State ex rel. Brown v. Beaton

190 Iowa 216
CourtSupreme Court of Iowa
DecidedJune 11, 1920
StatusPublished
Cited by14 cases

This text of 190 Iowa 216 (State ex rel. Brown v. Beaton) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Brown v. Beaton, 190 Iowa 216 (iowa 1920).

Opinion

Ladd, J.

1- discontinuance. — From the facts as above recited, it appears that the Crestón, Winterset & Des Moines Railway Company was organized in 1911, completed its line of railway from Crestón via Spaulding and Zion to Macksburg, a distanCe °f 2^2 mileS> earl7 in 1913- About July 1,1912, the company executed a mortgage thereon, to secure bonds in denominations of $500 each, to the amount of $200,000, to trustees; and, as no interest thereon or taxes were paid, proceedings to foreclose, and for the appointment of a receiver, were begun, June 15, 1914. A receiver was appointed, and later, on February 18, 1915, a decree was entered, as prayed, directing the receiver to sell without right of redemption said railroad, “together with all the right, title, estate, and interest of said railroad company of, in, and to all and singular the several pieces and parcels of land upon which is established the roadway of said railroad; the tracks, rails, bridges, yards, stations, grounds, buildings, fences, fixtures, the right of way and privileges and franchises appurtenant or thereto belonging; the rolling stock, including locomotives, tenders, passenger cars, baggage, express ears, mail cars, freight, stock, and dumping ears, flat cars, and all other cars of every kind and description which are now or may hereafter be owned by the railroad; all machine shops, car shops, blacksmith shops, and other shops situate upon or appurtenant to said railroad; all machinery, stationary engines and buildings, and all articles used in constructing, replacing, and repairing said railroad engines and in the operation thereof; together with all material in the machine shops, car shops, and other shops, together with all articles and implements; together with the equipment, working, operating, conducting, and repairing of said railroad now owned or hereafter to be acquired by said railroad company, all of which chattels are declared to be fixtures and appurtenances of said railroad, and are to be deemed and taken as part thereof, including its rights and franchises as a corporation, and all the [224]*224right, title, interest, and property whatsoever, as well in law as in equity, of said railroad company of, in, and to the same, and as in any and every part thereof, with the appurtenances thereunto belonging.”

The day of sale was fixed, as well as conditions thereof, and the right was reserved by the court to reject any sale, and by supplemental decree or order to require a readvertisement and resale, and jurisdiction was retained to enter any further orders or decrees. This decree also established priority of certain labor claims, and directed the proceeds of the sale to be applied (1) on costs, (2) on certain claims, and (3) on the mortgage indebtedness. The property was not sold at the time fixed, and, on October 24, 1918, the receiver applied to Judge J. H. Applegate, one of the judges of the district in which the railroad was located, in vacation, for an order directing the sale of the property pursuant to the decree, representing that the expense of operation of the railroad exceeded its income; that he was without means to pay for insurance under the Workmen’s Compensation Act; that the roadbed was in such run-down condition as to render it much more dangerous to operate trains over than ordinary railroads, and that a large outlay would be required to put it in good working condition, which the receiver did not have; that, owing to the high price of labor, coal, and other things required to continue to operate the road in its present condition by a receiver, operation thereof will result in further loss and debt; that there is at present, as this receiver believes, an opportunity to sell the said property; and that a sale of the property to persons able to handle the road will be for the best interest of all persons concerned. His honor fixed the date for hearing, directed five days’ notice to be given to attorneys! in the foreclosure proceedings and to claimants therein and to the board of railroad commissioners, by registered mail, which was done, and, on the day designated, made an order, in vacation, directing the receiver to sell the property described above on November 9, 1918; “that the sale be made with the right to the purchaser to operate said property or to discontinue such operation or to dismantle the said property, at his election. ’ ’

The clause quoted does not appear in the original decree, nor was it asked in the application of the receiver. The sale [225]*225was made at the date fixed; but whether this option was announced at the sale does not appear from the receiver’s report, and it does not appear whether it was incorporated in the deed executed by the receiver and approved by the judge. The sale was approved, and such approval indorsed on the deed, and that instrument delivered to Beaton and Ornstein, upon payment of $30,000, less taxes constituting a lien on the property. The purchasers did not operate the railroad,- but shortly afterwards sold all personal property connected with the railway, including rails and ties, to Harris and Greenberg, who proceeded to dismantle the road by removing the steel rails and shipping them away.

This recital, though somewhat extended, seems essential to a correct understanding of the questions raised, which we shall dispose of in cofivenient order.

2' amendment*m vacation. I. The validity of the decree of foreclosure is not assailed; though one of appellants’ attorneys contends that the sale made was invalid. Such an issue is not raised in the pleadings. The allegation of the petition is that “since the acquirement of said railroad by the defendants” . ^ave operated it, but have been and are proceeding to dismantle it, without pursuing the course required by Sections 2092 to 2098, inclusive, of the Code. To this, appellees respond by pleading the order of Judge Applegate, permitting purchasers at the sale “to operate, discontinue, or dismantle. ’ ’ The contention of appellants is that this feature was void; and it must be so regarded. The decree contained no such privilege. It merely ordered the sale of the property described; and the purchaser at the sale acquired the railroad property burdened with the same obligations with reference to its preservation and operation as bound the railroad company. As held in State v. Central Iowa R. Co., 71 Iowa 410:

“When the decree of foreclosure was entered, and the road sold, and the sale approved, and the property conveyed, the old company was, for all practicable purposes, wiped out of existence. With the sale of its road, right of way, depot buildings, side tracks, and all the appliances necessary to operate the road, the franchise, or right to operate the road, passed with the sale. [226]*226It is true, the purchaser took the road unincumbered by the debts of the old company. But the obligation to operate the road to Northwood was more than a debt. It inhered in the franchise, so to speak, and pertained to the right to operate the road. It did not pass by an assignment proper; it passed to the grantee as a burden or limitation upon the right to operate the road.”

3 rauboabs: ohaser°fuuder foreclosure. See, also, State v. Iowa Cent. R. Co., 83 Iowa 720. Sale under the provisions of the decree would transfer the railroad and property used in connection therewith, burdened with the obligation to operate the same as a common carrier; and a judge in vacation was without authority to modify a decree entered by court. Whitlock v. Wade, 117 Iowa 153; Marengo Sav. Bank v. Byington,

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190 Iowa 216, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-brown-v-beaton-iowa-1920.