CENTRAl. TRUST CO. OF NEW YORK
'/I.
MARIETTA & N.
G.
RY.
CO.
875
does not invalidate the contract as between the parties or in favor of a prior mortgagee. The deoision appealed from should he affirmed, and it is so ordered.
CENTRAL TnusT Co. OF NEW YOR'" '11, MARIETTA & N. G. Ry. Co., .(JACKSON & SHARP CO., Intervener.) (C1Ircuit Oourt oj .AppeaZs, Fifth Circuit. December 7, 1891.) FORECLOSURB OJ' RULliOAD MORTGAGE -CoNDITIONAL SALE-RIGHTS OJ' VBNDOJlINCREASED· VALUB OF ROLLING STOCK.
In a Buit to foreclose a. railroad mortlrage, wherein an intervener claimed title to certain rolling stock as vendor under a conditional sale tbereof, tbe evidence sbowed tbatthe value of rollinK stock had increased 10 per cent. since·tbe time when the rolling stock in question was furnished by the. intervener, HeW that, in deter. mining the Bum which the receiver in the Buit should pay in order to retain pOBBes- . SiOD of the rolling stock, 10 per cent. should be added to tbe COBt thereof before deducting a pereentage per annum for wear and tear. .
Appeal from the Circuit Court of the United States for the Northern District of Georgia. Bill in equity by the Central Trust Company of New York against the Marietta & North Georgia Railway Company to foreclose a mortgage made by the railway company. The Jackson & Sharp Company intervened,claiming certain rolling stock and railway equipment in possession of the receiver appointed in the suit. Decree for intervener. Plaintiff appeals. Affirmed. lI. B. Tompkins, for appellant. Hoke Smith, fora,ppellee, BeforePAkDEE, Circuit Judge, and J..oCKE and BRUCE, District· Judges. PARDEE, J. The Jackson & Sharp Company intervened in the case of Central 7Tmt. Co. of New York vs. Marietta & Georgia By. Co., a suit pending for the foreclosure of a mori,gage in the circuit court of the for the northern district of Georgia, claiming that thecerUnited tain rolling stock and railway equipment described, then in the possession of the receiver in the main case, belonged to the intervener, and· pl'l1ying that the receiver be directed to turn over said property, with full compensation for its use, or else to pay the value thereof as stated, 'l'he court allowed the intervention to be filed, referred the same toa special master, directing him to report as to the validity of the.claim. of the petitioner, and as to the advisability of the purchase of the property by the receiver. Thereafter the petitioner, under iea\'e of the court; filed an amended petition, stating that the cars claimed were placed on the Marietta & North Georgia Railway through the instrumentality GeorgeR. Eager, as prE'sident of the North Georgia Improvement Com- . pany, and .with the full knowledge and consent of the vice-presiden$ Andiacting president ·of the railway company; that the property belongedcto the intervener; and that the title was toremaininitjfurther
of.
876
REPORTER,
vol. 4.8.
showing tbat the intervener has never received one cent from the improvementcompany, or from any other source, on account or said cars, except two certain cars mentioned. Pending the hearing before the, master, the Central Trust Company, complainant in the main suit, filed an answer to the intervention. controverting on various grounds the intervener's right to recover. Other, facts necessary to the proper consideration of this case will be found in the extracts quoted from the special master's report, as follows: "First, as to the value of said rolling stock. Under th,e ruling of the court in Similar interventions, I find the value of the rolling stock on the 19th January, 1891, the date when the receiver was I find the of the first-class passenger-car No. 15 and the parlor-car No. 16, if entirely January 19, 1l:l91, to be ten per cent. advance of what they were sold for to the North Georgia Improvement Company iii Novem bel.', 1889, The p,rice a,twhich both cars were sold to the North Georgia Improvement Company was $9,700. Ten per cent. advance added to this sum makes the value of said two cars, if entirely new, $10,1370, on January 19, 1891. The eyidencelihows that they have been in use by the Marietta & North Georgia Railway Company about twelve months, and that the percentage of deterioration for wear and ,tear and use of cars is 6 per cent. per annum. 'rhe amount to be deducted, therefore, on account of wear and tear, is $640.20, leaving the net value of said cars, January 19, 1891, as $10.029,80. I find and report this, therefore, as the value of said cars at said date, with interest at 7 per cent. pet1annum from said date. The interveners were paid about $3,UOO on ,accQuu,t Qf said cars by the North Improvement Company, but, as the said North Georgia Improvement Company transferred all its interest in said cars back to the interveners before the filing of this intervenlion, 1 do not think this payment is material. 'rhe evidence shows that the seven passenger-cars, if entirely new, were worth, on the 19th of January, 1891, $32.725; and that the three combination mail, baggage, and express cars, if eutirely new, were worth on said date the sum of $8,550,-an aggregate amount for the ten cars of $41,275. The evidence shows that these ten cars have been in use,by,the Marietta & :North Georgia Railway for about four months. :Qeductingfrom this amount, at the rate of 6 per cent. per annum for de· ,use, 2 per .cent. for the four months, the sum of $825.50, leaves the net value of these cars on January 19, 1891, $40.449.50. I therefOre' find and report the value of the twelve cars on January 19. 