1. Where a bill in equity is necessary to have a construction of
the orders, decrees, and acts made or done by a federal court, the
bill is properly filed in such federal court as distinguished from
any state court, and it may be entertained in such federal court
even though parties who are interested in having the construction
made would not, from want of proper citizenship, be entitled to
proceed by original bill of any kind in a court of the United
States.
In such a case, the question will not be whether the bill filed
is supplemental or original in the technical sense of equity
pleading, but whether it is to be considered as supplemental or
entirely new and original, in that sense which the Supreme Court
has sanctioned with reference to the line that divides jurisdiction
of the federal courts from that of the state courts.
2. A railroad company, owning the whole of a long railroad, and
all the rolling stock upon it,
may assign particular
portions of such rolling stock to particular divisions -- certain
cars, for example, to one division, the residue of the rolling
stock to another -- and mortgage such portions with such divisions
so as to attend them. Whether the company have so mortgaged their
rolling stock is a question of intention. In the present case, it
was decided that they had.
3.
Quaere whether a marshal's sale is valid in any case
unless supported by a judicial order previously made. It is not
valid where made under the marshal's wrong interpretation of an
order which the court did in fact make; not valid in such a case
even where the court confirmed of record the marshal's sale, the
court's attention not being specifically directed to the marshal's
mistake nor any issue raised as to what the court really meant, nor
decision made, on such issue raised, that the marshal's act should
remain firm.
The La Crosse & Milwaukee Railroad Company was chartered by
the Legislature of Wisconsin to build a road across that state from
Milwaukee to La Crosse, and began
Page 69 U. S. 610
to build at Milwaukee, proceeding westward. The legislature also
gave the company the right to mortgage, for the purpose of raising
money, any particular division of their road separately. Under this
provision of the statute and for the purpose apparently of
mortgaging them separately, the company divided the main road into
two divisions, nearly equal in length, called the Eastern Division
and the Western Division; the Eastern Division extending from
Milwaukee to Portage City, ninety-five miles, and the Western from
Portage to La Crosse, one hundred and five miles. Upon
each
image:a
of these
divisions of the road, as well also as upon
the
entire road, AND upon the
rolling stock,
either of each division,
or of the entire road -- this
exact matter of whether the rolling stock mortgaged did belong to
the road as a
whole, or to it in its
divided
character, being one of the questions in this suit -- it gave
certain mortgages; among them these:
ON THE WESTERN DIVISION
1856, December, 31. -- A mortgage to Bronson, Soutter
and
Knapp, commonly called the Land Grant Mortgage. This
mortgage conveyed also a road, not important to be here spoken of,
from Madison &c.
The descriptive part of this mortgage was as follows:
"All and singular the several tracts, pieces, or parcels of land
which now are, or may
hereafter be, or constitute the site
of the roadway, turnouts, engine houses, workshops, depots, and
other buildings, and all the other lands and real estate which now
constitute, or may hereafter constitute, or be a part of the roads
of said railroad company from Madison &c., and
from Portage
City to La Crosse; and also all and singular the
superstructure of
said roads, whether now made, or to be
made hereafter, and all the engine houses, workshops, depots, and
other buildings, and all the other improvements on or pertaining to
said roads, whether now built and made, or to be built and
made hereafter;
and also all and singular the locomotive
engines and other rolling stock, and all other equipments of every
kind and description which have already been, or may hereafter be,
procured for or used on said roads, or either of them; and all the
materials, tools, implements, utensils, and other personal
property which have been, or may hereafter be, procured for or used
in connection with said roads, or either of them; and also all and
singular the rights, liberties, privileges, and franchises of
said railroad company, of every kind and description,
relating to said roads."
ON THE EASTERN DIVISION
1854, June 30. -- A mortgage to Palmer, sometimes
called the First, and sometimes the Palmer Mortgage.
The descriptive part of the mortgage was as follows:
"All their said road, from its eastern termination, in the City
of Milwaukee, to Portage City, being ninety-five miles in distance,
constructed, and to be constructed, together with all and singular
the railways, land procured or occupied, or so to be, for right of
way
within the limits aforesaid, together with bridges,
fences, privileges, rights, and real estate owned by said company
for the purposes of said road, or which may hereafter be acquired
or owned by them
within the limits aforesaid, and all the
tolls, income, issues, and profits to be had from the same, and all
lands used for and occupied
within the limits aforesaid by
depots and stations, with all buildings standing thereon, or which
shall be procured therefor, together with all
locomotives,
engines and tenders, passenger cars and freight cars, shop tools
and machinery, now owned or hereafter to be acquired by said
company, and in any way belonging or appertaining to said railroad,
now constructed or to be constructed within the limits
aforesaid, including all its property, real and personal,
pertaining to said railroad, within said limits, and all its
rights, credits, and franchises
thereunto
appertaining."
The mortgage went on -- after the descriptive part above given
-- to say:
"But nothing herein contained shall be so construed as to
prevent the said company from selling, hypothecating, or otherwise
disposing of any lands
or other property of said
Page 69 U. S. 612
company not necessary to be retained for the roadway, depots and
stations, nor required for the construction or convenient use of
that part of said road, nor from collecting moneys due
said company on stock subscription or otherwise; nor shall anything
herein contained be so construed as to prevent the said parties of
the first part from collecting and appropriating towards the
construction, use and repair of the remaining parts of said road
westward towards the Mississippi River, all stock
subscriptions, donations, or loans of money, lands or other
property which may have been, or may hereafter be, made for that
purpose; but said parties of the first part shall have full right
so to proceed, without let or hindrance from said party of the
second part. And the
remaining portion of the said
railroad which, by the said parties of the first part, may be
constructed, shall be held in use by the said parties of the first
part, to their own benefit and behoof forever, so far as the claims
of the said party of the second part, or his successor, might
otherwise be construed as in conflict therewith. It being
distinctly understood that the conveyance made by this indenture is
only for so much of the present or hereafter to be acquired
rights, interest and property, of the said company,
parties of the first part, as are or shall be vested, or belong or
appertain
to that part of said railroad extending from
Milwaukee to Portage City aforesaid, and being in distance
ninety-five miles."
1857, August 17. -- A mortgage to G. C. Bronson and T.
J. Soutter, commonly called the Second Mortgage. This mortgage also
conveyed the Eastern Division and a road not important to be
Page 69 U. S. 613
here spoken of, from Watertown to Midland. Its language was
thus:
"And also, all and singular the locomotive engines, and other
rolling stock, and all the other equipments of every kind and
description,
which have already been or may hereafter be
procured for, or used on, said railroads, or either of them;
and all the materials, tools, implements, and utensils, and other
personal property, which have been or may hereafter be procured for
or used in connection
with said railroads, or either of
them; and also all and singular the rights, liberties,
privileges, and franchises of said railroad company, so far as they
relate to said railroads from Milwaukee to Portage City, and from
Watertown, by way of Columbus, to Midland aforesaid; and it is
hereby declared to be the intention of the parties to convey to and
vest in said parties of the second part all the property, real and
personal, of said railroad company, to be acquired hereafter, as
well as that which has already been acquired, together with all the
rights, liberties, privileges, and franchises of said railroad
company,
in respect to said railroad from Milwaukee to Portage
City, and from Watertown, by the way of Columbus, to Midland,
as fully and amply as the same might be conveyed if said railroads
had already been fully constructed and equipped."
OVER THE WHOLE ROAD.
1858, June 1. A Mortgage to W. Barnes. -- This mortgage
conveyed the whole road from Milwaukee to La Crosse, and all the
rolling stock, personal property, franchises, choses in action, and
property of the debtor company, real, personal, and mixed. Its
descriptive part need not be more fully given.
The Barnes mortgage, though given last, was first
foreclosed.
