Southern Ry. Co. v. Tillett
| Decision Date | 10 November 1896 |
| Docket Number | 171. |
| Citation | 76 F. 507 |
| Parties | SOUTHERN RY. CO. v. TILLETT. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Willis B. Smith and Henry Crawford, for appellant.
R Carter Scott, for appellee.
Before SIMONTON, Circuit Judge, and HUGHES and MORRIS, District judges.
This case comes up on appeal from a decree of the circuit court of the United States for the Eastern district of Virginia.
The question in the case is between the intervener, John R Tillett, intervening in the main cause, and the purchaser at the sale for foreclosure of the Richmond & Danville Railroad. The claim of the intervener is for the building of a culvert and repairing a washout on the Virginia Midland Railroad October 16, 1891. The Virginia Midland Railroad was a part of the Richmond & Danville System, held under a lease for 99 years to the Richmond & Danville Railroad Company. By the terms of this lease, the Virginia Midland was to be operated by the lessee road, and all of its earnings received by the lessee. The whole of the earnings, after payment of operation expenses, including repairs and maintenance, were to be applied to the payment of interest on certain existing bonds secured by mortgages of the Virginia Midland Railroad in existence at the date of the lease, according to their legal priorities. These bonds are specified in detail in said lease concluding with the following provision:
'(6) Any and all residue of said receipts, income, and revenue remaining after each and every of the above-mentioned and specified payments have been made shall be paid over to the said party of the first part.'
This leasehold interest in this lease is included among the property mortgaged to the complainants in the main cause, and has been sold by the decree of the court, and has been purchased by the purchasers. Interest was paid on the bonds of the Virginia Midland Railroad Company. On 15th June, 1892, Clyde and others, stockholders and creditors, filed their bill against the Richmond & Danville Railroad Company, and on that day Reuben Foster and F. W. Huidekoper was appointed receivers. In the order appointing them was a provision instructing them 'to pay and discharge all the current and unpaid pay rolls and vouchers and supply accounts incurred in the operations of the said railroad system at any time within six months prior hereto. ' On 16th August, 1892, special masters were appointed, who, among other things, were directed to call in all creditors of the system to come in and prove their claims before them on or before a day certain. The receivers thus appointed entered upon their duties, and operated the system, receiving large earnings therefrom, which were applied to operating expenses, debts, improvements of a permanent character, and interest on mortgage bonds. On 17th July, 1893, the Central Trust Company, a mortgage creditor, filed its bill for foreclosure of its mortgage on the whole system of the Richmond & Danville; whereupon Reuben Foster, F. W. Huidekoper, and Samuel Spencer were appointed receivers. Foster and Huidekoper, the receivers under the Clyde bill, thereupon accounted as such receivers, and were discharged. In the order appointing receivers in the case of the Central Trust Company is this provision:
'Nothing in this order contained shall be construed to vacate any of the orders heretofore entered in the case of William P. Clyde, and others; but the court reserves full power to act upon the master's reports filed in the said cause, and in said cause to adjudge and decree upon the rights of creditors ascertaining a claim against the property of the said railroad company or income thereof, in preference to the mortgage debt thereof by orders to be entered in the said suit of William P. Clyde and others, upon notice to parties, with like effect upon the mortgaged property and income as if such orders were entered in this cause.'
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