Imagens das páginas
PDF
ePub

can be adopted than one which requires that this loss should be fully repaired; that the injured party should be made whole by having restored to him, as far as this may be done in money, what he has lost in the depreciation of his property by reason of the new burdens to which he has thus been subjected?

the law of the case: "(1) Abutters upon public streets in cities are entitled to damages sustained by them by reason of a diversion of the street from the use for which it was originally taken, and its appropriation to other and inconsistent uses; following Story v. Railroad Co., 90 N. Y. 122. (2) An elevated steam railroad in the streets of a city, as usually constructed, is a perversion of the use of the street from the purpose originally designed for it, and is a use which neither the city authorities nor the Legislature can legalize or sanction without providing for compensation for the injury inflicted upon the property of abutting owners; following same case. * * * (5) In an action by an

by an elevated railroad built in front of them, damages can be recovered on account of the gas, smoke, steam, dust, cinders, ashes and other unwholesome substances emitted from the locomotives."

The exceptions to the instructions given to the jury upon this subject were not well taken, aud the assignment of error thereon is disallowed.

It seems clear to us that this rule of recovery was within the legislative intent when it was provided that "every company which lays a track upon any such street, alley, road, or ground shall be responsible for injuries done thereby to private or public property lying upon or near to such ground," etc. This view is supported by Railroad Co. v. Ball, 5 Ohio St. 568; Hatch v. Railroad Co., 18 id. 92; Dodson v. Cin-abutter to recover for the injury to his premises caused cinnati, 34 id. 276; Powers v. Railway Co., 33 id. 429; Railroad Co, v. Cobb, 35 id. 94; Railroad Co. v. Williams, id. 168; Railroad Co. v. Mowatt, id. 284; Railway Co. v. Lawrence, 38 id. 41; Railway Co. v. Hambleton, 40 id. 496; Cohen v. Cleveland, 43 id. 190; Grafton v. Railway Co., 21 Fed. Rep. 309. The latter case is important from the fact that it is reported by an eminent jurist, Mr. Justice Matthews, who was construing the statute now before us. He says: "In an action by the owners of such abutting lots against the railroad company for damages, they are entitled to recover full compensation for the depreciation in value of their property caused thereby. * * *The statute must be taken to mean what it plainly says; and there being no sufficient reason to the contrary, must be so construed that the railroad company, in the case contemplated, shall be held responsible for all injuries of every description done by its work to the plaintiff." This construction of the statute also finds support in Adden v. Railroad, 55 N. H. 413, where it is said: "Whatever tends directly and substantially to diminish the value of the tract of land left to the owner should be weighed and considered in determining his damages. That imminent and appreciable danger from fire does so diminish the value of his property there can be no question. The location of the track, and all such matters as grow out of and are caused by the location, are proper matters for the jury to consider."

In Railroad Co. v. Combs, 10 Bush, 382; S. C., 19 Am. Rep. 73, the court say: "If his houses are damaged by having soot, smoke or fire from passing engines thrown or blown into or against them, he is entitled to recover for this also. The diminution of the value of the adjacent property occasioned by these circumstances will be the measure of his right of recovery."

In Railway Co. v. Heisel, 38 Mich. 62, the court say (Cooley, J.): "In such a case his injury is not confined to making use of the public easement, but he may recover for any injury the incumbrance causes;" and continues: "He may recover for annoyances to business or to family occupation which the operations of the railroad company may cause."

In Ham v. Railway, 61 Iowa, 716, it was held, after giving the rule to be the difference in value, that "in estimating such damages, the obstruction of the owner's view, interfering with his privacy, and the noises of operating trains, were proper to be considered."

In Railway Co. v. Eddins, 60 Tex. 656, the court say: "Injuries resulting from sparks of fire from engines, smoke, cinders, unusual noises from bells and steam whistles, and other annoyances of like character, are proper elements of damage.'

2. Did the trial court err in the admission of evidence upon the subject of the damages sustained? The following questions were permitted to be asked and answered: "State your damage by reason of the railroad being in Spruce street?" "How much less per year do you receive as rent for the store-room on these premises, described in your petition, than before the railroad was built along Spruce street?" What difference is there in the value of this property with the track there and with it somewhere else?"

