CLEVELAND, C. & S. RY. CO. V. KNICKERBOCKER TRUST CO.
73
an unavoidable accident. It was shown that the Indian commissioner had written forbidding the administrator to sign or verify vouchers. The vouchers that were admitted in evidence were signed,-the one by the superiutendent of the Indian schools, the other by the administrator of the decedent. There was competent and undisputed evidence that the vaccine virus had been used in vaccinating the Indian children, and that the paint brushes were worn out in painting the agency buildings. Upon the evidence offered on the trial, the defendants were entitled to a verdict irrespective of the set-off. We search the record in vain for a justification of the harsh charge that the agent appropriated and con· verted to his own use the moneys of the United States. Nor can we see that the ends of justice have been subserved by burdening his estate with the expense of this writ of error. The judgment of the circuit court will be affirmed.
OLEVEI,AND, C. & S. RY. CO. v. KNI'CKERBOCKER TRUST CO. OF NEW YORK et al. (Circuit Court, N. D. Ohio, E. D. No. 5,156. 1. RAILROADS-}IECHANW'S LIEN-OHIO RAII.ROAD LIEN LAW-BRIDGES.
April 12, 1898.)
A Ilen upon a railroad bridge In Ohio for work performed and material furnished cannot be obtained under the mechanic's lien law, but must be obtained under the act of April 10, 1884, known as the "Railroad Lien Law," under which the lien must be filed within 40 days after the account Is closed. A railroad bridge becomes a part of the permanent structure of a railroad, and a mechanic's lien cannot be maintained for work performed and material furnished for a bridge as against liens created by prior mortgages on the railroad.
2.
SAME.
S.
SAME-PRIORITY OF CLAIM FOR NECESSARY REPAIRS.
Where a railroad bridge became so defective that it was unsafe to run trains over it, and repairs were necessary to keep the railroad a going concern, those who performed the work and furnished the material necessary in repairing the bridge are entitled, on the insolvency of the company and the appointment of a receiver, to priority over the mortgage bonds, without showing any diversion of income, and such priority may be allowed, though more than six months elapsed between the time the work was done and the appointment of a receiver. Such priority is allowed as against Ilens created by mortgages placed on different branches of the consolidated road when they were independent corporations. The term "original construction" (as distinguished from repairs) has a technical meaning, and is that construction of bridges, grades, culverts, rails, ties, docks, etc., that is necessary to be done before the road can be opened, not such structures as are intended to replace old and worn out counterparts.
4.
5.
SAME-ORIGINAL CONSTRUCTION.
Baldwin & Shields, for complainant. C. E. Pennewell, Amos Denison, and F. A. Durhan, for intervenei'", T. B. Townsend Brick & Contracting Co.
86 P'EDERAL REPORTER
RICKS, District Judge. 'l.'heintervener seeks to obtain a preferentia] Iienfor work done and performed and material furnished for the Cleveland, Canton & Southern Railroad Company upon the pier and abutments of the Independence street bridge over the Cuyahoga river, in the city of Cleveland, and; with that end in view, sets up three grounds for recovery: (1) A mechanic's. lien is asserted. (2) It is asserted that at least a portion of its claim is preferred under the order of the court appointing receiver, in which six months' claims for material, supplies, and labor are to be paid out of the net income of the road in the hands of the receivers. (3) That the labor performed and material furnished were necessary to keep the road a going concern, and that, in equity, they are entitled to payment out of the corpus. In my opinion,the mechanic's lien placed l1ponthe bridge upon which the work was performed and material furnished is ineffectual to charge the railroad company, for the reason that a claim against a railroad cannot be obtained under the general mechanic's lien law, but must be obtained under the act of April 10, 1884, and known as the "Railroad Lien Law." According to the provisions of that law, the lien must be filed within 40 days after the account is closed. The lien upon which reliance is placed in this case was not filed until after the expiration of 40 days. The last work was done June 20, 1893, and the affidavit was not filed until August 16th thereafter. The Townsend Company also failed to 'serve notice of its alleged lien within 10 days after the filing thereof on the secretary 0'1' other officer of the company, as provided by the act referred to. See Commissioners v. Tommey, 115 U. S. 122, 5 Sup. Ct. 626, 1186; Industrial & Mining Guaranty Co. v. Electrical Supply Co., 16 U. S. App. 196, 7 C. C. A. 471, and 58 Fed. 732. Then, too, the meehanic's lien . relied upon includes the Independence street bridge only as the property affeeted. The United States