Commonwealth v. Susquehanna & D. R. R. Co.

• Decision Date: 01 October 1888
• Docket Number: 6
• Citation: 15 A. 448,122 Pa. 306
• Parties: COMMONWEALTH v. SUSQ. & DEL. RIVER R. CO
• Court: Pennsylvania Supreme Court

15 A. 448

COMMONWEALTH v. SUSQ. & DEL. RIVER R. CO

122 Pa. 306

No. 6

Supreme Court of Pennsylvania

October 1, 1888

May 30 1887, Argued; May 28, 1888, Re-argued

ERROR TO THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY.

No. 6 May Term 1887, Sup. Ct.; court below, No. 243 January Term 1886, C.P.

On January 6, 1886, a writ of quo warranto issued against an association called The Susquehanna & Delaware River Railroad Company, upon a suggestion filed by Mr. Attorney General Lewis C. Cassidy, that certain persons therein named since August 22, 1881, were pretending to act as directors of an association called The Susquehanna & Delaware River Railroad Company, and claimed to possess and enjoy the franchises corporate rights and privileges of The Pennsylvania & New England Railroad Company, a corporation which had been organized on May 5, 1880, under the general railroad act of April 4, 1868, P.L. 62, with power to construct a railroad from a point near Harrisburg, through the counties of Dauphin, Lebanon, Berks, Lehigh and Northampton, to the New Jersey state line; and averring that the said association and the parties named did not have and never had any corporate rights whatever.

On May 24, 1886, the amended answer of Charles H. Mintzer and others, as president and directors of the Susquehanna &amp Delaware River R. Co., was filed, wherein it was set forth in substance:

That The Pennsylvania & New England Railroad Company, whose lawful existence was by the said suggestion admitted, on June 1, 1880, executed a mortgage upon its franchises and property to secure the payment of 1100 coupon bonds of $1,000 each, payable on June 1, 1910, with interest payable semi-annually on June 1st and December 1st each year, as provided in the coupons attached to said bonds, and that said mortgage was duly recorded in the counties of Lehigh, Northampton, Berks, Lebanon and Dauphin. The following is a provision of the mortgage:

And . . . if default be made in the payment of any of said coupons, or instalments of interest as aforesaid, by the said company, for a period of one year, it shall be the duty of said trustees, or the survivor of them, or their successors, upon a written request of holders of bonds upon which interest shall remain unpaid, representing bonds to the amount of three hundred thousand dollars ($300,000) then outstanding, to sell and dispose of said mortgaged premises, with the appurtenances, by public sale . . . giving at least three months' notice of said sale, the equity of redemption being hereby waived and released on the part of said company, and full authority to sell as aforesaid being vested in said trustees, and apply the proceeds of said sale to the payment and satisfaction of the principal and interest of said bonds, first deducting costs and expenses of sale, and any sums or amounts due the trustees.

It was averred further that the said company on June 1, 1881, made default in the payment of interest on said bonds, and afterwards, 18 of said bonds with the coupons attached became the property of Frederick Baker, each of the coupons being for the sum of $30. Payment of the coupons having been refused, suit was brought upon them in the Court of Common Pleas No. 2 of Philadelphia county, and on June 25, 1881, judgment obtained against the company for the sum of $542.25, the amount of the coupons with interest; that thereupon a fieri facias was issued from said court upon said judgment, by virtue of which the sheriff of the county made demand of said corporation at its principal office, and payment being refused, and no personal property pointed out, a special return was made accordingly; that afterwards, an exemplification of the entire judgment and proceedings thereon was filed in the Court of Common Pleas of Lehigh county, and judgment entered thereon in said county, from which on July 9, 1881, a fieri facias issued directed to the sheriff of Lehigh county, upon which writ levy was made, as directed, "upon the corporate franchises of the said The Pennsylvania & New England Railroad Company, granted May 5, 1880, with all the rights, powers and privileges thereunto belonging, consisting of authority to construct and build, and operate a railroad, commencing in or near Harrisburg, in Dauphin county, and extending northeastwardly through the counties of Lebanon, Berks, Lehigh and Northampton, to a point of connection with the Pennsylvania & New England Railroad at the New Jersey state line, a short distance south of the Delaware Water Gap, about 107 miles in length," etc., etc.; and that said franchises and property on July 18, 1881, were sold to Damon Y. Kilgore for the sum of $600, the sheriff's deed therefor afterwards acknowledged, delivered and duly recorded in the said several counties.