It is too well settled in this State to admit of controversy that the rule of damages in such cases is the difference in the value of the property affected before and the value after the location of the railroad, and that this is to be determined by the jury in the light of the facts established by the evidence, and not upon the mere opinions of witnesses, except so far as opinions may be received upon questions of value. Railroad Co. v. Campbell, 4 Ohio St. 595, followed and approved in Railroad Co. v. Ball, 5 id. 573. In each of these cases witnesses were allowed to testify to their opinions concerning the amount of damage sustained, and in each case this was held to be error, and the judgment reversed. The jury is entitled to be informed by witnesses concerning the value of the land before, and the value of it after the location of the road. These are the primary facts which enable the jury to determine the extent of the injury. If it be contended that when a witness has stated what, in his opinion, is the difference in the value of the land before and after the location of the road, or how much less it is worth after than before, he has substantially stated the substantive fact to be ascertained, the obvious answer is that he is, by this form of inquiry, left to estimate in his own mind the amount of damages sustained, and give this to the jury as the difference in value. There is no assurance that he will, in making his estimate, take into account the actual value before and after the location of the road; indeed there is no assurance that he may have an intelligent opinion of the value of the land affected, either before or after such location.

In Powers v. Railway Co., 33 Ohio St. 437, it is said by Day, J,, in speaking for the court: "On the trial one of the land-owners was permitted to answer, against the objection of the company, the following question, viz.: 'How much less value will your land be in consequence of this appropriation?' Afterward These cases are in line with the manifest tendency substantially the same question was asked of another of modern adjudications.

[ocr errors]

In Lahr v. Railway Co., 104 N. Y. 268, the Court of Appeals of New York was recently called upon to consider some of the questions involved in the case at bar, and unanimously declare the following to be

witness on the part of the company, to which the land-owners objected, and the court sustained the objection, but in so doing, at the same time, ruled out the answer already given by the land-owner, to which he excepted. The ultimate ruling of the court in re

gard to the propriety of the question as asked on both sides would seem to be sustained by the holding in Railroad Co. v. Campbell, 4 Ohio St. 583, and Railroad Co. v. Ball, 5 id. 568."

Here is more than an intimation that these two forms of question--one relating to amount of damage, and the other to difference in value-are substantially equivalent. But the form of question we are considing related to the difference in the value of the property "with the track there and with it somewhere else." What other location of the track with reference to the property, and how such different location may have affected its value, was concealed in the mind of the witness, so that his answer may have been a mere opinion upon facts of which the jury was not permitted to have the benefit. It was permitting the witness to usurp the province of the jurors, and settle for them the ultimate fact which they were called upon to determine.

Concerning the question which involved the rents received, it is not easy to see how the jury could be aided in determining the value of this property by being informed how much less per year the plaintiff received as rent after the location than before. The actual value of the rent was not necessarily involved in this question. If this inquiry was permissible, it would place it in the power of the plaintiffs, by private compact with the lessees, to fix their own basis of damages. Special reasons may have existed for letting the property at an extremely low rate of rent, and other reasons may have induced an extremely high rate; and all this without necessary reference either to the actual value of the property or over the actual rental value. The question did not call for an estimate of the actual rental value of the property, but simply called for a disclosure of the terms of a particular letting, which may and may not have been made with reference to the fact which the jury was to determine. But even if the inquiry had covered the past and prospective rental value of the property, we are met by the declaration of this court in Railway v. Railway, 30 Ohio St. 624, that "it is the difference in the value of the land, and not the diminished annual rental, that is to determine the damage," citing Amsden v. Railway Co., 28 Iowa, 542. This case is cited and approved in Powers v. Railway, 33 Ohio St. 435, where it is said: "The difference in the value of the owner's property with the appropriation and that without it is the rule of compensation. This difference must be ascertained with reference to the value of the property in view of its present character, situation and surroundings. It cannot be enhanced by proving facts of a contingent and prospective character, such as the probable rents that may be derived from the property," etc.

In permitting the foregoing questions to be asked and answered, there was error, which calls upon us to reverse the judgments below.

