Southern Ry. Co. v. Bouknight

• Decision Date: 07 November 1895
• Docket Number: 121.
• Citation: 70 F. 442
• Parties: SOUTHERN RY. CO. v. BOUKNIGHT.
• Court: U.S. Court of Appeals — Fourth Circuit

70 F. 442

SOUTHERN RY. CO. v. BOUKNIGHT.

No. 121.

United States Court of Appeals, Fourth Circuit.

November 7, 1895

The Charlotte & South Carolina Railroad Company was incorporated by the states of North Carolina and South Carolina, and the Columbia & Augusta Railroad Company by the states of South Carolina and Georgia. These companies were consolidated under the name of the Charlotte, Columbia & Augusta Railroad Company, in accordance with an act of the general assembly of South Carolina approved March 19, 1869, which provided 'That the Charlotte and South Carolina Railroad Company and the Columbia and Augusta Railroad Company shall, upon the consent of the stockholders of each company, be consolidated and form one and the same body corporate, under the name of the Charlotte, Columbia and Augusta Railroad Company possessing all the rights, powers, privileges, immunities and franchises conferred upon said companies by the several acts heretofore passed and now of force, incorporating said companies, and amending the charters thereof,' and that 'the affairs of the said consolidated company shall be managed and directed by a general board, to consist of eighteen directors, to be elected by the stockholders from among their number: provided that four of the directors shall be elected from amongst the stockholders residing in the state of North Carolina, and four amongst the stockholders residing in the state of Georgia. ' Laws S.C. 1868-69, p 232. And an act of the legislature of Georgia, approved February 20, 1869 (Laws 1869, p. 154), and of the legislature of North Carolina, approved April 12, 1869 (Pub. Laws N.C. 1868-69, p. 598), to the same effect.

The consolidated company owned a road extending from Charlotte, N.C., to Augusta, Ga., which passed across the state of South Carolina, in which by far the largest part of the track was situated. On July 1, 1883, this company executed to the Central Trust Company of New York a mortgage upon the whole road, together with equipment, appurtenances, and franchises, to secure its coupon bonds, which were issued and negotiated to the amount of $500,000. The mortgage recited that its execution was authorized at a meeting of the board of directors of the company, held at the city of Columbia, S.C., June 1, 1883, and ratified by the stockholders of that company at a meeting held in said city on July 26th of that year. In 1886 the company leased all its franchises and property, including the whole line of railroad from Augusta to Charlotte, to the Richmond & Danville Railroad Company; and thenceforward all the rolling stock of the road was owned, and all its operations were controlled and managed, by the latter company, whose agents, without interference on the part of the lessor, were in charge of all of the business of the road. The Richmond & Danville Railroad Company and all its property and leased lines went into the hands of a receiver in June, 1892. The interest falling due July 1, 1893, on the bonds secured by the consolidated company's mortgage, was not paid; whereupon the trustee in the mortgage, the Central Trust Company, filed its bill to foreclose July 31, 1893, and receivers were appointed under order, dated July 28, 1893. April 7, 1894, a final decree of foreclosure was entered, ordering the sale of the road. This decree provided: 'The purchaser or purchasers at said sale shall, as part of the consideration for such sale, take the property purchased upon the express condition that he or they, or his or their assigns, approved by the court will pay off and satisfy any and all outstanding and unpaid receivers' obligations having priority over the lien of the mortgage hereby foreclosed, and all other 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; and the purchaser or purchasers or their approved assigns shall be entitled to appeal from any and all orders or decrees of the court in respect to such claims or any of them, and shall have all the rights in respect to such appeals which the complainant, Central Trust Company of New York, would have in case such appeals had been taken by it. The purchaser or purchasers at said sale shall also, as part of the consideration, in addition to the payment of the sum or sums bid, take the property purchased upon the express condition that he or they, or his or their assigns, approved by the court, will pay off and satisfy all debts or obligations incurred or to be incurred by the receivers having possession of such property, which have not been or shall not be paid by said receivers or out of the proceeds of the sale or sales herein ordered or otherwise, and which shall be adjudged by the court to be debts or obligations properly chargeable against the property purchased, and to be prior or superior to the lien of the mortgage foreclosed in this suit. 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 as aforesaid, to comply with any order of the court in respect to payment of prior lien claims above mentioned within twenty days after service of a copy of such order upon said purchaser or purchasers, or his or their assigns. ' And also that the fund arising from the sale should be applied, among other things, 'to the payment of all outstanding and unpaid debts and obligations of the receivers incurred since their appointment in and about the actual operation of the railroad, and all such claims as are decreed by the court to be prior in lien or equity to the lien of the mortgage foreclosed in this suit.'

