Fid. Ins. v. Shenandoah Val. R. Co

• Decision Date: 11 April 1889
• Citation: 9 S.E. 759,86 Va. 1
• Court: Virginia Supreme Court
• Parties: Fidelity Insurance, Trust & Safe-De posit Co. et al. v. Shenandoah Val. R. Co. et al.

9 S.E. 759

(86 Va. 1)

Fidelity Insurance, Trust & Safe-De posit Co. et al.

v.Shenandoah Val. R. Co. et al.

Supreme Court of Appeals of Virginia.

April 11, 1889.

Railkoad Companies —Bonds —Constitutional Law—Novation.

1. Act Va. March 21, 1877, was entitled: "An act to secure the payment of wages or salaries to certain employes of railway * * * corporations." It provided that employes, and persons furnishing iron, fuel, or other supplies to such a corporation, should have alien for their debts on all its property superior to any mortgage or other lien thereafter given. Act April 2, 1879, amended said statute by adding engines and cars to the list of supplies for which a lien was given thereby. Meld, that said acts, so far as they purported to give a lien to persons furnishing cars and engines, are repugnant to Const. Va. art. 5, § 15, requiring the object of a law to be expressed in its title.

2. One furnishing rolling stock to such a corporation, retaining the title as security, before the appointment of a receiver, after being paid by the latter for the use of the rolling stock, since his appointment, and exhausting his lien thereon, is, as to the residue of his debt only, a general creditor of the corporation, with a claim inferior to that of a mortgagee.

3. A railroad corporation owed wages and other debts of a privileged class, and also overdue coupons secured by mortgages. C. & Co. held a large amount of these coupons, and furnished the corporation money to pay portions of said debts, taking its promissory note therefor. A scheme for funding all this indebtedness was adopted, and bondssecured on the income of the road were issued, of which C. & Co. took enough, at 60 cents on the dollar, to equal the amount of their claim, and also took an additional sum for which they paid cash. These bonds were issued, as the company stated, "to pay and provide for its floating indebtedness, " and to secure their prompt negotiation the interest thereon was guarantied by another railway corporation. No express agreement was made as to whether the former claims of C. & Co. should be extinguished. C. & Co. also took prior mortgage bonds as collateral security for the payment of their income bonds. Held, that the acceptance of the bonds constituted a novation of the debt, and that the debt of C. & Co. was postponed to those of the prior mortgagees, as to the mortgaged property.

Appeal from circuit court of city of Roanoke; Henry E. Blatr, Judge.

This is an appeal from a later decree in the same cause in which the opinion in Atwood v. Railroad Co., ante, 748, was rendered. The decree was rendered in April, 1888, and decided that certain "car-trust creditors" had a lien on all the property of said railroad for rolling stock furnished, superior to that of the holders of bonds secured by mortgages. It also rejected the claims of certain "income bondholders" to priority over the other creditors, except as to the amount of the income bonds paid for with coupons of prior mortgages. For statement of facts, see the opinion, and the opinion in the case referred to above. Clark & Kimball, holders of income bonds, appeal from the portion of the decree affecting them, as do also the first mortgage bondholders.

Chas. L. Lamberton, Joseph Leedom, W. W. & B. T. Crump, W. R. Staples, and Jos. S. Clark, for various appellants. Johnston, Williams & Boulware, Camm Patteson, Wm. J. Robertson, F. P. Clark, W. R. Staples, H. Gordon McCouch, R. C. Dame, and W. H. Trovers, for various appellees.

