Amount brought forward.... Proportion of $47,803.33 to total tax ($251,134.26), 19.03%. Add penalty Add attorney fees.. 19% of $31,433.88 $47,803 33 $12,556 66 Interest from date of judgment, Feb. 5/93, to June 8/96, 3 years 4 mos. 3 days, at 7% per annum.... Less payments by company: Bill rendered and paid, 1st Inst. of reassessment Interest, Nov. 22/94, to June 8/96, 1 year 6 mos. 16 $53,785 20 12,580 36 $66,365 56 $14,902 86 1,611 16 Interest on tender of 2d Inst. of reassessment, Apr. 25/95, to June 8/96, 1 year 1 mo. 13 days, at 7%.. 1,167 80 17,681 82 $48,683 74 Payment should be made to the treasurer S. P. Co., San Francisco, Cal. If any item is questioned, or explanation is required, address General Auditor, San Francisco, Cal. The Mercantile Trust Company and the United States Trust Company each filed an answer to the petition of the receiver. By its answer, the former objected to the payment of any portion of the penalty or attorney's fees included in the bill in question, and the latter protested against the payment of any portion of the bill, on the ground that the tax in question became delinquent, and the penalty accrued, prior to the appointment of either of the receivers, and that, while the claim may be valid against the Atlantic & Pacific Railroad Company, it is invalid as against its mortgagees, and consequently not a proper charge against the receiver. Thereafter the Southern Pacific Railroad Company filed an intervening petition, asking the court to direct the payment of the bill rendered by it, to which the receiver and the United States Trust Company filed answers. matters at issue were thereupon referred to a special master to take the proofs of the respective parties, and report the same, together with his findings of fact and conclusions of law, to the court. The report of the master was filed December 11, 1896, and to the report the Southern Pacific Railroad Company filed exceptions January 4, 1897. Thereafter the report and the exceptions thereto came on regularly for hearing, at which time the receiver, by leave of the court, amended his petition by so changing the clause therein in relation to the acknowledgment and ratification by the receivers of the contract of August 20, 1884, as to make it read as follows: The And that the receivers have not disavowed said contract, neither have said receivers affirmed said contract in any manner whatever, unless their acts with reference thereto shall in law be deemed to amount to an affirmance thereof. The first and third findings of the special master are to the effect that the Southern Pacific Railroad Company leased the line of railroad extending from The Needles to Mojave, with its appurtenances, to the Atlantic & Pacific Railroad Company, which company entered into possession thereof under such lease, and continued in such possession until the appointment of the receivers. To these findings the Southern Pacific Railroad Company excepted, on the ground that they are contrary to the terms and legal effect of the written contract of August 20, 1884. The sixteenth finding is as follows: The value of the leased property, for the purposes of taxation for the year. 1887, considered separately from any franchises or rolling stock (and taking into consideration the fact, which I find to be true, that the cost of operating the leased property has for many years prior and subsequent to the appoint ment of the receivers herein exceeded its earnings), was $4,000 per mile, or a total of $969,480, which is 5.39% of the entire valuation of the franchises, roadway, roadbed, rails, and rolling stock of the Southern Pacific Railroad Company in California, as fixed by the state board of equalization for that year. To this finding, the Southern Pacific Railroad Company excepted, on the ground that all of the testimony upon which it is based was erroneously admitted, and was objected and excepted to by the intervener at the time, and upon the ground that the finding is unsupported by the evidence as given, and is not a finding of the value of the property for the purpose of taxation for the year 1887, considered separately from any franchises or rolling stock, and, further, is in entire disregard of the contract of August 20, 1884, The nineteenth finding is as follows: I find that 5.39% of $251,154.26, the amount of the original tax for 1887, without interest or penalties, amounts to the sum of $13,536.13. To this finding the intervener excepted, upon the ground that it is not within the issues presented by the pleadings. The twenty-second finding is as follows: I find that the action of the intervener, the Southern Pacific Railroad Company, in refusing to pay the said taxes levied and assessed for the fiscal year of 1887, ending June 30, 1888, and in defending the said suit of the state of California therefor, was wholly voluntary upon its part, and was in no manner induced or caused by any request, consent, or advice upon the part of the defendant the Atlantic and Pacific Railroad Company, represented by W. C. Hazeldine, its general attorney, or other attorney, officer, or agent having authority in the premises, or upon the part of the present or former receivers herein, or of any attorney or representative of such receivers. To this finding the intervener excepted, upon the ground that it is not only unsupported by, but is directly contrary to, the evidence in the case. The twenty-third finding is as follows: I find that, while the original receivers and the present receiver have continued to operate and use the leased line of road since their respective appoint ments, the contract of lease dated August 20th, 1884, has not been expressly or impliedly affirmed or adopted by them in such manner as to require the present receiver to pay the account of the intervener in question. To this finding the intervener excepted, on the ground that it is in conflict with the petition of the receiver, and with the answer filed thereto by the United States Trust Company of New York, and with the orders theretofore made by the court in the cause, and with the evidence in the case. Exceptions were also taken by the Southern Pacific Railroad Company to all of the conclusions of law reported by the special master, the first of which is to the effect that the evidence offered and introduced before him, showing the respective amounts of taxes levied and assessed for the years 1883, 1884, 1885, and 1886, and subsequently reassessed and paid by the intervener, was irrele vant and immaterial, and should, together with the findings of fact based thereon, be disregarded. The second is to the effect that, although the amounts shown by the bill rendered by the intervening petitioner to the receiver were not paid until June 6, 1896, yet inasmuch as such payments were made exclusively on account of taxes due for the fiscal year 1887, ending June 30, 1888, upon the assessment made by the state board of equalization for that year on all of the property of the Southern Pacific Railroad