1891, to be $50,479.30, to which 7 per cent. annum interest must be added from said date. The evidence shows that all of said cars are necessary to the operation Of the road by the receiver, and I therefore recommend that he be authorized to purchase the same at their value. as above stated, on January 19, 1891, with 7 per cent. per annum added from said date. As tQ the receiver's ability to pay fol' the same. I refer to my reports filed in the Hiawassee Company intervention and .Jackson & Woodin Company intervention. The evidence in, this, caSe shows that these cars were purchasell by the North Georgia 1mprQvement Company from the intervener, Jackson &Sharp Co.; the fi rst-class pl\Slilenger-carNo. 15 and parlor-car No. 16 having been purl}hased by written l,lont.ract"Noyember 1. 1889, but nut legally executed, until the 19th day 6f January, 181H. In said written contract title was reserved in the vendors until fully paid for. As to the other ten cars, there was no consummated COntract or purcbase. either oral or written, but it was understood, both by the interveners, by the North Georgia Improvement Company. and by Lenox Stnith, of the Marietta & North Georgia 1{ailway Company,
CENTRAL TRUST CO.
'0"
NEW YORK
'MARIETTA: & N. G. RY. CO.
877
that these car,s were to reItllLin tMproperty of the Jackson & Sharp Co. until they were fully paid for; and the evidence shows that ,they have not been paid for. All of these cars were >placed upon the Marietta & 'North Georgia Railway without any contract, either oral 01' written. ,Counsel for trust, company contend in this case, as in the other cases. that the interveners have no lien on said rolling stock as against the mortgage bonds now being foreclosed in this court. as said written contract covering the two cars was never recorded, and there was no written contract as to the other cars. In support of .this position he citps the act of the legislature approved October 13, 1889, The master is of the opinion in this case, as in the other cases. that the contract as to the first twocl)rs, though not recorded,.is valid as to the parties thereto; and that the verbal contractas to the other ten cars isvalid as to parties,thereto; and that the Marietta & North Georgia Railway qUiredno title whatever to but simply held possession of it undel' an implied contract of bailment. The master reiterates hi this case his opinioriin the other cases. that George R. Eager was not ,required by his contract, or by any evidence introduced in the case, to equip and pay for the rolling placed, on the Marietta & North Georgia Railway 'To'the.special master's report the Central Trust Company filed excep;. ,,' , , ,,' i tiot!8,;as fulJows: 'lJ!irst. The special master had no right or authority to hear evidence or to make i8lilldillgas to what passenger-car No. 15 and parlorcar No. 16 would have :been worth, if entirely new, on January 19. lS91;but it was only pr9per ,shouldjind what said GarE!,were )Vortl1on 19th of January. 1891, ,taking into consideration the agreed Wqic4 weresold. and deducting therefroIl\ such pereentllge'as price wasprO"en' tHey had deteriorated by use. Arid 'the said special masMr has found l thatslich<deterioratibn for wear and tpar an'd use of the cars was at the rate of 6 per cent. per 'annum from November, 1888', to 19th of Janual'Y; 1891;' and bectherefore. shguJd'have ded ucted that amau ntfrom 89 1700, the priceatW·hich said cars were sold, and not from that,price, with 10per cent. added thereto. making $10,700. f$econ¢. Said Central Trust C0!I!pl!-ny ob. special master in respect to theseyen jects ande)Ccepts to the finding of passenger-cars and the three combination mail, baggage. and express (,lars for the same'reason and lipon the same grounds set forth and allegedi'n the going Objection; No.1; tllat is, because the master took into consideration what the said ten cars last above refeued to, if entirely new, might have been worth,o;>1 the, 19lJ:J Of January, instead of tilldillg the value j)f said cars. on Jan, u,a,ry, 1.,9.,,1891,. b,Y as,certaiiJing thep1',i,ce, for. Wh,,i,Ch the,.Y "','er,e SOld.'t and deducting ,therefrom the for we,ar tear. Third. Saiq. Central Tru8t'Company further objects and excepts to said report because it: finds anything in favor of the intervener; and this respondent avers that under the evidehce in this cause. and the law as applicable thereto, the intervener. Jackson'&Sharp Co., did not reserve or retain any title whatever, railway eqUipment. or any part thereof; and. therefore, w,ben tl)e North,qeorgia ,lmprovemPDt Company placed said equipment, through George R. upon. the Marietta & NorthGeorgia &i1way. and there the title to said equipment vested in siIid railway company. an4that n6 lien'or reservation of title' attached' to said property as against company'superior to Lhe,1ien of the mortgage bonds now being forooltised." the court' below affirmed the master's' report, and the Central, Ttust Company appealed, assigning for errol' on appeal the sameqpestions made in the exceptions to the master's' -report. ' We therefore' conside't the case as made by the exceptions.