Page 69 U. S. 614
Sale under it was made in May, 1859. The purchasers organized
themselves into a company, as the statutes of Wisconsin allow in
like cases, and took the name of the
Milwaukee & Minnesota
Railroad Company; often, for brevity, styled the Minnesota
Company simply, conceiving and asserting that they had succeeded to
all the rights, property, and franchises of the old company --
subject, of course, to prior mortgages.
In December, 1859, Bronson, Soutter, and Knapp, the trustees in
the Land Grant mortgage on the Western Division, filed a bill in
the District Court of the United States for the District of
Wisconsin, having circuit court powers to foreclose their mortgage,
making the mortgagor company, the Minnesota Company, and others,
defendants.
At the same time, that is, in December, 1859, Bronson and
Soutter, trustees in the second mortgage (on the Eastern Division),
proceeded, in the same court, to foreclose their mortgage, making
the same defendants.
All the mortgagees in each of these mortgages, the first, or
Palmer; the second, or Bronson and Soutter; and in the Land Grant,
or Bronson, Soutter, and Knapp, were citizens of the State of New
York,
and were entitled, therefore, to sue, as they did sue,
their mortgagor company in the federal courts.
In 1860, the district court, in a creditor's suit in favor of
one Howard against the old company, appointed Hans Crocker receiver
of the whole road and rolling stock, and he entered into possession
under this appointment. In the Western Division foreclosure suit,
the same person was appointed receiver of the Western Division and
rolling stock pertaining thereto, and afterwards, in the Eastern
Division suit, an order was made appointing him also receiver of
the road from Milwaukee to La Crosse, and all the rolling stock and
franchises, "subject, nevertheless, to a previous order of court
appointing him to be the receiver of the western portion of said
road, from Portage City to La Crosse."
The two foreclosure suits -- of the Land Grant on the Western
Division, and of the second mortgage on the Eastern -- progressed
in the district court to final decrees, and the
Page 69 U. S. 615
orders and proceedings were as follows, the judge who made them
having delivered an opinion that the rolling stock was a fixture of
the road:
ORDERS OF REFERENCE
(March 11, 1861)
"
WESTERN DIVISION CAUSE"
"That the masters ascertain and report the
whole amount
of rolling stock on the road, and that they specify the quantity
thereof that is covered by and included in this mortgage, and also
in the first and second mortgages respectively."
"
EASTERN DIVISION CAUSE"
"That the masters ascertain and report the whole amount of
rolling stock on the whole road, and that they specify the quantity
thereof
that is covered by and included in the first mortgage,
and also in this mortgage, and in the mortgage of Bronson,
Soutter, and Knapp"
[
i.e., the Land Grant mortgage, or mortgage on the
Western Division].
REPORTS OF MASTERS.
(September 1, 1861)
WESTERN DIVISION CAUSE
"We have ascertained the whole amount of rolling stock on the
whole road at the cost price. The amount thereof was, at the date
of the filing of the bill in this cause, $569,635.78, and an
additional amount of $53,600 has been purchased since the filing of
this bill, making the whole amount to $623,235.78."
"And we have ascertained and report that of the said rolling
stock, forty box cars, amounting, at the cost price thereof, to
$31,979.64, and numbered 330 [the numbers of forty cars were here
given, up to No. 408] &c., are covered by and included in the
mortgage executed to the complainants [Bronson, Soutter, and Knapp]
as set forth in the bill, the said cars having been purchased by
the proceeds of a portion of the bonds to which this mortgage is
collateral. and all the
remainder of the said rolling
stock is covered by and included in the first [
i.e., the
Palmer] mortgage upon the said railroad, and in the mortgage upon
the said railroad executed to Bronson and Soutter on the 17th day
of August, A.D. 1857."
EASTERN DIVISION CAUSE
"We have ascertained the whole amount of rolling stock on the
whole road. The amount thereof, at the cost price, was, at the date
of filing the bill of complaint in this cause, $569,635.78; and an
additional amount of $53,600 has been purchased since the filing of
the bill, making the whole amount now on the road $623,235.78."
"And we have ascertained, and do further report, that of the
said rolling stock, forty box cars, amounting, at the cost price
thereof, to $31,979.64, and numbered 330 [the numbers of forty cars
were here given, the same cars as mentioned in the left hand
column] &c., are covered by and included in the mortgage of
Bronson, Soutter, and Knapp, and no other; and all the
remainder of the said rolling stock is covered by and
included in the first mortgage upon the said railroad, and in the
complainants' mortgage specified in the bill of complaint."
These reports, therefore, which found the amount and cost of the
rolling stock gave forty cars, designated by numbers, to the
Western Division and to the Land Grant mortgage and the residue to
the Eastern Division and the mortgagees of it. The complainants in
both suits were apparently dissatisfied. The parties seeking to
foreclose on the Eastern Division wanted not only all that the
masters gave them, but the forty cars that were allowed to the
Western Division; while the parties seeking to foreclose on the
Western Division wanted not only the forty cars allowed them, but
all the other rolling stock; with some exceptions which they
stated. The respective complainants accordingly filed
EXCEPTIONS TO THE MASTERS' REPORTS
WESTERN DIVISION CAUSE
"4th. For that the masters have certified that all the rolling
stock on said road (except forty box cars, which are specially
named in their report)
was covered by and included in the first
mortgage upon the said railroad, and in the mortgage upon the said
railroad executed to Bronson and Soutter, bearing date on the
17th day of August, A.D. 1857."
"Whereas, the masters ought to have certified that all the
rolling stock on said road (except that purchased by the receiver
since the commencement of this suit, amounting to the sum of
$53,600) was covered by
and included in the mortgage given
to the said complainants, and described in the bill of complaint in
this cause, and that said mortgage was a first and prior lien on
said rolling stock, superior to all other liens, and that, as to
the rolling stock purchased by said receiver above mentioned,
105-200ths thereof was covered by the mortgage described in the
complaint; and that, to that extent, the complainants' said
mortgage was a first lien thereon."
EASTERN DIVISION CAUSE.
"For that the masters have certified that of the rolling stock
forty box cars, amounting, at the cost price thereof, to
$31,999.64, and numbered 330, 332 &c.,
are covered by and
included in the mortgage to Bronson, Soutter, and Knapp, and no
other, whereas the said masters should have certified
that
the said rolling stock was covered by and included in the mortgage
of the complainants in this action."
The court, having heard the parties, made the following
ORDERS ON THE EXCEPTIONS.
WESTERN DIVISION CAUSE
"Ordered
that the fourth exception of complainants be
overruled, except as to the forty box cars
which are
covered by this mortgage."
"And further ordered, that on said exception the said report be
so modified that
all the other stock that was on said road
when the receiver was appointed,
except the said forty box
cars, is covered by and included in the First Mortgage of the road
from Milwaukee to Portage City, and that all the rolling stock
on said road that has been purchased or procured since the court
has held possession by its receiver, costing $147,943.62, be
applied to the
said first mortgage and the mortgage in this
bill in proportion to the net revenues on such portions of the
road said mortgages respectively covered, since the appointment of
the receiver."
EASTERN DIVISION CAUSE
"Ordered, that the report of the masters, allowing forty box
cars to be covered by the Land Grant mortgage of said company to
Bronson, Soutter, and Knapp, be confirmed."
"And that the said report be so modified that all the other
rolling stock that was on said road when the receiver was
appointed, except the said forty box cars, is covered by and
included in the first mortgage of the said company from Milwaukee
to Portgage City."
"And that all the rolling stock on said road that has been
purchased or procured since the court has had possession by its
receiver, be applied
pro rata, in proportion to the
revenues of the road, to the first said mortgage and the said Land
Grant mortgage."
In January, 1862, final decrees of foreclosure and sale were
made in both causes, as well the one relating to the Eastern
Division as the other relating to the Western.
