FARMERS' LOAN & TRUST CO. V. CHICAGO & A. RY. 00.
653
and that both were insolvent at the time when these complainants undertook to create the second trust. Without discussing the testimony produced by the defEmdant in relation to these charges, it is sufficient to say that the evidence does not support them. Mueller and Mrs. Hartje are the successors in interest to the Pittsburgh Company, and are entitled to have the royalties due on the patents paid to their trustee. The creditors of Hartje can prosecute their claims, in their own names, here or elsewhere. This case is decided on its own merits as they appear from the record evidence. The bill is dismissed as to Waldemar A. Schmidt, and sustained as to the other complainants, and a decree will be entered accordingly.
MCKENNAN, J., concurs.
FARMERS' LOAN
&
TRUST CO. OF NEW YORK V. CHICAGO
& A. Ry.
CO.
(Circuit Court, D. Indtana.
December 9, 1890.)
L
MORTGAGES-FoRECLOSURE SALE-RIGHTS OF PURCHASER'S ASSIGNEB TO WRIT OJ' ASSISTANCE.
t.
After a sale on the foreclosure of a railroad mortgage, the court directed its receiver to turn over the possession of the road to an assignee of the purchaser at the sale; the court reserving the right to resume the possession if the assignee should thereafter refuse to pay into court ,any part of the purchase price. Hetd, that this order brought the assignee within equity rule 10, which prOVides that every person, not a party to a cause, in whose favor an order has been made, shall be enabled to enforce obedience to such order by the same process as if he were a party to the cause; and that a writ of assistance would issue in favor of such assignee against another railroad company which unlawfUlly refused to surrender possession of part of the road.
SAME-MORTGAGOR'S CONTRACT PENDENTE LITE-DISCLAIMER BY PURCHASER.
Pending the foreclosure of a railroad mortgage, the mortgagor leased to another railroad company an equal right to the use of a designated part of the road for a period of 20 years. The foreclosure decree provided that the purchaser at the sale should be at liberty to abandon or disclaim any leaselloId interest or contracts or other agreements entered into by the mortgagor after the commencement of 'foreclosure proceedings. HeW, that the purchaser's right to abandon and disclaim the lease, as provided in the decree, was not affected by the receipt of the rent by the receiver during the pendency of the foreclosure proceedings, and,his acquiescence in the lease, and that all right of possession in the lessee ceased on being notified of the purchaser's intention to disclaim and abandon. Shortly after the foreclosure sale, the purchaser notified the lessee of its intention to disclaim the lease, and forbade the latter from using the road at the expiration of 30 days from the date of the notice. Held, that the receipt of the rent for these 30 days by the purchaser, which was expressly stated to be without prejudice to its right to abandon the lease, was not such a consent to the lessee's possession as to constitute it a tenant from year to year, within the meaning of Rev. St. Ind. 1881, §§5207, 5208, which provide that all general tenancies where premises are occupied with the c()nsent, either express or constructive, of the landlord,llhaU be deemed tenancies from year to year, to be determined by three 'months' 'notice to be given the tenant before the expiration of the year. " , ',', "..,
3.
SAME-WAIVER OF RIGHT TO DISCLAIM.
.. FEDERAL CbURTS..,..JURISDICTION-WRIT OF ASSISTANCE.
Where the undisputed facts show that the purchaser, after the forecloSiIre sale, never waived its right to abandon and disclaim the lease, the federal coutt'in Whicp. the in the of its primary jurisdiction oyer th/! matter, will Issue a writof assistance III favor of such purchaser, notwithstanding the issuance ofatempor'l!ol'Y- injUnction by a state court, in Which thepnrcbaser appeared, restraining it from interfering with the lessee's possession.