The road and franchises were thereupon sold, July 10, 1894, to the Southern Railway Company, and the sale confirmed, and conveyance executed. The order of confirmation contained this clause: 'And the court further reserves full power from time to time to enter orders binding upon the said Southern Railway Company, as such purchaser, under its decree, requiring it to pay into the registry of this court all such sums as have been or may be ordered by this court, for the payment of any and all receiver's debt or claims adjudged or to be adjudged by it as prior in lien or equity to the mortgage foreclosed in this cause, or entitled to preference in payment out of the proceeds of sale prior to such mortgage bonds. ' On the same July 10th, Joseph Bouknight filed a petition of intervention in the cause, alleging that on November 24, 1891, he was injured by the negligence of the employes of the Danville Company, then operating the Charlotte road as lessee; that he sued the Charlotte Company therefor within 12 months thereafter in the circuit court of common pleas of Edgefield county, S.C., and recovered judgment in March, 1893, for $10,000, which judgment was affirmed by supreme court of the state (19 S.E. 915); and was entitled to priority of payment out of the proceeds of sale or by the purchasers at such sale; and praying for relief accordingly.

The petition was referred to a special master, before whom the judgment roll was exhibited, from which it appeared that petitioner claimed that on November 24, 1891, he purchased from the Danville Company, at Trenton, S.C., a station on the Charlotte Company's road, a ticket from Trenton to Augusta and return, and on this ticket proceeded to Augusta, Ga., and that on his return, before the train had gone out of the Augusta station, he was injured in his person by the negligence of the agents of the Danville Company; that he brought his action against the Charlotte Company within 12 months thereafter, and subsequently, on issues joined, obtained a verdict and judgment, which judgment was affirmed by the supreme court of South Carolina. The master reported in favor of the priority of the judgment over the mortgage, and the Southern Railway Company filed exceptions, which were overruled, and a final decree entered January 9, 1895, awarding priority and ordering payment by the Southern Railway Company, as purchaser, of the intervener's judgment, with interest and costs, from which decree this appeal was prosecuted. The opinion of the circuit court (Simonton, J.) is reported in 65 F. 257.

Henry B. Tompkins (Henry Crawford, on the brief), for appellant.

John C. Sheppard and E. F. Verdery, for appellee.

Before FULLER, Circuit Justice, GOFF, Circuit Judge, and HUGHES, District Judge.

FULLER Circuit Justice (after stating the facts).

The main track of the Charlotte, Columbia & Augusta Railroad Company, extending from the city of Augusta, in the state of Georgia, to the city of Charlotte, in the state of North Carolina, its other tracks, its bridges, depots, workshops, and other buildings, its rolling stock, equipment, and right of way, and its corporate rights and franchises, were sold to the Southern Railway Company as a unit, under a decree which provided that the purchaser at said sale should, as part of the consideration for the sale, pay off and satisfy all claims held and adjudged by the court to be prior in lien to the mortgage foreclosed in the suit; and the order of confirmation reserved full power from time to time to enter orders binding the Southern Railway Company as purchaser under the decree, requiring it to pay into the registry of the court such sums as might be necessary for the payment of such claims.

Section 1528 of the General Statutes of South Carolina of 1882 (being section 117 of an act approved February 9, 1882) is as follows:

'Whenever a cause of action shall arise against any railroad corporation, for personal injury, or

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