In the Western Division, the decree says:
"The description of the property authorized to be sold under and
by virtue of this decree, so far as the same can be ascertained
from the mortgage above referred to, or from the bill of complaint
in this cause, is as follows,
viz.:' [Here follows the
Page 69 U. S. 618
description of premises quoted from the mortgage] 'With forty
box cars, numbered 330 &c. [the numbers being all set out], and
such portion or share of rolling stock purchased and procured by
the receiver, costing one hundred and forty-seven thousand nine
hundred and forty-two dollars and sixty-three cents, as the ret
revenues of the portion of road covered by this mortgage bears to
the balance or other end of the road since the appointment of the
receiver.
The remaining rolling stock is subject to prior
mortgages. [
Footnote
1]"
In the Eastern Division cause, the Bronson and Soutter mortgage,
the decree quoted the description of the premises from that
mortgage, as given before, but added no direction to sell any
rolling stock.
After the decree in the Western Division cause, the marshal
advertised that division, and also all the rolling stock on the
whole road, the forty box cars, and the proportion of rolling stock
purchased by the receiver, mentioned in the decree, to be sold
absolutely, and the remaining rolling stock
"subject
to prior mortgages." The sale took place as advertised -- two
persons, Pratt and White,
citizens of Wisconsin, becoming
the nominal purchasers. The sale as made -- that is to say, with
the remaining rolling stock sold, "subject to prior mortgages," was
reported to the district court, and confirmed by that court as
reported. Nothing, however, in the record showed specifically, that
the attention of the court was called to the fact that the marshal
had attempted to sell the
whole rolling stock. After the
confirmation of this sale, Pratt and White organized -- as under
the laws of Wisconsin it was lawful for them to do -- the Milwaukee
and
St. Paul Railway Company; sometimes for brevity called
the St. Paul Company, simply; and this company applied by petition
to the district court, in the Land Grant case, showing the purchase
by Pratt and White at the foreclosure sale, the organization by
them of said company, and asserting that this company had acquired
the right to work the
Page 69 U. S. 619
Eastern Division as well as the Western, and to
exercise all the franchises of the debtor company,
"in running, operating, and controlling said railroad in its
entire length, from the City of Milwaukee to the City of La Crosse,
and that such right so to run, operate, manage, and control the
same, is prior and superior to the rights of any of the defendants
in this cause, and prior and superior to the rights of the
mortgagees in the mortgage to said Bronson and Soutter, on the
Eastern Division, under which said Crocker is acting as receiver,
inasmuch as the said mortgage to the said complainants is prior in
date and lien to the mortgage to said Bronson and Soutter."
Upon this petition, the court, May 7, 1863, made an order,
directing the receiver to deliver to the St. Paul Railway Company,
the Western Division of said railroad and appurtenances between
Portage City and La Crosse,
"and the rolling stock and property
specially described in the decree," and ordered that the
receiver take perfect inventory of all rolling stock other than
the forty boxcars specially mentioned in the decree, and
of all personal property belonging to the debtor company, and
report the same to the court.
On the 12th of June, 1863, the court made orders in the two
causes, as follows -- the reasons for them being stated by the
judge who made them, to be a duty which the court owed alike "to
the public and the parties, to secure the use of a continuous
route without interruption or deviation of trade or travel
between the termini," Milwaukee and La Crosse.
WESTERN DIVISION CAUSE
"On consideration of the petition of the Milwaukee and
St.
Paul Railway Company, it is ordered by the court that there be
delivered over to the said company, all and singular the railroad
between the City of La Crosse and Portgage City, its roadbed and
track, with its depots, station houses, engine houses, and all
other property belonging to said railroad between the said points,
and the forty box cars mentioned and described in the decree."
"And also the share or proportion of the rolling stock and
personal property purchased by the receiver, as mentioned in the
decree."
"And also,
subject to other or previous liens or
claims, the possession of the rolling stock on hand when the
receiver took the same under the order of the court."
"And it is further ordered by the court, that the said receiver
be and hereby is discharged as such from the management and control
of the said Western Division of said railroad under the appointment
in this case, subject, however, to the final settlement of his
accounts,
and subject to the orders made or to be made in
this case, and in the other cases in which he was appointed or may
hereafter be appointed."
EASTERN DIVISION CAUSE
After reciting the petition of the St. Paul Co. &c.
&c.,
"Ordered by the court, that the order appointing a receiver in
this case be modified in the manner following,
subject to any
further or other order rescinding, altering, or modifying this
order now here made: that the receiver let the said Milwaukee
&
St. Paul Railway Company into the possession of the
Eastern Division of the La Crosse & Milwaukee Railroad from
Portage City to Milwaukee, with the appurtenances and property and
rolling stock thereto belonging. And that the said railway company,
subject to the further order or orders of the said court, operate
said Eastern Division of said railroad in connection with the said
Western Division thereof, so that one continuous line of railroad
between La Crosse & Milwaukee may be operated and conducted as
directed in the original charter of the La Crosse & Milwaukee
Railroad Co., without hindrance, interruption, or diversion, the
same as if the whole line of road continued to be in one company,
in pursuance of said charter, and not otherwise."
[The St. Paul Company was ordered to let the receiver see the
accounts continually; keep the Eastern Division and its rolling
stock in order; pay over to the receiver, at stated times, balances
&c., and give bond to abide orders &c.]
Under these orders of June 12, 1863, all the rolling stock of
the whole road was delivered to the St. Paul Company, who, in
consequence, took a general control of all things.
The orders in the Eastern Division cause were brought before
this Court, December, 1863, and declared void, as having been made
after a statute had taken away from the district court the powers
which in making them it exercised. [
Footnote 2] Still, however, the St. Paul Company kept
possession; and a new line of railroad having been made between
Milwaukee and Portage City, by way of Watertown (
see
diagram at page <|69 U.S. 610|>610), it was obvious that it
might carry business and travel through from La Crosse to Milwaukee
completely well and yet ruin the Minnesota Company in the
process.
Page 69 U. S. 621
This last-named company now filed a bill on the equity side of
the federal court for Wisconsin, in which, or in the predecessor in
law of which, the Land Grant mortgage had been foreclosed against
the St. Paul Company -- White and Pratt the purchasers, and Soutter
and Knapp (Bronson being dead), to have matters rectified, as it
conceived, both generally and particularly.
The bill set forth the different mortgages, the foreclosure of
that of Barnes, the Minnesota Company's now ownership, thereunder,
of the equity of redemption of all the road, rolling stock, and
franchises of the old La Crosse & Milwaukee Company, the
foreclosure of the Land Grant mortgage (stating that the Minnesota
Company had not answered, though made defendants therein), the
marshal's sale and confirmation of it, as already mentioned. It
alleged that the Land Grant mortgage left
unmortgaged over
half a million of dollars in value of this rolling stock, that the
decree of the court did not order it to be sold, and that the
district court only placed it in possession of the St. Paul Railway
Company, as it did the Eastern Division of the road, for the
purpose of enabling that company to run the road from Milwaukee to
La Crosse as one road. That notwithstanding this, the Milwaukee
& St. Paul Company were building and would soon complete a
railway from Milwaukee, by way of Watertown, to Portage City
(
see again the diagram at page <|69 U.S. 610|>610),
independent of and to be used in competition with the said Eastern
Division, now owned by the Minnesota Company, complainants in the
bill; that they gave out that, by the purchase of Pratt and White,
and subsequent organization, they had acquired a right to separate
and disconnect the said railroad from Portage City to La Crosse
from the said Eastern Division from Portage City to Milwaukee, and
on the completion of the road by Watertown would transfer the
rolling stock from the Eastern Division to this
southern
connecting line; and by so connecting Milwaukee and La Crosse and
diverting the rolling stock, render the roadbed of the Eastern
Division wholly useless until restocked, which could be done duly
at great expense, all this being in fraud
Page 69 U. S. 622
of the right of the Minnesota Company and to their great and
irremediable injury.