3. The error assigned for the following charge of the court is not well taken: "And I say to you that the track was completed whenever the defendant, or its predecessors, put it in condition fit for permanent use in running trains of railroad cars over it, and with a view to permanently using and occupying the track for that purpose in connection with the main line; and the two years within which the action must be commenced, begins to run from that time." "If after the defendant, or its predecessors, had put the track in condition for permanent use, it deemed it neces sary or convenient to change, and did change the track, by moving and placing it on a part of the street less injurious to the plaintiffs' property, the jury would not be justified in saying, from the fact of the change alone, that it was not completed until after the change was made; but the fact of the change is a

[merged small][merged small][ocr errors][merged small][merged small][merged small]

Where articles of partnership expressly declare that the real estate purchased with partnership funds and held by the firm "shall be considered as part of the joint-stock and funds of the firm, and as possessing all the incidents and liabilities of partnership funds and personal property, and hereby fully impressed by the parties with such incidents and liabilities," and these articles are duly probated as part of the will of the deceased partner, the deed of the surviving partner, though not executed for the purpose of paying the debts of the partnership, conveys a perfect legal title as against the heirs of the deceased. TATUTORY real action in nature of ejectment. The opinion states the case.

STA

W. S. Cary, for appellants.

Troy, Tompkins & Loudon, contra.

CLOPTON, J. The land sued for was formerly the property of the firm of Lyman & Davis, purchased with partnership funds, and used for partnership purposes. The partnership having been dissolved by the death of Davis, Lyman, as surviving partner, sold and conveyed the land, in May, 1876, in part payment of a firm debt, to Malone & Foote, under and through whom the defendants claim to hold. The appellants, who bring the action, claim title as the heirs of Davis, and defendants concede their right to recover, unless the conveyance of the surviving partner passed the legal title to the grantees. The solution of the question depends on the construction of a clause contained in supplementary articles of copartnership entered into November 28, 1867, which is as follows: "That all the real estate whatever, belonging to the said firm of Lyman & Davis (the same having been purchased solely with partnership funds), shall be, and is hereby considered as part of the joint-stock and funds of said firm of Lyman & Davis, and as possessing all the incidents and liabilities of partnership funds and personal property, and is hereby by the parties fully impressed with such incidents and liabilities."

To a better and clearer understanding of the purport and intention of this clause, it should be stated that the partnership was originally formed in 1865, to carry on a mercantile business in Selma. The declared purposes of the supplementary articles are to provide for circumstances which had arisen and were not provided for by the previous agreement; for the extension of their joint business to manufacturing in Montevallo; and in the event of the death of one of the partners, for continuing the business for a limited period, and the final settlement of the affairs of the firm. By an instrument in writing, made by Davis, December 18, 1867, which he designates a codicil, it is declared that specified parts of the supplementary articles, being the provisions relating to the continuance and settlement of the partnership business after the death of one of the partners, including the clause above quoted, "shall be taken and considered as my last will and testament, as to all matters and things therein contained;" and both instruments were duly probated as his will, which is conclusive as to their testamentary character. Mattheurs v. McDade, 72 Ala. 377.

By the settled doctrine in this State, the real estate

of a partnership is in equity considered as personal, so far as may be necessary for the payment of the debts, or for an adjustment and equal settlement between the partners. Upon the dissolution of the partnership by the death of a member, the survivor is charged with the duty of paying the debts. To enable him to discharge this duty, he has the right to dispose of the real estate for this purpose. While his deed will not pass the legal title, it will convey an equity, through which the purchaser may compel the heir-atlaw of the deceased partner to perfect the purchase by a conveyance of the legal title which he holds in trust to pay the debts. Andrews v. Brown, 21 Ala. 437; Espy v. Comer, 76 Ala. 501. In the case last cited it is said: But this is purely an equitable doctrine, and the legal title, with all the characteristics of realty, attaches to it, until it is so applied to partnership wants." In the absence of an express provision in the contract of partnership, the real estate "only becomes personalty pro tanto." The intent of the understanding and direction, that the real estate shall be considered as possessing all the characteristics and liabilities of personal property, and impressing it with such incidents and liabilities, is declared by the introductory phrase immediately preceding, "for the purpose of facilitating and simplifying the settlement and winding up the said firm." The manifest design is to impress the real estate with the incidents of personal property, both at law and in equity, as between the parties to convert it into personalty; not an equitable conversion pro tanto, but a conversion in toto, for the purpose of closing and settling the partnership affairs; and to confer rights and powers on the surviving partner which are not incident to the relation, nor implied in the mere contract of partnership.

