Westinghouse Air-Brake Co. v. Kansas City Southern Ry. Co.
| Decision Date | 12 April 1905 |
| Docket Number | 2,106. |
| Parties | WESTINGHOUSE AIR BRAKE CO. v. KANSAS CITY SOUTHERN RY. CO. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Syllabus by the Court
The vice of multifariousness is the union of causes of action which, or of parties whose claims, it is either impractical or inconvenient to hear and adjudicate in a single suit. Where it is as practical and convenient for court and parties to deal with the claims and parties joined by a petition in one suit as in many, there is no multifariousness.
The union of two or more causes of action for the same demand or relief does not render the bill or petition which presents them multifarious.
The union of a cause of action upon a mechanic's lien and a cause of action upon an equitable preference in a bill to enforce the same demand against the same property does not render the pleading multifarious.
Decisions of the state courts which so construe their statutes as to destroy or impair rights previously acquired through contracts between citizens of different states under statutes and constitutions which warranted and sustained them when they were vested are not obligatory upon the courts of the United States.
The furnishing to a railroad company of proper materials to be used by it in the construction or improvement of its railroad or equipment is sufficient to sustain a mechanic's lien under sections 4239 et seq., Rev. St. Mo. 1899, without proof of the application and use of them for that purpose.
The acceptance for a debt secured by a mechanic's lien of a promissory note which matures subsequent to the time fixed by the statute for the commencement of an action to foreclose the lien estops the creditor from enforcing the lien, and destroys it.
A mechanic's lien once destroyed is not capable of revival in the absence of fraud or mistake.
The subsequent delivery of materials under the same original contract will not revive a lien for a prior debt which has once been destroyed.
The general rule, subject to exceptions on account of peculiar equities, is that preferential claims for labor or materials furnished for the operation of a railroad must accrue within approximately six months preceding the impounding of the income and seizure of the property by the mortgage bondholders.
One whose claim accrued more than 17 months before the impounding of the property by the mortgage bondholders, and who extended the time of its payment for 18 months after it was due, is not entitled to a preference over the mortgage bondholders in the payment of his claim either out of the income or the proceeds of the mortgaged property.
This is one of the remnants of the foreclosure of the mortgage of the Kansas City, Pittsburgh & Gulf Railroad Company. It is an appeal from a decree which dismissed the intervening petition of the Westinghouse Air Brake Company.
On April 1, 1893, the Gulf Company mortgaged its property to the State Trust Company and another, as trustees, to secure the payment of its bonds to the amount of $23,000,000. On April 6, 1899, the Trust Company exhibited its bill to the Circuit Court for the Western District of Missouri for a foreclosure of this mortgage, and on April 28, 1899, that court appointed receivers of the railroad and of the other mortgaged property, and ordered them to pay out of any revenues which came to their hands all debts lawfully contracted by the Gulf Company after May 1, 1898, for materials and supplies and in the maintenance and operation of the railroad, and that other claims and demands should only be paid upon orders of the court subsequently made. On February 5, 1900, a decree of foreclosure and sale was rendered which provided that the purchaser or purchasers of the property thereunder, their successors and assigns, should take it subject to the condition that they should pay any indebtedness or liability of the Gulf Company which should be finally decreed to be prior in lien or superior in equity to the mortgage of April 1, 1893. The Kansas City Southern Railway Company is the successor of the purchasers under this decree, and it took the mortgaged property subject to the conditions of the decree, and became a party to the foreclosure suit on March 20, 1900.
On January 1, 1896, the Gulf Company agreed to purchase of the Westinghouse Air Brake Company all the air brake and signal apparatus and materials it should use on its railroad at certain specified prices, subject to certain rebates on certain conditions. Between February 19, 1897, and November 11, 1897, the Brake Company furnished to the railroad company under this contract brake and signal materials for which there is a balance due of $12,316.21 which is evidenced by a note of the Gulf Company, dated November 17, 1898, which is the last renewal of a note of that company for $32,316.21, which was made November 11 1897. Between November 11, 1897, and the appointment of the receivers, the Brake Company furnished to the Gulf Company brake and signal materials, the schedule price of which was $14,659.63. After deducting the rebates to which the Gulf Company was entitled, and a payment of $1,091.66 made by the receivers, there remained $11,271.05 owing on this account. Of this amount $8,404.71 was due for materials used by the Gulf Company between May 1, 1898, and April 28, 1899.
