526 in whic117:oourfrthere was to be a trial de nollO with the right to present additi9na1 ievidEince and. to amend the pleadings; and, for. the first time of the cause, trial byjurywas to be had.' It is turther objected, however, to the of removalin this case, that the order of removal 'was obtained from the circuit court 'without notice to the parties, and, upon affidavits which, it is alleged; are not true. In the' Case of COoper v. Railroad Co;', 42 Fed. Rep. 697, this court held that..;...;. . . .. "Since Act March 8. 1887, which provides for the removal of causes on the ground of'localprejUdice.does not prt>seribe any mode of procedure, a petition for removal. accompanied by an affidavit by a person authorized to make it, stating. of his own knoWledge the existence of prejudice and local 1nftllence. i!!li sufficient to j an order. of remuval; aud w here such an affidavit .is the court will \lot .permitthe adverse party t() traverse it, and Will, not on thesuj.>ject." . it has been tbe rule of this court. On the whole case presented Qn· this motion; 'to remand are of opinion, for the reaBOns aIQresilid). that the. cause waS properly removed ,from the'state court to tbis court.';rhe Illotionto J"eJlland is denied.
a
d
·
we
NlllWXU.
J., ooncur8.
OmrmAt
TRUST Co. ". (!ANNISTON LoAN
&
& B. COAT" IRON & RAILWAY Co., Co., Intervenor.) N. D.December .28, 1890.) '. .·.. .··..
;
"
_ \.
.CO'Urt,1!1·· .,
'
.
; .
., ."
.. ,
\ .
II.
Where, by consent of all parties, the receiver. of a railroad company, though not in operating the road,' is authorized 'by order of court to issue certifioates whiQh shall CQnstitute a lieu on the company!s property superior to,certain prior mortgages, and the money obtained on such certificates.is ulled in preserving' and improving the property, the purchasers of the property at a subsequent sale to fore,'eIO&lJ,'Said UI'Ortgages are estopped from nenyillg the validity of the certificates.
....
, The receiver wlloissued the certificates,and who bas in bis hand the funds from tIley shOuld be paid it ,valid, is a necessary party defendant to suoh interven. 'tilln.; ... ,
.....
..
,.
...
I.
, travel'l!;)', aJld 110
ali! againsthilIl' "
, '..
, 'fp
" 011
to
CENTBA.L DUST 00. tl. SHEFFIELD &B. OOll, mON & BY. CO.
'527 .'
Iri.'thiscause the Anniston Loan vention, setting forth as follows:
& Trust Compariy mes ali inter.. .
"(l)t'Your petitioner, the Anniston Loan and Trl1stCompany, a body cotporate under the laws of the state of Alabama, respectfully represents unto your honors that on, to-wit, the 11th day of July, A. D. 1889, a decree was rendered by your honors authorizing and empowering .Tacob G. Chamberlain, receiver of the Sheffield and Birmingham Coal, Iron, and Railway Company, to issue receiver's certificates' or debentures in a sum not exceeding one hundred and fifty thousand dollars, bearing a rate of intt'rest not exceeding 7 per cent. per annum,and constituting such certificates, when issued. a first lien on all the pl'operty, rights; appurtenances, and franchises of the said Sbellield and Birming'lam Coal. Iron and Railway Company. liS set forth and described in two mortgages or deedllof trust; the first executed on the 2d 'day' of JanuarYJ 1888, and the second mortgageexecutect on the 1st day of June, A., D; U88,' together with another properties,' rights·. and franl'hises of the tsaid ShHliehl and Birmingham Coal, Iron, and Railway Company,ofeveryna1l'ureamd! description, wheresoever situated, and also alien upon whatevet"res.. idue of theeamings. incomes, and profits of said' property tbatthere,may ·be, 'whicldlave accrued since'the appomtment of the recel\'er.and' aftf'r deducting ol,erating expenses, and, the 'cost 'ofneooed repairs; and the' expellBes of the receive1'8hip;saiddecree and said certificates furt-bEll' providingtlil\t: said lien should"beprior:to'all'other liens of any kind'wbatsMwr 'property, . Thesaids6Condmortgage executed June 188l:l;tas'aforesaid; al· though 'formally a'lien upon a, 'railroad known as the' Sheffield,: and: Bh;mingisham .Railroad/ was not a.lien on said raitroad when said sued, copies i of whi chsaid Iriortgagps are: attached, as Ex·h i bits A and i IB" to ,theoriginBlbill of complaint in the abov&oentttled cause;ltoaUofwhioh'ref· .erenee is: ht'reby made. 'and all! of which mure fUlly and at lengthaf,ptoarin and 'by ,aid decree of this QOl1.,t in said cause, and t,o whichreferenae is heft-by made, 'amlllhe same mades part hf'reof, as·though tJ;Jey ·were hereintpl'lrtic'lllarly set out at length. Said receiver's certificates will be produced !by the coinplail1auJ;:on the trialofllllid c a n s e . " "(2) That'said Jacob G. Chamberlain, receiver as aforesaid, aoting tinder and by virtue of theauthOlity vested in him by said decree, engaged one Charles D. Woodson, president of the First National Bank of Sheffield.' 'Ala., as his agent to negotiate the sale of ight of said c£'rtlficates, to-wit, 'Nos. 1;, 2, 3, 8, 9,10, ll,and 12, respeeti vely, of the par value each of ,ft ve'thousand dollars, bearing 6 per cent. interest, payable at the National Park New York city, three years after date. the said certificates 1. 