Van Frank v. St. Louis, Cape Girardeau & Ft. Smith Railway Co.

67 S.W. 688, 93 Mo. App. 412, 1902 Mo. App. LEXIS 386

Opinion

GOODE, J.

We are satisfied the referee and the judge of the circuit court were more likely to reach correct conclusions in regard to the facts of this controversy than we would be, 'were we to review the evidence and revise their findings. The abstracts of the record furnished by the parties are not clear as to what evidence was adduced on the trial in the court below, or as to how much of it is now before this court. Nany similar intervening demands were heard by the capable and painstaking referee who heard this one, and he must have become familiar with all the facts involved; as must also the learned circuit judge, who found no reason to set aside the referee’s conclusions, but approved them all, after carefully weighing the exceptions taken by all the parties to the litigation. We will, therefore, also accept them as accurate de ductions from the evidence adduced and will confine our attention to the legal propositions involved.

The intervener thus stated the kind of services for which he presented this demand and asked that it be accorded preference to the mortgage debts: “I did all that is usually required of a chief engineer of a railroad. That is, I laid out the lines for it, superintended construction, secured rights of way and attended to a great many other duties not really in the line of an engineer and not usually required of an engineer.” His principal services, it is plain, were rendered in surveying routes and superintending construction — the proper work of an engineer. Whatever duties of a different character he performed were not separated from his engineering work in the account so that their value or the time they consumed can be ascertained. The account simply contains charges of one hundred and twenty-five dollars for wages for each month of the eight years from 1885 to 1893 and various sums paid out by the intervener for expenses incurred and for labor and supplies required in making surveys. In fact, practically all the charges are for engineering work.

The intervener testified that the road could not have been built without the services of an engineer. In our judgment that kind of work is lienable within the meaning of our statutes, which provide that all persons who shall do any work or labor or furnish any material in constructing or improving the road, rolling-stock, station-houses, depots, bridges or culverts of any railroad company shall have a lien on the railroad property for such labor or material, provided the work was done or the material furnished pursuant to a contract with the railroad company, its agents, contractors or subcontractors, lessees, trustees, or a construction company engaged in building the road (R. S. 1899, sec. 4239; R. S. 1889, sec. 6741). That statute is of broader intention and scope than section '1006, Revised Statutes 1899, which was designed to protect such employees of corporations as are called laborers or "workmen in common parlance (William C. Miller v. Henry Boemler, Assignee, 91 Mo. App. 85) or even than section 1057, which is for the benefit of subcontractors, laborers, or other persons working under an original contractor for the construction or improvement of a railroad. It was in construing an act of similar import to section 1006, supra, that the Supreme Court of Pennsylvania ruled a civil engineer was not embraced by its provisions. Penn. & Delaware R. R. Co. v. Leuffer, 84 Penn. St. 168. The same is true of Tod v. Railroad, 3 C. C. A. 60. But our railroad law provides a lien for all persons who shall do any work or labor in constructing or improving the roadbed or other appurtenances of a railway, and we think that language includes a civil engineer who surveys and stakes out the line and then superintends the building of the road.

In the intervention cases in the present foreclosure litigation, which were heretofore determined by this court, the question touching the kinds of demands which may legitimately be accorded a preference over railway bonds in a proceeding to foreclose the mortgage security, was carefully considered, as the point had never before been decided by an appellate court of this State. In one of those cases it was adjudged that when the claim is one for which a lien is afforded by the statutes relating to liens in favor of contractors, materialmen and laborers, against railroads, that statutory remedy excludes the equitable one of allowing a preference in a foreclosure suit. Van Frank v. Ehret-Warren Mfg. Co., 89 Mo. App. 573.

