Case Name: H. K. STEWART v. THE B. & O. R. R. CO. et al.
Court: Fayette County Court of Common Pleas
Jurisdiction: Ohio
Decision Date: 1901
Citations: 8 Ohio N.P. 179
Docket Number: 
Parties: H. K. STEWART v. THE B. & O. R. R. CO. et al.
Judges: 
Reporter: Ohio nisi prius and general term reports
Volume: 8
Pages: 179–182

Head Matter:
(Fayette County Common Pleas.)
1901.
H. K. STEWART v. THE B. & O. R. R. CO. et al.
(1) . Where receivers have been appointed at the instance of a Railroad Co. itself, (in this case the B. & O. R. R. Co.) not for the purpose of bringing the property to sale and paying its debts, but to put its property temporarily beyond the reach of creditors on execution, and enable it to tied over temporary financial embarrassment, the receivers under such circumstances will be treated as the agents of the corporation which will be held liable for their torts to the full extent that any other principal is liable, and therefore liable for the damages for the death of plaintiff’s wife caused by the negligence of the employes of such receivers.
(2) . But where the property of a railroad corporation is seized by its creditors and a receiver appointed on their application, to operate the road pendiing sale, in the interest of the creditors; the property finally being sold,and the proceeds, of both’its sale and operation, applied in satisfaction of demands of creditors, the property itself passing to strangers, the proposition that the corporation should be liable for torts of the receiver or bis employes would have no application.

Opinion:
HIDY, J.
Plaintiff brings his action to recover damages for loss of services, eto., of his wife, the result of an injury sustained by her from being struck by a locomotive of defendant's road under circumstances imputing negligence both to the Company as such and employes engaged in operating the locomotive in question.
It.appears from the petition that, at the time of the accident, the road was being operated by John R. Cowan and Oscar Q. Murray, receivers appointed by the United States circuit count, for the district of Maryland on February 6th, 1896; that the appointment of said receivers was procured by the railroad company, for its own benefit, for the purpose of temporarily placing its property beyond the reach of its creditors on execution, and of aiding and assi iting the said railroad company in making certain betterments and improvements on its property, and of enabling it to relieve itself from temporary financial embarrassment. That on Maroh 2nd. 1896, the appointment of said Cowan and Murray as suoh receivers was adopted and confirmed by the United States circuit court for the southern district of Ohio, eastern division, sitting at Columbus, Ohio.
That said receivers took charge of all the property of said railroad company, including its line of railway between Columbus and Cincinnati, Ohio, upon which the injury complained of was.received, and continued to operate said railroad until June 30, 1899. at which time said United States circuit court for the southern district of Ohio eastern division, found and adjudged that said defendant railroad company was solvent and entitled to receive possession of all its property then in the possession of said receivers, and said receivers were ordered to turn over the same to said railroad company as of midnight, June 30, 1899, subject to the following provision in said order:
"Said railroad company shall take the property upon the express condition that it will pay off and satisfy all debts or obligations, incurred or to be incurred by the receivers, which have not been or shall not be paid by the receivers, and which shall be adjudged by this court, to he the proper and valid debts and obligations of the receivers; and that it will pay off and satisfy each and every debt and obligation of the said railroad company to any party, intervener, or claimant, in this cause, which the court has adjudged or shall allow and adjudge due and payable by it, and in accordance with the order or orders of the court allowing such claim and adjudging with respect thereto."
That pursuant to said order and di rection the said receivers did on the30tb day of June, 1899, turn over to the railroad company all of the said property in their hands as receivers. That no part of the property of the railroad company was sold by the receivers, but on the contrary, the receivers made large improvements and betterments on said property while it was in their hands, and the property was turned over with all such improvements and betterments to the company, under said order of the court.
This aotion was brought by the plaintiff after the railroad company had retaken the possession of its property from the receivers, under the order of court above mentioned.
Tile railroad company files a general demurrer to the petition.
There is no question, that the circumstances under which plaintiff's wife received the injury complained of, as stated in the petition, were such as to render the company liable if it can be held for damages resulting from torts of the employes of the receivers during the time they were in possession of the property and operating the road.
But liability of the company for the torts of the receivers and their agents, under such circumstances, is denied by counsel for the company, in argument, and they further say that the company is not made liable by the terms of the order under which it took the property back from the receivers, for the claim here asserted is neither a debt nor an obligation incurred by the receivers within the meaning of those terms as employed in the order of court; neither has the olaim been adjudged to be a proper debt or obligation by the court, as provided in the order.
In support of the position that the company is not liable for torts of the receivers or their employes,counsel cite the text of Smith on Receivership, and the cases referred to in support of the text, in a foot note.
The proposition is stated broadly as contended for by counsel, in the text, and some of tne courts rendering opinions in cases cited, employ language, perhaps warranting the author's statement; but in every case the statement is obiter, pure and simple, the principle not being necessary to the determination of the controversy at bar.
I am led to think from examination of other cases, and considerations based upon general principles of law, that the statement of the rule as made is subject to very material qualification, under certain circumstances.
Counsel for plaintiff cite the case of Railway Company v. Johnson, 151 U. S., 82, and rely upon that case as an adjudication by the supreme court of the United States, of two propositions, either of which, would fix liability upon the company in this case.
