The statutes of North Carolina of March 28, 1870, and March 1,
1873, the first, giving a lien to mechanics and laborers in certain
cases and the other regulating sales under mortgages given by
corporations, do not give to those performing labor and furnishing
materials in the construction of railroads a lien upon the property
and franchises of the corporation owning and operating such
roads.
Ordinary lien laws giving to mechanics and laborers a lien on
buildings including the lot upon which they stand, or a lien upon a
lot or farm or other property for work done thereon, or for
materials furnished in the construction or repair of buildings,
should not be interpreted as giving a lien upon the roadway,
bridges, or other property of a railroad company that may be
essential in the operation and maintenance of its road for the
public purposes for which it was established.
The proviso of the third section of the said Act of 1873,
Battle's Revisal, c. 2G, § 48, has reference to the debts and
contracts of private corporations formed under the Act of February
12, 1812, Pub.Laws N.C. 1871-1872, c. 199, and not those of
railroad corporations organized for public use under the Act of
February 8, 1872.
The authority of
State v. Rives, 5 Ired. 297, is
questioned by the Supreme Court of North Carolina in
Gooch v.
McGee, 83 N.C. 59.
The Spartanburg and Asheville Railroad Company -- a corporation
created by the consolidation, in the year 1874, of a railroad
company of the same name, organized under the laws of South
Carolina, and of the Greenville and French Broad Railroad Company,
of North Carolina -- executed, under the date of October 1, 1876, a
deed of trust whereby, for the purpose of securing the payment of
its bonds, with interest coupons attached, it conveyed its
franchises, railroad, rights, lands, and property, real and
personal, in trust for those who should become holders or owners of
such bonds. The deed contained a provision by which the principal
of all the bonds should become due after continuous default for six
months in the payment
Page 115 U. S. 123
of semiannual interest upon them, or upon any of them. Such a
default having occurred in respect of the installments of interest
due January 1, 1878, the present suit was brought for the purpose
of enforcing, in satisfaction of the entire amount of said bonds
and coupons, the lien given by the before-mentioned deed. Certain
parties -- Garrison, Fry & Deal, Clayton, and Rice &
Coleman -- were made defendants because, as creditors of the
railroad company, they claimed, respectively, a lien upon property
covered by the mortgage superior to that asserted in behalf of the
bondholders. Garrison alleged that, being a mechanic, he
contracted, December 1, 1876, and June 2, 1877, with, and
afterwards built for the railroad company two trestles in Polk
County, North Carolina, his work being completed February 18, 1878;
Fry & Deal (the first named being a mechanic), that they
furnished materials and work upon trestles in the same county,
under a contract made with the company on June 2, 1877, and fully
executed June 17, 1878; Clayton, that he performed work (grading,
etc.) upon the company's road in the same county, under a contract
made with it prior to the mortgage, but not executed until after
its date, and Rice & Coleman, that they did work and labor, and
furnished materials, on the company's road in Henderson County,
North Carolina, such work beginning June 1, 1876, and ending May 1,
1878.
The decree below, ordering a sale of the mortgaged property,
must have proceeded upon the ground that under the laws of North
Carolina, these defendants acquired no lien whatever upon the
property of the railroad company. The contention here is that some
of the defendants acquired a lien as well under a statute passed in
1873, regulating sales under mortgages given by companies upon all
their works and property, as under the act called the workmen's
lien law of 1870, and that one of the defendants has a lien under
the former, while others have liens under the latter statute. The
main inquiry now is whether the court below correctly interpreted
those statutes. It is necessary, to a clear understanding of the
case, that their provisions be examined in detail.
By the Constitution of North Carolina of 1868, the general
Page 115 U. S. 124
assembly of that state was required to "provide by proper
legislation for giving to mechanics and laborers an adequate lien
on the subject matter of their labor." Art. 14, § 4.
Subsequently, by an Act approved March 28, 1870, entitled "An
act for the protection of mechanics and other laborers, materials,"
etc., it was provided
"That every building built, rebuilt, repaired, or improved,
together with the necessary lots on which said building may be
situated, and every lot, farm, or vessel, or any kind of property
not herein enumerated, shall be subject to a lien for the payment
of all debts contracted for work done on the same or material
furnished,"
§ 1; that
"Any mechanic or citizen who shall make, alter, or repair any
article of personal property at the request of the owner or legal
possessor of such property shall have a lien upon such property so
made, altered, or repaired for his just and reasonable charge for
his work done and material furnished, and may hold and retain
possession of the same until such just and reasonable charges shall
be paid,"
&c., § 3; that
"All claims under $200 may be filed in the office of the nearest
magistrate, if over $200, in the office of the superior court clerk
in any county where the labor has been performed or the material
furnished,"
§ 4; that proceedings to enforce the lien created must be
commenced in the courts of justice of the peace, and in the
superior courts, according to their jurisdiction, and, upon
judgment's being rendered in favor of the claimant, an execution
for the collection and enforcement thereof may issue in the same
manner as upon other judgments in actions arising upon contracts
for the recovery of money. § 11. Pub.Laws N.C. c. 206, p. 253;
Battle's Revisal, N.C. c. 65, pp. 563-564.