supreme court in the case of Porter v. Steel Co., 122 U. S. 267, 7 Sup. Ct. 1206, held that: "The· bridges become a part of. the permanent structure of the railroad as mucl] so as the rails laid upon the bridges or upon the railroad outside of the bridges." "Whatever Is the l1lle applicable to locomotives and cars, and loose property susceptible of separate ownership and of separate liens, and to real estate not llsed for railroad purposes, as to their being unaffected by a prior mortgage given by a railroad company, covering after-acquired property. it is well s<!ttled In the decisions of this court that rails and other articles, which become affixed and a part of a railroad covered by a prior mortgage, will be held by the lien of such mortgage in favor of bona fide creditors, as against any contract between the furnisher. of the property and the railroad company, containing stipulations like those in the contracts In the present case."
If a specific contract made by the company giving a lien upon a bridge cannot be maintained as against mortgage lienors, certainly a mechanic's lien cannot be made more effectual for that purpose. Even if this lien can be maintained, it would be subordinate to all the mortgages executed by the company, and set up in the proceedings affecting the property of the railroad company in this court, because of their prior date. 2. The authorizing the payment of certain items of indebtedness by the receivers reads as follows:
CLEVELAND, C. & S. RY. CO. V. KNICK.lJ:RBOCKER TRUST CO.
75.
"And the said receivers are hereby authorized to pay and discharge out of the net income of said railroad all unpaid traffic balances and the indebtedness of said company to its servants and employes, and for materials and supplies accruing within six months last past, and also the unpaid coupons, amounting in all to $4,000, due JUly 1, 1893, on the Coshocton & Southern Railroad line, and mentioned in the said bill of complaint."
The master found that, of the amount due for work and materials claimed in this case, the sum of $6,072 accrued within six months prior to the appointment of the receivers. It is suggested that this amount is inaccurate, and that the amount due within six months is not so much as found by the master. This claim is not founded upon proof, but upon the assumption that only one-half the estimate for March ($2,496) should be allowed. In the absence of anything' definite, the court will adopt the master's findings of facts. If the character of this contract was such tilat the order of the court preferring labor and material men applies to it, only the sum of $6,072 could be paid by the receivers, and then it could only be paid out of the net income in their hands. The evidence does not establish the fact that there is a net income in his hands applicable to the payment of said sum of $6,072 so reported by the master.. If it can be shown that there is sufficient net income in the hands of the receiver topay this sum, I am of the opinion that the nature and character of the work done by the intervening creditor would entitle it to payment out of such income. But there is nothing in that order which would entitle it to payment out of the corpus of the property, to the prejudice of the rights of mortgage creditors. If the claim of priority is justified, it must be on the grounds of superior equity. The International Trust Company, representing certain of the bonds secured by mortgage on the property of the railroad company, by its solicitors, alleges that the contract under which the labor was performed and material furnished was a contract for original construction made in April, 1892, about 18 months before the receivers were appointed, and more than two-thirds of the work done under it more than 6 months before the receivers were appointed,-a contract made with full knowledge of the existence of the bonds and mortgages upon tl:).e property,-and that no equity arises as against these mortgages; and it asserts that the Hamilton Case, 134 U. S. 296, 10 Sup. Ct. 546, and other cases cited, are conclusive upon this point. If the work of the intervener was original construction, within the view of the Hamilton Case, then there can be no priority. The agreed statement of facts in this case is as follows: "The old bridge at Independence street was built in 1880, and was a wooden structure. In 1886 it was re-enforced by overhead trusses. Later, it was necessary to support it by piling. In 1892, because of the age and worn-out condition of the bridge. it became necessary, in order to safely operate the road, to replace the old bridge with a 'new one. On application to the city for permission to put a new bridge over the river, the city required a draw to be put in the new bridge, and refused to permit the old bridge to be replaced by anything but a drawbridge, and thereupon the new bridge for which the pier was built by the intervener was constructed and took the place of the old one."
