Court Opinion

ID: 9830040
Source: CourtListenerOpinion
Date Created: 2023-09-01 19:50:17.700825+00
Date Added: 2024-06-11T07:43:11.494887
License: Public Domain

On Motion for Rehearing.
In disposing of this appeal the suit was treated as one for a personal judgment against the appellant; no effort,appearing to fix any character of charge or lien upon the railway property. In the trial below a personal" judgment was rendered in accordance with the. pleadings of the plaintiff, and no special objection to that form of judgment was called to our attention in the original brief filed by counsel, or in the oral argument made in the case. But in the motion for a rehearing it is urged that under both the pleadings and the proof there was no personal liability on the part of the appellant for the claim sued on. Whether or not there was any basis for the rendition of a personal judgment depends upon the construction that should be given to article 6624, referred to in the original opinion. It is conceded that the agreement filed with the secretary of state is in the very language of that statute. Appellant contends, however, that the law undertakes to impose only a charge upon the property taken by the purchasers for the payment of the liabilities mentioned, and does not require them to personally assume the debts. In the absence of some legal requirement extending the pre-existing liabilities of a sold out railway corporation, all claims against the property, except those secured by prior liens and those provided for in the judgment of foreclosure, are extinguished by the sale, and the purchasers take the property and franchises of the former corporation free from any character of liability. H. & T. C. Ry. Co. v. Crawford, 88 Tex. 277, 31 S. W. 176, 28 L. R. A. 761, 53 Am. St. Rep. 752: G. C. & S. F. Ry. Co. v. Morris, 67 Tex. 692, 4 S. W. 156; Ry. Co. v. Harle, 101 Tex. 170, 105 S. W. 1107. But, in the language of the writing filed with the secretary of state, the purchasers whom the appellant succeeded agreed—
“to take and hold said property and franchises, charged with and subject to the payment of all subsisting liabilities and claims for death and for personal injuries sustained in the operation of the railroad by the company, and by any receiver thereof,” etc.
The general rule seems to be this, where purchasers take property subject to a pre-existing lien, without a covenant assuming the mortgage debt, they are not personally liable in the sense that they may be held responsible for any deficiency beyond the value of the incumbered property in their hands. Belmont v. Coman, 22 N. Y. 438, 78 Am. Dec. 218, and notes; Klapworth v. Dressler, 13 N. J. Eq. 62, 78 Am. Dec. 69, and cases cited in notes; I-Heid v. Vreeland, 30 N. J. Eq. 591. In this case it is conceded that the statute does contemplate the imposition of a charge against the railway property which passed by the receiver’s sale. It is probably true that in the enactment of this law the Legislature did not intend to impose upon purchasers who filed the agreement provided for, a personal liability that would extend beyond the value of the property taken over, and bind them to pay any deficiency that might result. But evidently the Legislature did intend to make such purchasers personally liable for claims less than the value of the incumbered property. In the case last referred to the court said:
“There can be no doubt at this day that where the purchaser of land incumbered by a mortgage, agrees to pay a particular sum as purchase money, and, on the execution of the contract of purchase, the amount of the mortgage is deducted from the consideration, and the land conveyed subject to the mortgage, that the purchaser is bound' to pay the mortgage debt, whether he agreed to do so by express words or not. This obligation results necessarily from the very nature of the transaction. Having accepted the land subject to the mortgage, and kept back enough of the vendor’s money to pay it, it is only common honesty that he should be required either to pay the mortgage or stand primarily liable for it. His retention of the vendor’s money for the payment of the mortgage, imposes upon him the duty of protecting the vendor against the mortgage debt. This must be so even according to the lowest notions of justice, for it would seem to be almost intolerably unjust to permit him to keep back the vendor’s money with the understanding that he would’pay the vendor’s debt, and still be free from all liability for a failure to apply the money according to his promise.”
Language somewhat similar is used in Blood v. Levick Company, 171 Pa. 328, 33 Atl. 344.
When property is held subject to the “pay. *789meat of a subsisting” claim, the liability constitutes a .primary charge on the property. If there is no other person primarily bound for the payment of the claim, it then devolves upon the owner and holder of the property to either surrender a portion sufficient to satisfy the claim or to pay the debt out of other funds. If he refuses to pay the debt, or to turn over to the claimant enough of the incumbered property to be sold in order to raise the required funds, he has no right to complain at the rendition of a personal judgment against him for that amount. Under the law as it now exists the appellant, by the filing of the written agreement'with the secretary of state, has acquired the original corporate franchise. ‘Whatever legal existence the old corporation had which did not pass to the appellant has vanished. Railway Co. v. Harle, 101 Tex. 170, 105 S. W. 1107. This liability occurred while the property was under the control of the receiver, but the property has been sold and the receiver discharged. There is then no other person, or legal entity, whose duty it is or who can legally mate the payment provided fo? by the statute. The appellant is not holding the property as a trustee, but as the owner, and is daily deriving a revenue from its operation. It is well settled that when railway property is returned by a receiver without sale, the owners take it charged with’ such debts as the receiver should have paid out of the earnings, if those earnings have been invested in betterments. T. P. Ry. Co. v. Johnson, 76 Tex. 421, 13 S. W. 463, 18 Am. St. Rep. 60; H. & T. C. Ry. Co. v. Crawford, supra. In such cases the charge upon the property becomes a personal liability of the owners. The “charge” which, under those conditions, imposes a personal liability upon the owners, is not legally different from the one provided for by article 6624, when the property passes into the hands of a new group of stockholders.
In Jones on Mortgages (6th Ed.) § 751, the author says:
“Whenever the mortgage debt forms a part of the consideration of the purchase, although the purchaser has not entered into any covenant, or agreement, to pay it, he is bound to the extent of the property to indemnify the .grantor.”
Numerous cases are referred to in the nqtes as supporting that rule. It can hardly be doubted that the charge imposed upon the property for claims arising during the operation of railroads by receivers was intended by the lawmakers as a part of the consideration to be paid by the purchasers who buy at such foreclosure sales. Presumably tbe amount of such claims, if known, or their probable amount, if unknown, is to be taken into account by the purchasers in making their bids, and a- corresponding deduction made. It then follows that, when > such a claim is established and paid by the purchaser, he discharges an obligation which /he impliedly assumed in taking over the property. He delivers to the claimant a sum of money that might otherwise have gone to the original owners, or to former creditors.
A personal judgment for money can always be satisfied by the payment of money. Such a judgment against an owner holding property subject to forced sale does not become more burdensome than the legal establishment of a claim against the property except when the personal judgment exceeds the value of the property. As long as the owner can discharge the liability by selling the incumbered property, he sustains no injury by reason of the particular form of the judgment. The courts will judicially know’ that the value of the claims which this statute undertakes to perpetuate and protect is small when compared with the value of railway property held subject to their payment.
In reply to the reiterated complaint that the trial court’ was without jurisdiction, we need only add that, since this judgment by its terms operates only against the person of the appellant, or at most establishes the amount and validity of a claim, without directing its payment out of any particular property, the plea to the jurisdiction was properly disposed of.
The motion will be overruled.