52
"
I':;YEDERAI;'REP(JRTER,' vol.!5:2.
,:
vapor was :n was held that the pipes, beiritVelSsentialto,the ente11>:tise,with thedicellse of easement would pass under a sale of the property as under which an entirety. A lien was allowed upon the lot and plant for material and labor furnished in respect of the pipes. ' In Badger' LU'IYI,berOJ. v. Mn?'ion Water Supply, etc., 00., 29 Pac. Rep. 476; on rehearing, 30 Pac. Rep. 117 ,-the supreme coui·t of Kansas adjudged a!mechanic's lien upon an electric power plant, and the premises upon which the plant was situated, for poles placed in the public streets, and upon which were stretched the wires connected with the electric light machinery. In Brooks v. Rauway Co., 101 U. 8.443, a lien for materials and labor upon one sectiollofarailway was extended over the entire road. This is an instructive case; :Thecompany was organized to build a railroad from Burlington, Iowa, to some point on the ,Missouri. river. From Burlington tdViele the company used the track ,of another company; from Viele to,Bloomfield the company built and paid forits own track; from Bloomfield to: Moulton the'coinpanyusedtme track of another company';and \from Moulton; Iowa, to Unionville; Mo. ,it built its own road., The i1iaterials and labor for whiah a lien was ,claimed were" nishedand, lobe upon'1:his latter piece of road. It was urged in resistance of the daim that the road was built in sections, and that there, was such aseparatiQn iri'space and time that they could not be considered as 'one improvement. The lien was, however, declared upon the road, right' of way, stations, etc., oithe companY', from Viele junction to the south sta:tElline of Iowa; the ;courtasserting, that "the intersection of fourteen nliles of another roan between Bloomfield and, Moulton does not destroy the identity of th-e improvement,'nor convert' it into two " railroads." , The supreme court Wisconsin, in considering the statute in question, has' adopted a like liberalconstruction of the law, with a view, to securing the benefit ofa lien to thosElwhose rights were sought to be protected. The statute accords a lien to one who t'urnisheslabor or materials in or about the construction of the bliJi11\:iing or machinery, "constructed so as to become part of the freehold .upon which it is to ,be situated." Notwithstandillg this language, that court, in Sp?'Uhen v. Stout, 52 Wis. 517, 524,'9 N. W.Rep. 277, allowed a lien for a draft tube, procured and designed to be attached or permanently annexed to the mill, but which, in fact, had not been attached, The effect of this decision is that, if the principal structure be a part of 'the freehold, there exists a lien thereon for parto furI1ished with the intent to be affixed, but not in fact attached. With greater reason should a lien be allowed upon the principal structure for piping attached'andcohstitl1ting an essential and indispensable part of rthe ofEu!a'l.daWater'Co. v. Addyston Piper!c Steel Co., 89 Ala. 552,8 South. Rep. 25, stands, opposed to the cases cited, andtoth'e,noldi'ng'here. It'is otilY'necessaryto observe, with respect to that case, ihat,:.as I think, it gives bilt narrow interpretation to the statute, and evidences adherence to the strictest letter of the
or
NATIONAL FOUNDRY & PIPE WORKS V. OCONTO WATER
co.
53.
