Lang v. Choctaw, O. & G.R. Co.

• Decision Date: 03 March 1908
• Docket Number: 2,536.
• Citation: 160 F. 355
• Parties: LANG et al. v. CHOCTAW, OKLAHOMA & GULF R. CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

160 F. 355

LANG et al. v. CHOCTAW, OKLAHOMA & GULF R. CO. et al.

No. 2,536.

United States Court of Appeals, Eighth Circuit.

March 3, 1908

[Copyrighted Material Omitted]

This is an appeal from an order which granted a temporary injunction against the prosecution by certain judgment creditors of a suit in the chancery court of Crittenden county, in the state of Arkansas, to subject a railroad and its appurtenances which were owned by the complainant, the Choctaw, Oklahoma &amp Gulf Railroad Company, under a decree of foreclosure rendered by the United States Circuit Court for the District of Arkansas, to a lien alleged to be paramount to the mortgage foreclosed and to satisfy their judgment, which had been rendered after the foreclosure against the predecessor in title of the mortgagor, by a sale of the railroad. Neither the mortgagor, the mortgagee, nor the Gulf Company were parties to the action which resulted in that judgment.

The chief subject of this controversy is the railroad from Little Rock, in the state of Arkansas, to Hopefield, upon the west bank of the Mississippi river opposite Memphis. In 1887, the Little Rock & Memphis Railroad Company, hereinafter called the Little Rock Company, succeeded to the title to this railroad of the Little Rock & Memphis Railroad Company as reorganized, and mortgaged the railroad and its appurtenances to secure its bonds to the amount of $3,186,000. The reorganized company, and its predecessor in title, had at various times between 1872 and 1887 appropriated to the use of its railroad without compensation about 90 acres of land on the west bank of the Mississippi river at Hopefield, to undivided interests in which the defendants had title. This land was used for a time by these predecessors, and it then caved into the river and disappeared so that little of it is, or ever has been, in the possession or use of the Gulf Company. In 1880 the defendants commenced a suit in the circuit court of Crittenden county against the old reorganized company, in which they prayed that the amount due them for the use of this land and for the removal of earth and timber therefrom by that company and by its predecessor in title might be ascertained and paid, and that the reorganized company might be enjoined from using this land until this amount was paid. There was no claim to or prayer for any lien upon the railroad in the bill in that suit, or in the amended bill therein, which was subsequently filed. The final decree in that suit was rendered on February 27, 1902, and it was that the defendants should recover from the reorganized company $17,956.36, and interest from September 23, 1901, and costs, and it granted no other relief. Between the commencement of that suit in 1880 and the final judgment in 1902, it had been dismissed, and its dismissal had been reversed (Organ v. Memphis & Little Rock R.R. Co., 51 Ark. 235, 11 S.W. 96); a judgment had been recovered against the reorganized company by the defendants for $13,868.80, and that judgment had been reversed (Memphis & Little Rock Railroad Company v. Organ, 67 Ark. 84, 55 S.W. 952);

the defendants had brought a suit on September 12, 1895, to enforce their judgment of $13,868.80 by subjecting the railway and other property to an alleged lien, had obtained a decree, and that decree had been reversed (Memphis & Little Rock Railroad Company v. Organ, 70 Ark. 195, 66 S.W. 922), and that suit had been abandoned.