By a general statute, approved February 8, 1872, entitled "An
act to authorize the formation of railroad companies and to
regulate the same," provision was made for the formation, by any
number of persons, not less than 25, of corporations for the
purpose of constructing, maintaining, and operating railroads. This
statute contains 66 sections, and prescribes the mode in which a
company may be organized under it; what its articles of association
shall contain; what shall be the amount of its capital stock, and
in what way
Page 115 U. S. 125
subscribed; when it shall become a corporation, with the powers
and privileges therein granted; to what extent its stockholders
shall be liable for the debts of the company; when it shall be
liable to laborers for the amount due them from contractors for the
construction of any part of the road; the mode in which it may by
condemnation acquire real estate needed for the purposes of its
incorporation; an annual report to the governor showing its
operations and conditions in every respect; when and under what
circumstances the legislature may alter or reduce its rates of
freight, fare, or other profits, and many other duties respecting
the operation and management of its railroad and other property.
Pub.Laws N.C. 1871-1872, c. 138; Battle's Revisal, c. 99, p.
727.
Corporations formed under that statute are given power to do
various things involving the raising and expenditure of money, and
also
"from time to time to borrow such sums of money as may be
necessary for completing and finishing or operating their railroad
and to issue and dispose of their bonds for any amount so borrowed
and to mortgage their corporate property and franchises to secure
the payment
or [of] any debt contracted for the purposes
aforesaid,"
&c. The statute further declares that "all existing railroad
corporations within this state shall respectively have and possess
all the powers and privileges" therein specified.
On the 12th of February, 1872, the General Assembly of North
Carolina passed another statute providing for the formation of
"private corporations for any purpose not unlawful" by three or
more persons. Pub.Laws N.C. 1871-1872, c. 199.
At its subsequent session, an act was approved, March 1, 1873,
entitled "An act to regulate mortgages by corporations, and to
regulate sales under them." As the present case depends largely
upon the construction to be given to the provisions of that
statute, its first and third sections, the second and other
sections being immaterial in the determination of any question here
involved are given entire, as follows:
"SEC 1. If a sale be made under a deed of trust or mortgage
executed by any company on all its works and property, and there be
a conveyance pursuant thereto, such sale and conveyance
Page 115 U. S. 126
shall pass to the purchaser at the sale not only the works and
property of the company as they were at the time of making the deed
of trust or mortgage, but any works which the company may, after
that time and before the sale, have constructed and all other
property of which it may be possessed at the time of the sale other
than debts due to it. Upon such conveyance to the purchaser, the
said company shall
ipso facto be dissolved, and the said
purchaser shall forthwith be a corporation by any name which may be
set forth in the said conveyance or in any writing signed by him
and recorded in the same manner in which the conveyance shall be
recorded."
"SEC. 3. When such corporation shall expire or be dissolved or
its corporate rights and privileges shall have ceased, all its
works and property and debts due to it shall be subject to the
payment of debts due by it, and then to distribution among the
members according to their respective interests, and such
corporation may sue and be sued as before for the purpose of
collecting debts due to it, prosecuting rights under previous
contracts with it, and enforcing its liabilities and distributing
the proceeds of its works, property, and debts among those entitled
thereto,
provided that all debts and contracts of any
corporation prior to or at the time of the execution of any
mortgage or deed of trust by such corporation shall have a first
lien upon the property, rights, and franchises of said corporation
and shall be paid off or secured before such mortgage or deed of
trust shall be registered."
Pub.Laws N.C. 1872-1873, c. 131; Battle's Revisal, c. 26, §§ 46,
48, pp. 269-270.
MR. JUSTICE HARLAN, delivered the opinion of the Court. He
recited the facts as above stated, and continued:
The first question to be considered is whether the act of 1870
gives a lien to mechanics or contractors upon the property of a
railroad corporation, for work performed or materials furnished
Page 115 U. S. 127
in and about the construction of its road or of its bridges
constituting a part of its line. We are of opinion that no such
statutory lien exists in North Carolina or was intended to be given
by the act of 1870. In reaching this conclusion, we are not aided
by any direct decision of the question by the Supreme Court of
North Carolina. Reference was made by counsel to
Whitaker v.