It stated the character of these two foreclosures, that of the
Land Grant on the Western Division, and of the second or Bronson
and Soutter mortgage on the Eastern Division, as follows:
"Your orator shows that in the suit to foreclose the mortgage
upon the Western Division, no persons or corporations were made
parties defendant, except those having or claiming to have an
interest in the said Western Division; and that in the suit
commenced to foreclose the mortgage upon the Eastern Division, no
persons or corporations were made parties, except those having or
claiming to have some interest in the said Eastern Division;
and that in neither of the said suits did not complainants
therein pray or claim any relief as against the complainants in the
other suit, but the said two foreclosure suits were in all
respects, and in every particular, separate and independent suits,
as the respective mortgages, which they respectively were exhibited
to foreclose, were separate and distinct mortgages upon separate
and distinct premises."
"Your orator further shows that neither the said mortgage upon
the Western Division, nor the said mortgage upon the Eastern
Division, pretended to specify or particularly describe the amount
of rolling stock intended to be thereby conveyed; and that in
neither of the suits commenced to foreclose said respective
mortgages, did the bill of complaint pretend to enumerate or
describe the precise rolling stock, or amount of rolling stock
included or intended to be included in and conveyed by the mortgage
which it was exhibited to foreclose, or which belonged thereto at
the time said bill was exhibited. But your orator, as owner of the
equity of redemption of the said Western Division, and the rolling
stock and franchises pertaining thereto, was made a party defendant
to the said bill of complaint, which was exhibited to foreclose the
said mortgage on the Western Division; and your orator in the said
Western Division mortgage foreclosure suit, and as against the
complainants in that suit, was the owner of and entitled to
reserve, claim and have all the railroad rolling stock and
franchises which had belonged to said debtor company, except that
which was included in and encumbered by the said Western Division
mortgage. And your orator,
Page 69 U. S. 623
as the owner of the equity of redemption of the said Eastern
Division, and rolling stock and franchises pertaining thereto, was
made a party defendant to the bill of complaint in the suit
commenced to foreclose the said Eastern Division, mortgage; and in
that suit, and as against the complainants in that suit, your
orator was the owner of and entitled to claim, reserve and have all
the railroad, rolling stock and franchises, which had belonged to
the said debtor company, except that which was encumbered by and
included in the Eastern Division mortgage."
The bill also charged that no proceedings had ever been had in
the Land Grant cause or otherwise, to ascertain the relative
proportions of the net earnings of the Eastern and Western
Divisions, so as to determine what proportion of the rolling stock
purchased by the receiver passed under the Land Grant sale; that
the St. Paul Company, being in possession of the whole road and
rolling stock, claimed ownership of all the rolling stock, or
nearly all, and were asserting title and employing their
possession, to the great injury of the Minnesota Company.
It has been already mentioned that Bronson, Soutter, and Knapp,
the mortgagees in the Land Grant mortgage (as in fact was the case
with all the mortgagees), were citizens of New York; they therefore
properly foreclosed their mortgage, in which corporations of
Wisconsin were the parties in interest as defendants, in the
federal court.
The present bill, however, being filed by
the Minnesota Company, a corporation of Wisconsin, against the St.
Paul Railway Company, another corporation of that
same
state, and against White and Pratt, citizens of
it, as
well as against Soutter and Knapp, survivors, stood on a different
ground. As an original bill, it would plainly have not lain, under
the rules which regulate this subject in the federal courts.
The bill accordingly represented itself as "supplemental" to the
Land Grant foreclosure bill, and claimed the benefit of the
proceedings in that cause, praying that the Minnesota Company might
be decreed to be the owner of all the rolling stock on the road at
the time of the appointment of the receiver, except the said forty
box cars; that an account
Page 69 U. S. 624
might be taken to ascertain the relative net earnings of the two
divisions; and that thereupon, according to the principle of, and
basis fixed by said Land Grant decree, it might be adjudged and
definitely determined and declared by this Court what proportion of
rolling stock purchased by the receiver really and equitably
belonged to the Minnesota Company and to the St. Paul Company
respectively, and that a separation of said stock purchased by the
receiver might be ordered, or that it should be sold, and the
avails paid over to the respective companies according to their
proportions. It prayed also a proper allowance for rent for the use
of their rolling stock on the Western Division, and that the avails
might be applied to the interest due on the mortgage. It prayed
finally an injunction on the appointment of a receiver, and for
other and general relief.
To this bill the St. Paul Company demurred, assigning for cause,
want of jurisdiction, want of equity &c., the fact that the
bill was not supplemental, and that the parties were citizens of
the same state. The court below having sustained the demurrer, two
questions were now presented here:
1. Was this bill, in any sense, supplemental or ancillary, so
that it could attach itself to the original proceeding, and thus,
according to the practice of the federal court, be entertained;
though in itself and independently -- from want of proper and
differing citizenship in the parties -- not capable of being thus
treated.
2. If it was, did the complainant present any case calling for
equitable relief?
Page 69 U. S. 631
MR. JUSTICE MILLER delivered the opinion of the Court.
The first question raised by the demurrer relates to
jurisdiction.
Page 69 U. S. 632
For the purposes of this question we are to take the facts set
up by the bill [his Honor had stated the main ones] and demurred
to, as true, and consider whether they make a case for the
jurisdiction of the Circuit Court of the District of Wisconsin,
which has become successor of the district court in that
district.
The present suit grows immediately out of and is a necessity
which arises from the suit, by Bronson, Soutter, and Knapp, to
foreclose the Land Grant mortgage; under the decree in which suit
the Western Division of the La Crosse & Milwaukee Road was
sold, and also all the rolling stock of the company belonging to
both divisions, to the Milwaukee & St. Paul Railway Company.
The present suit is really a continuation of that one. The rights
of the parties depend upon the construction which is placed upon
the acts of the court in it, and the present bill is necessary in
order to have a declaration of what was intended by the orders and
decrees made in that suit, and to enforce the rights which were
established by it.
The road and rolling stock, which are the subject matter of this
controversy, were placed in the hands of a receiver in the progress
of that suit, and he was in possession of the rolling stock when,
by an order of the district court, made June 12, 1863, in that
suit, and a similar order of the same date, in another suit, it was
all delivered to the Milwaukee & St. Paul Railway Company.
At the last term of this Court, [
Footnote 3] we decided that, by the act creating the
Circuit Court for the District of Wisconsin, the district court
lost its power to make such orders, and that they were void. The
consequence of this ruling is that in contemplation of law, this
property is still in the hands of the receiver of the court. If in
the hands of the receiver of the circuit court, nothing can be
plainer than that any litigation for its possession must take place
in that court, without regard to the citizenship of the parties.
[
Footnote 4] If it has been
taken illegally from the custody of the receiver, it is
Page 69 U. S. 633
equally clear that the court has not lost thereby the
jurisdiction over the property, or the right to determine where it
shall go, so far as that right is involved in that suit. This is
the very object of this bill, and it is rendered all the more
necessary by that which the court has done as well as that which it
has failed to do. In the case of
Randall v. How. [
Footnote 5] these principles are fully
stated as applicable to a proceeding in a state court, and are
given as reasons why the federal court would not interfere,
although the parties had the right, so far as citizenship could
give it, to litigate in the courts of the United States.
It is objected that the present bill is called a supplemental
bill, and is brought by a defendant in the original suit, which is
said to be a violation of the rules of equity pleading; and that
the subject matter, and the new parties made by the bill, are not
such as can properly be brought before the court by that class of
bills.
