East Tennessee Ry Co v. Frazier

• Decision Date: 23 March 1891
• Citation: 11 S.Ct. 517,139 U.S. 288,35 L.Ed. 196
• Parties: EAST TENNESSEE, V. & G. RY. CO. v. FRAZIER et al
• Court: U.S. Supreme Court

139 U.S. 288

11 S.Ct. 517

35 L.Ed. 196

EAST TENNESSEE, V. & G. RY. CO. v. FRAZIER et al.

March 23, 1891.

Wm. M. Baxter, for plaintiff in error.

H. H. Ingersoll, for defendants in error.

BREWER, J.

This case is submitted on a motion to dismiss or affirm. The facts are these: The state of Tennessee in 1847 (Acts 1847-48, p. 195) granted a charter of incorporation to the East Tennessee & Virginia Railroad Company. In 1869 this corporation was consolidated with the East Tennessee & Georgia Railroad Company, under the name of the East Tennessee, Virginia & Georgia Railway Company. This consolidated company, in 1881, executed a mortgage, which in 1886 was foreclosed, and the plaintiff in error, the East Tennessee, Virginia & Georgia Railway Company, as purchaser, took possession of the franchises and property. After this foreclosure and sale, petitions in the nature of creditor's bills were filed in behalf of the defendants in error, judgment creditors of the railroad company, to subject its property in the hands of the purchaser, the railway company, to the satisfaction of their judgments. These judgments were, in point of time, subsequent to the mortgage of 1881; and the question presented was whether they were superior liens. Such superiority was claimed under and by virtue of a proviso to section 3, c. 72, of the Laws of Tennessee of 1877, p. 92, which reads: 'And pro- vided, further, that no railroad company shall have power under this act or any of the laws of this state to give or create any mortgage or other kind of lien on its railway property in this state, which shall be valid and binding against judgments and decrees and executions therefrom for timber furnished and work and labor done on or for damages done to persons and property n t he operation of its railroad in this state.' By final decree of the chancery court, approved by the supreme court of the state, priority of lien was given to the appellees' judgments, and satisfaction decreed out of the property. Of this adjudication of priority plaintiff in error complains, and presents as a federal question the proposition that the act of 1877, giving priority to certain judgments over mortgage liens, was an impairment of the contractual rights created by the act of 1847. The fifteenth section of that act contained this provision: 'The said company may at any time increase its capital to a sum sufficient to complete the said road, and to stock it with everything necessary to give it full operation and effect, either by opening books for new stock, or by selling new stock, or by borrowing money on the credit of the company, and on the mortgage of its charter and works.' And the contention is that this section granted the right to create an absolute first lien by mortgage, which could not be taken away by subsequent statutes giving priority to any judgments or claims of date later than the mortgage. The claim that the act of 1877 was in impairment of contractual rights given by a prior act of the ligislature applicable to the corporation mortgagor presents, doubtless, a federal question; and the first matter for our consideration is whether there was color for the motion to dismiss. It appears that in the pleadings filed by the railway corporation responsive to the petitions of the appellees the unconstitutionality of the act of 1877 was alleged; but such unconstitutionality was not predicated on any provision of the United States constitution, but solely on those of the constitution of the state. We quote from the answer to one of the petitions, which, in this respect, is as full and complete as any: 'Respondent is advised and will insist that the act of 1877 under which petitioners seek to pursue and appropriate respondent's property to the payment of their claims, and especially the provision of the third section of said act, is unconstitutional and void, because said...