Newbold v. the Peoria
| Decision Date | 31 December 1879 |
| Citation | 5 Ill.App. 367,5 Bradw. 367 |
| Parties | JOHN S. NEWBOLD ET AL.v.THE PEORIA AND SPRINGFIELD RAILROAD COMPANY ET AL. |
| Court | United States Appellate Court of Illinois |
OPINION TEXT STARTS HERE
APPEAL from the Circuit Court of Peoria county; the Hon. J. W. COCHRAN, Judge, presiding. Opinion filed January 7, 1880.
Messrs. CRATTY BROS. & ULRICH, and Messrs. JUDD & WHITEHOUSE, for appellants; that the corporation is estopped from alleging an issue in excess of the amount ordered, as against the rights of a bona fide holder for value, cited Knox Co. v. Aspinwall, 21 How. 159; Bissell v. City of Jefferson, 26 How. 298; Mercer Co. v. Hackett, 1 Wall. 93; Supervisors v. Schenck, 5 Wall. 783; Pendleton v. Amy, 13 Wall. 305; Lynde v. County, 16 Wall. 13; Marcy v. Oswego, 2 Otto, 637; Koouts v. Northern Bank, 16 Wall. 196; Humboldt Tp. v. Long, 2 Otto, 642; Bolton v. Board of Education, 1 Bradwell, 193; Coloma v. Eames, 2 Otto, 593; Warren v. Marcy, Monthly Jur. July, 1878; Merchants' Bank v. State Bank, 10 Wall. 644; Gal. R. R. Co. v. Cowdry, 11 Wall. 459; Moran v. Cours, 2 Black, 722; Maxcy v. Williamson Co. 72 Ill. 207; Hackett v. City of Ottawa, 11 Chicago Legal News, 240; Stanton v. Ala. etc. Ry. Co. 2 Woods, 523.
The receiver stands in place of the company and is liable, if in like case the company would be liable: Casper v. Hawkins, 8 West Va. 291; Klein v. Jewett, 26 N. Y. 474; Meara's Adm'r v. Holbrook, 20 Ohio St. 137; Blumenthal v. Brainerd, 38 Vt. 402; Paige v. Smith, 99 Mass. 395; Safford v. The People, 85 Ill. 558.
The receiver is an agent and the evil consequences of his acts, if any, should fall upon those who placed him in position to do the wrong: Garvin v. Wiswell, 83 Ill. 215; Gavagan v. Bryant, 83 Ill. 376; Stoner v. Milliken, 85 Ill. 218; How v. Nichols, 1 Salk. 289; Merchants' Bank v. State Bank, 10 Wall. 644.
Appellants were not bound to see to the appropriation of the money: Stanton v. Ala., etc. R. R. Co. 2 Wood 506.
An over-issue is an irregularity and does not go to the power to issue: N. Y. & N. H. R. R. Co. v. Schuyler, 34 N. Y.
Upon the question of negotiability: Stanton v. Ala., etc., R. R. Co. 2 Wood 506; McPherson v. Foster, 43 Iowa 48; Bank of Montreal v. C. C. Ry. Co. 48 Iowa 518; Mercer Co. v. Hackett, 1 Wall. 83; Woods v. Lawrence County, 1 Black, 386; Meyer v. Muscatine, 1 Wall. 385; Lee Co. v. Rogers, 7 Wall. 181; Grand Chute v. Winegar, 15 Wall. 356.
No change of ownership or possession can affect the rights of the parties: Clemens on Corporate Securities, 190; Stanton v. A. & C. R. R. Co. 2 Woods, 523.
The court can adjust equities so that no harm can be done by the misapplication of the funds by the receiver: Fosdick v. Schall, 11 Chicago Legal News, 216.
The doctrine of lis pendens does not apply to choses in action: Mead v. Orrery, 3 Atk. 235; Winston v. Westfeldt, 22 Ala. 760; McLourine v. Munroe, 30 Mo. 462; Baldwin v. Love, 2 J. J. Marsh, 489; County of Warren v. Marcey, 97 U. S. 96.
As to estoppel: DeWinton v. Mayor of Brecon, 26 Beav. 533; Stanton v. A. & C. R. R. Co. 2 Woods, 514; Bradley v. R. & W. R. R. Co. 40 Vt. 399.
As to priority of appellant's claim: Gardner v. Diedrichs, 41 Ill. 159; Flower v. Elwood, 66 Ill. 438; Sewall v. Brainard, 38 Vt. 364; Jones v. R. R. Securities, § 327.
Messrs. HOPKINS & MORRON, Mr. L. W. JAMES and Mr. WILLIAM F. BRYAN, for appellees; that the receiver had no authority to issue the certificates, cited Hooper v. Winston, 24 Ill. 353; High on Receivers § 180; McPherson v. Foster, 43 Iowa, 48; Marshall v. Silliman, 61 Ill. 218; Town of Elmwood v. Marcy, 92 U. S. 289; Bissell v. Kankakee, 64 Ill. 249.
The holders of these certificates will be presumed to have known that they were issued without authority, and therefore void: Marshall Co. v. Cook, 38 Ill 44; Schuyler Co. v. The People, 25 Ill. 181; Supervisors v. Clark, 27 Ill. 305; McClure v. Oxford, 94 U. S. 429; South Ottawa v. Perkins, 94 U. S. 260; Township v. Skinner, 94 U. S. 255; Pendleton Co. v. Amy, 19 Wall. 299; Kennicott v. Supervisors, 16 Wall. 452; St. Joseph v. Rogers, 16 Wall. 644; Coloma v. Eames, 92 U. S. 484.