But we think that the question is not whether the proceeding is
supplemental and ancillary or is independent and original, in the
sense of the rules of equity pleading; but whether it is
supplemental and ancillary or is to be considered entirely new and
original, in the sense which this Court has sanctioned with
reference to the line which divides the jurisdiction of the federal
courts from that of the state courts. No one, for instance, would
hesitate to say that, according to the English chancery practice, a
bill to enjoin a judgment at law, is an original bill in the
chancery sense of the word. Yet this Court has decided many times,
that when a bill is filed in the circuit court, to enjoin a
judgment of that court, it is not to be considered as an original
bill, but as a continuation of the proceeding at law, so much so
that the court will proceed in the injunction suit without actual
service of subpoena on the defendant, and though he be a citizen of
another state, if he were a party to the judgment at law. The case
before us is analogous. An unjust advantage has been obtained by
one party over another by
Page 69 U. S. 634
a perversion and abuse of the orders of the court, and the party
injured comes now to the same court to have this abuse corrected,
and to carry into effect the real intention and decree of the
court, and that while the property which is the subject of contest
is still within the control of the court and subject to its
order.
It is objected that Pratt and White and the Milwaukee & St.
Paul Railway Company were not parties to that suit, and cannot,
therefore, be compelled to yield their right to litigate with a
citizen of Wisconsin in the courts of that state.
Pratt and White are mere nominal parties, who were the agents
and attorneys of the corporators composing the Milwaukee & St.
Paul Railway Company, and purchased the property at the marshal's
sale for them. They and the company may both be considered as
purchasers at that sale; and it is in their character of
purchasers, and on account of the possession which they obtained on
petition of the company, and the rights they claim under that
purchase, that they are now brought before the court. If the court
has jurisdiction of the matters growing out of that sale, and order
of possession, as we have already shown that it has, then it has
jurisdiction to that extent of these parties without regard to
their citizenship. It would, indeed, be very strange if these
parties can come into court by a petition, and get possession of
that which was the subject of litigation, and then when the wrong
they have done by that proceeding is to be corrected, they shall be
permitted to escape by denying that they were parties to the suit.
In the case of
Blossom v. Milwaukee & Chicago Railroad
Company, [
Footnote 6] this
matter was fully discussed, and it was there held, that a purchaser
or bidder at a master's sale, subjected himself
quoad hoc
to the jurisdiction of the court, and became so far a party to the
suit by the mere act of making a bid, that he could appeal from any
subsequent order of the court affecting his interest. [
Footnote 7]
Page 69 U. S. 635
The objection to the jurisdiction must therefore be
OVERRULED.
We next proceed to inquire whether the bill makes a case calling
for relief.
This involves the consideration of the mortgage of complainants
in the original suit, and of several orders and decrees of the
district court, all of which are the subject of conflicting
constructions by the parties and their counsel.
In reference to the roadbed which is covered by these various
mortgages, there is no diversity of opinion; but in reference to
the rolling stock, it is contended by appellees that these several
mortgages were successive liens on all the rolling stock of the
company, and by appellant that they are liens only on the rolling
stock belonging to, or in some way identified with, that part of
the road included in each mortgage respectively. At first blush it
would seem that in a road used continuously as one road, there
could be no such definite relation between any particular division
of the road and any particular portion of the stock. But as it was
competent for the company which owned all the road and all the
stock to assign certain stock to one division, and certain other
stock to the other division, when the roads were divided for the
purpose of making mortgages, we cannot assume as a fact that there
was no such allotment of the rolling stock, but must look to the
language of the mortgages themselves, to see if any such intention
is expressed. If it is not, then obviously the other view prevails,
and the mortgages are successive liens on the whole stock.
The language in the descriptive part of the Palmer mortgage, and
that in the corresponding part of the mortgage on the Western
Division, when considered in reference to the rolling stock alone,
may not be free from doubt as to its construction. [
Footnote 8] But when we consider it in
reference to the clear purpose of the parties to make the mortgages
distinct, and different as to everything else conveyed by them, we
conclude
Page 69 U. S. 636
that it was intended that the rolling stock covered by each
mortgage was that which was properly appurtenant to each particular
division of the road.
It is not so important that we be right in this, however, as we
are satisfied that the district court in the foreclosure suit
decided this question; and as that decision is in full force and
unreversed, it must conclude the parties to the present suit, all
of whom claim under the decree of the court.
The complainants in the original foreclosure suit made
defendants of all the judgment creditors of the company who had
liens subsequent to themselves, and made the Milwaukee &
Minnesota Company defendant, who held under the subsequent mortgage
to Barnes, with a view to cut off their equity of redemption; but
they did not make defendants of Bronson and Soutter, who held a
subsequent mortgage on the Eastern Division, and a subsequent lien
on the rolling stock, which complainants would also desire to
extinguish, if they had believed it covered the same rolling stock
which theirs did. By omitting these mortgagees, they show their own
construction that their mortgage, and that of Bronson and Soutter,
did not cover the same stock; which could only be because it was
appurtenant to the Eastern Division.
About the time that foreclosure suit was commenced, a suit was
instituted in the same court to foreclose the second or Bronson and
Soutter mortgage on the Eastern Division, but the holders of the
Palmer mortgage were not made defendants to either suit. The two
suits progressed
pari passu to a final decree, but while
the Western Division went to sale, an appeal stayed proceedings in
the Eastern Division case, and no sale has yet been made under that
decree. Very shortly after these suits were commenced, the court
made an order of reference in each of them to masters in chancery,
who were the same masters in both cases. These references were for
the purpose of ascertaining the amounts due on the bonds, the
amounts due certain judgment creditors, and the amount of rolling
stock on the whole road, and the amount included in each mortgage.
The language of
Page 69 U. S. 637
the order of reference on this latter point in the original suit
in this case is as follows:
"And it is further ordered that said masters ascertain and
report the whole amount of rolling stock on the road, and that they
specify the quantity thereof that is covered by this mortgage, also
in the first and second mortgages respectively."
The reference in the other case is in language almost
identical.
Now it is argued that the object of this order was to ascertain
and settle the priorities between these different mortgages. No
such inference can be made from its language, for it says nothing
about priorities in date, or superiority of lien. There was no
occasion or reason for ascertaining those priorities in that suit,
for the respective parties were not before the court, and could not
be bound by its decree. It would not even bind complainants,
because there would be no mutuality in the estoppel. It is an
impeachment of the legal attainments of the court and of the
counsel to suppose that they would make a reference to a master to
ascertain a fact which could have no influence on the suit, and if
passed upon by the court, could affect nobody's interest in the
slightest degree.
But the language of the order clearly implies a different thing.
The object is to ascertain what is covered by one mortgage to the
exclusion of the other, an object which had manifest pertinency to
the duty which the court was called upon to discharge. The judge
who made these orders delivered an opinion at the trial, in which
he decides that the rolling stock of a railroad is a fixture, and
if we suppose him to have considered that which was mortgaged to
Palmer and to Bronson and Soutter as a fixture on the Eastern
Division, and that which was mortgaged to Bronson, Soutter, and
Knapp, as a fixture on the Western Division, we have a clear idea
of what he wished to ascertain, in view of the decrees he was to
make in the two suits.
We have next the report of the masters on this subject, which is
as follows:
Page 69 U. S. 638
"We have also ascertained the whole amount of rolling stock on
the whole road at the cost price. The amount thereof was, at the
date of the filing of the bill of complaint in this cause,
$569,635.78, and an additional amount of $53,600 has been purchased
since the filing of the bill of complaint, making the whole amount
$623,235.78."