On June 1, 1893, the Central Trust Company, the trustee named in the mortgage of the railroad and its appurtenances made by the Little Rock Company in 1887, filed its bill in the court below to foreclose that mortgage, and on that day the court appointed a receiver of the railroad and its appurtenances who took immediate possession thereof and held the same until he delivered this property to the purchaser under the foreclosure sale, which was made on October 25, 1898. The Little Rock Company was a party defendant to this foreclosure, and the decree which was rendered on October 22, 1894, provided that the property should be sold, that all equity of redemption of the Little Rock Company and all persons claiming under it should be thereupon foreclosed and forever barred, that in addition to the purchase price which should be bid the purchaser should pay 'all claims filed in this cause, but only when the court shall allow such claims and adjudge the same to be prior in lien to the mortgage foreclosed in this suit, and in accordance with the order or orders of the court allowing such claims and adjudging with respect thereto. ' The decree also contained these provisions: 'The court reserves the right to retake and resell said property in case of the failure or neglect of the purchaser or purchasers, or his or their assigns, approved by the court aforesaid, to comply with any order of the court in respect to the payment of receiver's certificates, debts, or obligations, or of prior liens or claims above mentioned within 20 days after service of such order upon such purchaser or purchasers, or his or their assigns. * * * And, further, the said purchaser or purchasers shall have and be entitled to hold the said railroad and property free and discharged of and from all lien of the mortgage foreclosed by this suit, and from the claims of the parties to this suit, or any of them, except the claim of the complainant, Central Trust Company of New York, by reason of the payment of $45,000 made by it to the State of Arkansas, as hereinabove mentioned. All questions not hereby disposed of and determined are hereby reserved for further adjudication, the settlement of the same being held not to be necessary for the purposes of this decree. And the court reserves all right to make such further order at the foot of this decree as may seem just and proper. ' While this suit was pending and the railroad and its appurtenances were in the possession of the receiver, and on September 28, 1895, the defendants filed their petition of intervention therein, in which they alleged that by virtue of their claim against the old reorganized company, for which they had then secured the judgment for $13,868.80, which was subsequently reversed, they had a lien upon the line of railroad between Little Rock and Memphis, which the Little Rock Company had mortgaged to the Central Trust Company, which was prior in lien and superior in equity to the lien of the mortgage, and prayed that the railroad should be first applied to the satisfaction of that lien. On August 7, 1896, they filed an amended and supplemental petition in this foreclosure suit, and prayed that the railroad then in the possession and under the control of the receiver of the court below should be adjudged by that court to be subject to their alleged lien for their claim against the old reorganized company, that such lien be declared to be superior and paramount to all other liens and claims, and that the railroad and its appurtenances be sold for the payment thereof, or that a sufficient amount of the proceeds of the sale in the foreclosure suit be segregated, set apart, and applied to the amount due them in preference to all other claims and demands whatsoever. The foreclosure sale was made on October 25, 1898, to Frederick P. Olcott. It was confirmed by the court, and certain allowances were made and directed to be paid out of the proceeds of the sale on November 19, 1898, but no order or decree was ever made that the prayer of the petitioners in their intervening petition should be granted, or that they were entitled to a lien paramount to that of the mortgagee and of the purchaser at the foreclosure sale. Olcott, the purchaser, conveyed the railroad to the Choctaw & Memphis Railroad Company, which subsequently and on June 30, 1900, conveyed it to the Gulf Company, which now owns it.

On September 8, 1902, the defendants in this suit filed a bill in the chancery court of Crittenden county, against the Gulf Company and others, in which they alleged that their judgment of $17,956.36 against the reorganized company was secured by a lien upon the entire railroad from Little Rock to Memphis and its appurtenances, which was paramount and superior to the title of the Gulf Company under the foreclosure sale, and prayed that the railroad and all its appurtenances and franchises be sold to satisfy that lien. They also alleged that the old reorganized company had certain specific real estate upon which they had levied an execution under their judgment, that the reorganized company was insolvent, and prayed that a receiver of its assets and property be appointed, and that its property be sold and the proceeds distributed among its creditors. Thereupon the Gulf Company and the Choctaw & Memphis Railroad Company, its predecessor in interest under the foreclosure, exhibited their supplemental bill in the foreclosure suit, in which they set forth the material facts which have been recited, and also the fact that on March 12, 1897, in this foreclosure suit, the court after hearing, enjoined the defendants from levying an execution upon the specific property upon which they aver in their bill that they have levied an execution, and prayed that the defendants be enjoined from prosecuting their suit in the state court to establish a lien upon the railroad paramount to their title under the foreclosure decree, and to sell the specific property which they had theretofore been enjoined from selling, and the court granted a preliminary injunction in accordance with this prayer.

Wm. M. Randolph (George Randolph and Wassell Randolph, on the brief), for appellants.

Thomas S. Buzbee (Edward B. Peirce and John T. Hicks, on the brief), for appellees.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

SANBORN Circuit Judge (after stating the...