law, in despite of its manifest purpose. The decision is in sharp contrast with the holding in Brooks v. Railway Co., and the liberal construction adopted by the supreme court of Wisconsin. I am persuaded to the conclusion that the fact that the piping is laid within the streets presents no objection to charging its cost. as a lien upon the plant and the parcel of ground upon which the pumping works and well are situated. 4. It is further insisted that the lien statute has reference only to property that may be sold on execution, and that the plant here, being such only as is essential to the use and enjoyment of the franchise, cannot be taken in execution, and is therefore exempted from the operation of the law. In support of this contention the court is refelTed to the following authorities: Fosterv. Fowler, 60 Pa. St. 27; Guestv. Water Co., 142 Pa. S1. 610,21 Atl.Rep. lOOljFoundry Co.v. Bullock, 38 Fed. Rep. 565; Harrison & Howard Iron Go.. v.Gauncil Bluffs City Waterworks Go., 25 Fed. Rep. 170. The first is the leading case. Guest v. Water Co. is but an echo. Foundry Co. v. BUllock is rested solely upon grounds of public icy, citing in support Foster v. Fowler, and the decision of the supreme court of Wisconsin in Wilkinson v. Hoffman; not, however,. distinguishing between a corporation municipal and one quasi public, nor referring to Hill v. Railroad Co , where the distinction is asserted.' .Harrison & Howard Iron Go. v. Council Bluffs City Waterworks Co. does not pass upon the question. In Foster v. Fowler, a water company incorporated for the purpose of introducing water into certain boroughs, for the use of the inhabitants of those boroughs, was sought to be subjected to the operation of the mechanic's lien law of Pennsylvania, with respeat to its property es-sentia! to the operations of its franchise. The court declared against the lien, saying that corporations" for the building of bridges, turnpike Toads, railroads, canals, and the like," are agencies of the public, "directly interested in the results to be produced by such corporations in the facilities afforded to travel and the movements. of trade and commerce," and that the use of the franchise "is not to be disturbed by the seizure of any part of their property, essential to their active operations. by creditors. They must recover their debts by sequestering their earnings, allowing them to progress with their undertaking to accommodate the public." The court quotes approvingly the remarks of SERGEANT, J., in Canal Go. v. Bonham, 9 Watts & S. 27, that"The privileges granted to corporations to construct turnpike roads. etc., are conferred with a view to the public use and accommodation, and they cannot voluntarily deprive themselves of the lands and real estate and franchises can they be taken from them. by which are necessary for that purpose; execution. and sold by a creditor, because to permit it would defeat the whole object of the charter, by taking the improvements out of the hands of the corporation. and destroying their use and benefit." The court further observed: "We think the remark of LOWRIE. J., in WilUams v. Controllers. 18 Pa. :St. 275. 1'8 in point here, ·that. where there can be no execution, there can be no action,' and that is as true in this case, if we are right in the character w( ,have assigned to this COl"pOration, a8 it was in that." ,
nlDERAL REPORTER,
vol. 52.
In the case :referred,to,a mechanio's"lien was denied for mllterials furnished in the construction of a public schoolhouse; the quoted remark of Judge LOWRIE being used in this connection: there ean betioexecution, there caD be no action, and as a le'vari fatJias isthe:onlyexecutioriproper on a judgment on a mechanic's lien, and aathat sort otexOOHtion is not allowed against a cOllnty, it follows that this fonn of action cannot be sustained. if these defendants come within the meaning o,f the word ·cpunty."· Judge LoWRIE then proceeded to show that the statute exempts from execution all public 'corporations. ,lhave quoted at length from the opinion in Fosterv. Fowler because it becomes important to ascertain the precise reasons upon which that decision is,grounded , with a view to ascertain whether the principles declared can:beapplied to conditions prevailing within the state of Wisconsin. The supreme court of Pennsylvania, it will be perceived, bases its holding upon ,two grounds: First, because of the public character of the enterprise;ethat therefore, ,8sthe corporation itself cannot voluntarily depriveitself of its propeJPtyessential to the purpose of its organization; so it cannot,be taken by,oJPeditorsj and, second, and quite incidentally, that, "where there can be no execution, there can be no action." With respect to the'iirst ground, if I have correctly interpreted the ofthe supreme court of Wisconsin, the public character of the entel,'prise is not allowed ,to defeat the application oLthe general laws of the state to a private cOl1poration. The policies of the two states in this regal'd would seem to be widely divergent, and. the deoision of the one cannot be allowed to control the policy of the other. It would also appear ;frdmthe observation of Judge SERGEANT tbaiUn Pennsylvania a qr£a8i.publiccorporationcarinot voluntarily deprive itself of its property eSsen.tialto the exercise ofits franchise, and that the right of the creditorto ta:ke'corresponds' with the right of the debtor to alienate. It is not eo i'DiWisconsin. 'Here the corporation may "take and hold prop. erty, both real and personal, * ** and sell, convey, or otherwise dispose of the same;" may "mortgage its franchises, tolls, revenues, and property, both real and personal, to secure the payment of its debts, or to borrow money for the purposes of the corporation," (Rev. St. Wis. § 1748,subds. 6, 7,) and may lease, sali, convey, or assign its franchises and privileges conferred by law to any corporation, where such rights would be in direct aid, of the bueiness.of the purchasing corporation, (Id. § 11'75a, as amended by chapter 127, Laws 1891.) :In the exercise of of alienaWm, the oorporation stands upon like footing l!-nq t()like .liability to involuntary alienatiop., , "it is an inseparable incident to property that it.&hQuld:be liable to the debts. o,f the owner, as it is to his alienation." Hoogh v. Cress, 4. Jones, Eq. 295, 297. .. ,statute book. To the contpe legislil,tuJ:e designed that the prop:erty·@LllJllpriv:ate wr.pm:ations, or qttasi public, should be subject to sale for the payment of debts. In the case of the latter
NATIONAL FOUNDRY'& PIPE WORKS '/7. OCONTO WATER CO.