The parts of supplementary articles, having reference to the contingency of the death of one of the partners, make special provisions for the management and settlement of the business in Selma, and authorize the surviving partner to sell the real estate situated in that place, at such time and on such terms as he may consider best for the interest of all concerned, requiring the personal representative of the deceased partner to join in any deed necessary to convey a perfect title both at law and in equity. If he did not deem it advisable to sell the real estate in Selma, when he closed the mercantile business, he was authorized to lease it; but in no event should a sale be postponed beyond five years from the death of the deceased partner. The surviving partner is authorized to take the entire interest in certain designated lots in Montevallo at a fixed price, and the personal representative of the deceased partner is required to make a conveyance if he elected to take, but no provision is made for selling to others. The firm owning other real estate, which includes the land sued for, after making the foregoing specific provisions, which for some reasons were deemed specially material, the partners incorporated the general clause above quoted, relating to all the real estate. What is the legal effect of such stipulation in a contract of copartnership? Though at first there was opposition in England to recognizing realty as a part of partnership stock, in Thornton v. Dixon, 3 Brown Ch. 199, Lord Thurlow said, that if the agreement had been that the lands should be valued and sold, it would have converted it into personalty; but that the agreement in the case before him was not sufficient to vary the nature of the property. Here is a distinct recognition of the authority of the partners to effect a conversion by agreement. The courts being forced, by the necessities of trade, to hold that realty may become a part of the partnership stock, by a series of subsequent decisions, the doctrine was established;

and it is now the settled rule in England, that when real property is purchased with partnership funds for partnership purposes, the transaction, by force of the contract, in the absence of a special stipulation, makes it personalty, effecting a conversion out and out. Darby v. Darby, 3 Drew. 495. The doctrine is rested on the ground that by the contract of partnership all the firm property, real and personal, is to be sold on a dissolution. This goes further than the American rule, by which the real estate, not wanted for partnership purposes, to pay the debts, or to equalize the benefits and burdens between the partners, remains realty, subject to all incidents, as such, in the hands of those holding the legal title. Nevertheless the parties may, by express agreement, stamp it with the character and qualities of personal property. The supplementary articles, by the express and special stipulations of the deceased partner under which he became joint owner, impress the real estate with "all the incidents and liabilities of partnership funds and personal property," thereby placing it on the same legal footing and in the same legal position as the personalty. The specific performance of the stipulations of the contract, in respect to the settlement of the business and the disposition of the firm property after the death of one of the partners, would itself convert the real estate into personal assets. Wilcox v. Wilcox, 13 Allen, 352.

Such being its effect and operation, what are the rights and powers of the surviving partner, under such contract of copartnership? In determining these, we are not left to imply them from the supplementary articles alone, for in connection therewith, the codicil may be properly considered. The testator prefaces the dispositions of his individual property, as made by the codicil, with the declaration that by the supplementary articles he "did provide, give, and grant all necessary arrangements, directions and powers for the conduct and management, control and winding up and settlement" of all the firm matters. The partners exhibit entire confidence in the business capacity and integrity of each other; and the predominant purpose is to facilitate and simplify the settlement of the partnership affairs by the survivor, on whom the right and duty are devolved by both the will and the law. To consummate this controlling object, the parties agreed to impress the real estate with all the incidents and liabilities of partnership personal property, and directed that it should be considered a part of the joint stock and funds, and as possessing all such incidents and liabilities. The question arises, what are the incidents and liabilities which attach to the personalty, and not to the realty, belonging to a partnership? They may be regarded as legal in their nature and character, as distinguished from merely equitable. On dissolution by the death of a member, the survivor has the right and power to sell and pass the legal title to the personal property, though there may be no firm debts, and a sale is necessary only for the settlement of the partnership, and the distribution of the assets; but he has a right to sell the real estate only when required for the payment of debts, or for an adjustment and equalization of the partnership accounts, and then can convey only an equitable title. Both kinds of property are subject to the debts, but the primary liability rests on the personal assets, on the insufficiency of which depends the right of the survivor to dispose of the real property, and without the exhaustion of which a court of equity will not charge the realty in favor of a creditor.

