Pennsylvania Steel Co. v. New York City Ry. Co.

Decision Date18 July 1912
Docket Number238.
CourtU.S. Court of Appeals — Second Circuit

Richard R. Rogers (Albert J. Kenyon, of counsel), for appellant.

Masten & Nichols (Arthur H. Masten, Ellis W. Leavenworth, and Frederick W. Kobbe, of counsel), for Joline and another receivers.

Dexter Osborn & Fleming (Mathew C. Fleming, of counsel), for Ladd receiver.

Before COXE, WARD, and NOYES, Circuit Judges.

WARD Circuit Judge.

December 29, 1911, the property of the Metropolitan Street Railway Company was sold in foreclosure proceedings in the Circuit Court under the company's general and collateral trust mortgage and refunding mortgage, and possession delivered on the 31st. On the latter day there were pending 889 actions against the receivers arising out of injuries sustained during their operation of the road, and other actions are likely to be brought thereafter until the three-year statute of limitations has run, with the extensions in favor of persons under disability, such as infancy, insanity, or imprisonment for crime. New York Code of Civil Procedure Secs. 393 and 396. The New York Railways Company, which is the assignee of the purchaser at the sale, filed its petition praying the court to require the receivers to set aside out of the moneys in their hands a fund of $500,000 for settling and discharging such tort claims. The theory is that these personal injuries are operating expenses incurred by the receivers, which ought in the first instance to be paid by them; the purchaser being liable for any deficit.

There is obvious equity in this proposition, and if any one had been present when the decree was settled to represent the purchaser, whoever it might be, the court would no doubt have given it serious consideration. But the measure of the purchaser's rights is the decree actually entered (Central Trust Co. v. Wabash Railway Co. (C.C.) 30 F. 332, 336), and we agree with the court below that it is conclusive against the petitioner. The decree originally entered in the Circuit Court provided in article X as follows:

'That it shall be a condition of sale of the lines of railway, leasehold estates, and parcels of land separately enumerated and directed to be sold by article IV of this decree that the purchaser shall, as a part of the consideration for such sale and in addition to the price bid, assume all pending contracts in respect to the property of the Metropolitan Street Railway Company, whether leasehold or otherwise, theretofore made by

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