2,and 3 being'dated September 19, lS89. and the said certi'ficatt's Nos. 8, 9,10. 11, and 12 being 'dated. to-wit,the 10th dayof October, 1889, with interest payuble semi-annU" ally, and said certificates 8, 9,10; 11, anll12 were dUly 'placed in the !lands of said Charl/'s D. Woodson to be negotiated and soll! byhim. with full pOwer and authority to act for and represent the said JaoobG. Chamberlain in the matter,of the sale of said·certificates. That under and by virtue of said authority, and while the llaid certificates were in his possession and control,oh, to-wit, the 10th day of October, 18l:l9. the saillCharles D. Woousonsoldlihe same to Qne Duncan T, Parker, who is now dE'ad, at and for'the sum,'0f, towit, fi,ve thousand dollars for each certificate, and the said Parker thereupon paid the. said Woodson the said price of the said certificates, li.ndthereupon tbeywere tU11ledover and transferred to 'him by said Woou80n. i "i "(3)!ibat afterwards, on,to-wit, theB(>cond day of,Novembel',1889;the 8aid,Dilnean T.Parker sold"tl'8nsferred. and· delivered'sai:dcertifteate8 ,NOll; 8. 12, fora .valupble cOJlBid&rationjWlowUdor lihe sbm:Jof'J!ve
528
,;
,
vol. 44.
(85,000.00) l1ach, to your petitioner, and the said certificates are now owned and held by petitioner. "(4) 'fhat it is the duty of the said Jacob G. Chamberlain, receiver, to pay the semi-,ulnuilol interest and the prinlli.pal of said certificates out of any funds or property in his hands assllch receiver; that the semi-annual interest on said certificates 8,9, 10, 11, and 12, am'ounting in the aggregate to, to-wit, seven hundred aud fifty dollars, ($750.00,) due on, to-wit, the 10th day of April, A. D. 1890, at the National Park Hank of New York city, were on that day presented at Said bank for payment of the interest thereon, but such paY.!llent was refused; anll petitioner since then has frequently called upon and requesJ;ed .the said receiver to pay the interest on said certificates, but he has wholly tailed. ,and ,refused to do so, though the funds in his hands are amply sufficient for tile payment thereof. "(5) 'That, on :Lhe day of---, 1889, the said Jacob G. Chamberlain dulyrepo.rted the sale of said receiver's certificates 8, !:I, 10, 11, and 12, ,of five thousand d,ollars '($5.000.00) each, by C. D. Woodson, and at the same time reported the sale of certificates Nos. I, 2, and 3, also of five thousand <iollars ($5,OOO.OO) eacb, to tile Ul)ited States circuit court of the northern division of the northern di8trict of Alabama, and that ,the proceeds of said had been placed by said WoQdson to the credit of said receiver at the First National atSheffield,Ala., less6 percent. commission for "(6)ThaJ;, pn,to-wit, the 3d day o,fDecember, 188!:1, A. D·· a decree was rendered in .,aid court, f(lll'eciosing the mortgage aboverefllrred to, and order· ing the: sale of the property e,Olhracedtherein, andeXipressly ordering that the purchaser at saill sale should ,.be reqUired to pay the receiver's certificates embraced in schedule · B ' the said decree, among which are the said certificates Nos. 8.9, 10, 11. and 12, owned and held by the petitioner, all of WhICh more fully appears inand.by said decree, to which reference is hereby roade, and, the same made a. part hereof. as thollgb.,herein set out at length. It was further or<lered by said" decree that the purchaser of said property should pay said certificatea, in additi,on to the amount bid at said sale for said property. " ,- " , "(7) That, on January 4th. said court made an order purporting to modify the former decree of December 3, 1889. so far as to autho.'izethe purchaser at said sale to contest the ,validity ,of said certificates Nos, 8.9, 10. 11, and 12, sold bysaid C. D. Woodson as agent for said receiver for said D. T. Parker, as aforesaid. and purchased from said Pal"ker by petitioner; that said decree of January 4, 1890, was made !1fter said D. T. Parker had purchased the said certificates from said C. D. Woodson, the duly-authorized agent of the receiver f9r, the, sale thereof, in good faith. and for a valuable consideration, :,..,nd, sold them tOPetitiqner. in good faith, fOI" a like good and valuable conllideration. and afte,r said receiver had reported said sale to said court, and l'eportedthat the money paid fOI' the plll"chaseof said certificates was on depO$itto his,credit in tile First National Hank of Shf'ffield. Ala., and without said D. T. Parker, 01' petitioner. the owner of sHid certificates; tAaton the 21st day of April. 1890, said property was sold under said decree pi foreclosure. and a part of the same was purchased by Napoleon Hill, trustoo, for certain parties, for three hundred and tifty thousand dollars. ($350,000.00.) and a certain other part of said pl'Operty was sold to James C. Neely. ttrustee, for other parties. for one hundred and fifteen thousand dollars, ($115,000.00.) ,which ,iaid saiewas duly reported to said court, and. confirmed on May la, 1890, subject to all lie lUI created upon said property bytbe receiver, unU\lr the ,0I'der of the said court, and r,equiredby the previous or subsequent Qrdersof said court to be paid by said purchaser, all of which more .rully appearttf,;om the repQrtof, SlUe made by ,tha D. D. Shelby, in