Smith, 81 N.C. 340, where it was held that an overseer is not
entitled under that act to a lien for his wages upon the employee's
crop or land over which he has superintendence. After alluding to
the constitutional requirement that laws be enacted to give to
mechanics and laborers an adequate lien on the subject matter of
their labor, the court said:
"A very large proportion of the laboring population of the state
had just recently been released from thraldom and thrown upon their
own resources, perfectly ignorant of the common business
transactions of social life, and this provision of the constitution
and the acts passed to carry it into effect were intended to give
protection to that class of persons who were totally dependent upon
their manual labor for subsistence. The law was designed
exclusively for mechanics and laborers."
If such be the effect of the act of 1870, there is strong reason
to hold that a mere contractor for the construction of a railroad,
or of railroad bridges, is not entitled to the lien given by it.
But without accepting as conclusive an opinion delivered after the
rights of the parties had become fixed,
Burgess v.
Seligman, 107 U. S. 33, we
rest our interpretation of the statute upon the ground that it has
no reference to work done or materials furnished in the
construction of railroads. The words of the act are scarcely
adequate to express a purpose to give a lien upon a public
improvement of that character. The words "building," "lot," "farm,"
and "any kind of property not herein enumerated" are too limited in
their scope to justify the conclusion that the legislature had any
intention by that act to give a lien upon railroad property. This
view is strengthened by the circumstance that by the subsequent act
providing for the organization of railroad companies and regulating
their affairs, no saving is made of liens in behalf of mechanics
and laborers, and express power is given to such corporations
to
Page 115 U. S. 128
borrow, from time to time, any sums necessary for completing and
furnishing or operating their railroads upon bonds secured by
mortgage upon their corporate property and franchises. Indeed, the
idea of a lien in favor of laborers actually performing work in the
construction of a railroad seems to have been intentionally
excluded, for when the railroad contractor fails to pay such
laborers, the company, upon notice, may become bound to do so; but
no lien is given therefor upon the property of the corporation.
Apart, however, from these considerations, we are of opinion
that a law giving to mechanics and laborers a lien on buildings,
including the lot or ground upon which they stand, or a lien upon a
lot or farm, or other property for work done thereon or for
materials furnished in the construction or repair of buildings
should not be interpreted as giving a lien upon the roadway,
bridges, or other property of a railroad company that may be
essential in the operation and maintenance of its road. In North
Carolina, as in most if not in all the states, railroads, although
constructed for the private emolument of those engaged in such
enterprises, are highways which have been established, under the
authority of law primarily for the convenience and benefit of the
public. The general statute of February 8, 1872, authorized the
formation of corporations to construct, maintain, and operate
railroads
"for public use in the conveyance of persons and property or for
the purpose of maintaining and operating any unincorporated
railroad already constructed for the like public use."
Battle's Revisal, c. 99, § 1. The pecuniary profit derived by
those who project and operate them is the reward which they receive
for maintaining a public highway. Municipal taxation to aid in
their construction has been maintained only upon the ground that
they are in a large sense instrumentalities or agencies for the
purpose of accomplishing public ends. Upon that ground rests the
authority of the state to invest them with the right of eminent
domain in the condemnation of private property, and to prescribe,
from time to time, in the interest of the public, reasonable
regulations for their control and management.
Taylor v.
Ypsilanti, 105 U. S. 68,
105 U. S. 69.
Such being the relations existing
Page 115 U. S. 129
in North Carolina between these corporations and the public, it
should not be presumed that the legislature intended to subject
them to the operation of ordinary lien laws, enacted for the
benefit of those performing labor and furnishing materials in the
construction, repair, or improvement of what the statute of 1870
designates as buildings, or who perform labor upon lots, farms, and
other property belonging to private persons, and having no
connection with public objects. A different construction of the
statute would enable parties having liens for amounts within the
jurisdiction of justices of the peace to destroy a public highway
and defeat the important objects which the state intended to
subserve by its construction. No such intention should be imputed
to the legislature unless the words of the statute clearly require
it to be done.
There is nothing, it may be observed in this connection, in
Brooks v. Railway Co., 101 U. S. 443, in
conflict with the views here expressed. The decision in that case
rests upon the construction given to the mechanics' lien law of
Iowa by the Supreme Court of that state. Besides, the Iowa statute
in terms included, among those entitled to the lien it gave,
"contractors, subcontractors, material furnishers, mechanics,
and laborers engaged in the construction of any railroad or other
work of internal improvement."
