Court Opinion

ID: 3962121
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:22:23.302442+00
Date Added: 2024-06-11T13:53:12.130652
License: Public Domain

In the appeal of the St. Louis Union Trust Company, this day decided and the opinion here referred to, in its eleventh assignment, complaint was made of the allowance by the court as operating expenses incurred by the receiver of claims and demands of car rentals and loss and damage to cars by fire and operation. These demands are held by the M., K.  T. Railway Company of Texas, and many other railway companies herein, and these companies file assignments claiming priority of payment out of the proceeds of sale of the railway properties as necessary operating expenses of the receiver, and challenging the action of the court in reducing the amount of their several demands upon the ground that they had no notice of any contest or denial of the correctness of their demands by *Page 183 
the St. Louis Union Trust Company, the certificate holders. It was determined in the appeal of the trust company, the certificate holders, that indebtedness incurred by the receiver in, or arising out of, or incident to, his necessary operation of the railway by order of the court, such as car rentals and loss and damage to such cars by fire and operation while in the control of the receiver, were demands properly classified and allowed by the court as operating expenses of the receiver, and were properly payable as such, as ordered by the court, out of the proceeds of the sale of the railway. The finding of the court was that such demands were incurred by the receiver and necessarily arose out of and were incident to his operation of the road, and were necessary as actual operating expenses and charges of the receiver, and were just charges against the receiver as such. It was further ruled in the St. Louis Union Trust Company appeal that these demands, as operating expenses of the receiver, were entitled to priority in payment to the certificates in question because the terms of the order authorizing the issuance of the certificates expressly decreed their payment, as in classes "B" and "C," below operating expenses and charges of the receiver in class "A."
The specification of error of the several railway companies as to the reduction of the amount of their several demands, upon the ground specified, is next considered, and should be, we think, sustained. These several appellees, made such in this court by this appeal, in obedience to an order of the court, it appears, filed their respective demands with the master, to whom the same were referred, and who was authorized by the court, if found to be just and correct, to approve them, and if not so found to disapprove them, and to make due report to the court of his action in the matter so referred to him. The report of the master to the court, as shown in the record, contains a list of creditors of the receiver, appellees being among the number, with the amounts due each and for what the amounts are due and owing that had been filed with him. No particular findings of the master appear. The receiver, under order of the court, filed his report of outstanding and unpaid indebtedness due by him in his operation of the road, and the demands of appellees with the amount due appear on the report. The report of the receiver is verified by his affidavit thereto. The amounts due as reported by the master and the receiver are the same, and this is the amount the several appellees claim respectively is due them. The amount so reported and claimed was reduced by the court at the instance, it appears, of the St. Louis Union Trust Company. No objection or exception was made to the report of the master or receiver specifically with respect to appellees' demands by the St. Louis Trust Company or by any other creditor or party to the proceedings. There does appear a general exception by the said trust company as to any demand or debt being allowed payment out of the proceeds of the sale on an equality with or in priority of their certificates. But the justness or correctness of the amounts of the appellees' demands is not challenged by the pleading of the said trust company. In this attitude of the case the court, on the hearing of the intervention of the said trust company and on the evidence offered by the trust company as to the amount that appellees *Page 184 
should have allowed in their favor, reduced the amount of the several appellees' demands. This was error, we think, in the record in this case. In view of the order of the court referring these claims to the master for ascertainment of amounts and justness thereof, the report of the master to the court must be considered by this court as involving a finding by him and report thereof to the court in favor of the amounts due, as correct and just, that he so reported. The master having the power to make findings in these claims, then, in order for the other creditors to call in question his conclusions, objections should have been filed to his report. Fletcher on Eq. Pl. and Pr., sec. 601; Hamm v. Live Stock Co., 18 Texas Civ. App. 241[18 Tex. Civ. App. 241], 45 S.W. 330. No such objections having been filed either before the master or before the court, the appellees had a right to rely upon the finding of the master as to the amount so reported, and to presume, in the absence of any exception thereto, that the amount of their demands so reported would be allowed and decreed by the court as determined by the master. There does not appear any error on the face of the master's report that would authorize or require its being inquired into further. It affirmatively appears that the reduction of the amount of appellees' demands as reported by the master was not made on the court's own motion, but solely at the instance of the trust company. If, independent of the master's report, the said trust company, as adverse claimants of the fund, had sufficient grounds to contest the correctness of the amounts properly due these appellees at the time of the distribution of the funds, and desired so to do under proper order of the court, it still should be done under proper specific exceptions and with notice thereof to appellees. But here no exception or objection was made to the appellees' demands, except in the form of a legal contention as to the proper classification they should take. This was not sufficient to advise appellees that a contest of the correctness and justness of their demands was being made by creditors, and that it should be met with proof at their hands. If it was proper to allow a contest to be made by the trust company of the amounts due appellees, it would still be proper to allow the appellees an opportunity to appear and offer proof of their correctness before same are finally disallowed in part. It may be that the trust company has reasonable grounds in the record to contest the reasonableness of the amounts due appellees, and we have hesitation to render judgment, and conclude that it would be in the interest of fairness and justice to the appellees and to the trust company that the case be remanded for determination under proper pleadings of the amounts due appellees.
The judgment of the court, in so far as it classifies and directs payment of the appellees' claims for car rentals and for loss of cars by fire and operation, as operating expenses of the receiver, is sustained, and in so far as it directs payment on an equality basis with the receiver's certificates in question is reformed as to direct payment in priority of the said certificates, and, as reformed in this respect, is affirmed; but in so far as it determines the amounts of the appellees' demands, is reversed and remanded, with instructions to hear, under proper pleadings, evidence, if desired by the parties, on the part of *Page 185 
appellees and the trust company, and then fix the amounts as might properly, in the opinion of the trial court, be found to be due.
Reformed and remanded.