CENTRAL TRUST CO. ". SHEFFIELD &: B. COAL, IRON &: RY. CO.
529
said case, and the decree entered in said cause by said court, and on file in said court, to which referf'nce is here made, and the same made a part hereof, as though it was herein particularly set out at length. "(8) That the bondholders under said mortgage are very numerous, and unknown to your petitioner, and it is not practicable to make them parties to this intervention." The relief prayed for is a decree requiring the accumulated interest and principal due on said receiver's certificates to be paid out of any funds or property in the hands of, Of under the control of, the receiver; and that the amount due upon said receiver's certificates be declared a lien upon the property mentioned in the decree of foreclosure; and for sale of the same, and for general relief. The defendants unite in a demurrer to the said bill of intervention, and assign as grounds: ."Fi1'st. Tllatjt appeareth by the petition and intervention that said A,1)niston Loan & Trust Company is not entitled to the relief prayed for against thosedefendauts, or either of them. Second. That it appears from said tionand intervention that there is a misjoinder of the parties, and that neither said Uentml Trust Company of New York; nor said J. G. Chamberlain, receiver, i8 in anywise interilsted in said litigation; or properly a party thereto. . .It appears by said petition and intervention that said receiver's certificates therein to, three of tht'm for $5,000 each, dated· September 19, 11;89, and three of them for $5,000.00 each, being dated lOth October, 18d9, {ire not due ·u.ntil three years after the datt's thereof, respectively, and that petitioner. claiming to own and hold five of said receiver's certificates, for five thousand dollars eal'h,dated 10th of October, 1889, has no right to sue for or reCover tl:Jeprincipal, or any part thereof, of said certificates, the same not havil.lg become due. Fourth. Because it appears that petitioner has no right what· ever to any suit or action upon said five receiver's (·ertificates, numbered respectively 8, 9, 10, 11, and 12, dated 10th of OClober, 1889, except for ·pastdue iriterest thereon. Fifth. Because it appears from said petitIOn and intervl'ntion of the Anniston Loan & Trust Company, and by proct'edings and records in the cause of the Ue1ltml 1'1-ust Company of New York vs. Shejfield & Birmingham Coal, han & Railway Co., to which reference is made as if the same were particularly set out at length in said petition and intervention, that sllid receiver's Ct'rtificates were issued only upon tile property, inclUding the furnaces, coal lands, coal mint'S, and coke ovens, and that said certifi· cates were not issued upon or made a lien 011 any line of railway; and that tht'refore said certificates were issued illegally, and without authority in law orequity, and are in no sense a lien upon the properties rt'ferred to in said petition and intervention, prior in right or superior to said two mortgages referred to.in said petition and intervention. &ixth. That it appears from said records and pruceedings in said cause of the Central1'1u8t Company of New York vs. Shejfield & Birmingham Coal, I1'on & Railway Company and anothe7',; which are partiCUlarly referred to in said petition and intervention, that, at thetime of the order, to-wit. on the 11th day of July, 1889, authorizing said J. G. Chamberlain, as receiver, to Issue said receiver's certificates, lines said receiver did not have under his custody or control any line of railway that he was operating or managing; and that said were not issued in an action then pending for the foreclosure of a railway mortgage or mortgages; and that said certificates were so illegally and improd. dentlyissued, and constitute no lien upon said properties referred to ill said petition and intervention of the Anniston Loan & TrustCompany·. , BefJenth. V.44F.no.8-34
1530
. FEDERAL REPORTER,
voL 4,k,
rThat it appears that there is no copy or Clopies of said cates attac\led to the petition and intervention of. said Anniston Loan &, 'rrust Company. nor is there any, offer ,to 'produce .the,originals of. said certificates at the hearhl8!' . Eighth. That It appears bysuidpetltionand intervention, and ,the reoords and proceedings In this honorable cpurt, therein referred to and made a part of said petition and intervention, that the ordE'r and dt'cree of this court of 4th January, 1890, modifying the decree of fort'closure and sale of 3d Deoember, 1889, togetMr withtbe petltl<)ns. allegations, and proof order and deoree of4th.Jl\nuary, 1890. was made,are and unQisputec;1; and, under these facts, th,e Anniston Loan & Trust Company are not entitled in law or inequity to set up said five receiver's 'cates, or·to recover anything from any perllob,: or corporatiou UlJOD the same, or enforce' any "lIen therefor." , ,
John B., Knox, for intervenor. Henry It 'Tompkins, for defendants.