' " ' .. is the grantee of MeElSrs. Coster and Who ,pQrchased the ChiGago & Atlantic Rai;lroad at the sale made of August last. The sale was made upon the decree of this on the foreclosing two mortgages, dated,respectively, June court 13, 15, 1883. The decree 'Yas predicated upon two supplemental and amended bill, filed,September 24,1886, by ,the original complainant, the Farmers' Loan & Trust Company, filed July Which WIlS a trustee in eacQ of the mortgages, and a 19,,18&7,: by Q;eqrge J... BipPlls, co· trustee of that..company in the second mortgage. On the 1st of September last, in pursuance of an order of the court entered that day, the receiver surrendered possession of the property to the Chicago & Atlantic Com pany l. that portion of the road between Hammond and Laketon junction, Ind., of which the Wabash Company was in quasi possession jointly with the receiver, and of that portion the receiver surrendered the possession which he had beld·..' The petition is for the aid, of the court to exclude the Wabash CQmPlinyfrom 'that part of thlr road. · . In its answer to the petition the Wabash Company sets up a contract made June 1, 1887, between theChicago & Atlantio Railroad Company A'shley and 1\., A. Tlj.lmage, as roanagillg agents of the purchasing committee of the Wabash, St. Louis & Pacific Railway Company, 'wherebY-. , . .· ."In collsideration of certain payments. COVl'nants, and agreements specified, 'the Chicago & Atlantic Company leased lind dt;lmised to said Ashley and Talmagll;;theiJ," and for a IlPriod of twenty years. lin eq ual rigbt for: UJltngand enjoying. jointly with said railwaYCl.lllJpany, the road, road;.bed,·track, ,side tracks. switches·. bridges. outbuildings. tanks, coalcbutes, cattle-cars,' and all ol111ir fixtures appertaining to' the road of the Chi· cago &i AVllntic COHlpany betwel',u Lakelunj"n,<:UolI, aforesaid. in Wahash county, tndiana,. SIlll point ahove the tl'Rf·ks of the Chicago & Atlantic Railway Company oonnected With. tbe Cbicago & Western Indiana RailwayCl.lmpany atar Ham "",-And avers that afterwa'rds) by virtue of certain transfers and assignments IDl;lde with ,the consent lif the;, Ohicago &> Atlantic Com pany, the Wabash ConilJany:, as the successor of the Wabash, St. Louis & Pacilic and the Wabash''&; Wt-stern, Lecame entitled.to the rights of Ashley a,nd Talmage under that and lease, and, as tenant, paid to, the Chicago & frqUl,time;to time, all rentals accruing. as they became due jthat on or about the 20th day of .May, 1889, this court, at the of the and bondholders, appointed Volney T.s M.a1otheceiver of therai1road Rnd property of the Chicago & and .that thereupon the receiver alld the' Wabash Companyentelled,uponthejoint use and occupation of the. Chicago & Atlantic road between: and Hammond; the receiver holding, under"his appointment, Rnd the said Wabash Railroad ColnoccupYhig"fith., the knowledge' and L'Onsent o£:the pliny m.ortgagell·llnA 5bridholdersarid receiver. under the aforesaid contract of ver I astht)' '!tgeQtrtnll e 0, £th.e mort". '",; r' ... , "", . ',. ,, ,:." ,oj .; _._' ( ,.,. _. · .' ' .. ,
In
,
"
FARMERS'LOAN & TRUST CO. V. CHICAGO&; A. RY. CO.
655
gagees and bondholders, ratified the said lease, and :all the terms thereof, excepting as to duration; that ever since pointment of the receiver the Wabash 'Company has continued W pity the rents to him, as the agent and representative of the mortgagees and bondholders, as 'the same became due,and that, by reason of the ises, a general tenancy was created between said mortgagees and holders, of the one part, and the Railroad Company, of'the other part, and that, as sllch general tenant, it has ever since, with the knowledge and consent of said mortgagees and bondholders, been in posElession of said railroad and appurtenances. It is further averred that the sale was made on the:13th of August, 1890, to Coster and Thomas, who conveyed to the Chicago & Erie Company; that the receiver, in the of the court, delivered possession to th1it c0!Dpllny: on the 1st ofSepternber; tnat thereupon that company upon the, joint use of the property, with the Wabash CO,Dlpany the stations aforesaid; ,that thereafter;. the Chicago '&.,Erie Company, by. ,the schedule rules which it adopted and put in force on said railroad, captinned. to recognize the Wabash Company as having equal rights with Chicago & Erie Company to pass its trains ove.r said railroad,and that the Chicago & Erie Company duly furnished the Wabash Company ,with such coal, water, and telegraph as were necessary to en'; ·ableitto.run its trains; and also required the Wabash 'port register with the agents of the Chicago & Erie Compa'ny each .andeve'rytFain of the Wabash passing over road,'/;\S rEt .qpired py thE! contract. of J UO(l 1,: 1887; in consequence wheJ:eoL the :WabashCompany becalUe a general tenant by parol of the Chicago & Erie Company on the terms expressed io' said contraet,and becanieetItitled to continue the use and enjoyJrient of said railroad on the tj;\rms ,aforesaid until such tenancy should be, lawfully. terminated; that it :paid to tb,at company the lInder said lease for the nu)othQf and that, in recognition of the rights of the Waba* pany tQ the. joint use of said tracks as a tenant of the petitioner, the petitioner has, since it came into possession, daily issued the running of the Wabash trains, orders for the fuel required, and has the same to the Wabash Company; that the occupancyof the property by.the Wabash: Company has been by the cansent and with the approval of the petitioner, audthat, relying lJ.pon its rights as a general tenant of said mortgagees and bonqholders,'it ex':' pended large sums of money in increasing and building up a profitable business for said railroad,and is now trahsporting over the same lal'ge quantities offreight and a large number of passengers, to-wit,200cars QUreightand 300 passengers per day. ' It is further shown that-,th, ·Wabash Company, after being notified that it should cease to use, the Ohi.. eago & Atlantic toad after September 30th, applied to the Wabagh;ei'teuit court (astate'tribunal) for a restraining order against· the Chida'go & Atlantic Compllny;. that the Chicago & Erie Company appeared and resisted the application, but that a temporary injunction \\'as granteda!l"pNyed, and that ,the :complaint upon which the application to the stat(i, ;oou1t
656
RDERAL
REPORTER, vol. 44.