ane"
vol. 48. . 'fhefirst. with· re(erence ,to the. method of the masiter in arl'ivingat the value ·of the property on Januaryl9,1891, the date the'reeeiver 6btainedipossession, alldwhich was the date which the ·couttinotheriike intetvelltions had, at, the fixed tor the determinMion of the value.bf rolling stock .the receiyer claimed by outside I(appears that tberollingstock clairriedin thepresel}t interventiQll,was .new when, shortly' before Jl1ouary.19, 1891, it. was delivered to the Marietta. & North Georgia RailwayCompanYi and the master ascertained the actual "IlIMon January19, 1891','by finding 'what it would havfl been it new, an<nheri deducting the per cent. of deterioration in value by use. The evidence adduced as toyaluebefore the master was not given directly .8S to, the ,value on the 19tQof January, 1891, and could not well have been, as the hearing was nearly six months later, and none of the witnesseswstifying as to the value had inspectP.d the on that day·. The evidence shmVed a sharp increase-10 per:'cent.-in the :value of :rolling stock in/the time between the \lelivery, of the rolling stock in question and January 19th, and was as to the actual value of similar rolling stock then ali, toJb,eper cent. of usual decrease in value of rolling stock by wear and tear when in use. The 1I1ll8ter :was therefore'limited by the evic.lence to the: ;method he followed in giving the valueona '11t.e contention that the value ot'rollirig stockonJanuary 19thwas what it hadbet;nagreed was the valUe, at. the time .. of tile lease or' e/lle, less hyuse to January 19th, cannot. becapse, as before, ·sai;d;the showed' the stock had increased .in value prior to January 19, 18\H · . exception was! to the filldingofanything in· favor of the intervenet,beoause that,under the evidence in the case and thereto, the: intervener ,did not l'eservenor retain any the law title Whatever in the e<l;liiprnent. Theevi<lence fully. sustains the report of the mtisu,'r in as a matter of contract, the intervener did the title and,' ownership of Un} rolling stock in question. Whether or not the law applicable to the·transaction defeated the express retention of ownership by reason of the failure to record the in 8ccordanGe with the Georgia act of 1889 considered Al1d thecll,Seof (Jentml TI'1tst Co. y·. G. !ly.Co.,48 Fed. He,p. S65,.(just de(lided,) and we see 110 reaSPl1 to go over the. ground again.. It is not pretended in this case, that the intervener. had notice of,oris in' anywiSe charged with notice of, the equities alleged to exist behveenthebondholdersof the & North Georgia RAilway Company and George R.Eager, con.. to,.1', to.'".o,on.a.,truct,. a.lld;· rha.p.s. eqUiP,.· tl.le. said ra.)}.road; arising out . Of#16 8ml the issqanqe of thereunder by obtained theissuance,of·railroad bonds. Our conclusion p,f tile W.11 0 1e. p.ase is is no errorP.l'6jUdiCi8Ul? t.. h .appellant in ..e tpedecree renderetl by and that saiq, decree shouldbft "ffirmed. And it is so ordered. , .. · , .' . '. ," ... ,', '
in
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HOLLY JU.Nt1Jr'GCO. II. NEWCHESTlIlB WATER 00.
87g
HOLLY l!ANuF'G Co.
et al.
t7. NEW CHESTER WATER
Co· · czl.1
COUrt, B.D. Pcmmvl'VGnia. Beptember
ie, 1891.)
L
CON'l'RAOTS-RIGIlTS OJ!'
t.