"And we have ascertained, and do further report, that of the
said rolling stock, forty box cars, amounting, at the cost price
thereof, to thirty-one thousand nine hundred and seventy-nine
dollars and sixty-four cents, and numbered 330 &c. [giving the
numbers], are covered by and included in the mortgage executed to
the complainants as set forth in the bill of complaint in this
cause, the said care having been purchased, and by the proceeds of
a portion of the bonds to which this mortgage is collateral; and
all the remainder of the said rolling stock is covered by and
included in the first mortgage upon the said railroad, and in the
mortgage upon the said railroad executed to G. C. Bronson and J. T.
Soutter, and bearing date on seventeenth day of August, A.D.
1857."
In the foreclosure suit of the Eastern Division, these same
masters reported on the same day:
"We have ascertained and do further report, that of said rolling
stock, forty box cars, amounting, at cost price thereof, to
$31,979.64, and numbered 330 &c., are covered by and included
in the mortgage of Bronson, Soutter, and Knapp, and no other,"
and then adds, that the remaining rolling stock is covered by
the mortgage to Palmer, and to Bronson and Soutter -- that is, the
mortgage on the Eastern Division.
It is impossible in examining these reports to doubt that the
commissioners understood that they were directed to ascertain what
rolling stock was covered by each mortgage, in order that only such
might be sold under the decree in that case, and that they reported
that of all the rolling stock on the road, forty box cars alone
were subject to the mortgage in the present case, and that all the
other stock was subject to the mortgage in the other suit. At all
events,
Page 69 U. S. 639
they were directed to ascertain what was subject to the mortgage
in this suit, and they reported the forty box cars, and did not
report any more. This much is beyond dispute from the language of
the report in this case.
Counsel for complainant excepted to this report. His fourth
exception is that instead of certifying as they did, the masters
should have reported,
"That all the rolling stock on said road was covered by and
included in the mortgage given to said complainants, and described
in their bill of complaint in this cause, and that said mortgage
was a first and prior lien on said rolling stock superior to all
other liens."
This exception was overruled by the court, and the report of the
masters confirmed as far as this branch of the subject is
concerned.
We regard this as a judicial decision, that complainant's
mortgage did not cover the rolling stock which was covered by the
previous mortgage to Palmer, and that it only covered the forty box
cars, and such proportion of the rolling stock purchased by the
receiver as the net earnings of the Western Division bears to the
net earnings of the Eastern Division. This order modifying and
confirming the report of the masters settled the rights of the
parties, and by that decision, they must stand until it is reversed
on appeal, or set aside by some direct proceeding for that
purpose.
The final decree ordering the sale proceeds upon the same view
of the rights of the parties. After ordering a sale of the property
mortgaged, and copying the language given in the mortgage as
descriptive of what was mortgaged, the decree adds:
"With forty box cars &c., and such portion or share of the
rolling stock purchased and procured by the receiver, costing
$147,942.63, as the net revenues of the portion of the road covered
by this mortgage bears to the balance or other end of the road,
since the appointment of the receiver. The remaining rolling stock
is subject to a prior mortgage.
Page 69 U. S. 640
That is to say, having decided that what is covered by the other
two mortgages is not covered by this; it is not subject to sale in
this suit."
The marshal, however, who was directed to make the sale instead
of a master commissioner, did sell all the rolling stock, and that
sale was confirmed by the order of the district court of May 5,
1863.
It is too clear for argument, that a sale by the marshal,
unauthorized by the decree, is without any validity. Does the order
of the court confirming the sale make it valid?
Upon principle the question is by no means free from difficulty.
We are clear that a sale without a decree to sustain it would be a
nullity, and we doubt if a court can make it valid by a mere
general order of confirmation. If, however, an issue had been made
by exceptions or other proper pleading, as to the question whether
any particular piece of property had been included in the
decree, or order of sale, and the court had decided that
it was so included, it might be an adjudication upon the
construction of the decree which would bind the parties. Nothing of
the kind occurred here. There is every reason, on the contrary, to
believe, that the court had no suspicion that the marshal had sold
more than the decree authorized.
On the 7th day of May, two days after the order of confirmation,
the Milwaukee & St. Paul Railway Company, presented their
petition for the discharge of the receiver, and for possession of
the property which they had purchased. The court thereupon made an
order
"that the receiver deliver over to said Milwaukee & St. Paul
Railway Company, the said road and appurtenances between Portage
City and La Crosse,
and the rolling stock and property
specially described in the decree."
The only rolling stock specially described in the decree was the
forty box cars, and the proportion of stock purchased by the
receiver. The fact that this was ordered to be delivered to the
purchasers and no more, is almost conclusive of two things: first,
that the judge understood his decree and previous rulings as we
have interpreted them: and, second, that he had no idea that he had
confirmed
Page 69 U. S. 641
a sale of all the rolling stock on the road, to the purchasers
at the sale. It is true that over a month later, he ordered the
Eastern Division of the road and the remainder of the rolling stock
into the possession of the same company. But this was done to
enable them to run the whole road as a through route, on the
principle of public policy, and that it was better for all parties
concerned. This he declared in an opinion delivered at the time,
and it is substantially indicated in the orders themselves.
In the light of these facts, we cannot give to the order of
confirmation in this case the effect of making valid the marshal's
sale, however the rule might be on that subject in other cases. But
we do not mean to intimate that in any case a sale by a marshal, or
master in chancery, can be valid, when there is no decree to
support it. Cases in this Court [
Footnote 9] would seem to decide that it cannot.
The order of June 12, 1863, delivering possession of this
property to the Milwaukee & St. Paul Railway Company, has been
declared by this Court to be void for want of jurisdiction, and has
been set aside by the court which made it. It therefore affords no
support to defendants in this claim to the rolling stock in
dispute.
We have thus examined with care and patience the mortgage, and
the various orders and decrees of the district court, on which the
claim of the Milwaukee & St. Paul Railway Company to the
ownership of this property depends. There is in all of them some
want of clearness and precision, including the mortgage itself.
Before the court ordered the sale, it should have made clear all
these ambiguities. It evidently attempted to do so, and we think if
it has not in all cases effected that purpose fully, it has
furnished the criteria by which it can be done. And although the
language of its orders is not always free from doubt, we have been
able to satisfy ourselves of the court's intentions.
The title of appellant is clear on the record, unless it has
Page 69 U. S. 642
been divested by these proceedings. We think that they do not
confer title to the rolling stock on the Milwaukee & St. Paul
Railway Company, nor divest the appellant, except as to the forty
box cars, and the proportion of the stock purchased by the
receiver, which the net earnings of the Western Division bore to
the net earnings of the Eastern Division, and that they also decide
that the mortgagee under which they claim, did not include any
more.
Order of the circuit court sustaining the demurrer to
complainants' bill, and the decree of the court dismissing it
reversed, and the case remanded to that court for further
proceedings not inconsistent with this opinion.
[
Footnote 1]
This sentence in italics -- or the exact form of it -- was the
cause of one main difficulty in the case.
[
Footnote 2]
Bronson v. La Crosse
Railroad, 1 Wall. 405.
[
Footnote 3]
Bronson v. La Crosse Railroad
Company, 1 Wall. 405.
[
Footnote 4]
Freeman v.
Howe, 24 How. 460.
[
Footnote 5]
67 U. S. 2 Black
585.
[
Footnote 6]
68 U. S. 1
Wall. 635.
[
Footnote 7]
De la Plaine v. Lawrence, 10 Paige 602; Calvert on
Parties to Suits in Equity, pages 51, 58, and note to page 61.
[
Footnote 8]
See them
supra -- REP.
[
Footnote 9]
Shriver v.
Lynn, 2 How. 43;
Brignardello v.
Gray, 1 Wall. 627.
MR. JUSTICE NELSON, in whose opinion concurred CLIFFORD and
FIELD, JJ., dissenting.