was made, among other things. contained averments substantially the Bame as those of the answer filed herein. The answer contains other avelments which need not be stated because not material to the questions raised and argued at the. hearIng. The evidence, outside the records and files of the cause, showed that, after the surrender of possession by the receiver to the Chicago & Erie Company, the trains of the Wabash Company were permitted to run according to the schedule (No. 32) which tookefi'ect July 13, 1890, and the occupation and use of that part of the line in question continued in conformity with the terms of the contract of June 1, 1887, except that, commencing with the telegram of September 1st, there was the following correspondence between officers of the two companies: "SEPT. 1, 1890. "To O. M. Hays, 61eneml Manager Wabash Ry., St. Louis, Mo.: According to decree in suit Farmers' Loan and Trust Company against Chicago & Atlantic Company, the Chicago·& Erie Co. abandons contract between Ashley and Talmage and Atlantic, dated June 1st, eighty-seven. "OTTO GRESHAM. i "CHICAGO, Sept. 1, 1890. "The Wabash Rail,'oad Oompany, Mr. M. Hays, General Manager, St. Loui.S, Mo.-DEAR 81R: The Chicago & Erie Railroad Company, haVing, this first day of September, 1890, by order of the proper courts, been placed in possession of the railroad 'property of the former Chicago & Atlantic Railway, in accordance with the terms of the decree of foreclosure and sale entered in. the suit of the Farmers' Loan & Trust Company against the Chicago & Atlantic Railway Company, in the United States circuit court for the northern district of Ohio, western division, the district of Indiana, and the northern district of Illinois, hereby gives notice, in addition to the notice given by the purchasers to the master commissioner at said sale, to the Wabash Railroad Company of its abandonment and disclaimer of a certain agreement and contract entered into the tirst day of June, 1887, by and between E. D. Ashley and A. A. Talmage, agents of the purchasing committee of the Wabash, St. Louis & Pacitic Hailway Company and the Chicago & Atlantic Railway Company. THE CHICAGO & ERIE RAILROAD COMPANY. ".By OTTO GRESHAM, Atty. "THE WABASH RAILROAD CoMPANY. GENEmAL MANAGER'S OFFIOE. CHAS. M. HAYS, GENERAL MANAGER. "(ON ROAD,) Sept. 2-90. "Mr. Otto Gresham. Gen· .Atty. O. & Erie Ry., Ohicago, Ills.-DEAR SIR: rliave your message of the 1st inst" advising that, according to decree in the of Earmel's' Loan & Trust Company vs. Chicago & Atlantic Hy, Co., the Chicago & Erie Hy. Co. abandons the contract between Messrs. Ashley and Talmage atldthe Chicago & Atlantic Ry. Co., dated June 1st, 1887. I presume it is your intentIOn that we slum understand from this notice that, while you do .not recognize the existing contract as binding upon your COllipany, we are to continue under the terms of same until advised by your com· pany of your desire to modify the present arrangement, or terminate the use of your line by our company. Please advise if this understanding is correct. "Yours, truly, CHAS. M. HAYS, General Manager. "(ON ROAD,) Sept. 5, 1890. "Mr. 1$. M. Felton, Vice-President Ohicago & E1'ie Ry. 00., NewY01'k.'pEAR Snt:Notice has reached me, while out on the line of road, from Mr.
FARMERS'LOAN
TRUST CO.
V.
CHICAGO
657
Otto Gresham, attorney for the C. & E. Ry·· under date of September 1st. advising the Wabash R. R. Co., for the Chicago & Erie Ry. Co., of its 'aban· donment and disclaimer of a certain agreement ami contract entered into the first day of June, 1887, by and between C. D. Ashley and A. A. Talmage. agents of the purchasing committee of the W. St. L. & P. Ry., and the Chi· cago & Atlantic Ry.; the receipt of which has been This notice was not entirely unexpected, as I 'have been informed through other sources that the arrangement referred to was not satisfactory to your'company in every respect. Will you please advise me, as soon as convenient, if it is now your desire to make some modification or change in the terms of the contract under which we have been operating our trains over your line between Laketon junction and Hammond, Indiana. or if it is your intention to terminate absolutely all further relations with this company. If the former. I shall be glad to meet you at any time or place that may best suit your convenience. and, negotiate for the continued use of YOllr line by this company. upon such basis as we may be able to agree. If it is not your desire to do this. upon reasonable notice from you to that effect. we shall govern ourselves accordingly. Please answer. "Yours. truly. CHAS. M. HAYS, General Manager. "NEw YORK, September 16, 1890. "Mr. Ohas, M. Hays, General Manager Wabash Railroad Company, St. Louis, Mo.---,-bEAR SIR: I am in rt'ceipt of your favor dated 'St. Louis, (on road.) Sept. 5, 1890.' In reply I beg to say that the Chicago & Erie Company desires that any use of its track by the Wabash Railroad Company shall absolutely cease. In order that you may govern yourselves accordingly, I inclose a formal notice fixing a time when use shall cease. "Respectfully yours, S. M. FELTON. Jr., Vice-President. "NEW YORK, September 16,1890. "The Wabash Railroad Oompany, Mr. Ohas. M. Hays. General Manager. St. Louis. Mo.-DEAR SIR: Referring to the notice sent to the Wabash Railroad Company on behalf of the Chicago & Erie Railroad Company by Mr. Otto Gresham. attorney, dated the first instant. you are hereby notified that on and after the hour of midnight on the 30th day of September. instant. Wabash Railroad Company will not be permitted to run any cars or locomotives upon or over the track of the Chicago & Erie Railroad. "Yours, truly. J. G. MCCULLOUGH, President. "CHIOAGO & ERIE RAILROAD CoMPANY. OFFICE OF THE GENERAL SUPERINTENDENT. "CHICAGO, ILLS., Sept. 30, 1890. "The Wabash Railroad Oompany: Notice having been given by the purchasers at Indianapolis. Indiana, August 12th, HmO, at the foreclosure sale of railroad and property of the Chicago & Atlantic Railway Company, of the abandonment and disclaimer of a certain contract or agreement entered into on the 1st day of June. 1887, by and between the Chicago & Atlantic Railway Company and O. D. Ashley and A. A. Talmage. managing agents for the purchasing committee of the Wabash, Louis & Pacific Hailway Company. and notice also having been given by the Chicago & Erie Railroad Company on the 1st day of September, 1890, of the abandonment and disclaimer of said contract between the Chicago & Atlantic Railway Company and O. D. Ashley and A. A. Talmage. aforesaid. the Chicago & Erie H.ailroad Company Company, by o'clock midni!{ht of now demand that the Wabash this date, discontinue the use of the track of the Chicago & Erie between V .44F .no. 9-42
658
J'EDERAL REPORTER,
vol. 44.' .. ,
Ohlcago ilttid "Laketon,or an:y'other p'Oints, and after I2t>'clOck to-night the Ohicago ;&Erie will not expect the Wabash Railroad Company under any circuinstance.iJoo send trains ,over the track aforesaid. . '" ' , -,'. "THE CnWAGO & ERIE RAILROAD COMPANY.
;which given by the Chicago, & Erie Company to tht! W$bai3hCompanyfor rentals for the month. of September, is; indorsed---:' c. Witllollt preJl:tdice to the rights of the, company under'the noticegiv'en to commissioner of the fr'anchiSes of thE" Chicago & Atlantic Rai/wayCoinparty, and under'the notice given by Otto i'GrestJam, 1st, U:l90, from J. G. McCullough, .. to the WabashOompa#. alld without in any wise qualifying or modifying the said notiges, Of the J:ig'hts claimed. there'under, this voucher issi,gpe<:land , . The decree of foreclosure contains the following clause: !"It ialfarther ordered that 1tfuepllrehaser or purchasers atsl\id sale. and his. its, or assignl:l, at any ,t4mebefore the deli very of the deed by the master aban<\onor disclaim any, of the said leajleholdt>stiitesor oroontraf)ts.or other agreements,' or 'pri propertr;by 'givfllg notice in wdting ofsllchalJandontrient 'oX" disqlahner to master commissioner. who slJallannex the same to. 'aild',ftle'the same With·. his final report." . ' . B. ri. Bristow;)]. Ottn Gresham, for,petitioners· .W. H. Blodgelt,. Henry Crawford, and O. B. W.' V. Stuart,for respondent. '! "
is
"ByA. M. TUCKER, Gen'l Sup't."
w.
