Hanlon v. Smith

• Court: U.S. District Court — Northern District of Iowa
• Citation: Hanlon v. Smith, 175 F. 192 (N.D. Iowa 1909)
• Decision Date: 09 December 1909
• Docket Number: 678.
• Parties: HANLON v. SMITH et al.

175 F. 192

HANLON v. SMITH et al.

No. 678.

United States Circuit Court, N.D. Iowa, Eastern Division.

December 9, 1909

[Copyrighted Material Omitted]

John W Kintzinger, for plaintiff.

Hurd Lenehan & Kiesel and Carr, Carr & Evans, for defendants.

REED District Judge.

This action was commenced in the district court of Iowa in and for Dubuque county July 28, 1909, to recover of the defendants, as receivers of the Chicago Great Western Railway Company, damages for a personal injury alleged to have been sustained by plaintiff in February, 1909, while in their employ as a switchman in a yard of that company, in Dubuque, Iowa, because of their negligence in the operation of the railroad of the company, and in due time properly removed to this court. Since the removal the plaintiff has filed an amendment to his petition, in which he alleges, in substance, that since the action was commenced all of the property of the Chicago Great Western Railway Company that was in the custody and control of the defendants as such receivers has been sold under decrees of the courts appointing them to the Chicago Great Western Railroad Company, a corporation of Illinois, to whom the same has been deeded, and who in such deed has assumed and agreed to pay as a part of the purchase price of said property, besides other obligations, all liabilities incurred by said receivers at any time before their final discharge in operating said road, which includes their liability to the plaintiff for the injury sustained by him, that said property has been turned over by said courts pursuant to such sale and deed to said railroad company, and the receivers discharged from further service in connection therewith, and asks that said purchaser, the Chicago Great Western Railroad Company, be made a party defendant to this action, and that he have judgment against it for the damages so sustained by him, because of its assumption of, and agreement to pay, the liability of the receivers to him therefor. The defendants move to strike the amendment from the files upon the ground that the railroad company is not a necessary or proper party to the action, and, if made a party thereto, there would be a misjoinder of parties and of causes of action.

It appears from the records of this court in the suit of John A. Humbird et al. v. Chicago Great Western Railway Company, to which reference is made in support of the allegations of the amendment to the petition, that on January 8, 1908, the defendant Charles H. F. Smith and A. B. Stickney were appointed receivers of all of the property of every kind, nature, and description, wheresoever situated, of the Chicago Great Western Railway Company (an Illinois corporation then owning and operating a system of railroads in Illinois, Minnesota, Iowa, Nebraska, Kansas, and Missouri) by the Circuit Court of the United States for the District of Minnesota, Third Division, in a suit in equity brought in that court by said John A. Humbird et al. against said Chicago Great Western Railway Company; that ancillary proceedings were immediately instituted in this court, and in the several Circuit Courts of the United States in the various districts into which, or through which, lines of railroad of said company extend, and that said receivers were also appointed as such for all of the property and franchises of said company within this district and in said other districts; that they duly qualified as such and at once took possession of all of the property of said company, including that within this district, and continued thereafter to operate the same and receive the income thereof under the orders of said courts until finally discharged as hereinafter stated.

On January 1, 1909, said A. B. Stickney resigned as one of said receivers, and the defendant Horace G. Burt was appointed in his stead, and he thereafter continued to act as one of such receivers under the orders of the courts so appointing them. The order appointing such receivers authorized and directed them--

'to take immediate possession of said property, and to operate the railroad which is now operated by or in the interest of the defendant, and to collect and receive the income and tolls thereof and all the moneys due or to become due to said railway company. * * * '

It also contains a provision as follows:

'That for all liabilities incurred by said receivers in the operation of the railroads, or any of them, or the property hereby placed in their charge, each claimant may file an intervening petition in this cause, and have his demand adjudicated in this court, thereon. Judgments against the company, or against the receivers, or the properties upon demands which the receivers are by this order required to pay, not appealed from, will be audited and allowed upon filing a transcript of the same in the special master's office, of this court, and will be properly classified as adjudicated claims against the receivership; but nothing herein contained shall authorize the levy of an execution, or of any other writ or process, on the property in the hands of these receivers, or any interference whatever with their custody or possession of the same.'

July 10, 1909, said Circuit Court of the United States for the District of Minnesota entered a decree authorizing the sale by the special master of all of the property of said company so placed in the custody of such receivers upon terms specified in said decree, and prescribed the notice to be given of such sale, which decree was also entered in this court on July 12th following, and contains, besides others, the following provisions:

'(1) It is further ordered, adjudged, and decreed that: * * *

'As a part of the consideration for the property purchased, the purchaser shall take the property and shall receive the deed therefor upon the express condition that, in addition to the sum bid therefor (which shall not be less than $12,000,000), the purchaser shall pay and discharge all the following claims.

'(a) (The costs and expenses of the suit and receivership.)

'(b) All indebtedness, obligations, or liabilities which by such receivers shall have been contracted or incurred in the operation or on account of the property of the said Great Western Railway Company, at any time before the same shall have been delivered to the purchasers, or in the discharge of their duties as receivers at any time before they are finally discharged.

'(c) and (d) (Specify certain debts and obligations of the Chicago Great Western Railway Company, not necessary to now notice.)

'The purchasers shall pay any of the claims described in clauses (a) and (b) which are established or unquestioned, and any disputed claims when allowed by the master without objection or by the court, and they shall pay to the master or into court the moneys required to discharge the same from time to time as the court may direct. * * *

'Jurisdiction of this cause and of said property is retained by this court for the purpose of enforcing the provisions of this decree; and the court reserves the right to reject any bid and to retake and to resell said property in case for a period of 30 days the purchasers shall fail to comply with any order of the court with respect to the payment of any such indebtedness, obligation, or liability.

'The purchasers shall have the right to enter their appearance before said master or in this court or in any other court, and they or any of the parties to this suit shall have the right to contest any claim, demand, or allowance pending at the time of the sale and then undetermined, and any claim or demand which may arise or be presented thereafter, which, if allowed, would be payable by the purchaser or which would be chargeable against the property purchased under the provisions of this decree, and may appeal from any decision relating to any such claim, demand, or allowance. * * * '

It also appears that, pursuant to said decree, the franchises and all property of said Great Western Railway Company of every nature and description were on August 21, 1909, sold by the special master at public auction, after giving the required notice of such sale, and that the Chicago Great Western Railroad Company, an Illinois corporation, has succeeded to the rights of the purchasers thereof, subject to all the terms and conditions of said decree. Said notice of sale contains the following:

'(d) The purchasers or their assigns will take the property and receive the deed therefor upon the express condition that, in addition to the sum bid therefor, such purchasers shall pay and discharge all of the following claims, which are not paid by the amount bid, to wit: * * * also all indebtedness, obligations or liabilities which by such receivers shall have been contracted or incurred in the operation or on account of the property of said Chicago Great Western Railway Company at any time before the same shall have been delivered to the purchasers or in the discharge of their duties as receivers at any time before they are finally discharged. * * * '

And the master's report of such sale contains the following:

'In connection with said offer and before receiving any bids therefor, I did publicly announce that the said property was offered for sale, and would be struck off to the purchaser thereof, subject to the terms, conditions, reservations, and obligations in said decree contained, including those recited in the said notice of sale, Exhibit A hereto, and I did then and there specifically refer any and all intending bidders to the said decree of sale for more particular information in the premises.'

The sale of said property was duly confirmed by the decree of the courts on August 28, 1909, and said master...