Standard Steel Works Co v. Williams

• Decision Date: 27 February 1923
• Docket Number: (No. 3185.)
• Citation: 155 Ga. 177,116 S.E. 636
• Parties: STANDARD STEEL WORKS CO. et al. v. WILLIAMS et al.
• Court: Georgia Supreme Court

155 Ga. 177

116 S.E. 636

STANDARD STEEL WORKS CO. et al.

v.WILLIAMS et al.

(No. 3185.)

Supreme Court of Georgia.

Feb. 27, 1923.

(Syllabus by the Court.)

The provision in the act approved February 28, 1876 (Acts 1876, p. 122), relating to the duties and liability of receivers appointed for railroad companies, "that in all cases where the business of any corporation operating a railroad, either wholly or partially in this state, shall, by an order or decree of any court, be placed in the hands of a receiver." etc., covers the case of a receivership created by order or decree of a court for the railroad, or for the railroad and its business; and in a proper construction of the statute, so far as it fixes the liability of the receiver and defines his duties, no distinction can be drawn between the business of a corporation operating a railroad and the railroad company and its business.

[Ed. Note.—For other definitions, see Words and Phrases, First and Second Series, Business.]

The language of the statute under consideration, embodied in Civ. Code 1910, § 2797. isapplicable to the case of the appointment of a receiver for a railroad company under mortgage foreclosure proceedings.

The interest on the underlying bonds and the receivers' certificates partook of the nature of the debts out of which they issued, and does not fall under the head of incidental expenses for the payment of which provision is made in the statute controlling this case.

.[Ed. Note.—For other definitions, see Words and Phrases, Incidental Expenses.]

(Additional Syllabus by Editorial Staff.)

Error from Superior Court, Richmond County; H. C. Hammond, Judge.

Receivership suit against the Georgia & Florida Railway, in which the Standard Steel Works Company and others filed Interventions, opposed by J. S. Williams, receiver, and others. Judgment granting insufficient relief, and interveners bring error. Reversed.

The Georgia & Florida Railway, a railroad corporation operating a railroad in the state of Georgia, was placed in the hands of receivers by order of the superior court of Richmond county, on March 27, 1915, upon the petition of the trustees under a mortgage made by the railway in 1907. The receivers so appointed were directed, by order of the court, to continue to operate the railroad, and to contract for and purchase all materials and supplies necessary for that purpose. The plaintiffs in error, 11 in all, furnished to the receivers, in the year 1920, car wheels, locomotive parts, coal and other materials and supplies, necessary for conducting the business by the receivers and to keep the property in repair, to the value in the aggregate of something over $70,000. The receivers do not deny the indebtedness, but have failed and neglected to pay it. Separate interventions were filed in the receivership case by these creditors of the receivers, each seeking to establish a lien upon the gross income of the railroad in the hands of the receivers, superior to all other liens, under the laws of this state; and seeking to require the defendant in error, as the successor of the original receivers, to pay such liens, according to their date, out of any funds in his hands as such receiver; all in accordance with the provisions of section 2797 of the Code of Georgia of 1910. The plaintiffs in error also claimed in their interventions the right to payment of the indebtedness due them out of the gross income of the railroad coming into the hands of the receiver, in preference to the payment out of such income by the receiver of interest upon receivers' certificates and coupons and interest upon outstanding corporate bonds of the Millen & Southwestern Railroad, of the Georgia & Florida Terminal Company, and of the Augusta Southern Railroad, which are comprised within the railroad system of the Georgia & Florida Railway in the possession of the receiver. An order was entered, consolidating all of these interventions for the sole purpose of hearing the questions; and the receiver was ordered to show cause why the amounts claimed by the interveners should not be paid out) of the gross income in his hands, and why he should not be restrained from disbursing any of the said income of the receivership for any expenses or indebtedness, except such as is described in section 2797, supra, until the payment of the indebtedness due to the interveners.

The answer of the receiver admits that the gross income of the railroad coming into his hands exceeds the sum of $100,000 per month, but says that none of this is available to pay the interveners. The former receivers and the present receiver have paid, out of the gross income coming into the hands of the receivers, interest upon corporate bonds and mortgages, called underlying bonds, on portions of the Georgia & Florida Railway, as follows: On $212,000 of bonds of the Millen & Southwestern Railroad; on $400,000 of bonds of Augusta Southern Railroad; on $200,000 of bonds of the Georgia & Florida Terminal Company; on $1,600, 000 of receivers' certificates. The receiver admits that it is his intention, unless restrained or prevented by the court, to continue to pay interest upon such receivers' certificates and upon said underlying bonds, and he denies that the interveners are entitled to a lien and priority of payment in preference to interest on receivers' certificates or interest on bonds of the Millen & Southwestern Railroad, the Georgia & Florida Terminal Company, and the Augusta Southern Railroad. A very large proportion of the receivers' certificates have been used to purchase additions to and permanent improvements of the property in the possession of the receiver. Some of these certificates, as appears by the receiver's answer, were used as follows:

$191,000 were "for the purpose of repaying the * * * principal amount of notes of said receivers, now outstanding, to pay for theequipment obligations now outstanding, whether created by the Georgia & Florida Railway or by the receivers." $250,000 "were used to acquire the Augusta-Southern Railroad." $34,667.99 "to issue to the bondholders committee of the first mortgage 5 per cent. 50-year gold bonds of the Georgia & Florida Railway." $16,103.24 "to pay the balance on car trust obligations for the purchase money of equipment." $28,087.05 "to pay the balance of the purchase-money of certain lands." $7,500 "to purchase * * * the capital stock of the Georgia & Florida Terminal Company." $400,000 "for revision work to be done on the road from Augusta to a point shortly beyond Keysville. * *...