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FARMERS' LOAN & TRUST CO. V. NEWMAN, 127 U. S. 649 (1888)

U.S. Supreme Court

Farmers' Loan & Trust Co. v. Newman, 127 U.S. 649 (1888)

Farmers' Loan and Trust Company v. Newman

No. 253

Argued April 25-26, 1888

Decided May 14, 1888

127 U.S. 649




The receiver in a suit for the foreclosure of a railroad mortgage, being directed by the court to settle and adjust outstanding claims prior to the mortgage debt and to purchase in outstanding adverse liens or titles, agreed with the holder of a debt, which constituted a paramount lien on a portion of the railroad, for the purchase of his lien and the payment of his debt out of any money coming into the receiver's hands from the part of the railroad covered by the lien, or from the sale of the receiver's certificates, or from the earnings of that portion of the road, or from the sale of it under the decree of the court, and this agreement was carried out on the part of the vendor. When it was made, a decree for a sale had already been made in the foreclosure suit, and afterwards the road was sold as an entirety, with nothing to show the price paid for the portion covered by the lien, and payment was made in mortgage bonds without any money passing. The vendor of the prior lien then intervened in the suit, asking the court to enforce his agreement with the receiver. Subsequently the court confirmed the sale, reserving to itself the power to make farther orders respecting claims, rights, or interests in or liens on the property. At a subsequent term of court, the

Page 127 U. S. 650

court found that there was justly due the intervenor the sum claimed, and ordered the sale set aside unless the claim should be paid within ninety days. Held that the intervenor was entitled to the protection of the court, but that the proper remedy was not the annulling of the sale, and confirmation, and master's deed, if the court had the power to do it, but an order for a resale of the entire property in satisfaction of the claim of the intervenor.

The case as stated by the court was as follows:

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