Counsel for the intervener do not contest the proposition that their client’s demand was lienable so far as the wages owing to him and what he paid for labor and material are concerned, but ask us to reconsider our previous decision that a lienable demand may not be preferred by the order of a chancery court which appoints a receiver of the property at the instance of the bondholders, in a suit to enforce their security, if the statutory steps to obtain a lien have not been taken by the claimant. The principle of that decision is that a complete legal remedy is given to the claimant by the lien statutes, and as those statutes were in force in this State before the Federal courts first devised and enforced the equitable remedy decreeing certain classes of the floating debts of an insolvent railway company priority to the mortgage debts, this equitable remedy can not be invoked by claimants who might have availed themselves of the statutory lien. We distinctly recognized the familiar doctrine that an ancient remedy or jurisdiction of courts of equity is not abolished by the legislative creation of a legal remedy available in the same circumstances, unless the act expressly or by necessary implication, precludes the further exerci.se of the equitable] jurisdiction; but we treated the relief in question as an innovation in equity procedure, introduced by the Federal judiciary subsequent to the enactment of our lien laws and, hence, not to be enforced in cases where the claimant could have filed a lien but did not. Counsel for the intervener say the Supreme Court of the United States, in Fosdick v. Schall, 99 U. S. 235 (which case first announced the rule in question), did not exercise or declare any new principle of equity, but simply authorized a new application of old and well-settled principles of equity jurisprudence ; which is true, but nu argument against the soundness of our decision in Van Frank v. Ehret-Warren Manufacturing Company. The question is not, when did the principle on which the preference is allowed originate? but when did courts of equity first, assert jurisdiction of such interventions in railway foreclosure suits and assume the right to postpone mortgage liens on railway properties that certain classes of unsecured creditors might be paid? When, in other words, was this peculiar remedy adopted ? The underlying principles of equity jurisprudence are none other than those of morality and right conduct; they have existed always and were understood and expounded as early as the times of the Roman jurisconsults. It is hardly conceivable that a fresh equitable tenet could be enunciated; but remedial devices for enforcing and giving authority, in novel situations or under conditions of recent origin, to principles of acknowledged validity, occasionally need to be invented and used by the courts. But the creation of an equitable remedy for this purpose is not called for when there is already an adequate statutory one in force. Nor could an equitable one be tolerated in that contingency without disregarding the precept that cases are not cognizable in equity when there is a sufficient legal remedy, except in the few instances of concurrent jurisdiction.

The rule we are considering is thus stated by a learned commentator: “Whenever a court of equity, as a part of its inherent powers, had jurisdiction to interfere and grant relief in any particular ease or under any condition of facts and circumstances, such jurisdiction is not in general lost or abridged or affected because the courts of law may have subsequently acquired a jurisdiction to grant either the same or different relief in the same kind of cases and under the same facts or circumstances.” 1 Pomeroy’s Eq. Jur. (2 Ed.), sec. 276.

But the legal remedy available to the present intervener to collect the money the railroad company owed him for wages, was created years before any court had introduced the equitable relief he now invokes. The legal, instead of the equitable, procedure is the older and therefore precludes the exercise of the latter.

■ The novelty of the peculiar relief afforded in chancery to creditors at large of insolvent railroad companies, is shown by the circumstance that it has been so far confined, we believe, to railway foreclosure suits, and is enforced against those companies and their mortgagees on a ground specially applicable to railway companies, namely: that they are quasi-public corporations charged with the duty to the public to-keep their 'roads in operation, which can only be done, as bond holders and every one else are presumed to know, by purchasing labor and supplies. Farmers Loan & Trust Co. v. Grape Creek Coal Co., 13 C. A. A. 87; Miltenberger v. Railroad,. 106 U. S. 286. In the absence of lien statutes similar to ours, the courts of other States or the Federal courts, may find it necessary to prefer claims like the one in hand, but we are convinced such a holding in this State would violate the ancient and settled rule against chancery courts taking jurisdiction of causes adequately remediable at law. Hence, we shall adhere to our former decision of the question.

Nor was the intervener debarred from proceeding to perfect and enforce a lien in the statutory mode by the order of the court placing the railroad property in a receiver’s custody. Richardson v. Hickman, 32 Ark. 406; Snow v. Winslow, 54 Iowa 200; Smith on Receivers, sec. 276 (d). Courts of equity do not disregard plain statutes giving lienors a right to be paid before incumbrancers when they take charge of incumbered property at the latter’s instance. They follow the law and uphold all its provisions as to priority.

