The decision of this Court in
61 U. S. 20 How.
227 as to what averment in the declaration is sufficient to give
jurisdiction to the courts of the United States again affirmed.
Where there was a judgment at law against a bridge company under
which the tolls were sold in execution, a court of equity has power
to cause possession to be taken of the bridge, to appoint a
receiver to collect tolls, and pay them into court to the end of
discharging the judgment at law.
Page 62 U. S. 113
The facts of the case are stated in the opinion of the
Court.
As the decree of the circuit court was affirmed, and directed to
be carried into execution, it may be proper to state what that
decree was,
viz.:
"It is therefore ordered, adjudged, and decreed that John
McManaway be, and he is hereby, appointed a receiver of the tolls
and revenues of the said Covington Drawbridge Company; that he
enter upon, and by himself, his agents, and servants possess
himself of and control the said bridge, absolutely, and free from
all let and hindrance of the said Covington Drawbridge Company,
their agents and servants, and other persons whatsoever. And it is
further ordered, adjudged, and decreed that during the time the
said John McManaway shall be the receiver of the said tolls and
revenues of said bridge, the said company shall in no wise molest
or disturb the said receiver in the possession thereof, or in the
reception of the tolls and profits thereof, and that said receiver
may and shall receive the same tolls provided for in section three
of the act of the General Assembly of the State of Indiana,
approved January 15, 1850, incorporating said company. Said
receiver shall keep a daily account of his receipts and
expenditures, which shall be open to the inspection of the parties.
It is further ordered, adjudged, and decreed, that it shall be the
duty of the said receiver, by himself and other qualified person or
persons, during that time that the Wabash River may be navigable
for steamboats, to raise or otherwise remove the draw in said
bridge when boats are approaching, by night or day, and it shall be
the further duty of said receiver to cause lights to be placed on
each side of the draw of said drawbridge, when the said river is so
navigable, and it shall be the further duty of the said receiver to
keep the said bridge in suitable and necessary repairs, the
expenses of which shall be paid and borne by the said receiver out
of the tolls and income of said bridge, as well as his own fees and
charges for the discharge of his said duty as receiver. And it is
further ordered, adjudged, and decreed that the said receiver
shall
Page 62 U. S. 114
from time to time, at least as often as every three months, pay
whatever sum of money there may then have accumulated in his hands
of the tolls and income of said bridge, over and above the expenses
as aforesaid, to the complainants herein in a
pro rata
proportion upon their respective judgments in the complaint
mentioned, and further that the said receiver do, at each
succeeding term of this Court, report thereto his entire actings
and doings in and about his said receivership, provided that before
said receiver shall enter upon his said duties and take possession
of said bridge, he shall take an oath well and faithfully to
perform his said duties, to be endorsed on his bond next mentioned,
and that he shall, with one or more freehold securities, to be
approved by H. C. Newcomb, master in chancery, within thirty days,
enter into a penal bond in the sum of ten thousand dollars, payable
to the State of Indiana, conditioned for the faithful performance
of his duties and trusts imposed upon him by this order, which bond
upon breach thereof shall be for the benefit of either party
interested. "
Page 62 U. S. 122
MR. JUSTICE CATRON delivered the opinion of the Court.
In December, 1854, Shepherd and others recovered a judgment
against the Covington Drawbridge Company for upwards of six
thousand dollars. At the same time, Davidson recovered a judgment
against the same company for upwards of a thousand dollars.
The corporation was created by an act of the Legislature of
Indiana, and built a drawbridge over the Wabash River in that state
pursuant to its charter, was sued for a tort in the Circuit Court
of the United States for Indiana district, where the recoveries
were had. Executions at law were regularly issued, and at March
term, 1855, of that court, were returned by the marshal, "nothing
found." Alias writs of
fi. fa. were taken out and levied
on the bridge as real estate, and in November, 1855, the marshal
proceeded to sell the rents and profits of the same on Davidson's
judgment for the term of one year, at the sum of $4,666.62,
Davidson, the execution creditor, becoming the purchaser. The agent
of Shepherd and others instructed the marshal not to sell the
bridge on their judgment, and he returned the special facts.
Davidson demanded possession of the bridge from the corporation, so
that he might obtain the tolls, but the keeper of the bridge, and a
principal owner of the stock, refused to surrender possession. In
May, 1856, Shepherd, and those interested in the large judgment
jointly with Davidson, filed their bill in equity in the circuit
court of the United States for the District of Indiana, against the
bridge company and Richard M. Nebeker, as keeper, agent, and
manager, of the bridge, praying that the court should appoint a
suitable receiver to take possession of the same, and receive the
tolls and income, and apply them to discharge the judgments at law,
after defraying expenses. The court made the decree prayed for,
from which the bridge company appealed to this Court.
The first objection made to the decree is that it does not
appear by the bill that the defendant is properly described as
Page 62 U. S. 123
incorporated by the State of Indiana. The bill alleges that "The
Covington Drawbridge Company, of Covington, is a corporation and
citizen of the State of Indiana," and it is also insisted, that the
judgments at law are void, because jurisdiction was not given to
the United States courts by the averment of citizenship in either
of the declarations. The judgment at law, in
Shepherd's
Case, was brought before this Court at the last term, when it
was held that the averment of citizenship here objected to was
sufficient.