The parties evidently contemplated and designed that in winding up and settling the firm matters, all the property, both real and personal, should

Un

be sold by the survivor, without reference to the necessity of its use to pay debts, or to adjust the accounts. The general conception is the conversion of the real into personal property, both possessing the same incidents and liabilities, so that the real and personal assets shall constitute a joint-stock, which or any part whereof the survivor had the right to dispose of in his discretion, and as he deemed most advisable for the interests of all parties, to remove impediments to speedy and advantageous sales, and to relieve the survivor of the difficulties and embarrassments which might prolong a full and complete settlement. less the clause under consideration makes the realty chargeable with the debts equally with the personalty, whether at law or equity, unless it gives the survivor the power to sell the real estate the same as the personal property, it is without meaning, and has no field of operation. No precise form of words is necessary to create a power; it will be implied when the intention is manifest to enable an execution of the trusts devolved. As the intent is apparent, that all the property of the partnership, real and personal, shall be sold for the purpose of settling its affairs, and that a division of the residue should be made by the survivor between the parties entitled, the power to sell necessarily follows. Winston v. Jones, 6 Ala. 550.

This conclusion is strengthened when the codicil and the supplementary contract are considered together in respect to the appointment of executors. By the contract it is stipulated that the surviving partner shall be nominated co-executor with any other person appointed by any codicil or will thereafter made. In pursuance thereof, the testator, by the codicil, nominated John T. Davis, his son, and the surviving partner executors, "with full and plenary powers to sell and convey real estate, and to do all acts needful to carry out the true intent and meaning of this codicil, and the last will and testament to which it is added as aforesaid." When it is observed that the power to settle the partnership is a personal trust vested in the surviving partner; that the personal representative, other than the survivor, is required only to unite in and make conveyance in specified instances; and that full and plenary powers are conferred eo nomine to sell and convey real estate, and to do all acts necessary to carry into effect the intent and meaning of the supplementary articles-the intention of the testator cannot be misunderstood nor mistaken. It is apparent that in respect to the sale of the firm property the power was not intended to be a joint power, from the fact that the son was a minor, and another person is appointed to act as executor until he attained his majority, upon whom no special power is conferred, and who is exempt from responsibility except for assets actually received by him. His active duties relate to the individual estate of the testator; and there is no provision for continuing the partnership business, except at the discretion of the survivor, whose principal and constant aim shall be as speedy settlement as may be consistent with the interests of all parties.

We hold that by the clause impressing the real estate with all the incidents and liabilities of partnership personal property, in connection with the other provisions of the will, considered as an entirety, the same power is conferred on the surviving partner to sell the real which he has by law to sell the personal property, and that his conveyance as such conveys the legal title, unless when otherwise specially provided. Affirmed.

[blocks in formation]

national bauk, and who had substantial control and management, bought fifty shares of defendant's outstanding stock, to pay for which he indorsed a note, signed by M., the cashier, placed it in the bank as discounted paper, and drew the money thereon. He afterward bought 148 shares, and to pay for them obtained from defendant an ordinary call-loan. On subsequently selling a portion of the stock, L. applied the price to pay the note and reduced the call-loan. He did not assume to act for defendant in buying the stock, and it was transferred to him individually, and was in his name on the books. L. had no actual authority to buy the stock for defendant; but the evidence tended to show that the purpose of the purchase was to get the stock into the hands of persons who would be useful to defendant. Rev. Stat. U. S., § 5201, prohibits a national bauk from purchasing or holding the shares of its stock, unless necessary to prevent a loss of a bona fide debt. In an action for fraud in a subsequent sale of such stock by L., held, that defendant could not be charged as owner of the stock. (2) In an action against a national bank, to recover for the fraud of its president in a sale of defendant's stock, on the question whether the president represented defendant to be the owner of the stock, plaintiff testified that in the conversation resulting in the sale, the president stated that "we can sell you some of our stock" at 160, and that that was "the price that the bank took it in at." Plaintiff did not inquire as to the ownership. The president testified, that while he might have stated that "we have some stock," his best recollection was that he did not say "the bank took it in." The president was the owner of the stock, and though he was shown to be guilty of unlawfully taking the funds of the bank, and to have committed a fraud on plaintiff, no motive appeared for his representing defendant to be the owner. Held, that the evidence sustained a finding of the trial court negativing the representations. Oct. 4, 1887. Prosser v. First Nat. Bank of Buffalo. Opinion by Earl, J.

