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LOUISVILLE, E. & ST.L. R. CO. V. WILSON, 138 U. S. 501 (1891)

U.S. Supreme Court

Louisville, E. & St.L. R. Co. v. Wilson, 138 U.S. 501 (1891)

Louisville, Evansville and St. Louis Railroad Company v. Wilson

No. 153

Argued January 21, 1891

Decided March 2, 1891

138 U.S. 501


Some months after the sale of a railroad under foreclosure, and its surrender by the receiver to the corporation organized to receive it, the sale being made with a provision that the purchaser should pay all debts adjudged to be superior in equity to the deeds of trust foreclosed, an order was made giving such priority to the appellee. Held that an appeal lay in favor of the purchaser.

The term "wages of employs," as used in an order directing the payment of certain classes of debts out of the proceeds of the sale of a railroad under foreclosure in preference to the secured liens, does not include the services of counsel employed for special purposes.

Services of an attorney in securing payment to the receiver of a railroad of rent due for property of the railroad company and the return of the property, are entitled to priority of payment over the secured liens on a sale of the road under foreclosure of a mortgage upon it.

The other claims of the appellee, not being rendered for the benefit of the security holders, are not entitled to such priority.

On the 30th day of December, 1884, Isaac T. Burr filed in the Circuit Court of the United States for the Southern District

Page 138 U. S. 502

of Illinois his bill of complaint against the Louisville, Evansville and St. Louis Railway Company, the Mercantile Trust Company of New York, trustee, Noble C. Butler, trustee, and Robert A. Watts, trustee. The bill set forth the fact that the complainant was a judgment creditor of the railway company, and the others, trustees in deeds of trust given by the company. Subsequently, a cross-bill was filed by two of the trustees. The original bill prayed the appointment of a receiver, and on the 3d day of January, 1885, George F. Evans was appointed receiver and took possession of the railway property. In the order of appointment was this provision:

"It is further ordered, adjudged and decreed that the said receiver, out of the income that shall come into his hands from the operation of the said railway or otherwise, do proceed to pay all just claims and accounts for labor, material, supplies, salaries of officers and wages of employees that may have been earned or furnished within six months prior to January 1, 1885, and all taxes."

The outcome of the litigation was the sale of the road under a decree of foreclosure of the deeds of trust. This decree was entered April 23, 1886. A similar decree of sale was entered in the Circuit Court of the United States for the District of Indiana, in which court also foreclosure proceedings were had, the road extending through both districts. On the 9th of June, 1886, the property was sold in obedience to these decrees. On the 22d of July, 1886, this sale was confirmed. On the 8th of October, 1886, an order was entered in the Circuit Court in the Indiana District directing the receiver to surrender the possession of the property sold to the Louisville, Evansville and St. Louis Railroad Company, a corporation organized by the parties interested in the purchase, and to which the purchasers had conveyed all their rights under their purchase. This order was not entered in the Illinois Circuit Court at that time, but nevertheless, on the 11th of October, 1886, the receiver surrendered the entire property to the new corporation. In the order directing this surrender were provisions for the payment by the new corporation of all claims which might be adjudged superior in equity to the deeds of trust foreclosed, with the

Page 138 U. S. 503

right to retake possession of the property if payment was not made and with the further right to the new corporation to appeal from any adjudication of such claims. Appellee intervened in the Illinois circuit court, and on the 10th day of August, 1887, an order was entered adjudging that he be allowed $7,650. This order also provided:

"And the court does further order, adjudge, and decree that the receiver, George F. Evans, forthwith pay the same to the said petitioner, together with the costs of the proceedings, out of any money in his hands arising from the operation of the said railway as such receiver, and, if that is insufficient, then that the same be paid, prior to the bonded debt, out of the proceeds of the sale of the mortgaged premises."

On the 29th of August, 1887, the order entered in the Indiana circuit court on October 8, 1886, was, by the direction of the circuit judge, entered in the Illinois circuit court as of the date of October 8, 1886, and on the same day an order was entered reciting the appearance of the receiver; that he showed to the court that he had surrendered possession on the 11th of October, 1886; and, in addition, providing,

"in consideration thereof and of the decree herein entered on August 10, 1887, it is ordered, adjudged, and decreed that the sum of seven thousand six hundred and fifth dollars, allowed the intervenor, Bluford Wilson, together with the costs incurred on his intervention, is a lien and charge upon the earnings of the said property while in the hands of the receiver, and upon the proceeds of sale of the mortgaged premises, prior and superior to the deeds of trust of June 1, 1881, and March 1, 1882, and it is thereupon adjudged, ordered, and decreed that the Louisville, Evansville and St. Louis Railroad Company shall, within twenty days from this date, pay to the said intervenor or into court for him the said sum of seven thousand six hundred and fifty dollars ($7,650), with interest from this day, and the costs of the said intervenor upon this intervention."

The order also gave an appeal to the new corporation, and granted a supersedeas on the filing of a bond in the penalty of ten thousand dollars. This bond was filed and the appeal perfected. The appeal was taken from the order of August 29.

Page 138 U. S. 504

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