First Trust & Savings Bank v. Southern Indiana Ry. Co.

• Decision Date: 11 April 1912
• Docket Number: 29,175.
• Citation: 195 F. 330
• Court: U.S. District Court — Northern District of Illinois
• Parties: FIRST TRUST & SAVINGS BANK v. SOUTHERN INDIANA RY. CO. et al.

195 F. 330

FIRST TRUST & SAVINGS BANK v. SOUTHERN INDIANA RY. CO. et al.

No. 29,175.

United States District Court, N.D. Illinois, Eastern Division.

April 11, 1912

Charles E. Pope, for petitioner.

James C. Hutchins and Lessing Rosenthal, for Chicago, T.H. & S.E. Ry. Co.

William F. Peter, for Myron J. Carpenter, receiver.

KOHLSAAT Circuit Judge.

A. B Meyer & Co. present to the court their petition herein for leave to intervene, based upon the following facts, viz.: In the year 1902 petitioner entered into a contract with the railway company to transport coal during the years 1902 and 1903 from certain mines in Indiana to Indianapolis, at a rate of 40 cents per ton, being the then published freight rate for a valuable consideration. Petitioner performed its part of said contract, and a large amount of coal was so transported. Thereafter the published rates were advanced first, to 50 and again to 60 cents per ton. Petitioner was obliged to pay said advanced rates, and did so on the promise that the excess over 40 cents per ton would be refunded immediately-- not as a rebate, the petition states, but as belonging to petitioner. A statement of such excess amounting to $9,634.75, was presented as a claim to the railway company during the year 1903. On February 22, 1906, petitioner was notified by the railway company that its claim was vouchered, and would be paid by the treasurer of the railway some time in February, 1906.

The petitioner alleges, further, that a voucher was so issued to petitioner for $7,124.33, in part payment, and that, by some arrangement with the Big Four Railway Company, that company paid petitioner one-half thereof, to wit, $3,562.16, leaving a balance of $3,562.17 unpaid upon said voucher, or a balance of $6,072.59 still unpaid on said claim of $9,634.75. It does not appear that the balance of $2,510.42 was ever vouchered. Nothing further was paid upon said claim prior to the appointment of the receiver, and the amount unpaid upon said voucher was proved up as a general claim herein before the special master for $4,817.38 on July 6, 1909. On November 27, 1909, petitioner was advised by the receiver through his solicitor by letter to the effect that he did not anticipate any objection to the allowance of the claim as presented, and saying he knew of nothing further petitioner need do in the matter, that the claim would have to take its course with the other claims, and that it might be some time before results. On September 21, 1911, petitioner claims to have for the first time been advised that the claim had not been allowed as a preferred claim, and that there would be no funds with which to pay general claims, and thereupon presented its petition for leave to file an intervening petition setting forth its alleged rights and claims as a preferred creditor of said Southern Indiana Railway Company, and as having a lien and equity superior to the lien and equity of the trustee and those claiming under said general trust deed of May 1, 1906. In the meantime, and on May 27, 1910, the decree of sale in said cause was entered, wherein it is provided in article 11 thereof that:

'The purchaser shall also, as a part of the consideration and purchase price of the parcel of properties purchased and in addition to the sum bid, take said property and receive the deed or deeds therefor upon the express condition that he or his successors or assigns shall pay in cash so far as they are not paid, satisfied, and discharged out of the purchase price paid in cash or the funds in the hands of the receiver, any unpaid costs and expenses of this cause, * * * and also all other unpaid indebtedness and liabilities contracted or incurred by the Southern Indiana Railway Company, which shall have been heretofore presented to this court, either by filing an intervening petition herein or filing a claim with the special master (appointed by the former order of this court) and which may be prior in lien or superior in equity to the general mortgage and the bonds secured thereby upon the court adjudging the same to be prior in lien or superior in equity to said general mortgage and the bonds secured thereby and directing the payment thereof.'

In pursuance of said decree, and prior to the application to the court for leave to file the petitioner's said petition for preference, said railway was sold at public sale, and is now the property and in the possession of the Chicago, Terre Haute & Southeastern Railway Company. The question here presented is whether the petitioner may at this time, and under the facts of the case, be permitted to file its petition to have its said claim paid as one of the items assumed by the purchaser as a part of the consideration for the sale. In disposing of the petition for leave to file, the court must inquire into the subject-matter of the proposed petition and its relation to the other facts in the case. The vouchering of the petitioner's said claim means that the same has been investigated, passed on, and approved. It nowhere appears that the amount of money necessary to pay the same had been physically set aside. On the contrary, it was not expected that it would be paid at once. Therefore, there could be no question of a trust...