55
dass, to avoid arrest of the enterprise, and public inconveuience resulting from alienation, voluntary orinvoluntary, the law enacts that the purchasers of the franchise of any corporation, by purchase at sale under mortgage, in bankruptcy, or under judgment, order, decree, or proceedings in any court, may organize anew, and shall be vested with the rights, privileges, and franchises of the old corporation. Rev. St. Wis'. § 1788. I conclude, therefore, that the ruling in Foster v. Fowler, as to the first ground upon which it is based, is not applicable here. With respect to the second ground upon which the decision of that is placed, that, "where there can be no execution, there can be no action," it has been seen that the phrase occurs in Judge LOWRIE'S opinion, holding that a mechanic's lien cannot be enforced a municipality. Not content to rest his judgment, as it might well have been resred, upon the broad ground of pUblic policy, he prefers to base his eonclusion on the more technical objection that by the statute of the state a meohanio's lien OQuldonly be enforoed by levari jacia8,-a writ peculiar to the state of Pennsylvania,..,.-and such a writ could not by law issue agarn'st a public body. Such ground of deciBion is whally inapplicable in the state of Wisconsin,where the lien is foreclosed in equity, and the sale is under decree, and property of corporations may be sold under decree to enforce payment of debts. Upon, this phrase, so employed;rests the whole contention that the lien laws apply only to propthat can be sold under a writ of execution. It must be borne in miild that in Pennsylvania there exists no separate equity jurisdiction, as here; All judgments there are enforced by some sort of writ of execution, and are not, so to speak, self-executing. 'as is a decree inequity here. The phrase must be interpreted in the light of that fact. The term there employed,as I think, in a broad sense,comprehending all means by which the judgments or decrees of courts are In such sense, the phrase is. well enough as a test; whether an asserted right is given by statute, although modern permitting actions against federal and state governments without power of enforcement by the courts, presents an exception to the rule. In general the right to judgment or decree necessarily carries with it· the right of enforcement 'of satisfaction, and where, by reason of public policy , the right <:annot obtain, it is held the statute does not embrace the particular right asSerted. Property exempt from sale under any judicial upon grounds of publio necessity, is not within. the operation of the lien lawl', aud for the like reason, unless the law so expressly declares. In other words, the examption goes to the character of the use of the property, and not to the form of the writ· or proceeding by which the rigl;1t is enforced. . Judge .Dillon correctly apprehends the rule when be says, spellking .of the exemption from the operation of the lieu laws of municipal prop-arty held for public use: . "It is onlY,$UCh property as can under judicial process that is subject to ,such liElns·. :Laws creating liens' in favor of mechanics are enacted with reference to that class of property." . Dill. Mun. Corp. (4th Ed.)§ 577. In Budge/"Lwmh(!f' 00. v,·. Marion
56
FEPERAL REPORTER,
Water Supply, etc., 00., (Kan.) 30 Pac. Rep. 117, the rule is thus stated: "The general rule is that property of a corporation which may be soJd under a mortgage or specific lien given by the owner may be subjected to. a mechanic's lien." In whatever variety of language the rule may be formulated, the right to the lien corresponds with the right of the dehtor to' a:lienllte,aubj.ect only to litnitation founded upon grounds of public policy. In most states the. lien is enforced by writ of execution; here by foreclosure, as in case ora mortgage. All other lienholders for constJiuctionmayjoinas plaintiffs i or, refusing, be made defendants. All Rubsequent lienholders or purcHasers are to ,be made parties. and foreclosed oftbeir interests.' The sale is by decree, and absolute, without the caseofa sale underexl'cution. Rev. St. Wis. §§ 33.21,3324,,3326. If, there can be no action where there can be no of executioB, lien law of Wisconsin would be wholly,jnoperative, and inefficient for any purpose. The contention 'cannot be upheld. The lien law ofWiscbnsin applies to all property which is the subject of alienation by the debtor, and of sale under whatever forln ;of judicial writer proceeding. 'It ·does not apply to the propmunicipal corporations held for public use, because such property is of judicial sale while so heM. But the property of all corporations. private orquasi public, is· so subject under some form ofjudici1il:l I discover in the statutes no exemption. Actions against them may btkbrought as against natural persons, (section :3204;}Eind, after judgment at law and return of execution nulla bona, the court may sequestrate the stock, property, and effects, and appoint a receiver,. (section 3216,) and distribute its property among the creditors, (section 3217.) In the case of toU-taking corporations, the franchise and tneproperty maybe sold upon execution in the manner preSeC'A;ions 3229,3235.) A quasi public corporation being, then, scribed. not exempt by reason of any public policy, and expressly subjected to the laws for the, enforced payment of debts, the case of Foster v. Fowler cannot be applied here. The lien of the statute obtains unless the objection next to be considered avails to defeat the right. 5. It is lastly urged that the plant is essential to the use and enjoyment oLthe franchise, and insl'parable from it, and that therefore the lien of the statute cannot be enforced. It was said by Mr. Justice CASSODAY in Improvement Co.v. Wood, 81 Wis. --,51 N. W. Rep. 1004: . . . "The rights,fratlchises,and plant essential to the continued business and purposes of such corporations are not to be severed, 'broken up, or destroyed, withont express ll'gislative "authority, but, on tile contrary, are to be .nrein their ent}rety." . It alS!? asserted byMr. Justice.PTNNEY in Fond du Lac Water :V',CitlJ oj Fond'du 'Lac; 82.Wis. - , 52 N. W. Rep. 439, 441:
, ',·. virtue oltha intilllateand necessary relation lots and the l,nains. ,pipeR. and hydrnrits. which extend to most parts of the city. withlhe franprivileges of the plalntiff, it would seem that, as a of taxation, as well as of sale under judicial process, they are to be regarded as ·an entirety; and, as the plaintiff is a quasi public corporat,ion, a dismember-
NATIONAL FOUNDRY &: PIPE WORKS V. OCONTO WATER CO.
