Emerson v. European & N.A. Ry. Co.

• Decision Date: 04 June 1877
• Citation: 67 Me. 387
• Parties: JAMES C. EMERSON v. EUROPEAN & NORTH AMERICAN RAILWAY COMPANY and trustees.
• Court: Maine Supreme Court

67 Me. 387

JAMES C. EMERSON v. EUROPEAN & NORTH AMERICAN RAILWAY COMPANY and trustees.

Supreme Judicial Court of Maine.

June 4, 1877

ON REPORT.

ASSUMPSIT on an acceptance of the defendant company for $1000, on which a default was entered. The writ was dated October 30, 1875 and served on the trustees, November, 1, 1875.

The question presented was whether the alleged trustees are chargeable as such.

The trustees form a private co-partnership, doing business as expressmen between Boston and St. John, N. B., under the name of the " Eastern Express Co.," and are not incorporated. They disclose that under a contract made with the defendant railway company on January 1, 1873, for 5 years, they were at the time of the service indebted to the company in the sum of $541.66 for the transportation of its express crate over the road from Bangor to St. John, for the month of October, 1875. The sum agreed to be paid for the service was so much per year, to be payable in monthly instalments on the first day of each month for the month previous. The above named sum was the amount due for the month of October, and was payable on November 1. Payment having been delayed by reason of the attachment, G. K Jewett, for B. E. Smith, trustee, gave the trustees notice on November 4, 1875, that the fund had been assigned to him said Smith, as trustee of the railway company, defendants for the benefit of the creditors of the company.

Said Smith being cited, comes in and makes claim to the fund disclosed, and in support of his claim offers the mortgage deed of the said railway company of its road and property made to Samuel F. Hersey and himself in trust as aforesaid, dated December 5, 1872, said Hersey having since deceased, the mortgage covering the road over the whole distance from Bangor to St. John, and duly recorded. Under the mortgage, at the request of the holders of the bonds secured by it, he entered and took possession of the road on the 27th October, 1875, and at once on the same day gave public notice, by advertisement and posting, of his said entry, and for all persons indebted to pay him. The entry was legally made and for legal cause, coupons having remained unpaid overdue for more than six months after demand. After such entry Smith as such trustee has continued ever since in possession, and has continued to operate or run the road. And the said express company has continued to have the express crate carried over the road in the same manner and under the same arrangement as before.

The mortgage is made a part of the case. The descriptive part of the mortgaged premises is to be copied, and either party may refer to and make copies of such other parts as they may choose. The disclosure also may be referred to.

Previous to the mortgage to Smith, that part of the road and other property connected therewith lying between Bangor and the state line had been mortgaged to other trustees for the benefit of bond holders, and also that part lying between the state line and St. John, to other trustees for a similar purpose, and in both cases there had been a forfeiture of payments such as authorized the trustees to take possession of the road, but none has as yet ever been taken, and no claim to the fund in question is made by them or either of them. Up to the time of said Smith's entry on the 27th day of October, the road was worked by the consolidated company defendant, and the sum disclosed was proportionately earned as aforesaid while the road was so run by it, no interference by any of the mortgagees having been made except as herein stated.

The case was reported for the decision of the law court, whether the trustees are chargeable, and if so for what sum.

A. W. Paine, for the plaintiff.

C. P. Stetson, for B. E. Smith, mortgagee and claimant.

The mortgage to Smith was of all the property of the company possessed or hereafter to be acquired, and his claim to the fund disclosed is paramount to plaintiff's attachment. Woodman v. York & Cumberland, 45 Me. 207. Galena & Chicago U. R. R. Co. v. Menzies, 26 Ill. 121. Pierce v. Emery, 32 N.H. 484. Morrill v. Noyes, 56 Me. 458.

The amount disclosed was not due until November 1. Smith, as mortgagee and trustee, took possession Oct. 27, and is entitled to hold all income which became due after he took possession. Crosby v. Harlow, 21 Me. 499. Gale v. Edwards, 52 Me. 363, 365. 3 Kent's Com. 471 & note a. 1 Wash. R. Est. (3d Ed.,) 113, 114, 452, 458.

PETERS J.

The consolidated European and North American Railway Company, on December 5, 1872, mortgaged to B. E. Smith (the surviving trustee) and another, for the security of certain bondholders. On January 1, 1873, the railroad company contracted with the Eastern Express Company to carry their freight for five years for a price therefor to be paid by monthly instalments. On October 27, 1875, the mortgagee Smith took possession of the road for condition broken, in the manner provided in the mortgage. On November 1, 1875, the Eastern Express Company were in debted under their contract for a month's service performed by the road. On that day they were summoned in this suit as trustees of the railroad company. On November 4, 1875, the express company were notified to make payment to B. E. Smith. The plaintiff claims to hold the monthly payment by his attachment, and the mortgagee (in trust) claims that it becomes assigned to him, under a clause in the mortgage describing the premises mortgaged to him, as follows: " All its (Deft. Co.'s) right, title and interest in and to all and singular its property real and personal, of whatever nature and description now possessed or to be hereafter acquired, including its railway, equipments and appurtenances between said Bangor and said St. John, all its rights, privileges, franchises and easements, together with its branches, all buildings used in connection with said railway or the business thereof, and all lands and ground on which the same may stand, or connected therewith; also all locomotives, tenders, cars, rolling stock, machinery, tools, implements, fuel, materials, and all other equipments for the construction, maintaining, operating, repairing and replacing the said railway, or its appurtenances, or any part thereof."

The question presented is, whether this mortgage conveys or assigns to the mortgagee the future earnings of the road (this kind of earnings), as against the attaching creditors of the mortgagers. We think not. This must be regarded as a contest where legal and not equitable rules are to prevail. We have before us an action at law.

In equity, many, if not most, of the courts of the present day decide that, under some circumstances, a man may mortgage what does not at the time exist. Late opinions of Judge Lowell in the district court and Mr. Justice Clifford in the circuit court of the United States for the district of Massachusetts, in cases in equity, strongly assert the doctrine. The cases referred to are Brett v. Carter, 2 Low. 458, and Barnard v. Norwich & Worcester R. R. Co., which has not yet appeared in any volume of reports. Mitchell v. Winslow, 2 Story 630, and Pennock v. Coe, 23 Howard, 117, are perhaps the leading cases in this country advocating the same view. In Moody v. Wright, 13 Met. 17, decided in 1847, the court of Massachusetts came to an opposite conclusion. In our own state, the question whether equity would uphold such a mortgage, and, if so, under what conditions, has not been much discussed or ever decided. See remarks of Justice Davis upon the subject in Morrill v. Noyes, 56 Me. 458, on page 472.

But at common law it is not possible for such a rule to prevail. The common law maxim is conclusive upon the point. Nemo dat quod non habet. The reason that it may be different in equity, is not that a man conveys in presenti what does not exist, but that what is in form a conveyance operates in equity by way of present contract merely, to take effect and attach to the things assigned as soon as they come in esse; to be regarded before that time as only an agreement to convey, and after that time as a conveyance.

There are many instances in the decided cases where there may be some appearance of a departure from or a modification of this general principle of the common law, but where the results are produced by other principles not inconsistent with it. As where property has been added to property by way of accession natural or artificial, the greater taking to itself the lesser thing after the connection becomes inseparable without much injury. As where a house is built upon mortgaged land or a fixture is added to a house; or rolling stock is put upon a railroad, and becoming a necessary part and parcel thereof. Domat clearly defines it, thus: " The mortgage will extend to all that shall arise or proceed from that thing which is mortgaged, or that shall augment...