The complainants in this bill, who set up a right to the equity
of redemption in the Bronson and Soutter mortgage, insist that the
whole of the rolling stock on the old La Crosse & Milwaukee
Road, with a trifling exception, is subject to the lien of this
mortgage on the Eastern Division, the foreclosure of which is
pending, and that a proper allowance or rent for the use of it on
the Western Division should be made, and the avails applied to the
interest due on the mortgage, and further, that the question
involved was litigated and so decided in the foreclosure suit on
the mortgage of the Western Division.
We have looked into the position of the counsel for the
complainants, and have come to the conclusion that it is not
maintained.
For aught that appears, all the rolling stock of the old company
was purchased by it for the use and benefit of the whole of the
road, out of the common funds of the company, and a lien was given
upon it in each and all of the mortgages of that company on the two
divisions, the Eastern and Western, and also upon it in the
mortgage of the whole road to the complainants. These liens would
take effect as matters of law according to priority. Any other
disposition
Page 69 U. S. 643
of them would be unjust and in violation of good faith to the
bondholders, for the security of the payment of whose bonds the
mortgages were given.
The district court, however, seems to have entertained the idea,
that any of the rolling stock purchased by the proceeds of the
bonds of a particular mortgage should be exclusively subject to the
lien of that mortgage, and made a reference for this purpose, and
on the coming in of the report, acting upon this idea, decided that
some forty box cars purchased by the proceeds of the bonds of the
first mortgage on the Western Division, should be sold and the
proceeds applied exclusively to this mortgage, and that all the
rest of the rolling stock on the road (meaning the whole road),
when the receiver was appointed, was covered by the first mortgage
of the road from Milwaukee to Portage (meaning the Palmer
mortgage), and all purchased since the appointment of the receiver
be applied to this first mortgage, and the mortgage in the bill of
foreclosure, in the proportion therein mentioned.
The decree of foreclosure, after describing the property to be
sold, and particularly the forty box cars and the share of the
stock purchased since the appointment of the receiver, adds, "The
remaining rolling stock is subject to prior mortgages."
In the report of the sale by the marshal, he states, that he
sold of the rolling stock the forty box cars, and the share of the
stock purchased since the receiver was appointed, free and clear of
all encumbrances, but the remainder of the rolling stock was sold,
subject to the lien of mortgages prior in date to the mortgage
under which the sale was made. This report of the sale by the
marshal was excepted to, but after argument the exceptions were
overruled, and the sale confirmed, and although the complainants
here were party defendants in that suit of foreclosure, no appeal
was taken from the decree of confirmation.
*
We are of opinion, therefore, that the question as to the
Page 69 U. S. 644
ownership or the liens upon the rolling stock in question were
not adjudicated by the court below in the foreclosure suit on the
mortgage upon the Western Division, and that the question is open
for this Court to determine.
We agree that the rolling stock upon this road covered by the
several mortgages, and as respects any other valid liens upon the
same, is inseparably connected with the road -- in other words, is
in technical language a fixture to the road, so far as in its
nature and use it can be called a fixture. But it is a fixture
extending over the entire track of the road from Milwaukee to La
Crosse. It is not a fixture upon any particular division or
portion; but attaches to every part and portion. It was purchased,
as we have before said, for aught that appears, by the common funds
of the old La Crosse & Milwaukee Company, and which were
derived from its various resources -- subscriptions of stock, sale
of bonds secured by mortgages, earnings of the road after a part of
the whole line was fitted for the running of the cars, and the
mortgages or other encumbrances on the road made by the old
company, whether on a portion or on the whole line, take effect
according to the priority of lien. These liens, so far as respects
the rolling or moving stock, attach to them a right to have the
cars run upon the road, upon its entire line, as the value of the
lien depends upon this use of the property. The lien was acquired
in contemplation of this use, for without it a mortgagee or
lienholder of the commonest observation must have seen the security
would be next to worthless. The great value of the road and rolling
stock, as a security, consists in the use and operation of the same
as a railroad line in the carriage of passengers and freight; it is
the combined use maintained and enforced that enables the lien
creditor to realize the security contemplated when the credit was
given.
Our conclusion, therefore, is that the mortgagees of the Eastern
line have by virtue of the liens of their mortgages such an
interest in the rolling stock, as to entitle them to the
appropriate use of it in running the road for the carriage of
passengers and freight, and that the Milwaukee & St.
Page 69 U. S. 645
Paul Company, by reason of their title under the mortgage
foreclosed on the Western Division, acquired the same right, and
also, that the complainants by virtue of their title under the
mortgage foreclosed, acquired a similar right, and that neither has
acquired an exclusive right or title to any portion of the rolling
stock. We say nothing as to the persons or parties who may be
entitled to liens on their property, as these questions are not
before us, nor the evidence that would enable us to determine the
same, nor could they be determined under this bill. Our conclusion
is that the decree below should be affirmed.
*
Blossom v. Milwaukee R.
Co., 1 Wall. 655-667.
NOTE BY THE REPORTER
It will be seen in the foregoing report that one of the
questions decided in the inferior court was that rolling stock is a
fixture. The question was argued in this Court with ability on both
sides. But though the decision here is not inconsistent with that
idea, but on the contrary, as the reporter supposes, rather
affirmative of it, the point was apparently one not necessary to be
specifically passed upon, and is not discussed in the opinion. The
matter is, however, one of such practical and increasing importance
that the reporter supposes he will gratify the profession by giving
in this collateral way an extract from the brief of the appellant's
counsel, Mr. Carpenter, who endeavored to support the modern
view.
I
S ROLLING STOCK A FIXTURE?
The term "fixture" was early seized upon by legal writers to
supply a deficiency in their technical terminology, but was not
entirely reclaimed from its popular use and fixed in that
strictness and uniformity of meaning requisite to scientific
certainty, and as used by legal writers, it has, continually
fluctuated between a technical and a popular use. We have therefore
many kinds of fixtures, and many exceptions and qualifications to
each kind. A fixture is one thing between landlord and tenant; a
different thing between vendor and vendee; is one thing in the
economy of trade; another for the purposes of agriculture.
Originally the term denoted those movable things which had become
immovable by connection with the
Page 69 U. S. 646
freehold. But presently it came to mean those things, which
although attached to the freehold, could, under certain
circumstances, be removed. In its popular use it meant something
affixed or fastened to the freehold; and in the early cases, and
many of the later ones, we find the popular definition of the term
sweeping everything before it. An article was held to be a fixture
or not, from the presence or absence of a screw fastening it to the
floor.
By the great majority of cases, ancient and modern, there is no
doubt that a fastening was essential to constitute the thing in
question a part of the freehold, and nothing kept in place by mere
gravitation was held to be a fixture. It is not less true that from
the first we have the doctrine of constructive annexation equally
well established. In
Liford's Case, [
Footnote 2/1] it is said to have been decided in the
fourteenth year of Henry VIII, that a millstone, removed from a
mill to be picked, was nevertheless constructively a part of the
freehold, and passed by deed conveying the mill. In England, title
deeds have been held to be fixtures, and deer in a park, and fish
in a pond, to pass with the estate.
The right to remove articles as fixtures has been carried
farther in favor of tenants and to encourage trade than in any
other cases, yet this right has been somewhat limited, and it has
been held that where an engine, in no way attached to the freehold,
could not be removed without injury to the building in which it was
set up, that the tenant could not remove it. There are cases in
England of more recent date, still farther tending to put this
subject upon a reasonable, as distinguished from a philological
ground, and to hold that a thing is to be regarded as real or
personal property, according to its relation to, and connection in
use with, the freehold, rather than from the manner in which that
connection may be accomplished. And it has been expressly decided
that actual fastening is not necessary to make a thing part of the
estate.
In the United States we have three different rules established
by different states.
1. The thing must be so fastened to the estate that its removal
would seriously injure the freehold, beyond the loss of the thing
removed.
