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482

Vol. XX

Hamilton Common Pleas.

275

2 In an action to marshal liens where the holder of a judgment for "materials and

supplies” furnished in accordance with the provisions of that section, claims priority over mortgages existing before the supplies were furnished, the burden of proof is upon such claimant to show not only that he has obtained such judgment, but also that the cause of action upon which it was obtained

was such as to conie within the terms of sec. 3398. 3. Other holders of liens upon the railroad were not necessary or proper parties

to the original action in which the judgment was obtained, and the question of priority can properly be heard and determined in a subsequent action to marshal liens. Claims for supplies furnished under sec. 3398, may be assigned and judgment thereon taken by the assignee, who thereupon obtains the same right of priority as the original claimant would have obtained if the judgment had been taken by him.

PECK, J.

The only questions in the case arise upon the answer and cross-petition of the Baltimore & Ohio Railroad Company, which has been made a party defendant, and alleges, in substance, that it is the holder of an unsatisfied judgment for the sum of $1,220,307.62, rendered in this court against the Cincinnati, Washington & Baltimore Railroad Company, for materials and supplies furnished to the last named company since the date of its reorganization under the laws of Ohio in the year 1883. It is also alleged that although the materials and supplies were furnished since the date of plaintiff's mortgages, March 31, 1883, and the judg. ment therefor obtained in the year 1888, the judgment is, nevertheless, a lien upon the property of C., W. & B. Railroad Company prior to the lien of any of the mortgages, and the sale of the road and satisfaction of the judgment from the proceeds of the sale are prayed for. The plaintiff, in reply formally denies the allegations of the cross-petition.

At the hearing of the case evidence was offered by the Baltimore & Ohio Railroad Company, showing the rendition of the judgment by confession upon an account stated for materials and supplies furnished, and certain officers of the C., W. & B. Company were called as witnesses, who testified, in substance, that it was discovered soon after the reorganization that the income of that company was insufficient to pay fixed charges and running expenses, and thereupon an understanding was had with the officers of the B. & 0. Company, in pursuance of which the officers of the C., W. & B., one of whom was also an officer of the B. & O., from time to time purchased materials and supplies necessary for the operation of the road, the bills for which were paid with funds of the B. & 0. Company, remitted upon drafts for that purpose, and as each bill was paid, an assignment of the same was taken from the holder thereof to the B. & 0. Company. Blank fornis were provided for the purpose, and separate accounts of these transactions were kept by the officers of each company. The accounts were offered in evidence, and, upon comparison, found to agree, and to show that the supplies furnished were such as are ordinarily used in the operation of railroads, and it was further shown by testiniony that the supplies were received and used on the C. W. & B. road.

There is no room for dispute about the facts, and the only questions relate to the construction and effect of sec. 3398 of the Revised Statutes. The C., W. & B. Railroad Company having been reorganized under the chapter of the statutes of which that section is a part, and the mortgage having been executed as a part of the scheme of reorganization, the holders of bonds secured thereby are, necessarily, bound by the terms of the statute. When they elected to reorganize under these statutes,

Loan and Trust Co. v. Railroad Co. et al.

275

they must be presumed to have consented to the following provisions contained in them: Section 3398, “The lien of mortgages and deeds of trust authorized to be made by the preceding section shall be postponed to the lien of judgments recovered against the company for labor thereafter performed for it, or materials or supplies thereafter furnished to it, or for damages, losses or injuries thereafter suffered or sustained by the misconduct of its agents, or in any action founded on its contract or liability as a common carrier thereafter made or incurred.” It is urged that this section should be strictly construed so as to limit the effect upon existing liens as narrowiy as possible. The purpose of the statute is obviously to secure to the road, in any event, the supplies necessary to the ordinary conduct of its business, so that in case of insolvency its running may not be suspended for want of credit, and that the natural equity inherent in the claims of persons under such circumstances furnishing it with articles necessary to its existence shall be protected. The equity is much stronger in cases like the present, where the earnings of the road for and during the time when the supplies were being furnished, were applied to the payment of interest on the liens with which it conflicts. Fosdick v. Schall, 99 U. S., 235; Miltenberger v.

. Logansport R. Co., 106 id., 286; Union Trust Co. v. Souther, 107 id., 594; Burnham v. Bowen, 111 U. S., 776; Union Trust Co. v. Morrison, 125 U. S., 612; St Louis Ry. