Westinghouse Electric Manufacturing Co. v. Barre & Montpelier Traction & Power Co.

• Decision Date: 04 January 1924
• Parties: WESTINGHOUSE ELECTRIC MANUFACTURING CO. v. BARRE & MONTPELIER TRACTION & POWER CO. ET AL
• Court: Vermont Supreme Court

123 A. 201

97 Vt. 306

WESTINGHOUSE ELECTRIC MANUFACTURING CO. v. BARRE & MONTPELIER TRACTION & POWER CO. ET AL

Supreme Court of Vermont

January 4, 1924

December 1923.

PETITION to the Supreme Court during the pendency of an appeal in receivership proceedings from a decree determining priority of claims, the petitioner, the American Trust Company, being trustee under a mortgage from the traction company to secure its bondholders, such petition praying that the operation of certain branches of the traction company be discontinued and the rates raised, or, failing in such relief, operation of the entire railway be discontinued.

Petition dismissed.

Erwin M. Harvey for the petitioner.

George L. Hunt for the City of Montpelier.

Present WATSON, C. J., POWERS, TAYLOR, SLACK, and BUTLER, JJ.

OPINION

TAYLOR

The matter now before the Court arises on the petition of the American Trust Company, one of the defendants, the trustee under a mortgage from the Traction Company to secure the bondholders of the company. The original action was a receivership proceeding instituted in November, 1920, by the plaintiff, an unsecured creditor of the Traction Company. On hearing the court of chancery granted the prayer of the bill and appointed a receiver, who qualified and took over the management of the affairs of the company which included the operation of the electric railway serving the cities of Barre and Montpelier and the intervening territory. The receiver has hitherto continued to operate such railway under the orders of the court of chancery. Various parties in interest as creditors of the Traction Company have from time to time been cited in or permitted to intervene. The American Trust Company was granted leave to file a bill of complaint in the cause praying for the foreclosure of its mortgage on the property in the hands of the receiver. Upon hearing, involving principally the question of priority of claims, a decree was passed determining the order in which specified claims should be paid and granting a foreclosure of the bondholders' mortgage upon condition that the Trust Company pay the claims which were given priority over the bondholders. It was further ordered that, on failure of the Traction Company or the general creditors to redeem and of the Trust Company to pay the claims having priority within specified times, the receiver should sell the mortgaged property on or before a date named and distribute the proceeds thereof in accordance with the priorities set forth in the decree. From this decree the Trust Company appealed, and the case was heard and submitted on the appeal at the November Term and is still with the Court for decision. Subsequently the petition under consideration was filed in the case.

In substance it sets forth the financial condition of the Traction Company, the need of additional equipment, the existence of certain unprofitable branches of the railway, and the inability of the road to meet operating expenses and yield a reasonable return on the investment as at present operated. It prays for an order that the operation of the unprofitable branches be suspended and that the rate of fare be raised; with the alternative that, unless the foregoing prayers are granted, the entire road be ordered discontinued. Pending consideration of the questions raised on the appeal, the petition has been brought on for hearing and counsel have been heard on the question of the Court's jurisdiction to entertain the same.

Counsel for the petitioner rely upon the provisions of G. L. 1562 to 1564 in support of the claim that, since the appeal removed the cause in which the receiver was appointed to this Court, the court of chancery has no further jurisdiction during the pendency of the appeal; but that the jurisdiction of the subject-matter of the petition was by the appeal transferred to this Court. The question whether the appeal in such a proceeding terminates the jurisdiction of the chancellor to make orders respecting the care and management of property in the receiver's hands has, so far as we are aware, never before arisen in this Court. Under the practice in this State, the question of continuing jurisdiction would not be liable to arise in ordinary chancery cases. But where the subject-matter of the litigation is property in the hands of a receiver, who acts as an officer of the court and under its orders, the occasion for exercising this supervisory power may often arise pending an appeal. Hence, the importance of the question as a matter of chancery practice is at once apparent.

The original jurisdiction in receivership proceedings, as in all chancery matters, is conferred upon the court of chancery, the powers of which are vested in a single chancellor. G. L. 1487. The Supreme Court has only appellate jurisdiction in such matters. Slason v. Cannon, 19 Vt. 219; Canerdy v. Baker, 55 Vt. 578. The statute (G. L. 1491), conferring upon each justice the power and authority of a chancellor to issue or dissolve injunctions, to appoint receivers, and to make interlocutory orders, does not enlarge or modify the chancery jurisdiction of the Supreme Court. Its jurisdiction is statutory, acquired only in the manner provided by statute (Gove v. Gove's Admr., 87 Vt. 468, 89 A. 868; Ludlow Savings Bk. v. Knight, 91 Vt. 172, 99 A. 633; Essex Storage Electric Co., Inc. v. Victory Lumber Co., 93 Vt. 437, 443, 108 A. 426), and exhausted when the appeal has been considered, judgment entered, and the cause remanded. (Town of Underhill v. Town of Jericho, 66 Vt. 183, 28 A. 879; Monahan v. Monahan, 77 Vt. 155, 59 A. 176); subject, however, to be restored on proper petition or motion for rehearing. G. L. 1567-1570. On a casual reading, the sections of the statute relied upon seem to lend support to the petitioner's claim; but the inconvenience and cumbersomeness of the procedure contended for prompts an investigation of the development of our chancery practice to discover whether they should be given any such construction.

At its October session, 1779, the Legislature constituted the superior court a court of equity with jurisdiction limited to matters in dispute that did not exceed four thousand pounds and enacted that all cases in equity where the matter in dispute exceeded that sum should be heard and determined by the Governor and Council and House of Representatives. The act provided for a review in actions wherein the title of land was concerned and for an appeal in such actions to the Governor, Council, and Assembly. At the June session, 1782, a judiciary act was passed regulating justices of the peace and county courts and constituting a "supreme court of judicature" in place of the superior court. The first council of censors in their report made in 1786 criticize so much of the act of 1779 as invested the Governor, Council, and Assembly with equity powers as not only inexpedient but in violation of the Constitution. Their recommendation was heeded, and at the October session, 1786, so much of the act of 1779 as invested equity powers in the Governor, Council, and Assembly was repealed. Further it was expressly provided in the Constitution as amended in 1786 that the legislative, executive, and judicial departments should be distinct, "so that neither exercise the power belonging to the other," and the Legislature was authorized to erect a court of chancery "provided they do not constitute themselves the judges of said court." At the October session, 1788, an act was passed constituting a court of chancery to be held in the several counties at the times and places appointed by law for holding the Supreme Court therein. The judges of the law court were made chancellors, two of whom should constitute a quorum of the court of chancery. The act further provided that "the manner of process" (the proceedings) in said court should conform as near as may be to the rules and precedents established in courts of chancery in the Kingdom of Great Britain. These provisions were re-enacted in the revision of the statutes in 1797 in substantially the same language, except that to the provision respecting procedure was added, "so far as shall be consistent with the constitution and laws of this state." In 1821, by an act "making further provisions in the judiciary department," a single chancellor was given authority to make interlocutory orders and decrees in vacation preparatory to the final hearing in the court of chancery. No. 35, Acts of 1821, § 4. In the reorganization of the courts in 1824 it was provided that the Supreme Court and court of chancery should consist of one chief justice and three assistant justices any three of whom should constitute a quorum, and that said court should have original and conclusive jurisdiction of all suits in chancery. A single judge presiding in county court or during vacation was empowered as chancellor to make interlocutory orders or decrees, "preparatory to the proceeding and final hearing of any suit in chancery." The court, as before, held one session annually in each county. No. 46, Acts of 1824. The court of chancery as thus constituted remained unchanged until the revision of the statutes in 1839. It will be seen that from 1788 the Supreme Court had the original and conclusive jurisdiction in chancery matters, there being no provision for appeals in such proceedings.

The court of chancery as at present constituted came into existence in 1839. Each judge of the Supreme Court was made a chancellor and given within his judicial circuit all the jurisdiction and powers then or thereafter vested in a court of chancery. The powers and jurisdiction of the court were declared to be "co-extensive with the powers and jurisdiction of the court of chancery in England with the exceptions,...