Fox v. Seal - 89 U.S. 424 (1874)
U.S. Supreme Court
Fox v. Seal, 89 U.S. 22 Wall. 424 424 (1874)
Fox v. Seal
89 U.S. (22 Wall.) 424
1. Under the joint resolution of the Legislature of Pennsylvania passed January 21, 1543, and which declares that
"It shall not be lawful for any company incorporated by the laws of the commonwealth and empowered to construct any railroad, canal, or other public internal improvement, while the debts thereof, incurred by the said company to contractors, laborers, and workmen employed in the construction or repair of said improvements remain unpaid, to execute a general or partial mortgage, or other transfer of the rent or personal estate of the said company, so as to defeat, postpone, endanger, or
delay their said creditors, without the written assent of said creditors first had and obtained, and that any such mortgage or transfer shall be deemed fraudulent, null, and void, as against any such contractors, &c., as aforesaid,"
an unpaid contractor, laborer, or workman, employed in the construction of a railroad in Pennsylvania, has a lien of indefinite duration on such road, which lien has precedence over every right that can be acquired by or under any mortgage made after the debt to the contractor was incurred.
2. Such lien is not merged in any judgment got by the contractor against the company for his debt, nor by any proceedings in or judgments in scire facias, primary or subsequent, upon such judgments. In whatever shape the debt may be, it has the benefit of the privilege given it by the legislative resolution.
3. If the company mortgage their road after the contractor has got a judgment against it for his debt, such contractor is not bound, on a scire facias brought by him to revive his original judgment, to give notice to a mortgagee as a term tenant. A mortgagee is not a term tenant.
4. Under the Act of the Assembly of Pennsylvania of April 4, 1862, which, reciting the above-quoted joint resolution of January 21, 1843, enacts
"That whenever any incorporated company subject to the provisions of the above resolution shall divest themselves of their real or personal estate contrary to the provisions of said resolution, it shall and may be lawful for any contractor, laborer, or workman employed in the construction or repair of said company, having obtained judgment against the said company, to issue a scire facias upon said judgment, with notice to any person, or to any incorporated company, claiming to hold or own said real or personal estate,"
all that is required to enable the contractor, etc., to proceed by scire facias, as contemplated by the act, is that such contractor &c., have a judgment against the indebted company which gave the mortgage. It is not necessary that the judgment be a lien.
5. Where, on the intervention of a contractor having a lien such as is given by the above-mentioned joint resolution of 1843, a court, on proceedings in foreclosure of a mortgage of the road made subsequently to the date of the lien, orders a sale "subject to any lawful claims or rights which may exist prior or paramount to said mortgage," and the sale is made accordingly, the lien is not divested, whatever might be the case were the lien that of a judgment.
6. Nor will such a lien be divested by a statute authorizing a railroad company to borrow money and to pledge its income and property to secure the payment. A repeal of the joint resolution will not be inferred by the grant of such a power simply.
On the 21st of January, 1843, the Legislature of Pennsylvania passed the following
"JOINT RESOLUTION TO PROTECT LABORERS AND CONTRACTORS"
"Resolved that it shall not be lawful for any company incorporated by the laws of this Commonwealth and empowered to construct, make, and manage any railroad, canal, or other public internal improvement, while the debts and liabilities, or any part thereof, incurred by the said company to contractors, laborers, and workmen employed in the construction or repair of said improvement remain unpaid, to execute a general or partial assignment, conveyance, mortgage, or other transfer of the real or personal estate of the said company, so as to defeat, postpone, endanger, or delay their said creditors, without the written assent of the said creditors first had and obtained, and any such assignment, conveyance, mortgage or transfer, shall be deemed fraudulent, null, and void as against any such contractors, laborers, and workmen, creditors as aforesaid. [Footnote 1]"
This joint resolution being in force, the legislature of the same state, in the year 1850, incorporated the Hemphill Railroad Company; a company authorized to make a railroad from a town called Greensburgh, in the interior of Pennsylvania, to the western boundary of the state.
The act of incorporation gave the company no power to borrow money or mortgage the road. But a subsequent act -- one of April 12th, 1851 -- empowered the company to borrow money and "to pledge the property and income of the company in order to secure the payment thereof."
With these acts in force, the company, in 1853 (May 27th), entered into a contract with a contractor named Fox to do the work on the projected road, and he did it. In the following year, 1854, the company became embarrassed and requested Fox to stop working, which he also did.
Not getting paid, he brought suit February 16, 1855, in the Circuit Court of the United States at Pittsburg against the company, and on the 23d of November, 1860, got judgment against it for $33,500; this judgment constituting, by the law of Pennsylvania, a lien against the company's real estate for five years from its date, and no longer,
and the law of the state requiring notice to be given to terre tenants, when there are terre tenants, and the plaintiff in the judgment desires to revive the judgment as against them.
On the 27th of June, 1855 -- that is to say between the day when Fox brought his suit and that when he got judgment -- the debt to Fox being still unpaid and he having given no assent, written or other, thereto -- the company executed a mortgage on the whole of their road, franchises and property, real and personal, to one Seal as trustee to secure the payment of bonds to the amount of $1,000,000, to be issued by the company, and which were immediately afterwards issued, the bonds having twenty years, that is to say until 1875, to run. The mortgage was duly recorded in all the counties through which the road ran, and Seal, the trustee, took possession of the road and worked it until the time of the sale, hereafter mentioned. Interest on the bonds becoming due, and not being paid, suit was instituted in the Supreme Court of Pennsylvania to foreclose the mortgage and to sell the road, its franchises, and other property, real and personal. Fox hereupon applied by petition to be allowed to intervene pro interesse suo in the suit for foreclosure, or if this should not be granted, that he might be paid out of the proceeds of the sale. His petition contained a full history of the origin, character, and amount of his claim against the Hemphill Railroad Company. The court rejected his petition on both its parts, and a sale was made under the proceedings in foreclosure, the sale, however, being made (in consequence of Fox's petition) "subject to any lawful claims or rights which might exist prior or paramount to the said mortgage." The purchaser was another corporation, named the Pittsburg, Wheeling & Baltimore Railroad Company. This sale was made March 30, 1871.