1st. That the earnings of the road while in the hands of th-e receivers, having been diverted as alleged in the petition to the betterment of the property, and the property with its betterments, having been turned back to the company, the company must be held to have taken it subject to the duty to .pay all demands of whatever nature that could have been asserted against the property or earnings in the hands oE the receivers.
2nd. That the receivers having been appointed at the instance of the company itself,not for the purpose of bringing the property to sale, and paying its debts, but to put its property temporarily beyond the reach of creditors on execution, and enable it to tide over temporary financial embarrassment — the receivers under suoh circumstances will be treated as the agents of the corporation which will be held liable for their torts to the full extent that any other principal is liable.
I think counsel for plaintiff claim too much for this decision; that the United States supreme court does not in that case decide, or approve either of these propositions.
The case in the United States supreme court,was in review of a decision of the supreme court of Texas, in the same ease, and the last named court, did announce both propositions as law, and placed its decision upon the first proposition.
The United States supreme court merely affirmed the decision of the Texas court, upon another question involved, but as to the liability of the corporation, under such circumstances, held that it was not a federal question which the United States courts were authorized to review, and that the determination of the highest court of the state of Texas on that matter was as between the parties final.
So that the propositions contended for have not the sanction, neither have they the disapproval, of the United States supreme court, and they rest upon the authority of the supreme court of Texas.
Tliat authority is sufficiently respectable, in the absence of a contrary holding by the supreme court of our own state, to command my acquiescence,and especially is this so when based, as I think it is,on general notions,of justice, which can be traced trough the law, back, at le.ast, as far as the twelve tables.
It is manifest that there is no analogy between the case made by the petition, and a case where the property cf a railroad corporation is seized by its creditors and a receiver appointed on their application, to operate the road pending sale,in the interest of the creditors; the. property finally being sold, and the pro coeds, of both its sale and operation applied in satisfaction of demands of creditors, the property itself passing to strangers.
In the last mentioned case, the proposition that the corporation should not be liable for torts of the receiver or his employes would have a perfectly just application.
But a perfect analogy to the ease made by the petition, is found in what was known to Boman law as a universal succession.
In his work, Ancient Law, Sir Henry Maine says. "A universal succession, is a succession to a universitas juris; *• A universitas juris, is a collection of rights and duties united by the single circumstance of having belonged at one time to some one person. " "A universal succession "occurs when one man is invested with the legal clothing of another, becoming at the same moment subject to all his liabilities and entitled to all his rights." Maine's Ancient Law, pp. 173 and 174.
It requires no special insight to' see the analogy between the relations of the receiver to the property and the creditors in the case made by the petition and the universitas juris, of Roman law.
Here was a university (or bundle) of rights and duties, united by the circumstances of their belonging at one time tc one person, the receiver.
Immediately before the surrender of the property to the company, there was united in him the right to the property and its earnings, and the duty to pay out of these (or at least out of the latter) all just demands arising out of his control of the property.
This is precisely what constitutes a universitas juris. Nor does it require argument to convince us, of the perfect propriety and justice-of the Roman notion, that upon a succession by one to the rights, he should likewise succeed to the duties united with the rights, in this bundle.
This notion of a universal succession,, has been adopted into the law of modern Europe, and, at least in a modified form, is part of the common and statute law of England and this country, notably the law of descent and distribution-of the property of deceased persons.
In the ease of Compton v. The Railway, 45 Ohio St., 592, Judge Minshall called attention to the analogy between the transaction whereby through consolidation, a new company acquires the property of certain old ones, and the transfer of a universitas juris, as known to the Boman civil law, and made a. brilliant application of the notion of a universal succession determining the rights of creditors in that case.
The analogy was not more apparent, nor the application of the principle-more just in that ease than in the case made by plaintiff's petition here; and I hold that where a receiver diverts the earnings of a railroad corporation to the betterment of the property, and the corporation retakes all the property, with its betterments, it succeeds as well to the duties, as to the rights of the receiver, and must pay all just claims which might have been made against him out of the funds expended in betterments, or turned over to the corporation.
Having reached this conclusion, it is perhaps unnecessary to discuss whether the company would be held liable on the ground of agency for torts of the receivers and their employes, incident to the operation of the road, where the receivers were appointed at the instance of the company,for the purposes alleged in the petition.
The supreme court of Texas, in the case before referred to, held the affirmative, but refrained from putting its decision on that ground, because it hesi tated to find as a matter of fact that a receivership thus eollusivaly obtained would have been continued by any court. I am not embarrassed by any such considerations of delicacy here, for it is charged in the petition and admitted by the demurrer, that the receiver was appointed on the application of the corporation, and for the purpose of putting its property temporarily beyond the reach uf its creditors on execution.
I prefer, however, to place the liability of the company upon the other ground. The liability of the company being found to exist independently of the conditions presented by the United States circuit court in its order directing the surrender of the property to the the company, we need not inquire What is the proper meaning of the terms, •"debt and obiigation"therein employed.
Nor need we inquire whether it was the intention by that order of the court to relieve the company of all liability for claims except such as after being presented are adjudged by that oourt to be proper and valid debts and obligations of the receivers.
If such was the intention, the court was without jurisdiction to make the order. The right of the plaintiff does not rest upon the order of the United States oourt,nor can that court by a decree in a case to which the plaintiff was not a party, take away from him the right to seek his remedy in any court of competent jurisdiction.
Such was the holding of the supreme court of the United States in Railway v. Johnson, 151 U. S., 82.
The demurrer will therefore be overruled.