The certificates are not negotiable: Nichols v. Davis, 1 Bibb. 490; High on Receivers § 186; Mooney v. B. C. L. Ins. Co. 9 Abb. Pr. 103; Dawkes v. Deloram, 3 Wils. 207; Story on Prom. Notes, § 22; Parsons on Bills, § 43; 1 Daniels on Negotiable Instruments. § 149; Janey v. Herle, 2 Ld. Raym'd, 1364; Wordin v. Dodge, 4 Denis, 154; Harriman v. Sanborn, 43 N. H. 129; Averitt v. Booker, 15 Grat. 163; Corbett v. State, 24 Ga. 287; West v. Foreman, 21 Ala. 400; Mills v. Kerykesdall, 2 Blackf. 48; McGee v. Larramor, 50 Mo. 425; Husband v. Epling, 81 Ill. 172; Baird v. Underwood, 74 Ill. 176; Kelly v. Hemingway, 13 Ill. 604; Smalley v. Edey 15 Ill. 324; Chitty on bills, 155; Stanton v. A. & C. R. R. Co. 2 Woods, 510; Bank of Montreal v. C. C. & W. R. R. Co. 7 Cent. Law Jour. 267.
Mr. B. S. PRETTYMAN and Messrs. BLOOMFIELD & HUGHES, for the railroad company; that the authority of the receiver is bounded by the decree of the court, cited Stanton v. A. & C. R. R. Co. 2 Woods, 516.
The certificates are not negotiable: Stanton v. A. & C. R. R. Co. 2 Woods, 516; Bank of Montreal v. C. C. & W. R. R. Co. 7 Cent. Law Jur. 267; Newell v. School Directors, 68 Ill. 516; Roberts v. Clelland, 82 Ill. 538; Reynolds v. Hines, 14 Cal. 667.
In a suit to foreclose a mortgage, such certificates are subject to the equities against the mortgage: Olds v. Cummings, 31 Ill. 189; Haskell v. Brown, 65 Ill. 29; Thompson v. Shoemaker, 68 Ill. 256; Bryant v. Vix, 83 Ill. 11.
LACEY, J. John S. Newbold, intervening petition, claim $10,000 and interest.
Wiliam P. Brock, intervening petition, claim $5,000 and interest.
Richard S. Brock, intervening petition, claim $5,000 and interest.
Wiliam W. Frazier, intervening petition, claim $5,000 and interest.
In the above causes of the several intervening petitioners, the record only of that of John S. Newbold is here presented; but by stipulation of all the parties, it is agreed that the intervening petition of John S. Newbold and the amendments thereto, and the answers and replications thereto are of the same substance as of all the other named intervening petitioners, in so far as they set forth the fact and circumstances of the sale, transfer or negotiation of said certificates, so that the consideration of one will present the same facts and fact of sale as the consideration of each of the others, and that the cause of John S. Newbold may be heard and determined by the Appellate Court without full copies or transcripts of the other three intervening petitions, or of the pleadings therein.
The fact of the existence of the trust deed against the P. & S. R. R. Co., the commencing of the suit by S. H. Thompson, the appointing of James Haynes, receiver, the orders of court authorizing him to borrow money, the appointing of John R. Hilliard, receiver, the order of the court authorizing him to borrow money and issue receiver's certificates, and the action of William Dennison in filing his cross-bill, are all set out by the stipulation of the parties as follows: That the P. & S. R. R. Co. was a corporation under the laws of Ills., built from Peoria to Pekin, was authorized to, and did issue bonds, secured by deed of trust to Dennison, on all its property, to the amount of $600,000; that May 22, 1875, S. H. Thompson, claiming to be the owner of five $1,000 bonds upon which interest was due and unpaid, filed the original bill in this case asking for the appointment of a receiver; that James Haynes was duly appointed receiver for all the property of the road, that upon the application of the receiver the court made an order authorizing him to borrow $20,000 for certain purposes specified; that afterwards the court upon like application of the receiver made a further order, authorizing the receiver Haynes to borrow $34,646, including the sum of $20,000 already ordered for like purpose of repairing, improving and bettering the road, and other purposes not including the payment of interest on the mortgage bonds of the road, the loan to be on not less than one, nor more than five years, time, interest not to exceed ten per cent.; that he execute and deliver to the person from whom the money was borrowed receiver's certificates; that the money borrowed by the receiver, under the order, was made a lien upon the income, revenues, earnings and all the property of the road after deducting therefrom operating expenses; that the receiver, as soon as the money was borrowed, report the same to the court.
June 10, A. D. 1876, James Haynes, resigned and John R. Hilliard was appointed his successor on motion of William Dennison, trustee.
Nov. 18, 1876, on motion of Hilliard, the receiver, an order was made by the court authorizing the latter to borrow $100,000 for the purpose of paying former indebtedness incurred for the repairs of the road, etc, and making the certificates a lien on the property of the road, the same as the first order; that Jan'y 2, 1877, Dennison, as trustee, filed his cross-bill praying the foreclosure of the trust deed and the payment of all the $600,000 bonds and interest; that after Dennison resigned, William F. Bryan was appointed by the court his successor as trustee; that the latter, Oct. 28, 1878, filed his supplemental and amended cross-bill; that Feb. 28, 1879, final decree of foreclosure was rendered.
The order of the court authorizing the issuing of the second series of James Haynes' receiver's certificates was printed in full on the back of each said certificates, and the form, which was a part of the order, was also printed on the back, which was in substance that “James Haynes, receiver, etc., do hereby certify that there is due unto on account of and that the same is payable to said or order on or before the day of A. D. 187, with interest thereon at the rate of per cent. per annum from date until paid, that it was issued by order of court, and...
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