61 U. S. 20 How.
227. That decision is conclusive of the two foregoing
exceptions.
The consideration whether by a creditor's bill corporate
property and franchises can be subjected to pay the debts of the
corporation, by taking possession and administering its affairs,
and drawing to the court its revenues, is a question of great
importance and some difficulty. In advance of this question, it is
insisted here that there exists in Indiana an adequate remedy at
law; that Davidson's judgment is satisfied by the levy and sale of
the tolls of the bridge; and Davidson having obtained a remedy by
fi. fa., Shepherd may do the same. To ascertain whether
Davidson obtained satisfaction by the marshal's sale, we must
inquire what property was sold, and what title to it acquired, that
could be made available by possession and the receipts of
tolls.
The Covington Drawbridge Company was duly incorporated to build
a bridge across the Wabash River where it was navigable for
steamboats, and not subject to be bridged by an individual assuming
to exercise a mere private right. The corporation had conferred on
it a public right of partially obstructing the river, which is a
common highway, and which obstruction would have been a nuisance,
if done without public authority. This special privilege, conferred
on the corporation by the sovereign power, of obstructing the
navigation, did not belong to the country generally by common
right, and is therefore a franchise, and secondly, the authority of
taking tolls from those who crossed the river on the bridge was
also a franchise, and freedom to do that which could not be
lawfully done by one without public authority; this franchise could
only be conferred by the legislature directly, or indirectly
Page 62 U. S. 124
through public agents and tribunals in pursuance of a statute.
The bridge is part of a road, and an easement, like the road, and
the privilege of making the bridge, and taking tolls for the use of
the same, is a franchise in which the public have an interest; the
corporation, as owner of the franchise, is liable to answer in
damages if it refuses to transport individuals on being paid or
tendered the usual fare; the law secured the tolls as a recompense
for the duty imposed to provide and maintain facilities for
accommodating the public. Whether the timbers and materials of this
bridge could be sold at auction by the marshal, by virtue of a
fieri facias in his hands, as was held could be done by
the laws of North Carolina in the case of
State v. Rives,
5 N.C. 297, we are not called on to decide in this case, as here
the annual tolls were sold, and not the bridge itself.
By the laws of Indiana, lands and tenements cannot be sold under
execution until the rents and profits thereof for a term not
exceeding seven years shall have been first offered for sale at
public auction, and if that term or a less one will not satisfy the
execution, then the debtor's interest or estate in the land may be
sold, provided it brings two-thirds of its appraised value. The
tolls, under the idea that they were rents and profits of the
bridge, were sold for one year, according to the forms of this law.
The tolls of the bridge being a franchise and sole right in the
corporation, and the bridge a mere easement, the corporation not
owning the fee in the land at either bank of the river or under the
water, it is difficult to say how an execution could attach to
either the franchise or the structure of the bridge as real or
personal property. This is a question that this Court may well
leave to the tribunals of Indiana to decide on their own laws
should it become necessary. One thing, however, is plainly manifest
-- that the remedy at law of these execution creditors is
exceedingly embarrassed, and we do not see how they can obtain
satisfaction of their judgments from this corporation, owning no
corporate property but this bridge, unless equity can afford
relief.
By the laws of Indiana, stocks in a corporation may be sold
Page 62 U. S. 125
by virtue of an execution against the owner of the stocks, which
the sheriff may transfer to the purchaser, but this law does not
help these complainants; they did not proceed against the stocks;
their judgment at law did not affect individual property, but
corporate property. The question whether a railroad company's
property, including the franchises, can be subjected to the debts
of the corporation by a decree in equity is treated very fully by
Redfield on Railways, ch. 32, section 2, 571; there, the substance
of the decisions affecting the doctrine is given in cases where
there were liens by mortgage. The subject was well examined by the
Supreme Court of Georgia in the case of
Macon & Western
Railroad Company v. Parker, 9 Ga. 378. The contest there
involved claims of creditors. When speaking of the necessity of
equity exercising jurisdiction, the court said
"that the whole history of equity jurisprudence does not present
a case which made the interposition of its powers not only highly
expedient, but so indispensably necessary in adjusting the rights
of creditors to an insolvent estate as this did."
The road was sold according to the decree; but to settle the
difficulty as to the sale of a franchise without the consent of the
power granting it, upon application, an act was passed by the
legislature, creating the purchaser and his associates a body
corporate, with the powers and privileges of the old company. In
England, the practice is, to order a receiver to be appointed to
manage the corporate property, take the proceeds of the franchises,
and apply them to pay the creditors filing the bill.
Blanchard v. Cawthorn, 4 Simons 566.
Tripp v. Chard Railway Company, 21 E. Law & E.
53.
All that we are called on to decide in this case is that the
court below had power to cause possession to be taken of the
bridge, to appoint a receiver to collect tolls, and pay them into
court, to the end of discharging the judgments at law, and our
opinion is that the power to do so exists, and that it was properly
exercised. It is there ordered that the decree below be affirmed,
and the circuit court is directed to proceed to execute its
decree.
Page 62 U. S. 126
MR. JUSTICE DANIEL dissented, for want of jurisdiction of the
courts of the United States over corporations.
Marshall v. Balt. & Ohio R. Co., 16 How.