Iowa Rev.Stat. 1860 § 1846. The legislative will was there
expressed so clearly as to leave no room for interpretation of the
statute.
It is, however, contended that the proviso of the third section
of the Act of March 1, 1873, is sufficient to sustain the lien
asserted by such of the appellants as were contractors and
mechanics. That act, as we have seen, regulates sales under deeds
of trust or mortgages "executed by any company on all its works and
property," and provides for the purchaser becoming a corporation,
with all the franchises, rights, and conveyances of, and subject to
the duties imposed upon, the original corporation. In connection
with a general provision for the disposition of the assets of
corporations which shall expire or be dissolved, or whose corporate
rights and privileges shall cease, it is declared
"That all debts and contracts of any corporation, prior to or at
the time of the execution of any mortgage
Page 115 U. S. 130
or deed of trust by such corporation, shall have a first lien
upon the property, rights, and franchises of said corporation, and
shall be paid off or secured before such mortgage or deed of trust
shall be registered."
It must be admitted that the broad language of this act gives
some support to the proposition that it was intended to apply to
all corporations, including those formed for the construction and
operation of railroads. But there are reasons of great weight that
have brought us to the conclusion that such is not its proper
interpretation. The language of the proviso in question is fully
satisfied by restricting its operation to merely private
corporations, which may be formed by three or more persons. And to
this may be added the important consideration that any other
interpretation might defeat the express power given to railroad
corporations to raise money for completing and finishing or
operating their roads upon bonds to be secured by mortgage upon
their property and franchises, for such bonds, in the very nature
of things, could not be readily, if at all, disposed of if the lien
given by the railroad mortgage is subordinate to a lien for "all
debts and contracts," of whatever nature, "existing prior to and at
the time of the execution" of such mortgage. Did the legislature
intend that the power of a railroad corporation to mortgage all of
its property and franchises for money with which to complete or
operate a road for public use should be exercised subject to the
condition that every creditor it had at the time of the mortgage,
no matter how his debt originated nor whether there was an
agreement for a lien, should have a first lien upon the corporate
property and franchises? If this construction should be adopted, it
would follow that mechanics and laborers would acquire, as between
them and the holders of mortgage bonds, a first lien for work done
or materials furnished to the railroad company without filing a
claim therefor, as required by the act of 1870, and this although
the legislature had in that act refrained from using language that
necessarily gives them a lien upon railroad property and
franchises. We are of opinion that the proviso of the third section
of the act of 1873 has no application to deeds of trust or mortgage
given by railroad corporations.
Page 115 U. S. 131
This view is strengthened by the history of the compilation of
the statutes of North Carolina known as "Battle's Revisal." At the
same session of the legislature at which the railroad act of 1872
and the private corporation act of the same year were passed,
another statute was enacted providing for the publication of the
public statutes under the supervision of William H. Battle, who was
directed "to collate, digest, and compile all the public statute
laws of the state," distributing them under such titles, divisions,
and sections as he deemed most convenient and proper to render them
"more plain and easy to be understood." Acts N.C. 1871-1872, p.
373. His revision was reported to the legislature in 1873, and was
formally approved, to take effect January 1, 1874. Upon looking
into that revision, we find that the act of 1872, relating to
private corporations, and that of 1873, in reference to sales of
property under deeds of trust or mortgages executed by "any company
on all its works and property," are consolidated in one chapter
under the title of "Corporations" simply; the former constituting
§§ 1 to 44, inclusive, of that title, and the latter act
constituting §§ 45 to 49, inclusive, while the act of 1872, in
reference to railroad corporations organized for public use, is
placed under the separate title of "Railroad Companies." We have
thus what may not unreasonably be regarded as a legislative
indication of the original purpose of the act of 1873,
viz., to make provisions for sales of property covered by
deeds of trust or mortgages executed by merely private
corporations, formed by three or more persons, leaving the rights
of parties, in respect of like instruments executed by railroad
companies organized for public purposes, subject to the terms of
those instruments and the general principles of law. While Mr.
Battle had no powers, by any mode of revision, to change the words,
or to modify the meaning of the statutes themselves,
Sikes v.
Bladen Co., 72 N.C. 34;
State v. Cunningham, 72 N.C.
469;
State v. Taylor, 76 N.C. 64, he had no authority to
arrange them under their appropriate titles, and when the
legislature approved his placing the act of 1873 in direct
connection with that of 1872, relating exclusively to private
corporations, that fact is not without weight in determining
Page 115 U. S. 132
the scope and effect of the original act of 1873. This
circumstance would be entitled to very little weight if the
language of the last-named act necessarily embraced all
corporations, public and private, and was not, as we have said,
fully satisfied by restricting its operation to private
corporations, as indicated by the revision in question.