RECEIVER ISSUE OF CERTIFICATES FOR LABOR POSTPONEMENT OF MORTGAGE LIEN EXPENSES OF

RECEIVERSHIP - REORGANIZATION.- (1) The Rockaway Beach Improvement Corporation executed a mortgage to a trustee to secure an issue of bonds, and in subsequent proceedings to which neither the bondholders nor trustee were parties, an order was made without notice to them, authorizing the receiver of the corporation, appointed in those proceedings, to borrow money to pay employees of the corporation, and issue certificates therefor, the lien of which upon the corporate property should be prior to that of the mortgage. No emergency requiring the use of extraordinary means for preserving the property was shown, but a referee in other and subsequent proceedings found that at the time of the order the workmen were riotous, and that much of the corporate property would probably have been destroyed or seriously injured but for the loans upon the certificates. Held, that neither the facts shown on the application for the order, nor the facts found by the referee, authorized the postponement of the mortgage lien. No doubt a serious emergency existed, growing out of the discontent and riotous disposition of the workmen. But the State primarily assumes the duty of the preservation of public order, and the repression and punishment of crime. It enacts laws, constitutes courts and commissions officers to this end. It especially makes provision intended to prevent riots, and it seeks to insure prompt action on the part of local officers and communities by imposing upon the latter pecuniary responsibility for injuries to property caused by riotous assemblages. In this case no attempt, so far as appears, was made by the receiver or by the company to secure the intervention of the public authori

We

ties to suppress the apprehended disturbance, or to arrest those who threatened to burn the property of the company. It clearly ought not to have been assumed that the ordinary agencies of the law were inadequate to the situation, or that the law, operating through its regularly appointed channels, was impotent to control the situation. It would be difficult to define, by a rule applicable in every case, what are expenses of preservation which may be incurred by a receiver by authority of the court. It was said by James, L. J., in In re Iron-Works Co., 3 Ch. Div. 427, that "the only costs for the preservation of the property would be such things as the repairing of the property, paying rates and taxes which would be necessary to prevent any forfeiture, or putting a person in to take care of the property." Wherever the true limit is, we think it does not include the expenditure authorized by the order of August 17, and that such an expenditure is and ought to be excluded from the definition. There must be something approaching a demonstrable necessity to justify such an infringement of the rights of the mortgagees as was attempted in this case. have not lost sight of the recent very important cases decided in the Supreme Court of the United States involving the question of the power which may be vested by the court in receivers of insolvent railroad corporations, and the right of the court to provide for the payment of certain debts, contracted before or after the appointment of a receiver, out of the income, and if that is inadequate, out of the corpus of the property. These cases and decisions are the outcome of the growth of railroad enterprises and business within a comparatively recent period. It has been held that under special circumstances the court may direct the payment of ante-receivership debts for labor or supplies contracted within a limited period before the insolvency, the adjustment and payment of traffic balances in favor of connecting roads, and may direct the receiver to operate the road pending the foreclosure, and to that end purchase necessary rolling stock for the use of the road, and make repairs and improvements thereon, the expense of which shall be a charge on the property in priority to legal liens. Wallace v. Loomis, 97 U. S. 146; Fosdick v. Schall, 99 id. 235; Barton v. Barbour, 104 id. 126; Miltenberger v. Railway Co., 106 id. 286; Trust Co. v. Souther, 107 id. 591; Burnham v. Bowen, 111 id. 776; Trust Co. v. Railway Co., supra. It cannot be successfully denied that the decisions in these cases vest in the courts a very broad and comprehensive jurisdiction over insolvent railroad corporations and their property. It will be found on examining these cases, that the jurisdiction asserted by the courts therein is largely based upon the public character of railroad corporations, the public interest in their continued and successful operation, the peculiar character and terms of railroad mortgages, and upon other special grounds not applicable to ordinary private corporations. It was said by Waite, C. J., in Fosdick v. Schall, that "railroad mortgages and the rights of railroad mortgagees are comparatively new in the history of judicial proceedings. They are peculiar in their character, and affect peculiar interests." And it is said in Barton v. Barbour: "The new and changed condition of things which is presented by the insolvency of such a corporation as a railroad company, has rendered necessary the exercise of large and modified forms of control of its property by the courts charged with the settlement of its affairs, and the disposition of its assets." These cases furnish, we think, no authority for upholding the order of August 17, or for subverting the priority of a lien, which according to the general rules of law, the bondholders acquired through the trust mortgage on the property of the company. It would be unwise, we think, to extend

