Smith's Ex'x v. Washington City, V.M. & G.S.R. Co.

• Decision Date: 17 December 1880
• Citation: 74 Va. 617
• Parties: SMITH'S ex'x v. WASHINGTON CITY, VIRGINIA MIDLAND AND GREAT SOUTHERN RALLROAD COMPANY.
• Court: Virginia Supreme Court

74 Va. 617

SMITH'S ex'x v. WASHINGTON CITY, VIRGINIA MIDLAND AND GREAT SOUTHERN RALLROAD COMPANY.

Supreme Court of Appeals of Virginia.

December 17, 1880

Absent Moncure, P.

1. In the case of a claim secured by a mortgage although the remedy by an action at law for the claim may be barred by the statute of limitations, the remedy under the mortgage will not be affected by any lapse of time short of the period sufficient to raise the presumption of payment.

2. A trust deed by a railroad company provides that upon a sale of the trust property by the trustees out of the proceeds of sale, after satisfying the costs and expenses of sale and of this trust, the trustee shall pay to the holders of the bonds secured thereby the amount so held by them. If the trustee has performed services in executing the bonds, & c., for which he is entitled to compensation, he is entitled to be paid for these services in preference to the bondholders secured by the deed.

This is a branch of the case of Graham v. The Washington City Virginia Midland and Great Southern Railroad Company, for the nature of which case see the opinion of Christian, J., in Gibert v. Washington City Virginia Midland and Great Southern Railroad Company supra, 586.

This was a petition filed by Francis L. Smith's executrix in a cause depending in the circuit court of the city of Alexandria in the name of John C. Graham, who sues for himself and others, against the Washington City, Virginia Midland and Great Southern Railroad Company, asking the court to decree her compensation for services rendered to the company by the said Francis L. Smith in his lifetime. The circuit court refused to allow the claim, on the ground that it was barred by the statute of limitations; and the petitioner obtained an appeal to this court. The case is stated by Judge Burks in his opinion.

Ould & Carrington, for the appellant.

J. A. Jones, William H. Payne, C. M. Blackford and H. R. Garden, for the appellees.

OPINION

BURKS, J.

Mrs. Sarah G. Smith, as executrix of her late husband Francis L. Smith, one of the trustees in the fourth mortgage or deed of trust of the Orange and Alexandria railroad company, filed her petition in this cause in the court below, alleging that a large number of bonds were issued under said mortgage, all of which were signed by the said F. L. Smith as such trustee, which occupied and consumed a large portion of time, and that he discharged other duties and responsibilities as such trustee; that it is usual and customary to pay trustees under railroad mortgages for similar services: that nothing was ever paid to the petitioner, or to the said Francis L. Smith, for his said services as trustee, although, as alleged, he was entitled to have received large sums of money therefor. The prayer is for an enquiry as to the amount the said F. L. Smith was entitled to and should have received for his said services as trustee, and for an order directing the payment of the amount to the petitioner by the receiver out of the accruing profits and rents of the property under his charge.

The commissioner, to whom the petition was referred, reported in favor of allowing the claim, and fixed the amount at $1,560.

To this allowance, the Baltimore and Ohio railroad company, and other bondholders, filed three exceptions:

" 1. Because the said claim is barred by the act of limitations.

2. Because it is not customary to pay for such services in this State, and no other of the trustees under any of the mortgages covering said road has made any claim for similar compensation, or has ever been paid any.

3. Said claim, even if allowed, is not a lien upon the corpus of said road or its revenues in the hands of the receiver."

The circuit court was of opinion that the claim of the petitioner was barred by the act of limitations, and therefore sustained the first of the exceptions; and, without passing upon the others, dismissed the petition.

The exceptions, in the form in which they were taken, virtually concede that the services were rendered as alleged, and assuming that Mr. Smith had a valid claim therefor upon the company, the question is, without reference to the amount, whether the claim is barred by the act of limitations.

We are decidedly of opinion, that it is not barred. The claim is for services as trustee under the mortgage or deed of trust, is a part of the expenses of the trust, and is as effectually secured by the deed as the loan evidenced by the bonds provided for. In the event of sale by the trustees for default, it is expressly provided, that " out of the proceeds of sale, the said trustees, or the survivors or survivor of them, shall, after satisfying the costs and expenses of sale and of this trust, pay to the holders of said bonds the amount so held by them," & c.

It may be, that the remedy at law by personal action against the company is barred; but, if so, it by no means follows, that the specific lien created by the deed of trust is therefore extinguished, and the equitable remedy for its enforcement by foreclosure taken away. The generally received doctrine is that the statute bars the remedy, but does not extinguish the debt; and if the debt be secured by mortgage, though an action at law for its recovery be...