57
ment,-a separation of the entire plant,-under such proceedings, cannot be allowed." I fully concur with the declarations of these able jurists. I assume that the term "franchise," as there employed, refers to the privilege to maintain and operate. the plant, and not to the franchise to exist as a corporation; the former being the subject of transfer, the latter missible. Memphis, etc., R. Co. v. Commis8i0ner8, 112 U. S. 609, 619, 5 Sup. Ct. Rep. 299. WheD' then results? The incorporation of the material for which a lien is here claimed into a plant .operated under a franchise was the act of the defendant. The plant and franchise may not be ered by judicial sale, because of the peculiar public use to which th6' pla:nt is devoted. The law gives a specific lien upon the plant for the material incorporated into it. Does the inseparable character chise and plant present an insuperable obstacle to the enforcement of a. right given by the law? I think not. The defendant operates its pll;lnt "and uses its franchise subject to the obligation to pay the claim of the lienor." Purtell v. BoU C-o.,74 Wis. 132, 135, 42 N. W. Rep. 265. Since, then, the act of union was by the procurement of th:edefendant, and by severance of franchise and plant, the latter would become of. tie worth, and the paramount public welfare forbids·. their separation, in the interest of both creditor and debtor, in the interest of the public, and as a matter of common equity, plant and franchise should be creed to be sold as an entirety. I think it within the inherent powers of. a court of equity to so decree; not that the lien embraces the chise, but because plant and franchise have, by act of the defendant, been rendered inseparable. The plant has been applied to a public use. The public welfare requires that use to be uninterrupted. A court of equity may therefore well require that the right to the use shall follow the tangible property devoted to that use, and dependent upon it. It may well be required that, upon subjection of the plani to sale in faction of the lien granted by the law, the franchise to maintain and ,operate it for the public use shall be sold with it, as an essential incident to it; treating plant and franchise as an entirety. Otherwise, a judicial sale would work destruction to both plant and franchise. The course suggested is conformable to equity. It. conserves the public welfare. It preserves this property to public use, giving to the purchaser the estate as the defendant has it. It renders to the complainant a right p;iven it by the law. It operates not unjustly upon the defendant, since thereby its property, by the law to sale, is preserved from sacrifice necessarily resulting from separation of franchise and plant. It is <lemanded by the exigency of the occasion that equity should supplement and effectuate the law. Indeed, if, as a matter of strict legal right, the franchise to operate does not inhere in the tangible property necessary to its use, as an essential incident to it, I think that in a court of equity the defendant may well be deemed, by his act of devoting this plant to public use under its franchise, thereby rendering it inseparable therefrom! to have assented that upon its sale, voluntary or involuntary, the: fra'nchise to operate pass with it.