As the main ease in which this intervention was filed was a purely equitable proceeding and as the relief asked by the intervener was equitable, we think the adversary parties were not bound to plead the legal remedy in answer to his petition, to avail themselves of that doctrine. The question whether such a plea is required at all seems to have been set at rest by the Supreme Court in Humphreys v. Atlantic Milling Co., 98 Mo. 542, in which it was said: “Our conclusion is that under our practice act the plea of ‘remedy at law’ is unknown. It has no place under our system of pleading.” Be that as it may, the present intervener failed to make out a case entitling him to payment in preference to the bondholders. He neglected to take the necessary steps to make good his lien, and a chancellor is not justified in relieving him from the consequence of his neglect.

A comment on the character of the claim may be appro priate. It is an account extending over eight years for wages, expenses and advancements of money and, as originally asserted, included interest computed - at six per cent on each month’s installment of items to the time of filing, showing a total balance due the claimant of over five thousand dollars. Some items do not relate to his work at all, but are for his and another witness’s expense in attending court That the intervener was ordered or authorized to make the purchases or engage the labor for which he charged, was not- shown except by the testimony of the president of the company, who said he was satisfied with the reports Brooks rendered as engineer from time to time and saw nothing objectionable in the itemized account filed with the intervening petition, except a few items. Such an account of a railway employee, extending over years and including money paid out indiscriminately apparently on his own motion, is not a demand which ought to displace a prior lien on the property, created by a solemn contract, to secure creditors who advanced money to build the railroad on the faith of its securities. That these preferences are to be confined to debts possessing qualities which render them meritorious in justice and good conscience against earlier lienholders, was decided by the court where the rule originated; and undue extensions of the rule by subordinate tribunals were vigorously denounced as incompatible with contract rights. Kneeland v. American Loan & Trust Co., 136 U. S. 89. In fact, this doctrine whatever its actual effect may be, was not looked on when it sprang into being as infringing the sanctity of contracts or impairing their obligation; but as being entirely consistent with the general principles of the law of contracts, as in truth it is if judiciously applied. When bondholders buy railroad securities, they know very well that certain, classes of debts must be incurred on the faith of the road’s earnings to operate it,' and assent, in effect, to such debts being first paid out of the earnings. Eosdiek v. Sehall supra. In those cases where the corpus of the property was encroached on despite the fact that-no diversion of the earnings had occurred, the same principle was either logically or fallaciously followed on the theory that the debts preferred were necessarily incurred in preserving or improving the property for the benefit of both the mortgagees and the stockholders. Union Trust Co. v. Morrison, 125 U. S. 591; Jones v. Central Trust Co., 19 U. S. Cir. Court of App. 569.

While decisions can be found in the books extending this remedy to claims accruing more than a year prior to the appointment of a receiver, and other cases holding that the limit of time fixed by the order of appointment will not always bar older claims, the present account has no features which dispose us to disregard the limit fixed by the original order.

Only the claim-for wages for the month of October, 1.892, and the expenses of the intervener during that month.were ' found by the referee and adjudged by the circuit court to be properly owing to the intervener and also to fall within the prescribed time. His claim for wages should be disallowed because there was a good legal remedy for its collection. Eor his expenses during that month we will permit the decree to stand.

The judgment is, therefore reversed and the cause remanded with the direction to the circuit court to modify its decree awarding the intervener a preference for one hundred and twenty-five dollars for salary during said month of October, 1892.

Bland, P. J., and Barclay} J., concitr.

MODIFIED OPINION.

GOODE, J.

On motion of the defendants in this case, and to expedite the final settlement of the litigation growing out of the receivership referred to in the opinion, final judgment in this cause will be entered here instead of remanding it to the circuit court. Wherefore it is considered, adjudged and decreed that the intervener, James E. Brooks, have and recover from the St. Louis, Cape Girardeau & Et. Smith Railway Company, the sum of sixty-two dollars and twenty cents, with interest thereon at the rate of six per cent per annum from the sixth day of January, 1899, and that said sum be declared a preferential lien on the money realized by the sale of the railroad property, and it is further considered and adjudged that Jas. E. Brooks pay the costs of this appeal.

All concur.