American Loan & Trust Co. v. Clark, 857.

• Decision Date: 07 September 1897
• Docket Number: 857.
• Parties: AMERICAN LOAN & TRUST CO. v. CLARK et al.
• Court: U.S. Court of Appeals — Eighth Circuit

83 F. 230

AMERICAN LOAN & TRUST CO. v. CLARK et al.

No. 857.

United States Court of Appeals, Eighth Circuit.

September 7, 1897

Edward W. Sheldon, for appellant.

W. R Kelly, for appellees.

Before THAYER, Circuit Judge, and RINER, District Judge.

RINER District Judge.

Upon a bill filed for that purpose by Oliver Ames, Second, and others, in the circuit court of the United States for the district of Nebraska, and in the circuit courts of other districts through which the railway lines of the Union Pacific Railway system as then constituted extended, Silas H H. Clark, Oliver W. Mink, E. Ellery Anderson, John W. Doane and Frederic R. Coudert, the appellees, were in October and November, 1893, appointed receivers of the Union Pacific System, which included, in addition to the lines of railway and property of the Union Pacific Railway Company, the lines of railway and property of the Denver, Leadville & Gunnison Railway Company and several other corporations. The receivers above named continued to operate the Denver, Leadville &amp Gunnison Railway as a part of the Union Pacific Railway System until the 7th day of August, 1894, when they surrendered possession of the property to Frank Trumbull, who had been appointed receiver of the property by the circuit court for the district of Colorado in a foreclosure suit brought by the American Loan & Trust Company, as trustee against the Denver, Leadville & Gunnison Railway Company. On June 26, 1894, the receivers of the Union Pacific System filed a petition in the circuit court praying for instructions as to the continuance by them of the operation of lines of railway owned by certain of the defendants named in the original bill in the Ames Case, and included in the Union Pacific System whose earnings were represented to be insufficient to pay their operating expenses and taxes, the Denver, Leadville & Gunnison Railway Company being one of the lines mentioned. The court directed service of the petition to be made upon the parties interested, including the appellant and the Denver, Leadville & Gunnison Railway Company, and set the cause down for hearing. At the hearing an order of reference to the special master was made directing him, among other things, to 'take and state the accounts of the said receivers with the Denver, Leadville & Gunnison Railway and ascertain the amount of the deficiency arising out of the operation of the said railway as of the 7th day of August, 1894. On such hearing, the officers of the Denver, Leadville & Gunnison Railway Company, the American Loan & Trust Company, the trustee of the mortgage of August 1, 1889, made by the said railway company, may appear and contest any item contained in said account, and the said master shall report the amount of the deficiency ascertained after said accounting, and shall report the railroad or railroads or parts or divisions of railroads against which the deficiency so incurred should be charged, and the proper proportions for the distribution of such charge, and also what, if any, portion of such deficiency, should be charged as a lien against the property of the Denver, Leadville & Gunnison Railway Company, and whether the charge, if any, so to be made, should be prior in point of time to the lien of the said mortgage of the American Loan & Trust Company, dated August 1, 1889, and the surrender and delivery of the property of the said railway company hereinafter ordered is made subject to the lien and charge of any deficiency resulting from the operation of the said railway by the receivers which shall be adjudged to exist upon the final hearing upon the said report of the master. ' Hearings were had before the master, who found that the deficiency arising from the operation of the Denver, Leadville & Gunnison Railway from October 13, 1893, to August 7, 1894, was $207,201.83, and that the receivers of the Union Pacific System had turned over to the receiver of the Denver, Leadville & Gunnison Railway Company $48,870.15 worth of supplies, and recommended that the amounts for the deficiency and supplies be charged as a first lien on the property, in priority to the lien of the mortgage to the appellant. The American Loan & Trust Company filed exceptions to this report. May 9, 1896, the exceptions of the American Loan & Trust Company and the evidence taken before the master, together with his report, were submitted to the court. The court modified the findings of the master as to two items contained in his report, and decreed the amount of the deficiency resulting from the operation of the property to be $192,630.17, which, with interest at the rate of 8 per cent. per annum from August 7, 1894, 'constitutes a lien in favor of said receivers upon the property of the Denver, Leadville & Gunnison Railway Company, prior in right and superior in equity to the mortgage thereon dated August 1, 1889, and to all other liens and incumbrances upon said property, and should be enforced in the decree of foreclosure of said mortgage to be entered in the district of Colorado. ' It further decreed 'that Frank Trumbull, the present receiver of said property, is indebted to the five receivers, appellees herein, in the sum of $48,870.15, with interest from August 7, 1894, at the rate of eight per cent. per annum, for materials and supplies furnished by them to him for use in the operation of the railroads of that company when they surrendered the same to him, on August 7, 1894; and that said amount and...