Between the date of the above-mentioned mortgage and the sale under it, that is to day on the 4th of April, 1862, the Legislature of Pennsylvania passed an act to enable contractors, laborers, workmen &c., better to get the enjoyment of the lien which the joint resolution of January 21, 1843,
already quoted, had given them. This act was in these words:
"Whereas it frequently happens that incorporated companies, by assignment, conveyance, mortgage, or other transfer, divest themselves of their real and personal estate, in contravention of the provisions of the resolution of January 21, 1843; therefore,"
"Be it enacted that whenever any incorporated company, subject to provisions of the above resolution, shall divest themselves of their real or personal estate, contrary to the provisions of the said resolution, it shall and may be lawful for any contractor, laborer, or workman employed in the construction or repair of the improvements of said company, having obtained judgment against the said company, to issue a scire facias upon said judgment, with notice to any person, or to any incorporated company, claiming to hold or own said real or personal estate, to be served in the same manner as a summons, upon the defendant, if it can be found in the county, and upon the person or persons, or incorporated company claiming to hold or own such real estate; and if the defendant cannot be found, then upon the return of one nihil and service as aforesaid, on the person or persons, or company claiming to hold or own as aforesaid, the case to proceed as in other cases of scire facias against terre tenants. [Footnote 2]"
We should here mention that while some of these things were going on -- that is to say in 1867 (January 29th) -- and while Seal was in possession of the road as trustee, Fox had issued a scire facias against the Hemphill Railroad Company to revive the judgment which he had got against it in 1860; the lien of which judgment had, of course, under the law of Pennsylvania as already stated, expired in 1865. To this scire facias no one was made a defendant but the original defendant, the Hemphill Railroad Company. Judgment was entered on this scire facias March 14, 1867.
He now, February 23, 1871 -- thirty-seven days before the sale of the road, and while Seal was yet in possession of it -- issued a scire facias to revive judgment and quare executio
non on the judgment just now mentioned as obtained in 1867, and in this second scire facias he made Seal a codefendant with the original defendant, the Hemphill Railroad Company, and as soon as the sale of the old road to the Wheeling, Pittsburg & Baltimore Railroad Company had been made, brought in that company as another codefendant this being effected August 12, 1871, and he meaning in all which he did to act in conformity with what was directed by the Act of the Pennsylvania Assembly of 1862, quoted on the preceding page.
These two last-named parties -- that is to say Seal and the Wheeling, Pittsburg & Baltimore Railroad Company -- pleaded to this last scire facias.
The pleas were:
That the mortgage was not made in contravention of the joint resolution of 1843;
That the plaintiff was not a creditor within the scope of that joint resolution;
That any lien or claim which the plaintiff ever had, had expired prior to his bringing the present suit.
And, on issue taken &c., the question, divested of the technicalities of pleading and evidence, was whether the real and personal estate of the old Hemphill Railroad Company, which under the proceedings in foreclosure instituted by Seal had passed to the Wheeling, Pittsburg & Baltimore Railroad Company, was liable to the debt to Fox as ascertained by the judgment of the circuit court on which the scire facias to revive &c., had issued.
The plaintiff, to establish his case was about to offer certain pieces of documentary and record evidence separately, when the court directed that he should offer the whole in a body, and in connection. He now did this, offering the record of the mortgage (the same being without any written assent by him to it); the record of the proceedings in foreclosure and sale, with the order preceding it that it should be made subject to any lawful claims or rights prior or paramount to the mortgage; the joint resolution of the Pennsylvania
Legislature of January 21, and the Act of Assembly of April 4, 1862; the records of his own suit of 1855, ending in judgment in 1860; the record of the scire facias of 1867, to revive it; this to be followed up with evidence of the nature and date of origin of the claim on which the original judgment was got, to-wit that it was that of a contractor in the construction of the railroad prior to the date of the mortgage; that the mortgage, if not postponed to his claim, defeated it; that he was not a stockholder in the Hemphill Railroad Company &c.
The defendants objected to the evidence as irrelevant and incompetent, and the court rejected it, the plaintiff excepting to such action. Judgment having been given for the defendants, the plaintiff brought the case here.
For the reader's convenience, the dates of some of the important facts occurring in the history of the case are here set forth chronologically:
1843, January 21, joint resolution of the legislature.
1850, May 15, Hemphill Railroad Company incorporated.
1851, April 12, act of legislature authorizing a mortgage by it.
1853, May 27, Fox's contract made.
1855, February 16, Fox's suit brought.
1855, June 27, mortgage made to trustees, and trustees take possession.
1860, November 23, Fox obtains judgment.
1862, April 4, act of the legislature.
1867, January 29, scire facias to revive, against the Hemphill Railroad Company only.
1867, March 14, judgment on this scire facias.
1871, February 23, scire facias to revive judgment, et qu. ex. non against the Hemphill Railroad Company and the trustees also; the present suit.
1871, March 30, sale of the railroad.
1871, August 12, the Pittsburg, Wheeling and Baltimore Railroad Company brought in on motion as codefendants.