Sloan v. Central Iowa Railway Co.

• Decision Date: 16 June 1883
• Citation: 16 N.W. 331,62 Iowa 728
• Parties: SLOAN v. THE CENTRAL IOWA RAILWAY CO
• Court: Iowa Supreme Court

16 N.W. 331

62 Iowa 728

SLOAN v. THE CENTRAL IOWA RAILWAY CO

Supreme Court of Iowa, Des Moines

June 16, 1883

Appeal from Poweshiek Circuit Court.

AFFIRMED.

H. E J. Boardman, J. H. Blair and A. C. Daily, for appellant.

H. W Gleason and J. F. Lacey, for appellee.

OPINION

THE facts are sufficiently stated in the opinion.

SEEVERS J.

The Central Railroad Company of Iowa executed a mortgage to the Farmers' Loan & Trust Co., and, default having been made in the payment of the indebtedness secured, the trust company commenced an action in the United States circuit court to foreclose the mortgage, and therein asked for and secured the appointment of H. L. Morrill as receiver, who, as such, took possession of and operated the road. The receiver was operating the road on the sixth day of July, 1878, when, as the plaintiff claims, he was in the employ of the receiver as a brakeman, and was then injured by being run over by a train, because of the negligence of the engineer. This action, to recover damages sustained, was brought against the defendant, the receiver and the Central Railroad Company of Iowa. Neither the receiver nor the last named company appeared to the action, and no default or judgment was entered against either of them.

The mortgage was foreclosed, and the road and property embraced therein was sold by a master, and purchased by the Trust Company, to whom it was conveyed in trust for parties in interest. On the twentieth day of May, 1879, the United States circuit court ordered and decreed that the trustee and receiver transfer and deliver full and absolute possession of all of said property, together with all additions thereto, to the defendant, and said court further ordered and decreed as follows:

"And it is further ordered that the lawful debts contracted by the receiver during the litigation, and the costs and expenses of such litigation, do constitute and are hereby made a first and paramount lien upon all said property, moneys, credits, and all additions thereto, to all other liens, and to the title acquired by the purchaser at the foreclosure sale and by the conveyance to the Central Iowa Railway Company; and since it is not desirable to further continue said property under the control of the receiver for the purpose of making net earnings for the payment of said debts, costs and expenses, and the creditors having been notified, and making no valid or satisfactory objection thereto, it is further ordered and decreed that all said claims, and all claims pending in this court, debts and liabilities, including the claims of attorneys and others heretofore referred to special master Rogers, and reported on by him, and still pending on exceptions, shall be presented to the said Central Iowa Railway Company for adjustment and settlement; and the said Central Iowa Railway Company is ordered and directed to pay the said debts, costs and expenses; and the creditors entitled thereto are hereby required to accept payment thereof, with interest at the rate of seven per cent per annum, in one year from the date hereof, and for the purpose of enforcing the payment thereof, if need be, this court will and does retain jurisdiction of said cause, for the purpose of enforcing said payment and the lien herein provided for, without other action or independent proceeding."

In accordance with this order and decree, the road and property were transferred to and accepted by the defendant. While the road was in charge of the receiver, the claim of the plaintiff for damages was presented to the circuit court aforesaid, and permission asked to bring a suit against the receiver. It was referred to a master to take evidence, who made a report to the court, and, as claimed by the plaintiff, the claim was presented to the defendant and payment demanded, which was refused.

The circuit court aforesaid made an order that the "plaintiff be permitted to bring suit at law in this court, or in the district or circuit court of Iowa, on his said claim, against the Central Iowa Railway Company, (defendant herein,) the Central Railroad Company of Iowa, and H. L. Morrill, receiver; that, if suit is brought in the state courts, its judgments and orders be certified to this court."