',J'
the. faet8' I1S'
intElrVentioll ,and had cllrtHicateB,wene :.ilSSued.,; ;The. record, shows ItDat'r ,by proceedings subsequent to the deOfetl'j 'said trust,company has. no longer any 'interest in' the of intervenWm,.·,. or tl'ustcOlupally. It IDllyl::ie wi,tpou(preh1diciI?S thlj rightsqr, of the other pa.rties.,:,JaCQbG."Cham,berlainl the,rElcei,ver, is allegad to have issued said' certificht and is'charged1'l'ithhaving in his hands, funds suffis; cient and· applroable to pay the same,' and direct relief is prayed against bim. "'" '," "":' 2. that of.the silia certificates, which formt,he hasis of t4is.intervention, is not:yet due., still the interest tbereonisdue, and the:intervention can be maintained therefor. 3·. Thed.emurrer appears to present apropositibn that; as the receiver was not in possession 'of, nor operating, any line of railway, and as the suit pending was not for the foreclosure of any railway there was no apthority in the court to authorize the iS$.uance or, nor in the receiver to issue,receiver's ,pertificatelS which should constitute a lien on tbe property in the posSession of the court; .and, particularly, a lien prior in right to the two mortgages which were the subject 0f the foreclosure suit. 00U11Se1 have submitted no argument on this prop6sition, nf>r cited It Seems to me that if the proJ;>ositioIi is sound, granted by any means, the real defendants in this intervenwhich is tion, the purcllasers at the foreclosure sale, are !3stopped from setting it up. Receiver's.certificates were issued by consent of the parties; by the same consent they were, made a prior lien on the property in the possession of the court; moneys obtailwl thereon were usedfpr the preserva.. tion andiDlprprement of the property; and sold and purchased with the clear that .the vllJid outstanding receiver's constituted a prior lien wbich tbe purchase1'8 assumed and undertook to pay. "
CENTRAL TRUST
SHEFFIELD & B. COi\I". IRON & BY. CO.