In my opinion, the replacement of the old bridge, whether the work was done by "force" work of the company or by contract with
76
86
REPORTE&.
persons, was in all essentials necessary repairs, and not original construction. This agreement states that the old bridge had been reenforced by overhead trusses. Later it was supported by piling. In 1892, because of the age and worn-out condition of the bridge, it became necessary, in order to safely operate the road, to replace the bridge with a new one. The city authorities required a swing bridge. But the new bridge was built to repair or replace the old one. It is the history of all first'class roads that year after year the cheaper structures are replaced by better and more expensive structures; and the road gradually develops from a very inferior, improvised affair into the first-class, safe, and desirable road that is essential to the safety of passengers and economy of general traffic. The magnificent stone and iron bridges we see are not usually original structures,. but are the outgrowth of constant improvements and repairs upon the original road. The term "original construction" has a technical meaning. It is that construction of bridges, grades, culverts, rails, ties, docks, etc., that is necessary to be done before the road can be opened, or before they can be occupied or used, not such structures as are intended to replace old and worn-out counterparts. It is contended, by way of further defense to this claim, that, even if it be shown that the work done by the intervener was a part of the necessary operating expense of the road, only so much of the account as accrued within six months prior to the appointment of the receivers can be made a charge against the corpus, and payable out of the proceeds of the sale, before the mortgage creditors are to be paid, .and then only upon proof that there has been a diversion of the income of the road with the consent of the bondholders, either express or implied. On the other hand, the interveners insist that the subject of their account was necessary to keep the road a going concern, and that it is entitled, on the insolvency of the company and the appointment of a receiver, to priority over the mortgage bonds, without showing any diversion of income, and that such priority may be allowed, though much more than six months elapsed between the time the work was done and the appointment of the receivers. The first matter to be determined is whether this work was necessary to keep the road a going concern. The Cleveland, Canton & Southern Railroad is composed of several constituent lines. These branch lines are feeders of the main line, which has its principal terminus at Cleveland. Both its passenger and freight stations are located north of the Independence street bridge. It is there that its principal connecting lines are met, and its principal traffic, both passenger and freight, is dependent upon this terminus. If the Independence street bridge had become so defective that it was unsafe to run trains over it, aU the traffic that would naturally go to or come from Cleveland would have been cut off. The agreed statements of facts in this case show that in 1892, because ()f the age and worn-out condition of the bridge, it became necessary, in order to safely operate the road, to replace the old bridge, and the city authorities would not permit the building of a common bridge, but required that it should be a drawbridge. There cannot
77
be a draw without a pier to support the draw span. The repairs on the abutments became necessary by reason of the circumstances. No matter whether the Townsend Company did this work, or some one else did it, it was absolntely necessary, in my opinion, to the operation of the road, to preserve the property, to protect its franchises, and discharge its duties to the public. It appears from the record that, by consent of the mortgage creditors, receiver's certificates have been issued to pay the bridge com· pany for the iron superstructure of this bridge. The court, and the mortgagees, by their consent, recognized the fact that the bridge company had a superior equity. It would not be contended that the foundation for this bridge was less essential than the bridgework proper. If the mortgagees had taken possession of the road, they would have had the right to make such expenditures as were necessary to conserve and preserve the property, and such expenditures would be a charge against the corpus of the property. If the mortgagees can do this, the officers of the company, who, for the purposes of the bondholders, are the trustees and agents, can also do it, and even in duty bound to do it. It being determined that this work was necessary to keep the property a going concern, we are to decide whether lack of proof of diversion, and the fact that more than six months expired between completion and the appointment of receivers, precludes reeovery. I think not. This view is held in the case of New York