then
presently due in order that the opera
ton Of the mines in question should
not cease to the detriment Of the
estate. the railway and coal companies
as we'll This was done and receivers
notes creating paramount lien on all
I the estate of the bankrupt were an
thorized and issued and the grounds
for forfeiture were specified in writ
ten lease The trustees represent
both the secured and unsecured cred
itors. To now hold the oral agreement
made between the bankrupt and the
railway company. unknown to the re-
ceivers and the court at the time OF
their appointment) entered into and
formed a part of the written contract
of lease requiring the money raised by
order of court to be employed in the
production of coal to meet the claims
of petitioners, or that the contract
thus sought to be perpetrated for the
benefit Of the estate of the bankrupt.
and petitioners as well, should be
forfeited. would be. to my mind. so
manifestly unjust to the creditors of
the bankrupt and particularly to the
secured creditors as to require its de-
nial on the ground of natural justice.