58'
.n:" .:;:,. /'
'J'EJ)ERAL,REPOItTER,'vol.·52.
Qt'1d somewhat noveL I believe the course ,proposed to be grounded on acknowledged principles of equity. I think',. also,tlml it ,hastdne support'of highi,authority. It is, recognized in the .of purchasers'of,the iranchiseat judioial decree. Rev. Sky('is. § 1788. In upon bill. filed to enforce payme,n,t' Ot. a 'judgment at,]aw against: II. ,bridge company, .the court held that,it::WRS'withinthe province of ,a court of equity, without statutory sanotion;1 toc8use to'belta-ken of the bridge,:tO' appoint a raceivel'l,tdcoltect tolls,o:and'w,camie them to be applied in discharge of the'jttdglnent. In G'My.CanalOoJj'24 How. 257,264, Mr. Chief Justidli TANEY; without it; 'suggests the precise remedy. here asIn Railroad 00.> y. Jame8,o',Wall. 750, on appeal from this had obtained judgment at law againsHhe La Crosse &; :Mihv:aukee Railroad :Oompany, and filed his bill to declare the lien oi'!:bU.joGlf¢1entand :for lusilJe of the road. The court en'tereda decre,e llild ,aitectihg a· slile'.', .The report of the case, upon aPpeali do4Js MtidiBcloS&'the 'terms <?1i the decree,but, as appears ftom thi3 of this'court;:if sale .. !Ali the railroad propert, ,krI\own as the 'La & Mil waukee from Milwailkeei to depots, station houses, and rolling sblCJt, f1"anchises, and appurtenances or by Milwaukee and Minnesota R. J:t. Co. I I Upon :appeal the decree. was affirmed;, the court observing, after delien Of the judgment:, . "We do 110t dO'lbtthat' a'sale under a lIeci-ee in chancery. and conveyance whole interest of in' purauabce thereof., conJlrmed by the CQ,urt, t.be4QlDpany existing at term l'en4ition to the purchaser." :: !Thete!would13eem to be no e13capefrom the binding authority ofthis case.' .! The liert ··ofa jUdgment anll that arising under. the· mechanic's lien laWs' are at least of'equal dignity,; both being the creatures of statute,a:nd there ia no distillction in principle between' the' creation of lien by mortgage or by Hill v. RailrQad 00.,11 Wis. 223, 233. If, itiJtl$ elilforcement of the' lien of ajudgment upon the real estate of a eo,p6tlltiotlquaB'i' public, :itsfranchisee'to operate the property for public tisett1a! be sold with the property, I·fail to understand why similar action not be taken by a court of. equity with respect to the enforcemerit dfa mechanic's lien. In Railroad 00. v. Delamore,114 U. 8.501, 5 Sup. Ct. Rep. 1009, itwRs ruled that- the franchises ofa railroad company, which can be parted with by mortgage, will pass to the assignee in, bankruptcy ,and mlty1be sold under decree. The court declares, (page MO:) "It roll!>W! that, if the, ftanchises of a railroad 'Corporation can by law be mortgaged to secure its debts, the surrender of its property upon tbe bankru company the franchil$es, and they may be sold and passed at the. banltruptcy .' Andlthel1e,' as here, the, surrel:lder <>! su1)jection of the property to the creditor was involuntary, and by compulsion of law. In the case of
SAN
. fl.,
NAT. BANK.