Company, including the Mojave Division, such payments do not, under the orders appointing the receivers, and under the facts shown by the evidence, and found, constitute such an equitable claim, charge, or lien, as against the United States Trust Company, upon the property, or the earnings thereof in the hands of the receiver, as to require or justify the payment of the account, or any part thereof, by the receiver. The third conclusion of law is to the effect that the evidence introduced by the respective parties before the master in reference to the justice and fairness of the total taxes levied for the year 1887 and other years, upon the property of the intervener, which was charged by that company against the Atlantic & Pacific Railroad Company under the contract of August 20, 1884, was irrelevant and immaterial, and should, together with the findings of fact thereon, be disregarded. The fourth and last conclusion of law is to the effect that an order should be made and entered directing the receiver not to pay any part of the bill rendered by the intervening petitioner, the Southern Pacific Railroad Company, and that its petition in that behalf be dismissed. The findings of the special master, to which no exceptions were taken show, among other things: That the receivers originally appointed in this suit took possession of the property described in the contract of August 20, 1884, and continued to operate it as a part of the Atlantic & Pacific Railroad until the appointment and qualification of the present receiver, who thereupon took possession of the property, and has ever since continued to operate it as a part of the Atlantic & Pacific Railroad. That the Southern Pacific Railroad Company returned its franchises, roadway, roadbed, rails, and rolling stock, situated in the state of California, and subject to taxation by the state board of equalization, at the following valuation, for the following years: (A) For the franchise, roadway, roadbed, and rails, for the year 1885 For the rolling stock. Total (B) For the year 1886, for the franchises, roadway, roadbed, and rails For the rolling stock. Total (C) For the year 1887, for the franchises, roadway, roadbed, and rails For the rolling stock.. Total $ 8,991,350 00 1,383,050 00 $10,374,400 00 $9,991,300 00 1,387,300 00 $11,378,600 00 $ 8,992,592 00 1,427,350 00 $10,419,942 00 That the state board of equalization of the state of California increased the valuation as returned by the Southern Pacific Railroad Company for the years 1885, 1886, and 1887, as follows: For the year 1885 the value of the franchises, roadway, roadbed, rails, and rolling stock was fixed by the state board of equalization at $17,000,000. For the year 1886 the value of the same property was fixed by the same board at $17,000,000. For the year 1887 the value of the same property was fixed by the same board at $16,500,000. That the valuations so fixed by the state board of equalization of the state of California were so fixed for each year, respectively, as an entirety; and that the state board of equalization did not attempt to assess separately the value of either the franchises, the roadbed, roadway, or rails, or of the rolling stock; and that the evidence fails to show upon what, if any, particular class of property returned by the Southern Pacific Railroad Company for taxation for these years the increase in valuation was made. That the Southern Pacific Railroad Company successfully resisted in the courts the collection of the taxes assessed against it for the years 1885 and 1886 by the state board of equalization of the state of California. That, in pursuance of legislation authorizing such action, the state board of equalization of the state of California reassessed the property of the Southern Pacific Railroad Company in California for the years 1885 and 1886, and attempted to reassess the same property for the year 1887. That, as a result of such reassessment, the valuation of the said property as fixed by the state board of equalization for the years 1885 and 1886 was reduced as follows: "For the year 1885, to $9,570,200; for the year 1886 to $9,570,200." That the Southern Pacific Railroad Company paid the taxes so reassessed for the years 1885 and 1886, and the former receivers of the Atlantic & Pacific Railroad Company, appointed by this court January 8, 1894, paid to the Southern Pacific Railroad Company such proportion of said taxes as was demanded by the Southern Pacific Railroad Company, and at the time here stated, that is to say: That, of the taxes of the Southern Pacific Railroad Company for the year 1885, the amount apportioned to the Atlantic & Pacific Railroad Company as the taxes of the Mojave Division, by the representatives of the Southern Pacific Railroad Company, on the basis of the original assessment, would have been $52,517; and that interest on that sum at 7 per cent. per annum to the date of actual payment would amount to $29,409, making a total amount of $81,296. That the apportionment for the year 1886 on the same basis would have been, for taxes $52,517, and for interest $29,409, making a total of $81,296, or a total for the two years of $162,592; while under the reassessment the total amount paid by the Atlantic & Pacific Railroad Company for the years 1885 and 1886 was $59,889.40. That at the time the taxes for the years 1885 and 1886 were originally assessed, and for many years thereafter the Atlantic & Pacific Railroad Company was a solvent and going concern, while at the time of the reassessment in the years 1893 and 1894 it was insolvent, and in the hands of the receivers. The findings also show that, of the amount of taxes, attorney's fees, interest, and penalties originally adjudged to be paid by the superior court of the city and county of San Francisco, there was a deduction of interest amounting to $89,654.91, and of counsel fees amounting to $6,278.31, upon a review of that judgment by the supreme court of California, which was affirmed by the supreme court of the United States; that the total value of the franchises, roadway, roadbed, rails, and rolling stock of the Southern Pacific Railroad Company in California for the year 1887, as fixed by the state board of equalization, was $16,500,000; that, of the taxes assessed against the Southern Pacific Railroad Company in California for the year 1887, the former receivers paid to the Southern Pacific Railroad Company, on the 11th day of January, 1895, the sum of $14,902.86, which sum was paid within a reasonable time after demand made therefor; and that no subsequent demand for payment of any portion of the remainder of the taxes of 1887, as claimed by the Southern Pacific Railroad Company, was ever made until the presentation of the bill here in question. The special master further found that on the 23d day of May, 1892, the Southern Pacific Railroad Company refunded to the At lantic & Pacific Railroad Company the sum of $25,924.39, upon a demand by the Atlantic & Pacific Railroad Company, and upon a |