Court Opinion

ID: 5497167
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:54:02.79324+00
Date Added: 2024-06-11T08:33:50.593532
License: Public Domain

Martin, J.,
(concurring.) A lien upon the property of the Syracuse & Baldwinsville Railroad Company was acquired by the appellant under and by virtue of a judgment entered February 6, 1888, an execution issued thereon, and a levy thereunder made February 8,1888. It is true, this judgment was by default, and that the default was subsequently opened, but the judgment, execution, and levy were permitted to stand as security for the judgment subsequently rendered. The receiver in this action was appointed January 23, 1889, and took possession of the property of the railroad company on the 26th of the same month. The first judgment was entered nearly a year before the receiver, was appointed. It was under and by virtue of the execution issued upon that judgment that the sheriff, on February 8, 1888, levied upon the property of the railroad company, and it was then that a, lien was acquired, which was to remain as security for the judgment subsequently obtained. While the appellant’s right to enforce his judgment by a sale on execution against the property which had come into the hands of the receiver may have been affected by such appointment, still the lien of his execution was not thereby destroyed. Walling v. Miller, 108 N. Y. 173, 15 N. E. Rep. 65. If the court was authorized to make the order appealed from, it must, I think, be justified upon other grounds than that the receiver acquired title prior to the appellant’s lien. It seems to be well settled that the court may, in an action like this, direct the payment by a receiver of the debts of a corporation for labor and supplies, and the payment of traffic balances in favor of connecting roads, and may direct a receiver to operate the road pending foreclosure, and make improvements thereon and charge the expense thereof on the property prior to the legal liens. Wallace v. Loomis, 97 U. S. 146; Fosdick v. Schall, 99 U. S. 235; Barton v. Barbour, 104 U. S. 126; Miltenberger v. Railroad Co., 106 U. S. 286, 1 Sup. Ct. Rep. 140; Trust Co. v. Souther, 107 U. S. 591, 2 Sup. Ct. Rep. 295; Burnham v. Bowen, 111 U. S. 776, 4 Sup. Ct. Rep. 675; Trust Co. v. Railway Co., 117 U. S. 434, 6 Sup. Ct. Rep. 809. An examination of these cases discloses that the asserted power of the court to authorize a receiver to create a liability which shall have preference over the otiier debts of a corporation is based upon the duty of the court (1) to protect and preserve the trust property in its hands for the benefit of all the parties interested; and (2) to protect the interests and rights of the public. In Wallace v. Loomis, 97 U. S. 162, it is said: “The power of a court of equity to appoint managing receivers of such property as a railroad, when taken under its charge as a trust fund for the payment of incumbrances, and to authorize such receivers to raise money necessary for the preservation and management of the property, and make the same chargeable as a lien thereon for its repayment, cannot at this day be seriously disputed. It is a part of that jurisdiction always exercised by the court by which it is its duty to protect and preserve the trust funds in its hands. ” The same principle is asserted and recognized in most of the other cases cited. In Barton v. Barbour, 104 U. S. 135, Mr. Justice Woods, in delivering the opinion in that ease, says: “A railroad is authorized to be constructed more for the public good to be sub-served than for private gain. As a highway for public transportation it is a matter of public concern, and its construction and management belong primarily to the commonwealth, and are only put into private hands to subserve the public convenience and economy. But the public retain rights of vast consequence in the road and its appendages, which neither the company nor any creditor or mortgagee can interfere with. They take their rights subject to the rights of the public, and must be content to enjoy them in subordination thereto. It is therefore a matter of public right by which the courts, when they take possession of the property, authorize the receiver or other officer in whose charge it is placed to carry on in the usual way those active operations for which it was designed and constructed, so that the public may not receive detriment by the non-user of the franchises; and in most cases the *921creditors cannot complain, because their interest as well as those of the public- is promoted by preventing the property from being sacrificed at an untimely sale, and protecting the franchises from forfeiture for non-user. * * * It has come to be settled law that a court of equity may, and in most eases -ought, to authorize its receiver of railroad property to keep it in repair and to manage and use it in the ordinary way until it can be sold to the best advantage of all interested.” This doctrine is also affirmed in Trust Co. v. Railway Co., 117 U. S. 458, 6 Sup. Ct. Rep. 809; and in Miltenberger v. Railroad Co., 106 U. S. 311, 312, 1 Sup. Ct. Rep. 140. The doctrine of these cases was recognized in the case of Raht v. Attrill, 106 N. Y. 436, 13 N. E. Rep. 285. That the order granted was necessary for the proper protection and preservation of the property and franchises of the company, and to protect the interests and rights of the public, was abundantly established by the papers read on this motion. I am therefore of the opinion that the order should be affirmed, not upon the ground of any priority of title acquired by the receiver, but upon the ground that it was necessary to the preservation of the company property and franchises, and to the protection of public interests. These views lead me to concur in the result of the opinion of Mr. J us tice Hardin.