That, afterwards, to wit, on August 15, 1881, the parties interested in said purchase, and for whom and on whose account it was made, assembled and organized a new corporation, to wit, The Susquehanna & Delaware River Railroad Company, and afterwards, to wit, on August 17, 1881, did file a due and legal certificate of said organization, in the office of the secretary of the commonwealth at Harrisburg, and the commonwealth accepted the same and recognized the said corporation: Wherefore, etc.

To the foregoing answer the attorney general demurred, and prayed for judgment of ouster with costs against the defendants.

On September 21, 1887, the court, SIMONTON, P.J., filed the following opinion:

1. The commonwealth contends that the sale by the sheriff of Lehigh county, of the property and franchises of the Pennsylvania and New England Railroad Company to the persons who thereafter organized themselves as the corporation defendant, which sale is the foundation of their title to be a corporation and to exercise the rights and franchises claimed by them in their answer, passed no title to the franchises and rights of the former corporation, because the first fieri facias on which the return of demand, non payment, and nulla bona was made, having been issued out of and returned to the Court of Common Pleas of Philadelphia county, where the judgment on which it was founded had been obtained, the second fieri facias was not issued out of said court, but was issued out of the Court of Common Pleas of Lehigh county, after an exemplification of the record of said judgment and the proceedings thereon had been filed in said last named court.

We do not think this objection to the title of defendant is valid. The writ of fieri facias given by the act of April 7, 1870, is "in lieu of the provisions in proceedings by sequestration," under the act of June 16, 1836, and in addition to the provisions of section 72 of said act. This section prescribed what must be done to entitle the creditor to the writ of sequestration prior to the passage of the act of April 7, 1870. And the same procedure, since the passage of this act, gives the right to a levy by fieri facias on the franchises. Section 73 of the act of 1836 provides that in every case in which a judgment shall have been obtained against a corporation subject to sequestration, and an execution issued thereon shall have been returned unsatisfied in whole or in part, "it shall be lawful for the court in which such judgment shall have been obtained," to award a writ of sequestration. This return must, no doubt, be based upon the proceedings prescribed by section 72. It was held in Reid v. Railroad Co., 32 Pa. 257, that the writ was properly awarded upon a judgment which had been transferred from the Common Pleas of the county where it had been obtained to the Common Pleas of another county. And the same case decides that "if the record shows that there was a judgment against the corporation, that an execution had been issued thereon, and returned unsatisfied in part or in whole, then the requirements of the statute are satisfied." Since, therefore, everything was done that was necessary in this case to have warranted the awarding of a writ of sequestration by the Common Pleas of Lehigh county, if the act of 1870 had not been passed, the second fieri facias was properly issued out of that court and the sale upon it, unless for some other reason, passed a good title.

2. It is further contended, on behalf of the commonwealth, that defendants took no title by virtue of the sale under said fieri facias for the reason that no sale could legally be made on any execution based upon the judgment upon which the fieri facias issued.

The argument is this: The act of 1870 provides that the purchaser or purchasers of any property and franchises authorized to be sold by said act, "shall take the same clear of all incumbrance excepting any mortgage or mortgages which may legally exist at the time of levy thereupon, the lien of which shall not be affected in any manner by said sale." The sale in this case was made on a judgment for the amount of overdue coupons. The bonds to which these coupons were attached were secured by a mortgage which was a lien at the date of the levy. The coupons being for interest due upon the mortgage debt, represented part of the debt itself, and therefore a sale upon such judgment would necessarily discharge the lien of the mortgage; the very thing which is forbidden by the act.

This argument is, apparently, of great force, but we do not think it is conclusive. The act does not forbid a sale upon a judgment obtained for part or a whole of the mortgage debt. Suppose a judgment is obtained for the whole amount of the bonds secured by the mortgage, can it be that a fieri facias could not be issued on such a judgment, nor a sale made on it? But if this could be done would not the lien be discharged? If so it would be a case where the lien of a mortgage existing at the time of the...