the power of the court, in dealing with property in the hands of receivers, to the practical subversion or destruction of vested interests, as would be the case in this instance if the order of August 17, should be sustained. It is best for all that the integrity of contracts should be strictly guarded and maintained, and that a rigid, rather than a liberal construction of the power of the court to subject property in the hands of receivers to charges, to the prejudice of creditors, should be adopted. (2) A corporation to secure an issue of bonds, executed a mortgage to a trustee, who was one of its directors and stockholders. A receiver of the corporation, appointed in subsequent proceedings to which neither the trustee nor bondholders were parties, without notice to them, was authorized by an order of the court to borrow money, and issue certificates therefor, the lien of which should have priority over that of the mortgage, and after the issue of such certificates, the order was approved by the trustee, in common with others, acting in the capacity of a director and stockholder. Held, that neither such action of the trustee, nor his inaction estopped the bondholders, from obtaining a review of the order. (3) In a controversy between bondholders and holders of receiver's certificates of a corporation as to the disposition of the surplus moneys arising from the sale of the corporate property under a prior mortgage, expenses incurred in a scheme for the reorganization of the corporation, for which it is claimed a large portion of the bonds and other securities were pledged, may be adjudged, and any lien therefor enforced. Oct. 4, 1887. Rahtv. Attrill. Opinion by Andrews, J.

ABSTRACTS OF VARIOUS RECENT

DECISIONS.

ASSIGNMENT FOR BENEFIT OF CREDITORS — GIVING ASSIGNEE DISCRETION AS TO SALE VALIDITY.-A voluntary assignment for the benefit of creditors authorized the assignee to "sell and dispose" of the property conveyed "upon such terms and conditions as in his judgment may seem best, and most for the interest of the parties concerned, and convert the same into money." Held, that the discretion vested in the assignee must be understood as a legal discretion; that the terms used did not necessarily imply an authority to sell on credit; and that the assignment was therefore not void, as necessarily tending to hinder and delay the creditors in the collection of their debts. We are not inclined to follow the rule of construction adopted in Keep v. Sanderson, 2 Wis. 42; 12 id. 352, but to follow the rule laid down in Norton v. Kearney, 10 id. 443, and Bound v. Railway Co., 45 id. 543, in this court, and in Kellogg v. Slauson, 11 N. Y. 302, and Nye v. Van Husan, 6 Mich. 329, in the courts of New York and Michigan. It does not seem to us that under the present state of the law in this State in regard to voluntary assignments, a different rule of construction should be adopted in construing an assignment than is adopted in the construction of other contracts and grants of powers. We are disposed to adopt the rule as stated by this court in Norton v. Kearney, and which is clearly expressed in the opinion in that case in the following language: "It is contended that the words in my discretion' are as broad and comprehensive as the words upon such terms and conditions,' and necessarily imply an authority to sell upon credit. We are of the opinion that the discretion here vested must be understood as a legal discretion, that is, a discretion to be exercised within the limits which the law fixes in such cases. There is ample room for the exercise of this discretion, without transcending any rule of law. It must be held to apply to

« AnteriorContinuar »