State v. Northern Cent. Ry. Co.

• Citation: 18 Md. 193
• Parties: THE STATE OF MARYLAND, v. THE NORTHERN CENTRAL RAILWAY COMPANY.
• Decision Date: 30 January 1862
• Court: Court of Appeals of Maryland

18 Md. 193

THE STATE OF MARYLAND, v. THE NORTHERN CENTRAL RAILWAY COMPANY.

Court of Appeals of Maryland.

January 30, 1862

The Legislature has power to confer on the Court of Appeals the right to hear appeals in special cases, but such a law, to be constitutional, must leave the judicial functions of the court untrammelled.

The mere enumeration, in such a law, of the questions referred to the appellate court, which questions were all necessarily involved in the decision appealed from, neither enlarges nor restricts the powers of the appellate court, nor invests it with original jurisdiction.

The revision of the interlocutory orders and decrees, affecting rights of courts of original jurisdiction, is as much an appellate power as the revision of their final decrees interlocutory judgments and decrees, affecting rights, must so far as they go, have the same basis as final judgments and decrees.

Corporations owing their corporate existence, in part, to the State of Maryland, and exercising their franchises therein, may be restrained here from expending their funds for any other than corporate purposes anywhere.

A plea by a corporation, to the jurisdiction of a Maryland court, on the ground that the corporate property lies partly in another State, or that its corporate existence is derived, in part from a charter of another State, is not tenable.

Such a corporation must, for the purposes of justice, be treated as a separate corporation by the courts of each State from which it derives its being; that is, as a domestic corporation to the extent of the State in which it acts, and as a foreign corporation as regards the other sources of its existence.

The Northern Central Railway Company, whose road lies partly in this State and partly in Pennsylvania, and was chartered by both States, executed a mortgage of the entire line of its road, with all the tolls and revenues thereof, to the State of Maryland, to secure the payment thereto of an annuity of $90,000, and under this mortgage the State of Maryland stood as second and third incumbrancer; HELD:

That upon its being shown that this company, in violation of its duty, was applying, and intended to continue to apply, its revenues, the only means of paying this annuity, to the payment of junior incumbrances, this court ought to interfere, upon the application of the State, to the extent of the limits of its jurisdiction, by injunction, and the appointment of a receiver of the mortgaged property.

As a general rule, an injunction before final hearing does not necessarily prejudice any party: its province is, to preserve the property or fund in controversy, and effect ultimate justice.

In cases of waste or nuisance, an injunction will be granted where a mortgagor in possession is committing waste, equity will restrain him, for as the whole estate is the security for the money advanced, the mortgagor ought not to be allowed to diminish it.

In general where personal property, or the rents and profits of real estate in dispute, are in imminent danger of being wasted, a receiver may be appointed to take care of it for the benefit of all concerned, during the controversy.

Equity will appoint a receiver at the instance of parties beneficially interestested, where there is no fraud or spoliation, if it can be satisfactorily established there is danger to the estate or fund, unless such a step is taken.

A receiver is proper if the fund is in danger, and this principle reconciles the cases found in the books; fraud, or imminent danger, if the immediate possession should not be taken by the court, must be clearly proved, and it is not against public policy to appoint a receiver over the property of corporations.

A mortgage of the entire line of a railroad, with all the tolls and revenue thereof, covers not only the line of the road, but all the rolling stock and fixtures, whether movable or immovable, essential to the production of tolls and revenue.

A motion to reinstate an injunction is equivalent to an application for an injunction after bill and answer filed, and places the parties in the same attitude, as to the facts to be considered, as upon motion to dissolve upon coming in of an answer.

In such a case the court is confined to the facts stated in the bill, and to the answer to those facts; if the facts of the bill be admitted, or not denied, or if new matter be set up by way of avoidance, the injunction will be continued; matter set up in avoidance or discharge, where the matter of avoidance is a distinct fact, must be proved.