In view of what has been said, the issue made by the County of
Buncombe, as a stockholder of the company, in reference to Inman's
conduct as trustee, need not be examined. Upon the facts disclosed,
the county does not seem to be in any position to question the
decree in favor of the appellees. There is no error in the record,
and the decree is
Affirmed.
Page 115 U. S. 134
[Opinion on Petition for Rehearing]
MR. JUSTICE HARLAN delivered the opinion of the Court.
In the opinion in this case, it was stated that in North
Carolina, as in most if not in all the states, railroads, although
constructed by private persons or corporations for their own
emolument are highways, established under the authority of law
primarily for the benefit of the public. For that reason, in the
absence of an express statutory declaration to the contrary, we
were not willing to presume that the legislature of that state
intended to subject railroads within her limits, and established by
her authority, to the operation of ordinary lien laws, for such a
construction of her statutes would enable creditors to enforce
their liens upon distinct portions of a railroad, and thereby
easily destroy a highway and defeat the important public objects
intended to be subserved by its construction. The petition for
rehearing suggests that the Court is in error as to the policy of
the state with reference to the
Page 115 U. S. 135
seizure of railroad property by execution or other process, and
we are referred upon this point to
State v. Rives, 5 Ired.
297, and
Gooch v. McGee, 83 N.C. 59, authorities not
heretofore cited by counsel.
In the first of these cases, it was decided that under the law
of North Carolina as it then was, the writ of
fieri facias
lay against the land on which a railroad is laid out. In support of
that view, reference was made to an act passed in 1820. But from
the decision in
Gooch v. McGee, determined in 1880, it is
apparent that the court was not satisfied with the correctness of
that decision, for it said that,
"So far as the opinion, except by force of the statute, extends
the liability to the estates of corporations for public purposes
indispensable to the exercise of the conferred franchise and to the
performance of correlative duties, it is not in harmony with
adjudications elsewhere of the highest authority, and we are not
disposed to enlarge the sphere of its authority."
After citing several adjudged cases, including
Gue v.
Tidewater Canal Co., 24 How. 257, the court
proceeds:
"In our researches we have met with a single case,
Arthur v.
Bank, 9 S. & M. 394, recognizing the authority and
approving the decision in
State v. Rives and in opposition
to the current of judicial opinion. The general words of the
statute, which to some extent influenced that decision, may,
without violence to their meaning, admit of a narrower scope and be
restricted to the property of private corporations, and to that of
public corporations which may be replaced and is not indispensable
to the exercise of their necessary functions and the discharge of
public duties upon the distinction taken in the cases cited."
It is difficult to resist the conclusion that the Supreme Court
of North Carolina intended by their opinion in
Gooch v.
McGee to intimate that
State v. Rives was wrongly
decided even with reference to the statutes in force when (1844)
the latter case was determined.
It is suggested that § 9, c. 26, of the Revised Code of North
Carolina, adopted in 1855, indicated a public policy in that state
in harmony with the decision in
State v. Rives, for it is
claimed by that section the franchises and property of railroad
corporations having the right to receive fare or tolls may be
Page 115 U. S. 136
taken on execution. Upon this point it is sufficient to say that
we are not satisfied that the statutory provision referred to, as
being a part of the Code of 1855, was in force after Battle's
Revisal was adopted. By express enactment, "all acts and parts of
acts passed before" the session of the legislature which directed
the publication of Battle's Revisal, "the subjects whereof are
digested and compiled" in that revisal or which were "repugnant to
the provisions thereof" were declared to be repealed and of no
force or effect from and after the first of January next
thereafter, with certain exceptions and limitations not embracing
the present case. Battle's Revisal, p. 861. Independent, however,
of this question, and even if § 9, c. 26, of the Code of 1855, be
in force, we adhere to the opinion that there was no purpose, by
the act of 1870, to give a
lien upon the property of a
railroad corporation for work performed or materials furnished in
and about the construction of its road or of its bridges
constituting a part of its line.
In the original opinion, we were in error in supposing that the
act of 1873 was passed at a session previous to that at which the
act was passed approving Battle's Revisal and directing its
publication under the supervision of the compiler. Both acts, it
seems, were passed at the same session. The incorporation of the
act of 1873 into that part of the Revisal which related to private
corporations was therefore the work of Mr. Battle, and not in
pursuance of any previous express direction by the legislature.
Making this correction in the statement of a fact to which we
attached but little weight in our interpretation of the act of
1873, we perceive no sufficient ground for extending its provisions
to the property of corporations operating a public highway.
The rehearing is denied.