59
105U.6. 77, 89",tbe that state laws authorizing redemption from sales estate could not be applied to thereal.estate of a corporatiunoperating its property under a frl:\p-, chise and for public use. The court deQreed an absolute sale,because "a sale of the real estate, franchise, l!,nd, personal property separately might in every case prove disastrous to all and defeat. the ends for which the corporation was created." In Steger v. Refrigerator Co., supra, the supreme court of Tennessee ,declared" that the pipes, and th!'llicense or easement under which they are laid, would certainly pass under a sale of the property as an entirety,an<l for operating purposes, no reservation being made." So, also, in the case of Railroad Co. v. Parker, 9 Ga. 377, where judgment cr!'lditors were proceeding to sell separate, portions of the railroad, a court of equity arrested the execu·: tions, ap!J decreed a sale of the road, "with all the rights, franchises, and property connected therewith," and distributed the proceeds among creditors according to their respective rights. The eminent Judge LUMPKIN, reviewing ,this decree, observes: "Thechancellol', then, in taking this matttlr in hand, ,and directing a sale of the entire interest for the benefit of aU concerned, was but invoking the powers of eqUity to aid the defects of law, and applying analogous principles to the existing emergency; and, so far from transcending his authority, he is entitled to the thanks of the parties and the country for the correct arid enlightened policy which he.adopted. Had he faltered, or shunned the responsibility thus cast upon him, be would have shown himself unworthy of the high office which he filled. As it is, this precedent will stand in bold relief as a landmark for future adjudications." I follow these landmarks, guiding me, as I think, to a correct con' Let there be a decree for complainant, declaring a lien for its debt upon the waterworks plant and upon the interest of the defendant in the premises in question; directing a sale of the plant, and such interest in the lands, and of the franchise of maintaining and operating th0 plant for the uses to which it is devoted by the law of the defendant's incorporation, as an entirety, and that the proceeds of sale be brought into the registry of the court, for distribution among all who mayshow right thereto.
SAN DIEGO COUNTY
v.
CALIFORNIA NAT. BANK
et aZ.
COircuit
court, B.
D. Callforn1.a. FuNDS.
October 3, 1892.)
1.
BANKS AND
Where the treasurer and tax collect.or of a cojlnty, without authority oUaw, de,positcountY!J1oneysln a bank, and receive certiftcatesof deposit marked "Special," the title to the moneys does not pass, although there ill no agreement that the identical bills shall be returned, and they are mixed with the bank's general funds, and the county is entitled to recover an eg,ual amount from.a receiver of the bank prior to the payment of the general depOSitors.
S. SAME-EQUITABLE REMEDIES. The county's rights in such case are enforceable only by a bill in equity) for there i8 no privity of contract bet,ween it aDd the bank. National v. lnsura-nc. , 11K U. S. 54, followed. ,