G:uaranty & Indemnity Co. v. Tacoma Ry. & Motor Co., 27 C. C. A. 550, 83 Fed. 365; Central Trust Co. v. East Tennessee, V. & G. R. Co., 26 C. O. A. 30, 80 Fed. 624 (in which Judge Lurton delivered the opinion); Farmers' Loan & Trust Co. v. Kansas City, VV. & N. W. R. Co., 53 Fed. 182-189; Miltenberger v. Railroad Co., 106 U. S. 286,1 Sup. Ct. 140; Union Trust Co. v. Illinois M. By. Co., 117 U. S. 434, 6 Sup. Ct. 809; Atlantic Trust Co. v. Woodbridge C. & I. Co., 79 Fed. 39; Burnham v. Bowen, 111 U. S. 776, 4 Sup. Ct. 675; Trust Co. v. Morrison, 125 U. S. 591, 8 Sup. Ct. 1004; Hale v. Frost, 99 U. S. 389. . The principle upon which such preferences are allowed is very thoroughly discussed in the case of New York Guaranty & Indemnity Co. v. Tacoma Ry. & Motor Co., supra. In this case, and the others cited, the application of the general rules as to preferential claims enunciated by the federal courts depends to a large degree upon the circumstances of the case. While the fact that the labor performed and the material furnished in the case at bar resulted in lasting and valuable improvements to the property of the company, and so increased the security of the mortgagees, is not of itself sufficient ground for giving the claim a preference, it is an element and one of the circumstances which entitle the claimants, in my opinion, to priority over the mortgagees. It is urged that in this administration suit the court has no power to make any claim not incurred in the operation of the property by the'receivers a lien upon the property' itself, or to give such priority over the mortgages. If the court no such power, it is because in this suit no mortgagee or underlying lienor asks for a Ilale of the prop-
78
86 FEDEnAL' Rl!:PORTEl't.
,
erty. The Elupreme court, in the case of Railroad Co. v. Humphreys, 12 Sup. Ct. 787, did not pnss upon "the action of the court in making the appointment of, receivers on the application of the mortgagor," because that question was not before it ibut the theory that an insolvent railroad corporation may, in the public interest, and for the benefit of all its creditors, surrender its property to a court of equity, to be preserved and kept in operation until it can be disposed of according to the several private rights concerned, was not disapproved in that case. 'And in the cases of Farmers' Loan & Trust 00. v. Kansas Oity, W. & N. W. R. 00., 53 Fed. 182, and Oentral Trust 00. v. Wabash St. L. & P. Ry. Co., 30 Fed. 332, there was a substantial approval of such a proceeding. The right Of the court to prefer the claiin of the Townsend Oompany in this proceeding, so far as the equities are concerned, is not determIned by an order of' the court atthe instance of the mortgagor 'railroad company, but rests upon the broad'ground of superior equity, and such a preference may be given whether a socalled six-months claim order is made or not. In the case of New York Guaranty & IndemnJty Co. v.TacomaRy. & Motor eo., 27 O. O. A: 550, 83 Fed. 365, rio such order ismade,and the preferred creditor did. not file his intervening petition until after the sale was made and confirmed, and yet his claim was allowed. It is a well-recognized principle that the court has jurisdiction of a fund as long asJ! is in the custody of the court. " It is suggested that the division.al mortgagees cannot be subjected to loss of priority because brought into associfl,tion with others by the bill. ;Referring to the fact that the Cleveland, Canton & Southern Company bought up the various branches or divisions which were theretofore independent corporations, and against wbich, ,the several mortgag@ debts set out in the biU obtained, it is said: All the debts, outstanding and unsecured, arid debts of the, present company, and the mortgages, except the last two, are superior to any right of the present company. It could create no lien on any o,f this property that would not be, inferior to the prior mortgages. With the uniting of these properties by purchase, in the name of these mortgagee/'! had noth,ing to do,-no power tQ preveJ;l,t or promote it. Upon what principle,then, eim the contJ;'acts of this company, in the operation of its entire,sy,stem, or its purchases of material, or colltractsfor of better right or pri()r lien than these m.ortgages? , for tl;J.,e, operation or imp,rovement of the Coshocton Brancb, for instance, to :be charged as' a prior lien on the WaYJ;l,esburgBranch, in wl;J.ole orin part, and So on? That objection was in the case ofOentral TrusLCQ.v.Wabash, St. L. & but the,,(jourt overruled the objection; say: ' ", '" " , , "For a clean nntlerstanding of these, questions, it will be ne<:essary to go ba:ck to the in<:eption of this receivership. "At ,that time there was a single corporation,-the'V'abash, St. Louis & I t wa,s a corporation made up by the consolidatioI), "in, 1879,' 'o{ various' m'inot'corooratibns. After the consolidation by ",bieb 'tlie 'Wllbll!ih, ,St. LOUIs Into being,it absorbed
U.:NJTEI) STAtES V. DILL.