2. If the chattel is essential to the use of the real estate,
and actually, though slightly attached, it will pass with the
freehold.
3. If the thing be essential to the use of the real estate, and
has uniformly been used with it, then it passes, though not
fastened to it.
As an original proposition, the third rule seems the most
satisfactory. Take for instance a manufacturing establishment. The
building is constructed to receive the various machines necessary
for carding wool, spinning yarn, weaving and dressing cloth, and
this business is carried on in the building. One machine is so
light, or its motion so violent, that it must be steadied by some
fastening to the floor; the next is heavy enough to keep in place
by its own weight. Now there is no reason in saying that one
machine will, and the other will not, pass with the freehold. Both
are essential to
Page 69 U. S. 647
the same business, one is useless without the other, and both
are in the mind of the purchaser when he buys the establishment. It
seems absurd to say that, to be sure of getting all the machinery,
he must nail it down to the floor, when perhaps fifty men could not
start it a hair. The purpose for which the thing was constructed,
and the manner in which it was enjoyed in connection with the
freehold, should determine whether it is real or personal
estate.
Following this view, it was held, in
Farrar v.
Stackpole, [
Footnote 2/2] that
where machinery was essential to the purposes for which the
building in which it was used was erected, that this fact alone
constituted it real estate, whether it was nailed down or whether
only held down by the laws of gravitation.
Other cases [
Footnote 2/3] are
to the same effect; although a far greater number of cases could be
cited to the contrary, both from England and American reports.
In
Walker v. Sherman, [
Footnote 2/4] actual fastening was held essential, but
in a more recent case,
Snedeker v. Warring, [
Footnote 2/5] this distinction is
overruled, and the law of fixtures put upon sensible ground and
according to the doctrine in the above cases. In the latter case, a
statute and sun-dial were held part of the real estate. The court
said,
"If the statute had been actually affixed to the base, by cement
or clamps, or in any other manner, it would be conceded to be a
fixture and to belong to the realty. But as it was, it could have
been removed without fracture to the base on which it rested. But
is that circumstance controlling? A building of wood, weighing even
less than this statue, but resting on a substantial foundation of
masonry, would have belonged to the realty. A thing may be as
firmly affixed to the land by gravitation as by clamps or cement.
Its character may depend much upon the object of its erection. Its
destination, the intention of the person making the erection, often
exercises a controlling influence, and its connection with the land
is looked at principally for the purpose of ascertaining whether
that
intent was that the thing in question should retain
its original chattel character, or whether it was designed to make
it a permanent accession to the lands."
We come now to give this law of fixtures an application to the
present subject matter.
Suppose a corporation created by law to build, equip, and work a
railroad, and for no other purpose. It mortgages its roadbed,
between certain limits, all its depots and station buildings, its
right of way, and all appurtenances between those limits; and all
the franchises, privileges, and rights of the company of, in and
to, or concerning the same. The road is useless without the rolling
stock. Here is a case then falling fully within the principle of
earlier cases; [
Footnote 2/6] the
real estate worthless without the rolling stock,
Page 69 U. S. 648
which has been used
only upon the road; and the rolling
stock, so essential to the use of the road, utterly worthless for
any other or different use. We have already seen the senseless
fiction of fastening done away with; and we have but to apply the
principles of the cases cited, and we shall come to the result that
the rolling stock is in the nature of a fixture, and as such must
be conveyed by the mortgage conveying the estate. It has not,
indeed,
exactly the same connection with the realty that
the statute had in
Snedeker v. Warring; it is not held or
kept in
one place by fastenings, or by its weight. But
this circumstance is of no consequence if the principle deducible
from the cases above cited is to govern. If a billiard table were
fastened to the floor so as to be conceded a fixture, would not the
balls and cues pass also? A bucket in a well may be detached, and
it is movable, running from top to bottom of the well, yet it is a
fixture by common consent. A shuttle in a loom is thrown from place
to place by the motive power of the machinery, yet it is an
essential part of the machine. It is not inconceivable that rails
and cars might be so constructed as that the car should be held
upon the rail by certain material contrivances, and yet be
propelled from one station to another; from one end of the road to
another, by steam power. In such a case, none would doubt that the
cars were a fixture. Can it be said that the manner of
accommodating and adjusting the cars to the rails can make any
difference?
"The railroad, like a complicated machine, consists of a great
number of parts, a combined action of which is essential to produce
revenue. And as well might a creditor claim the right to levy on
and abstract some essential part from Woodworth's planing machine,
or any other combination of machinery, as to take from a railroad
its locomotive and passenger cars. Such an obstruction would cause
the operations to cease in both cases. [
Footnote 2/7]"
Then again, following the principle of
Snedeker v.
Warring, the
destination of the rolling stock, the
intention of a company to pass it, will have an influence in
determining whether such stock is real or personal property. This
consideration would be as conclusive in regard to the furniture of
a railroad as it was in regard to the statute, where it was
presented, and even more so. The statute might have been sold by
the sculptor for the adorning of any residence, though in fact it
was made for the particular use. The right to buy and own rolling
stock is a franchise, and can only be exercised as an accessory to
the operation of a railroad. Any buying or selling of cars, engines
&c., by the company for the mere purpose of speculation would
be unauthorized and illegal. Here, then, is a consideration showing
that a company intends the rolling stock to be used only for the
road, or in other words to become a permanent accession to the real
estate of the company. The intention of the owner, the use for
which the property was designed, the connection between the road
and the cars, and the essential relation between them for the
purposes of revenue, all combine to declare the rolling stock real
estate.
In
Pierce v. Emery, [
Footnote 2/8] the Portsmouth & Concord Railroad
Company had
Page 69 U. S. 649
mortgaged all their property, real and personal, and all their
franchises. The court held that the rolling stock acquired
subsequently to the execution of the mortgage belonged to the
mortgagee. The court said:
"The object of the act being to give the bondholders a
substantial and available security for their money and a preference
over other creditors not previously secured can only be answered by
so construing the law authorizing the mortgage as to give the
bondholders security upon the road itself, as the general subject
matter of the mortgage, and upon the changing and shifting property
of the road as part and parcel, by accession, of the thing
mortgaged."
In
Phillips v. Winslow, in Kentucky, it was held that,
in equity, the rolling stock acquired subsequent to the execution
of the mortgage, passed as an accession or fixture.
In
Redfield on Railways, [
Footnote 2/9] it is said, indeed, that rolling stock is
an accessory, though not a fixture. The distinction is perhaps one
of words. In the strict technical sense of the word, as used in the
old cases, rolling stock is not a fixture, but within the reason
and philosophy of the modern cases it would seem to be so. If it
must not be called a fixture, in deference to the old cases, it is
yet an accessory of that sort, which has every element of one, and
to be regarded accordingly, however named.
The conclusion is that rolling stock, put and used upon a
railroad, passes with a conveyance of the road, even without
mention or specific description.
[
Footnote 2/1]
11 Reports 50, b.
[
Footnote 2/2]
6 Greenleaf 157.
[
Footnote 2/3]
Lawton v. Salmon, 1 Henry Blackstone 259;
Fairis v.
Walker, 1 Bailey 541 (S.C);
Voorhis v. Freeman, 2
Watts & Sergeant 116;
Pyle v. Pennock, ibid., 390;
Goodrich v. Jones, 2 Hill 142.
[
Footnote 2/4]
20 Wendell 636.
[
Footnote 2/5]
2 Kernan 170.
[
Footnote 2/6]
Farrar v. Stackpole; Voorhis v. Freeman; and
Pyle
v. Pennock.
[
Footnote 2/7]
McLean J., in
Coe v. Pennock.
[
Footnote 2/8]
32 N.H. 484.
[
Footnote 2/9]
Page 576, note.
