Chicago, Rock Island & Pacific Railway Company v. Mcbride

• Decision Date: 28 October 1918
• Docket Number: 207
• Citation: 206 S.W. 149,136 Ark. 193
• Parties: CHICAGO, ROCK ISLAND & PACIFIC RAILWAY COMPANY v. MCBRIDE
• Court: Arkansas Supreme Court

206 S.W. 149

136 Ark. 193

CHICAGO, ROCK ISLAND & PACIFIC RAILWAY COMPANY v. MCBRIDE

No. 207

Supreme Court of Arkansas

October 28, 1918

Appeal from Sebastain Circuit Court, Fort Smith district; Paul Little, judge; affirmed.

Judgment affirmed.

Thomas S. Buzbee and George B. Pugh, for appellant.

1. The demurrer should have been sustained. Appellant was not liable for the negligence of the servants of the receiver. Appellant was not a party to the suit nor bound thereby as a privy. 96 Ark. 451; 75 Id. 1; 105 Id. 86; 96 Id. 405; 34 Id. 291; 35 Id. 62; 82 Id. 414; 80 Id. 82; 1 F. 641-643; 4 Pet 475; 74 A. 254; 110 P. 1037. There was no privy between the corporation and its receiver. 23 Enc. Law (2 ed.) 101.

2. A railroad is not liable for the negligence of the servants of its receiver. The receiver's possession is not that of the corporation, but is antagonistic thereto and the company cannot control the receiver or his employees. 44 Ark. 322; 72 Id. 250; 74 Id. 292; 67 F. 456; High on Receivers (2 ed.), § 396 et seq.; 151 U.S. 81.

Pace Seawel & Davis, for appellee.

The receiver was appointed by consent of appellant. The net earnings over and above improvements, betterments, expenses etc., amounted to a large sum, which was turned over to the company. In the face of the admitted allegations the company is clearly liable. 151 U.S. 87; 164 Id. 636; 177 Ill. 52-68; 69 Am. St. 206; 76 Tex. 441; 13 S.W. 471, 421; 30 S.W. 725; 60 F. 494; 59 Id. 523; 73 Tex. 47; 151 U.S. 81; 34 Cyc. 338-340.

OPINION

HUMPHREYS, J.

Appellee filed suit against appellant on the 22d day of March, 1918, in the circuit court of Sebastian County, Ft. Smith District, on a judgment of $ 20,000 which appellee had recovered against Jacob M. Dickinson, receiver of appellant, on the 22d day of March, 1916, in the Southern District of the Prairie Circuit Court. The complaint alleged, in substance, that appellee is a resident and citizen of Little Rock, Arkansas; that appellant is an Illinois corporation engaged in operating a railroad in the State of Arkansas; that on the 22d day of March, 1916, appellee recovered a judgment in the sum of $ 20,000 in the Southern District of the Prairie Circuit Court against Jacob M. Dickinson, receiver of appellant railroad, for injuries received while in the employ of the receiver while operating said railroad in Arkansas; that the receiver was appointed by the United States Court for the Eastern Division of the Northern District of Illinois, on the 20th day of October, 1915, by the consent and acquiescence of appellant; that the receiver took possession of all of its property and managed and operated the same until his discharge on the 27th day of July, 1917; that during the time the receiver operated the road, the gross earnings were $ 44,658,713.98; that out of the gross earnings he paid $ 20,496,550.53 and interest on the funded and mortgaged indebtedness, $ 6,370,529.70 on permanent additions and betterments; that when discharged, he turned the property back to appellant with all betterments and paid it $ 18,832,949.40 net earnings; that the receiver failed and neglected to pay appellee's judgment aforesaid; that the net earnings alone of the receiver during the time he operated the road were largely in excess of all claims, demands and judgments against the receiver, including appellee's judgment; that the net earnings and permanent additions and betterments delivered by the receiver, when discharged, to the railroad company are chargeable with appellee's claim and judgment.

Certified copies of the judgment obtained in the Southern District of the Prairie Circuit Court and the affirmance thereof by the Supreme Court of the State of Arkansas were made parts of the complaint and attached as exhibits thereto.

Appellant filed the following demurrer to the complaint: "Said complaint does not state facts sufficient to constitute a cause of action against defendant (appellant herein), for the reason that this defendant was not a party to the action brought by the plaintiff in the Prairie Circuit Court, Southern District, in which he recovered judgment for the sum of $ 20,000 against Jacob M. Dickinson, and to permit the said plaintiff to recover a judgment against this defendant upon the allegations of the amended complaint herein would deprive this defendant of its property without due process of law, and thus would be a violation of section 1 of the 14th amendment to the Constitution of the United States."

The demurrer was heard and overruled by the court. The appellant refused to plead further and elected to stand upon the demurrer. The court found the issue for appellee and against appellant, and rendered judgment against appellant for the amount, in accordance with the prayer of the complaint. Proper exceptions were saved and an appeal has been prosecuted to this court from the judgment of the court in overruling the demurrer and rendering said judgment.

It is insisted by the appellant that it is not liable for the negligence of the servants of its receiver while operating the road, and that the judgment in question was obtained against the receiver for the negligence of his servants. This contention is based upon authority to the effect that, because a corporation has no control either over the receiver or his employees and because the possession of a receiver is antagonistic to the possession of the corporation for which he was appointed, therefore, the corporation can not be held for the negligent acts of the receiver or his employees in the conduct and management of the business while in control of a receiver.

Appellant also insists that it was not a party or privy in the original suit and not bound by the judgment rendered therein. This contention is based upon the general rule that a judgment is conclusive only between the parties and their privies. It is true as an abstract proposition of law that a corporation is not responsible for the negligent acts of the servants of its receiver while the receiver is in possession of the property, and that only parties and privies to a judgment are conclusively bound by it. But the cause of action stated in this complaint and admitted by the demurrer is not an attempt to hold the corporation responsible for the negligence of the employees of its receiver, nor to recover from the corporation on the ground that there is privity between the corporation and its receiver. This is an attempt to hold appellant on entirely different grounds. The complaint alleged, and the demurrer admitted, that the receiver in the instant case was appointed with the acquiescence and consent of appellant; that the net earnings of the receiver, while he had possession of the road, amounted to many million dollars, a part of which he put in betterments, a part of which he applied to the payment of interest on the funded mortgaged indebtedness of the road, and a large part of which he paid to the corporation when he returned the property to it; that that part of the net earnings returned to the corporation exceeded all claims incurred during the receivership, including the claim of appellee; that the property delivered to the receiver, when appointed was not sold under order of court, but was returned with betterments and additions to appellant corporation, together with many million dollars of...