still other roads by consolidation,and took possession, of others by lea;le;' It was all Insolvent tion, and it came Into court pleading Its insolvency; and asking the court to take possession of its entire property, and administer it for the benefit of all concerned. There was then but a single corporation, owning many pieces of property, having possession of others by lease, which separate pieces of property were, many of them, covered by underlying mortgages. As a single corperation, it was also in debt to an amount exceeding $3,000,000 of floating indebtedness, and. yet of that character of Indebtedness which, by the decision of the supreme court, was preferred to all mortgages. Thus the preferential debts of three millions "and over were apriQr lien upon all the roads belonging to the Wabash,-not a lien upon one diVision, and no lien upon another, but a lien upon each and all of them, prior In right to every mortgage, general or local, junior or senior. It made no difference where those obligations were incurred,-whether in the operation of one line or another. They were obligations of the single debtor, and enforceable In law against every part of its property. In a case of a complicated railroad system like this Wabash, not only were they at law the obligations of one debtor enforceable against all its property, but in equity also they were chargeable upon all its property."
Until proceedings are had, either in this case or in a consolidated cause wherein an order shall be made for the sale of the property, and out of which a fund shall arise, the court cannot give this intervening claimant such relief as will discharge his claim; but, having recognized an equitable priority in his favor, the court will exercise such jurisdiction as may be necessary in a proper case.
UNITED STATES v. DILL. (Olrcult Court of Appeals, Third Circuit. No.2" 1. UNITED STATES MARSHALS-FEES-ATTENDANCE BEFORE COMMISSIONER,
March 18, 1898.)
A marshal is entitled to fees for attendance by deputy at examinations before a commissioner, though the deputy was paid for attendance on the same day on the district or circuit courts. 78 Fed. 614, affirmed. A marshal having made a charge of 40 cents each for returns of nihil habet, and it appearing that in the state practice two such returns were treated as equal to a service, that the charge should be allowed. 78' Fed. 614, affirmed. The marshal is entitled to a fee for necessary attendance on court on Sunday, though the judge was not actually present. 78 Fed. 614, affirmed.
2. SAME-RETURNS OF NIHIL HABET.
8. SAME-ATTENDANCE ON SUNDAY.
4. SAME-COMPENSATION FOR GUARDS.
The marshal is entitled to be reimbursed, as a contingent expense, for money ltctually paid for guards for prisoners attending court.. 78 Fed. 614, affirmed.
5. SAME-MiLEAGE.
The marshal is not entitled to mileage In going to serve warrants of removal and commitment, where he has been paid 10 cents per mile for transportation of the prisoner on the same warrant at the same time. 78 .B'ed. 614, reversed. 'fhe marshal is not entitled to fees for serving warrants of commitment. 78 Fed. 614, reversed.
6.
SAME-SERVING WARRANTS OF COMMITMENT.
In Error to the District Court of the United States for the Eastern District of Pennsylvania.