Court Opinion

ID: 8850137
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:10:34.781265+00
Date Added: 2024-06-11T17:05:27.982751
License: Public Domain

Mr. Chief Justice FULLER
(after stating the facts as above). It was conceded, on the argument, that the item mentioned in the second assignment of error related to a balance due by the receiver of the Chaileston, Cincinnati & Chicago Railroad Company to the Richmond & Danville Railroad Company, which had accrued subsequent to Ms appointment, and which, as a matter of fact, had been paid, and we assume that the intention of counsel was to question the allowance of the fourth, item for §8,095.58, and it will be so regarded. The two items complained of were for freight on shipments of coal, cars, oil, etc., consigned to the Charleston, Cincinnati & Chicago Railroad Company for its own use, and which were turned over by the agent of the Danville road to the agent of the formin' road a t Blacksburg, the Danville road being charged with all back charges, and paying them; and for balances of freight exchange found to be due by the Charleston, Cincinnati <& Chicago Company to the Danville Company. The order of February 2d, appointing the permanent receiver, expressly authorized him “to pay all the *208wages due to employes, at the date of the order appointing the temporary receiver herein, for labor and services within ninety days before the same, and also all balances due to other carriers and connecting lines and necessary to be paid for the conducting of said railroad.” This was such an order as is frequently made in these cases, and cannot properly be construed as limited to payment out of current earnings, especially in view of the condition of the road. The liabilities which made up the two disputed items accrued prior to December 11, 1890, and the bill was filed, and the temporary receiver appointed, on December 10. On March 16, 1891, the permanent receiver was granted leave to issue $30,000 of certificates, with which to meet obligations, which included freight, balances for freight, cross-ties, coal, and other supplies, which certificates were necessarily a charge upon the corpus of the estate. It does not appear that appellant raised any objection to either of these orders, although, if it considered them objectionable or injurious to its interests, it might well have applied to the court to cancel or modify them. U. S. Trust Co. v. Wabash W. Ry. Co., 150 U. S. 287, 303, 14 Sup. Ct. 86; Miltenberger v. Railroad Co., 106 U. S. 286, 1 Sup. Ct. 140.
It must be regarded as settled that a court of equity may make it a condition of the issue of an order for the appointment of a receiver of a railroad company that certain outstanding debts of the company shall be paid from the income that may be collected by the receiver, or from the proceeds of sale; that preferential payments may be directed of unpaid debts for operating expenses, accrued within 90 days, and of limited amounts due to other and connecting lines of road for materials and repairs and for unpaid ticket and freight balances, in view of the interests both- of the property and of the public, that the property may be preserved and disposed of as a going concern, and the company's public duties discharged; and that such indebtedness may be given priority, notwithstanding there may have been no diversion of income, or that the order for payment was not made at the time, and as a condition, of the receiver's appointment, the necessity and propriety of making it depending upon the facts and circumstances of the particular case, and the character of the claims. Miltenberger v. Railroad Co., 106 U. S. 286, 311, 1 Sup. Ct. 140; Trust Co. v. Souther, 107 U. S. 591, 594, 2 Sup. Ct. 295; Union Trust Co. v. Illinois M. Ry. Co., 117 U. S. 434, 6 Sup. Ct. 809; Morgan's L. & T. Railroad & Steamship Co. v. Texas Cent. Ry. Co., 137 U. S. 171, 11 Sup. Ct. 61; Kneeland v. Foundry Works, 140 U. S. 592, 11 Sup. Ct. 857. Of course, the discretion to enter such orders should be exercised with great care, but as late as Thomas v. Car Co., 149 U. S. 95, 110, 13 Sup. Ct. 824, the supreme court quoted the remarks upon the doctrine and its proper application in Miltenberger v. Railroad Co., supra, with approval, although, as observed by this court in Bound v. Railway Co., 58 Fed. 473, 7 C. C. A. 322, the tendency of that case was to narrow the limits within which an equity court should confine itself in making such allowances.
We are of opinion that the order of February 26, 1891, was providently entered, and that the circuit court did not err in its decree. *209The petition was sufficient, and the relief awarded, being consistent with the case made, was gran table under the prayer for general relief. The allowance of interest from the date of the appointment of the temporary receiver was, perhaps, open to question, but no error is assigned in regard to it, and, under the circumstances, we do not feel called upon lo disturb the decree on that account.
Something was said upon the argument in respect of the note and bonds of the Charleston, Cincinnati & Chicago Company, taken and held by the Danville Company, hut that was as collateral to the original obligation, and the express agreement was that the note was to be considered as payment only “when paid.” This was no waiver of the right to come upon the fund, and, when the amount of the decree is paid, whatever rights in that collateral appellant may be entitled to, by way of subrogation or otherwise, can he adjusted and determined.
Decree affirmed.