Central Trust Co. v. St. Louis, A. & T. Ry. Co.

• Decision Date: 27 February 1890
• Citation: 41 F. 551
• Parties: CENTRAL TRUST CO. v. ST. LOUIS, A. & T. RY. CO.
• Court: U.S. District Court — Eastern District of Arkansas

41 F. 551

CENTRAL TRUST CO. v. ST. LOUIS, A. & T. RY. CO.

United States Circuit Court, E.D. Arkansas.

February 27, 1890

Syllabus by the Court

An Arkansas corporation, owning a line of railroad in Arkansas consolidated with a Missouri corporation, owning a line of railroad in Missouri. By the consolidation, the consolidated company became the owner of the road in both states, but in Arkansas it is to be regarded as an Arkansas corporation, and in Missouri as a Missouri corporation.

When a receiver is appointed for a railroad, the better practice is for the judge or court making the appointment, to stipulate at the time, and as a condition of the appointment of a receiver, what debts and liabilities of the railway company shall be made a charge on the property and paid by the receivers. If the mortgagee is unwilling to take a receiver on the terms imposed, the foreclosure can proceed without a receivership. If no order is made when the receiver is appointed, it may be made afterwards.

When a state court has jurisdiction of the parties and the subject-matter, its judgment against the receiver of a United States court is as final and conclusive as it is against any other suitor.

The United States circuit courts are not invested with appellate or supervisory jurisdiction over the state courts, and cannot annul, vacate, or modify their judgments. This rule is not affected by the last clause of the third section of the act approved August 13, 1888, (25 U.S.St. 436.)

Receivers appealing in good faith from the judgments of the state courts should not be required to give supersedeas bonds.

Phillips and Steward, for complainant.

J. M. &amp J. G. Taylor, for defendant.

S. H West, for the receivers.

CALDWELL J.

In 1886 the St. Louis, Arkansas & Texas Railway Company in Arkansas and Missouri, a corporation organized under the laws of the state of Missouri, acquired the title to a railroad, previously built by another company, running from Bird's Point, in Missouri, to Texarkana, Ark. On the 4th day of May, 1886, this Missouri corporation executed a mortgage to the plaintiff, to secure the payment of its first mortgage bonds, on its road and appurtenances in Arkansas and Missouri. On the 4th day of August, 1887, the same company sold that part of its road in Arkansas to the Arkansas & Southern Railway Company, a corporation organized under the laws of Arkansas. On the 15th day of August, 1887, the Missouri corporation, viz., the St. Louis, Arkansas & Texas Railway Company in Arkansas and Missouri, then owning the road running from Bird's Point, Mo., to the Arkansas state line, and the Arkansas corporation, viz., the Arkansas & Southern Railway Company, then owning the road running from the Missouri state line to the Texas state line at Texarkana, with branches, were consolidated; the consolidated company retaining the name of the Missouri company, i.e., the St. Louis, Arkansas & Texas Railway Company in Arkansas and Missouri. On the 20th day of October, 1887, the consolidated company executed its mortgage on its road and branches in Arkansas and Missouri to the plaintiff to secure an issue of its bonds; and on the 15th day of August, 1888, it executed another mortgage to the plaintiff on the same property to secure a second issue of its bonds. This suit is brought to foreclose the three mortgages mentioned, on the road and property in Arkansas. The amended and supplemental bill filed in this district alleges the defendant is 'a corporation created by and existing under the laws of the state of Arkansas, * * * and a resident and citizen of said state of Arkansas. ' This is a correct statement of the legal status of the defendant in this state. The consolidated company owns the road in both states; but in Arkansas it is an Arkansas corporation, and in Missouri it is a Missouri corporation. Acts Ark. 1889, p. 43; Railway Co. v. Whitton's Arm'r, 13 Wall. 270; Muller v. Dows, 94 U.S. 444.

On the 13th day of May, 1889, on the filing of the bill to foreclose, Circuit Judge BREWER appointed a receiver, and directed 'that the said receiver pay, out of any income or revenue which may come into his hands, all just claims and accounts for labor, supplies, professional services, salaries of officers and employes, and regular traffic balances, remaining unpaid, and that have been earned or mature within six months prior to the date of this order. ' This order was not intended to be final. Its purpose was to confer on the receiver a present authority to pay wages due employes and such like claims, the payment of which ought not to be delayed. The final order to be made on the subject was left for future action. Creditors of the railway company have filed intervening petitions, praying that their demands may be decreed to be a lien on the mortgaged property, and the receivers directed to pay them out of the earnings of the road, if sufficient for the purpose, and, if not, then out of the proceeds of the sale of the road.

A statute of this state approved March 19, 1887, provides 'that every mechanic, builder, artisan, workman, laborer, or other person, who shall do or perform any work or labor upon, or furnish any materials, machinery, fixtures, or other thing towards, the equipment or to facilitate the operation of any railroad, and all persons who shall sustain loss or damage to person or property from any railroad for which a liability may exist at law, shall have a lien therefor upon the road-bed, buildings, equipments, income, franchises, and all other appurtenances of said railroad, superior and paramount, whether prior in time or not, to that of all persons interested in said railroad as managers, lessees, mortgagees, trustees, and beneficiaries under trusts, or owners. But said lien shall not be effectual unless suit shall be brought upon the claim within one year after it accrued. Said lien shall be mentioned in the judgment rendered for the claimant in an ordinary suit for the claim, and may be enforced by ordinary levy and sale, under final or other process, at law or in equity.'

This act was in force before the execution of the two mortgages by the consolidated company, and, as against these mortgages, it is conceded that the general creditors, coming within the purview of the act, have a prior lien on the mortgaged property; and it is claimed that under the statutes of this state, as construed by its supreme court, the first mortgage executed by the...