Afterward, on motion of Morrill, so much of the order was rescinded as permitted the plaintiff to bring an action against him, on the ground that he was not personally liable, and, as he had been discharged as receiver, he had no property in his hands which could be made liable to the payment of any judgment that might be obtained. The defendant, among other things, pleaded that it was not a party to the action in which the orders aforesaid were made, and that it could not be made liable for the debts of the receiver, and that the claim of the plaintiff was not one of the debts or liabilities that the defendant under the orders aforesaid was required to pay. The defendant, at the proper time, and in every way possible, made proper objections to everything which tended to show its liability, but the same were overruled. The foregoing statement is deemed sufficient to fairly present the important question we are required to determine.

I. It is provided by statute that "every corporation operating a railway shall be liable for all damages sustained by any person, including employes of such corporation, in consequence of the neglect of agents, or by any mismanagement of the engineers or other employes of the corporation. All the duties and liabilities imposed upon corporations owning or operating railways by this chapter shall apply to all lessees or other persons owning or operating railways, as fully as if they were expressly named herein." Code, §§ 1278, 1307.

Technically, it may be said that the road was in the charge of and under the control of the court, who, through or by its receiver, operated the road. As the court is neither a lessee nor person, it is said this action, under the statute, cannot be maintained.

While it is true that, in a general way, the road is in the charge of and under the control of the court, yet it is actually operated by the receiver, so far as the daily management of trains is concerned, and by what employes the same shall be run and controlled. The court cannot establish rules by which the receiver must be guided in such matters. As to these matters, the control of the receiver is just as absolute and unconditional as if he were the owner of the road. No action can be maintained against the court nor against its receiver, it will be conceded for the purposes of the case, unless the court so directs. But the receiver is a person, and, as the appointee of the court, is in fact operating the road. Usually railways are operated by corporations or their lessees. The statute includes them, and all "other persons owning and operating railways." The statute is remedial, and was evidently intended to include every possible person who was engaged in the operation of a railroad, whether for himself or for some other person. The court had control of the road for the time being for the persons or parties in interest, and was in fact having the road operated through its receiver for their benefit. We think the receiver was in fact operating the road, and the claim of the plaintiff was presented to the court by whom he was appointed, who investigated it and found it to be meritorious, and directed an action to be brought against its receiver for the purpose of having it judicially determined what amount was due, if anything. That the liability of the receiver is not personal may, possibly, be justly said. Any judgment obtained, however, could be satisfied out of the property in his hands, if the court by whom the receiver was appointed should so direct. But this in no manner affects the right of the plaintiff to have his claim judicially established.

We think the receiver is within the statute, and may be charged, and a recovery obtained against him, as a person who is engaged in operating a railway.

Conceding this to be so, counsel maintain that it by no means follows that the defendant is liable.

II. It must be conceded that the claim of the plaintiff was not a lien on the property in charge of the receiver at the time it was transferred or conveyed under the order of the court to the defendant. White v. The K. & D. M. R. Co., 52 Iowa 97, 2 N.W. 1016; B., C. R. & N. R. Co. v Verry, 48 Iowa 458; Jeffrey v. Moran, 101 U.S. 285, 25 L.Ed. 785; and it has been held that a railroad corporation cannot be made liable for the negligence of a receiver or his employes. The O. & M. R. Co. v. Davis, 23 Ind. 553. This last ruling is based on the thought that the receiver cannot be regarded as the agent of the corporation, and we think the receiver in the case at bar was not the agent of the defendant. We incline to think that the latter cannot be held liable, unless the property in the hands of the appellant can, under the order of the court, be charged with the payment of this claim. The order made by the court is exceedingly broad, and includes "claims, debts and liabilities." Against whom? The answer must be--the receiver, or property which in his hands was liable for the payment of the plaintiff's claim, debt or liability. We have determined that the receiver, or rather the property in his charge, was liable for the payment of the plaintiff's claim. The appellant, therefore, received the property charged with this liability. If it had been made a condition in the order that appellant, before the property was transferred or conveyed to it, should execute a written obligation binding itself to pay this claim, and it had done so, its liability, we think, would not be doubted. There would have been a sufficient consideration for the...