For these amounts of $12,316.21, evidenced by the note of the Gulf Company, and $11,271.05, due for materials furnished after November 11, 1897, the Brake Company filed a statement for a lien on the property of the railroad company, under sections 4239 et seq. of the Revised Statutes of Missouri, on May 10, 1899.
On June 15, 1899, the Brake Company intervened in the foreclosure suit and filed its petition, in which it set forth its contract, the furnishing of its materials, the filing of its statement for a lien, and prayed that it be adjudged to have a statutory lien upon the mortgaged property superior to that of the bondholders, and that its claim be paid out of the income or proceeds of the mortgaged property. On September 8, 1900, the Brake Company filed its amended petition, in which it again set forth its statutory lien, and also pleaded that the materials it furnished were essential to, and that the debt incurred for them was a part of the current expenses of, the operation of the railroad; that, after these materials were furnished, the Gulf Company and the receivers had diverted the income of the mortgaged property from the payment of current expenses to the payment for permanent improvements and of interest on the mortgage debt in amounts far in excess of the claim of the Brake Company; and it prayed for a decree that it had both a statutory lien and a preferential equitable lien upon the mortgaged property, and that its claim be paid out of its income or out of the proceeds of its sale. The Kansas City Company interposed an answer to this petition, in which it denied its averments. A replication was filed, and the case was referred to the master. He heard the evidence, and reported that the Brake Company had both a mechanic's lien and a preferential equitable lien for the $11,271.05 due for materials furnished after November 11, 1897, but that it had no lien for the $12,316.21 owing for materials delivered before that time. Exceptions were filed to this report by both parties, and, after argument, the court held that the amended petition was multifarious, because it counted upon both the mechanic's and the preferential equitable lien, and ordered the petitioner to elect upon which it would rely. The Brake Company chose the equitable lien. Thereupon the Southern Railway Company prayed and was granted leave to file an amended answer, in which it claimed for the first time that the Brake Company had an adequate remedy at law on its mechanic's lien, and that by filing its statement for that lien it had waived its claim for a preferential equitable lien. The Circuit Court sustained this claim, and dismissed the petition of the Brake Company.
Albert Blair and Delbert J. Haff (William C. Michaels and Lewis W. McCandless, on the brief), for appellant.
Samuel W. Moore and Fred H. Wood (Gardiner Lathrop and Thomas H. Reynolds, on the brief), for appellee.
Before SANBORN and HOOK, Circuit Judges, and RINER, District Judge.
SANBORN Circuit Judge, after stating the case as above, .
According to the averments of the intervening petition, the Brake Company had furnished to the Gulf Company within two years of the appointment of the receivers of its property in the foreclosure suit brake and signal materials which were essential to and which were used by it in, the maintenance and operation of its railroad, which were worth at least $23,587.26 more than the Brake Company had been paid for them. It had done this in reliance upon the expectation of the payment of its claim out of the income of the Gulf Company, and, in reliance upon the statutes of Missouri which give to the holder of such a claim a lien upon the property of a railroad company superior to that of a prior mortgage. Rev. St. Mo. 1899, Secs. 4239-4241. After it had furnished these materials the Gulf Company and its receivers diverted its income from the payment of current expenses to the payment of interest on the mortgage debt, and to the payment for permanent improvements to an amount in excess of the aggregate amount of the claim of the Brake Company and of other claims of like character. These facts gave to the petitioner a lien upon the property of the Gulf Company superior to that of the mortgage for at least that portion of the claim due for materials furnished within six months of the receivership, on two grounds: (1) Because the statutes of the state of Missouri granted to it such a lien, and (2) because an...
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