In answer to a bill filed by the State against a railroad company, to enforce payment of an annuity, secured by a mortgage of the company's road, tolls, and revenue, the company, in its answer, set up, by way of off-set or discount, the fact, that certain bridges on its road were destroyed by the mayor and police commissioners of Baltimore, and with the approval and sanction of the governor of the State, and claimed a large sum for such damage and waste. HELD:

That there is no principle of discount, set-off or recouper, which would authorize this court to recognize such a claim as a debt, obligation, or liability, for damages liquidated or unliquidated.

APPEAL from the Circuit Court for Baltimore City.

This appeal is taken from an order of the court below, refusing to reinstate an injunction, and appoint a receiver as prayed in the information filed on the part of the appellant. The allegations of the information and answers, and all the facts of the case are fully stated in the opinion of this court, and in the following opinion of the court below, (KREBS, J.,) delivered upon passing the order appealed from:

" The bill in this case is filed by the State of Maryland, as mortgagee of the entire line of railroad belonging to the Northern Central Railway Company, with all the revenue or tolls thereof, praying a decree for the sale of the said railway and mortgaged premises, or so much thereof as may be necessary to raise the sum of $1,500,000, the estimated principal value of the annuity of $90,000, secured to be paid to the State by the company. The bill alleges a default on the part of the company in the payment of part of the annuity, as the ground of the relief which it asks, and also prays for an injunction, to restrain the company from the application of its revenues, to the payment of certain debts, and interest on several of its bonds, to all of which the State claims a priority of lien by virtue of its said mortgage. It prays further, and more especially, that a receiver may be appointed, to take charge of the said railway, and other, the mortgaged premises, and work the same and apply the revenues thereof, under the direction of this court, to the arrears of the said annuity, now due, and hereafter to become due to the said State. I shall consider, first, the application for the appointment of a receiver. It is to be observed, that this is the case of a first, or legal mortgagee, who, at the time of filing his bill for foreclosure, by sale of the mortgaged premises, asks the court to appoint a receiver to take charge of the mortgaged property, and collect and receive the income and revenue thereof. According to the well established chancery practice in England, this is never done upon the application of such a mortgagee. In " Berney vs. Sewell, 1 Jac. & Walk., 627, Lord Eldon says: If a man has a legal mortgage, he cannot have a receiver appointed; he has nothing to do but to take possession. The rule about receivers is very clear; a mortgagee who has the legal estate cannot have a receiver." Daniell in his Chancery Practice, Vol. 3, page 245, referring to this decision, says: " As the object of appointing a receiver, is to protect the property in dispute, pending a litigation, the court will not appoint a receiver, on the application of a party who possesses the power of protecting the property without it." Sturch vs. Young, 5 Beav., 557. Assuming, however, that the court will entertain the application of the first, or legal mortgagee, for the appointment of a receiver, in what cases will it be granted? After a careful examination of the decisions of courts of equity with a view to the obtaining of a correct answer to this question, I am satisfied that they establish this rule, viz: where no provision is made to give the mortgagee a lien on the rents and profits, and the property is not a sufficient security for the particular debt of the complainant asking for a receiver, and the mortgagor, or other person in possession, who is personally responsible for it, is insolvent, equity will appoint a receiver, before a decree of foreclosure. The court in Warner vs. Gouverneur, 1 Barb., 36, states the rule substantially in the above language. To the same effect are the decisions in the following cases, 5 Paige, 39, Bank of Ogdensburgh vs. Arnold; 8 Ibid., 565, Sea Ins. Co., vs. Stebbins; 11 Ibid., 436, Astor vs. Turner; 3 Edw., 588, Shotwell vs. Smith; 4 Ibid., 413, Post vs. Dorr; 2 Halsted's Ch. Rep., 154, Best vs. Schermier; 3 Sandf. Ch. Rep., 69, Lofsky vs. Maujer; 6 Hare, 620, Meaden vs. Sealy. Now it is not pretended that there is any thing in this mortgage that gives to the State any specific lien upon the tolls and income of this road; the mortgagor is therefore entitled under it to all the rights, which, according to the decisions upon this subject, belong to the mortgagor under ordinary circumstances. The bill shows that the company has been in possession of the road, working it, and receiving the tolls and profits thereof since the alleged default, and at the time of the filing of the bill, and the law is settled, that were the mortgagor is permitted so to remain in possession of the premises, and take the

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