TllmD l'llRSONl!. . ' . .. The. ,New Chester Wl'terC\lmpanymBde a contract B. & Co.·. water-world contractors, to build ita wom;agreeing to pay them witi) its stocks and bondL These stocks and bonds were, as earned, pledged to W. G. H. & Co., to secure ad· Tances; After all the adv:ances had been made, said B. Co. and W. G. H. &Co. and&. D.'. W. &; Co. made a ite agreement, whioh reOited. that the stoo an.d . ..k . bonds pledged to W. G. H. & Co. been sold to &. D. W; & Co., and that B. &5 Co. represented that the New Chester water-works and tliree others could be Completed tor t2OO,ooo, and by, Whioh W. H. G. & Co. agreed to advanoe that sum toB. &Co,,1.o be applied by R. ,D. W.& Co., who guarantied the completion ot the works ofthefottr undertakingscleiU'ot allllens aheadot securities held by W. G. B. '& ,co., certain proPOrtiOlls ot the S2OO,ooo to be applied to each work. A leBs proportJon of the money specified was eI:PPI.Q.yed at the New Chllllter Compan"i works, but the whole amount, and $105,000 8dditional, was expencMi 011 the four work.. B. &; co. purohased engines for the ,New Chester .water-worka from ClOmplainanta, butonlY.parUypaid:fQr.them. BeldtlJ.at. complainants bMng parties to the tripartite'agreement; and being strangers to the considel'ation R;P., W. &; Co. w:ere:Dot persooall1llable for the, price of the engines em. aocount Of said agreement. .· ' .' Where .took·of a corporation has been transterred' tor'Iabor done, and the gooa faith of the Is ,oot impeached, lIor a'failure ofoonsideration shown, tne holde'i ls person"Ut on the grounds that said stockIs unpaid oapital alld that unpaid asBeBsmentil are a WIt. fund for the payment of the corporation indebtedness. . J'QB UNPAID AsSBSSMBNTL' ','
I. FIxTURES-Pulu'lNG-ENGINBS.
, ;.
B. &; Co.,a'ftrm engaged in fitting ull Ordered from an enginebuUd'. JJ1C qOJP-panl to beset.. up. in the works ot a water they were fitting up at Chester, agreeing to pay tor them in installments, andtbat the engine building companv should" have a lien on" the "en/{inBs and ClOnneo:. tions," and "shOUld full possebionthereof." .The engines were on land of whioh B. & Co. then held the legal title, in suoh a way that they oould readily be taken down and removed: and reJDained under the oontroi of the engine building a.,gent.·.j to 'Whom the engine..s had. been consigned at <IJhester· . Held, tbeemnes did not become realty, and a valld liel1ln favor of the vendon existed against B; &; Co. anHhe water companieL The Nllw Gllester, Water transferred all ita' shares of Btook either 4l· .reotly Co. orto Co.'Bemployes, and put ill the "absolute Qal!trol" of :a. & do., its OffioerSbel1l.g· n. & Co.'s servants. B. &; CO'lurohased machinery, m. bie.cj;,to a . lie.n,a.n.d placing it i.n the work.s 0 said wa.ter:COlllllany ; eom,e of. the direotors of the company had actual notice of the lien. Betel, the eampany had noticeof'tlie'lien. .
.
'To 'OirrlCBRSOJ'
LIBN·.
f; 'S.uloE-+V'EIIlDOR'S
Ttl,e retention of open colltrol by a vendor's employe over maohinery ill tlle'WorkB of 8 oompany whioh wetebelng fitted up by tile ,veOOee, la notice to II&id oompany of .the existence of a vendor's lien. ,. . . ' .
:
.., ,S.um-MBCJLunC'sLIBN...
, ,. The fact that the land and bUildings of a water oompany are not subject'to Uan , uOOer,the mellhallio'slien laws of Pennsylvania does not prevent a movable pieoe of machinery, ,eJelivered"conditiollal1y to such ,a oompallY-, from being SUbject to .a valid .contractuallien. Fosterv. Fowler, 6!l Pa. St: 27,iliscussed. , ""URISDrtlTWN 01/ Cllicui'r'COORTS-eITIZENSIlIP' OJ!' . P ARTrES,' Tbe parties giving a contractual lien on machinery, who, in purcbasing the1Dao ehinery,had acted solelya8 the agents of the respondents in the suit, and had conveyed aW6YIllll 'title to 'the 'property,wets, SUbsequently to the filing ot'thebill" made partie.scplsintUf by. amendment, not f01"lpUrpOses ot reliet, but tobting 'aU partiBII before the court. Said varties were oitizens of the same state as wllre the original complainants. I1eld, upon the objeot.,ionthat said parties should. ha.... been joined as parties respondent, and, when thu,s joined, the court had 1lO' lBeported b¥ Mark Wilks Cl)n.t,.Eaq., of the Phll&de1phia ba·