531
4. It is contended that, as, it is a well,settled principle that t:J pleading is to he taken and construed against the pleader, and that, as in this tervention, the intervenor refers to the records of the. court in the case in which he intervenes,and, particularly, to a certain decree modifying the main decree in the case, that thereby he admits the facts alleged upon which the modifying decree was based. This is the only ground of demurrer upon which counsel have submitted any argument. An examination of the record shows that the decree was modified upon the /3;& parte application of Chamberlain, the receiver, setting forth that the five certificates, which are the basis of this intervention, had been disposed of by one Charles D. Woodson, without his authority, and that the proceeds had not come to his hands; and thereupon the decree was modified in regard to the terms of sale, as foll{)ws: "That there be stricken from the said decree these words: · And expressly snbjeet to the receiver's certificates heretofore authorized to be isslled by said Jaco1.l G. Chamherlain, the receiver, to an limollnt not excl'edihg one hundred and filt)" thousand dollars. ($150,000.00;)' and that, in tht' place and stead of said words, ,there 1.Ie inserted these words: · And exprl'ssly subject to the re. ceiver's certilicates hert'tofort' authorized to be issul:'d by said Jacob G, Chamberlain, the receivel', to an amount not exceeding one hundred and twentyfive thousand dollars, ($125.UOO.00,) and that the twenty-five thlJusalld llollars of said receiver's certdicates, disposed of by said C. D. Woodson. the llame,be-. ing live .cl'rtilicatt's of five thollsand 1I0Ilar8($5,OOO.00) each, anll numb'l'red 8,9,10, ll,antl12, dated. Octuber 10, and set forth in the "tichedule B" of said decrt'e, be nut itll:ludl'd in said amount of one hundred and twentyfive but the purchasers of said proverty at thesnle,under said take. the same subject to the right to rt'sist the payment of said Ii ve terti ficates so dispused of 1.Iy said Woodson; and that the validity of said five certiliCIlLt-s be adjudicated in this court upon a pruper case to be made by the parties in intere;;t.' " . The intervention asserts that this modification ofthe decree was made Bubsequent to the 'time that tlltdntervenor's rights had attached andaccrued, and it was necessary and proper for the intervenor, who, under the terms, of the aloresail;lmodified decree, was given the rightto,.intervene in this cause, to state the basis of his right to intervene, and,thereby to refer to the order of court made as aforesaid, but to hold that, by terveningll:nu refe,ring to his authority therefor, he admit!': the truth 'If the statements containerl in the parte statement of the re(;p!ver upon which the order was made, is to hold thathe admits away his case, and this indirect opposition to the express and sworn averments of his intervention. The case seems tQ turn upon the fact whethtr or not lile proceeds of the five receiver's certificates sued upon by the intervenor came to the hands of the receiver. The decree throwing a doud upon intervenor's lights gave himauthority to intervene and assert them. It would he a vain thing, to give hjm such right if coupled with condition that, in order to exercise it, he must admit as truth a stllte of facts which case. The purchasers of the property referred to in the tLW Same with. the express understanding that the ceiver's(lertificates held.py the, had been issued un4er o);'ders the cou,l't, a they, an4,were
532
. J'EDERAL REPoRTER,
vol. 44.'
outstabdingj and, further, might be presented as valid of the receiver. They were granted the right, and they assumed the burden of contesting their validity. In their interest the contest was restricted, to this court. The intervention fairly presents the case for them to contest. The demurrer will be sustained, so far as the Central Trust Company of New York is concerned, but be overruled as to the other defendants, who will be required to answer the said intervention by theiule-day in February, 1891.
W AK]jlLEEV; D.wm. (o£rC'Uilt CO'Urt, S. D. New York.
7, 1891.) " " ..,." ,
j.
EQUITY JtmIBDICTION-INJUNCTIOIf:"'-EsTOPPEL.
One WhO lssbout to sue on a judgment wblch is void for want of proper service is entitled to a decree enjoining the j udgmentdebtor from !letting up its'lnvlill1dity, when.it aupears that the latter, while obtablJngo adlsoharge.in hankr:uptcy, secured substantiJl,i benefits by contending that the judgment was valid,&ndwoW,d, not be bOl.l\ld by Jiili disCiharge, ' " in bankruptcyI because, if he', pleads such discharge" complainant can ,then avail
S. SAME.:....REMEDY AT LAW,
Injunction wlU not issue to restrain the debtor from relying upon his discbarge constituting the e s t o p p e l . , i
herself oJ the
S. STARE DEOISIS-;-LAW OJ!' THE CASE.
.A decision on demurrer Is the law of the Qase until a dlf!el'ent rUle',is laid dowIi by the supreme court, although such decision was rendered by another jUdge thau the one trying the case finally. ,: :" "
'"
Final Hearing in Equity. Anson Maltby, for complainant. Henry A. Root and Thaddeus D. KenneBOn, for defendant. COXl!:, J. This bill is filed in aid of an action at law, which the complainant alleges she is about to commence, upon a JUdgment recovered against the deltmdant in a state court of California on the 18th of November, 1873. Under the decision of the supreme court in Pennoyer v; Neff, 95 U. S. 714, this judgment was void, the summons having been served by publication only, in an action in fJersonam. On the 6th of March, 1877, the defendaut obtained a discharge in bankruptcy froni the UnittJd States court for the district of California, he having been adjudged a bankrupt by said court September 30, 1869. This discharge; j,f there were no estoppel, would be a bar to the debt represented by the judgment. Boynton v. Ball, 121 U. S. 457, 7 Sup. Ct. Rep. 981; . The complainant contends that the defendant is estopped ing the validity of the judgment and from relying 'upon the discharge as it. defense, because in 1876, in the bankruptcy court, he obtained staritial "benefits by contending that toe' judgment was valid and would not be barred by II discqarge. The complainant, insists that' heshotild be held to< the sanie'positionnow) "and prays for an' injuncti6n