W aite:r staU";'g, the-jaC(8.) The objection is made at the threshold that the petitioner cannot have the assistance of the court in the way asked' td p'ecause not the hut comes as the at master-c0Il;lnuss1oIler's sale. The authorities 'citedip support otthisqbje,etion,do not fully suppo!:'t it. In Vqfl. Hook. v·. Throckmorton,8 Paige, 33, the court says.: "There is no settled practice ,of this, COl11't entitling a snbsequent purchaser from a purchaser ata master's sale as a matter of right to the assistance of the court to obtain possession of the premises which his grantor had purchased under the decree." . , . And. in People ,'t. Grant, 45 Cal. 97, and St(mley v. Sullivan, 71 Wis. 585,37 N. W. Rep. 801, t,hequestion waf' one of statutory construction, and the no general application. But, whatever the general rule in that respect is, it is not controlling in the present case; be-by the order of September 1st, this court recognized, and, in effect, declareq, a ofthti Chicago & Erie Company in the of the a(the sale, in respect both to rights and to duties a.I}d liabilities" )rhat orger, w4ighwas:,rpade with the consent of parties, besidef:l,dir,ecting thu'eceiver to deliver possession" to the said Chicago & Erie Railroad Company, as the grantee and assignee of said,pur(}haStlrs atthecornmissioner'ssale had herein," contains this clauSe:
()(jDS/J.,(
FARMERS' LOAN &:,TRUST CO·. V.CHICAGO &: A. RY. CO.
659
"And the court now reserve&the right to resume. the .possess,ion of said railroad and other property in case the said Chicago & Erie Railroad Company Elball hereafter fail or refuse, upon the or4er of the court, to pay into this court any money allowances for costs, expenses of the trust, or for claims against said receiver; and fofthat purpose the court retains jUl'isdiction of the said railroad and other property." If this did not make the Chicago & Erie Company a party to the cause within the meaning of equity rule 9, which authorizes the issue of the of assistance for the use of a party, it certainly entitles it. to the benefit ohule 10, whereby it is declared that"Every pl.'rson not lJeing a party in any. cause, who has obtained an order, or in whose favor an order shall have been made, shall be enabled to enfurce obedience to such order by Ihe samepl'Ocess as if he were a party tO'the cause; and every person not being a party inanycallsfl, against whom Obedience to any order of the court may be enforced, shall be liable to the same prouessfor enforci ng obedience to such order as if he were a party to the cause." The petitioner is therefore entitled to the writ, if the facts justify the granting of it. The answer of the respondent has in it the proposition that, by reason of the eOlJduct of the'receiver "as agent and representative of the mortgagees and bondholders;" his receipt of rent from the pany,and other facts alleged, "a general tenancy was created between the mortj(agees and bondholders, of the one part, and the Wabash Railroad Company, of the other part." In. respect to this it is enou/rhto say that the receiver did not make, or attempt to make, anyarrangement which should extend beyond the term of the receivership. Without' the consent of the cOlnt, I suppose, he could not have done so. The fact is ,that, during the possession of the receiver, he complied with the terms of-the contract of June 1,1887, in 'so far as they were obligat6ry upon the Chicago & Atlantic Company, so that there was, by reason of tbereceivership, no breach of the contract in that hehalf; and if, instead of a saIl.', the suit had ended in the restoration of control to the Chicago & Atlantic Company, the relation between the two companies in respect to that contract would have been the same-the contract would have been.jiist as binding upon them-as ifthere had been no receivership; and so, in. the language of the answer, it remained true, until the receiver turned the property over to the petitioner that "the reC'eiver and the Wahash Company entered upon the joint use and occupation of the railroad; * * * the receiver holdil'lg under bis appointment, as af<;lresaid, and the Wabash :Railroad Company holding and occupying * * * under the aforesaid contract of lease." . That contract, whether it created a tenancy or an easement, having been made pending the suit, the rights of the Wabash Company under it were necessarilybeld subJect to the decree, as much as if that c6mpany had been a pa.rty to the at the argumentthat the was made beaction. ; 'the fore the. filing of of Bippus jl'l immaleria1,because 9f,theFarme,rs' Loan & Tr.ust CompltnysQughta fQreclpsure of both mortgages, and consequently there was when that contract was made. in raspectto ,both mortgages,. R'lispendlms as complete;I suppose f : as ifthtt