Lewis, P. We are of opinion that so much of the decree of the April term, 1888, is erroneous as decides that the claims designated in the record as the "car-trust claims" constitute a lien on the franchises and all the property, real and personal, of the defendant company. These claims are for engines and other rolling stock which were furnished by the Railroad Equipment Company, E. E. Denniston, and other persons, to the defendant company, at different times, prior to the commencement of the present suit, and for which the company undertook to pay in monthly installments; the title, however, to be retained until the equipment should be fully paid for. As appears from the master's report, the aggregate amount of these claims exceeds the sum of $700,000, —a sum equal to, or perhaps in excess of, the real value of the equipment, —and they are reported by him, and adjudged by the court to be liens on the property of the company prior to the mortgages in question. This conclusion is based on certain provisions of the statute approved March 21, 1877, as amended by an act approved April 2, 1879, (Acts 1876-77, p. 188; Acts 1878-79, p. 352,) and its correctness therefore, depends upon the validity of those provisions. The title of the first-mentioned act is " An act to secure the payment of wages or salaries to certain employes of railway, steam-boat, and other corporations." And the first section of the act enacts "that hereafter all conductors, brakemen, engine-drivers, firemen, captains, stewards, pilots, clerks, depot, or office agents, storekeepers, mechanics, or laborers, and all persons furnishing railroad iron, fuel, and all other supplies necessary for the operation of trains and engines, employed in the service of any railroad, canal, or other transportation company, chartered under or by the laws of this state, or doing business within its limits, shall have a prior lien on the franchise, the gross earnings, and on all the real and personal property of said company which is used in operating the same, for and to the extent of the wages or salaries contracted to bo paid them by said company; and no mortgage, deed of trust, sale, conveyance, or hypothecation hereafter executed of said property shall defeat or take precedence over said lien." The second section then goes on to provide how the lien secured by the first section shall, in order to avail, he verified and recorded, and the third section protects the rights of an assignee of the lien. The title of the amendatory act is as follows: " An act to amend and re-enact the first and second sections of an act approved March 21, 1877, entitled ' An act to secure the payment of the wages or salaries of certain employes of railway, canal, steam-boat, and other transportation companies.' " And the only amendment made by the act which is material to the present case is that it adds the words "engines" and "cars" to the list of supplies mentioned in the first section of the original act, and for which a lien is given. The question upon which this branch of the case depends is whether this legislation, so far as it relates to what is known as supply creditors, is germane to the title of the statute, or whether it is not sufficiently indicated by the title, and therefore invalid by virtue of the constitutional requirement that "no law shall embrace more than one object, which shall be expressed in its title." Const, art. 5, § 15.

The question is a grave one, and we fully appreciate its importance and delicacy. Every act of the legislature is presumed to be constitutional, and ought to bo sustained by the courts, unless the conflict between the statute and the constitution be palpable. And especially is this so in a case like the present, as it is often difficult to determine the degree of particularity which must be observed in the title of a statute in order to 'make the title and the body of the act conform to the constitutional requirement. But where the repugnancy between the statute and the constitution is too clear to admit of reasonable doubt the constitution must prevail, and the statute, to the extent of the repugnancy, must be declared invalid, be the consequences what they may.

As to the constitutional provision in ques-tion, it is, as we have had occasion in a recent case to declare, not only mandatory, but of great public utility. It was introduced into the constitution for a wise purpose, and ought to be reasonably interpreted and firmly entorced. Its object is to prevent corrupt or surreptitious legislation by incorporating into a bill obnoxious provisions of which the title gives no indication, and its requirement is that the title, while it need not be a complete index of the act, must indicate its object with sufficient distinctness to enable the members of the legislature to fairly understand it by simply hearing the title read. In other words, the title is not to be used as a deceptive cover for vicious or surreptitious legislation. When the title is general, as it may be, all persons interested are put upon inquiry as to anything in the body of the act which is germane to the subject expressed. But when the title is restrictive, and confined to a special feature of a particular subject, the natural inference is that other features of the same general subject are excluded. "As the legislature, " says Judge Cooley, "may make the title to an act as restrictive as they please, it is obvious that they may sometimes so frame it as to preclude many matters being included in the act which might with entire propriety have been embraced in one enactment with the matters indicated by the title, but which must now be excluded, because the title has been made unnecessarily restrictive." "Nor can the courts, " he adds, "enlarge the scope of the title. They are vested with no dispensing power. The constitution has made the title the conclusive index to the legislative intent as to what shall have operation. It is no an-s werto say that the title might have been made more comprehensive, if, in fact, the legislature have not seen fit to make it so." Cooley, Const. Lim. 149. In a recent case in the supreme court of Pennsylvania it is said: "The purpose of the constitutional provision is to prevent a number of different and unconnected subjects from being gathered into one act, and thus to prevent unwise or injurious legislation by a combination of interests. Another purpose was to give information to the...