Kansas City, M. & O. Ry. Co. of Texas v. Latham

• Decision Date: 18 December 1915
• Docket Number: (No. 8277.)
• Parties: KANSAS CITY, M. & O. RY. CO. OF TEXAS v. LATHAM.
• Court: Texas Court of Appeals

182 S.W. 717

KANSAS CITY, M. & O. RY. CO. OF TEXAS v. LATHAM.

(No. 8277.)

Court of Civil Appeals of Texas. Ft. Worth.

December 18, 1915.

Rehearing Denied January 22, 1916.

Appeal from District Court, Nolan County; W. W. Beall, Judge.

Action by J. H. Latham against the Kansas City, Mexico & Orient Railway Company of Texas. From a judgment for plaintiff, defendant appeals. Affirmed.

H. S. Garrett, of San Angelo, for appellant. J. H. Beall and E. R. Spencer, both of Sweet-water, for appellee.

DUNKLIN, J.

The Kansas City, Mexico & Orient Railway Company of Texas has appealed from a judgment against it in favor of J. H. Latham for injuries to a shipment of cattle resulting from negligent handling of the cattle by the employés of the receivers of that railway, who were appointed by the federal court and who were finally discharged prior to the institution of this suit.

The case was tried upon an agreed statement of facts, which is a part of the record here. The defendant railway company expressly agreed that the claim asserted by plaintiff was a valid claim against the receivers before their discharge for the amount awarded by the trial court; but by all the assignments of error presented it is insisted that appellant is not liable therefor. Appellant was the owner of the property at the time the receivers were appointed, and upon its application the receivers were discharged, and the property returned to the company without a sale.

In his petition in the present suit plaintiff sought to hold the company liable for the claim upon two special theories: First, that while the property was in the hands of the receivers, earnings derived from operating it, in excess of the aggregate of all debts and liabilities incurred by the receivers, were expended for betterments and improvements of the property, the benefits of all which were realized by the company after the property was restored; second, that by the terms of the railway company's application for the discharge of the receivers and the restoration of the property to its possession and control and, as a condition precedent to the grant of such relief, it expressly agreed to assume all outstanding liabilities of the receivers, and that by the terms of the order of court granting the application the property was released to the company charged with all such liabilities.

But plaintiff also pleaded that appellant was liable for his claim by operation of law, and, in connection therewith, alleged that by order of court the receivers were discharged and the property in their hands returned to defendant without sale. The proof explicitly refuted any right to recover upon the first theory mentioned.

In the application for the discharge of the receivers, many claims were mentioned specifically, including those outstanding against the company prior to the appointment of the receivers, some of which had been allowed by the master in chancery and approved by the court, and others were still pending and undetermined. It was further alleged that there were outstanding receivers' certificates in the sum of approximately $1,470,000, secured by a preference lien on all the property of the company; and in addition thereto adjusted liabilities of the receivers in the sum of $250,000. A further allegation relative to outstanding claims reads:

"Your petitioner further states that there are pending undetermined and unadjudicated, by suit and in few instances by claims, other liabilities and demands against this company prior to the receivership, as well as against these receivers; but petitioner is unable to state what amount will finally be due upon the same."

The application concludes with the following:

"Now the premises considered, your petitioner prays for a proper order and decree discharging such receivers, and directing that all of its property and assets be taken from the possession and control of said receivers and delivered to this petitioner, and that it be authorized to take charge of said property and operate same, and in order that the rights and indebtedness of all parties may be fully protected, it hereby agrees to accept said property subject to the charge of all indebtedness which has been or may be finally adjudicated against it, and it further assumes all of the liabilities and indebtedness accruing or to accrue against said receivers of every kind and character whatever, and is willing that the court may make all proper and necessary orders which will protect the indebtedness of all parties having any claims or demands, either against this petitioner, or against the receivers herein.

"Wherefore, the premises considered, your petitioner prays that all due and proper orders be made and entered herein by this court, as herein prayed for."

The order of court granting the application contains the following:

V. "It is ordered, adjudged, and decreed by the court that said defendant, the Kansas City, Mexico & Orient Railway Company of Texas, hereby takes and receives, and shall take and receive, all of the property and assets of every kind and description owned by it involved in this receivership, including the assets of every kind and description held and delivered to it by the said receivers, involved in and conveyed by this order, directing the delivery of said property to the said defendant, the Kansas City, Mexico & Orient Railway Company of Texas, by the said receivers, expressly charged with and subject to the following claims, demands, and liabilities, to wit:

"(a) All of the court costs incurred in this receivership which are or may be properly chargeable to or against the complainant herein, or to or against the defendant, the Kansas City, Mexico & Orient Railway Company of Texas, or to or against said S. B. Hovey and M. L. Mertz, as receivers.

"(b) All of the liabilities which have heretofore been adjudicated and determined, and which may hereafter be finally adjudicated and determined and found to be just, true, and correct demands against the said S. B. Hovey and M. L. Mertz, as receivers, arising out of the operation of the lines or property of the defendant by such receivers.

"(c) All of the indebtedness and liabilities owed by and due from the said the Kansas City, Mexico & Orient Railway Company of Texas, which have been finally established and adjudged, or which may be hereafter finally adjudicated by this court, or by any other court of competent jurisdiction, and which may be found to be just and legal liabilities against the said defendant, the Kansas City, Mexico & Orient Railway Company of Texas.

"(d) Any allowances for compensation of any officer or officers of this court appointed in this cause, or officer or agents of the receivers, if, in the opinion of the court, any of such are entitled to such compensation, reservation being hereby made by the court of its right to hereafter determine such question.

"And it is further provided by the acceptance of the said the Kansas City, Mexico & Orient Railway Company of Texas of the provisions of this order and decree that it is deemed and held to have assumed all of such liabilities and indebtedness as herein provided for.

VI. "And it further appearing to the court that the Kansas City, Mexico & Orient Railway Company of Texas, through a bondholders' committee, has caused to be placed with S. B. Hovey and M. L. Mertz, receivers herein, the sum of three hundred fifty thousand dollars ($350,000), which said sum the said Hovey and Mertz accepted as trustees for the purpose of paying off and discharging the indebtedness and liabilities of the receivers finally adjudicated and determined, and of the class and kind named in the petition filed herein by the Kansas City, Mexico & Orient Railway Company of Texas, and also paying off and discharging the indebtedness and liabilities of the Kansas City, Mexico & Orient Railway Company of Texas, adjudicated and determined as set forth in said petition, and the court having confidence in the said trustees aforesaid, hereby orders and directs that the said S. B. Hovey and M. L. Mertz, as trustees, proceed with due diligence to expend the amount so placed in their hands as trustees toward paying off...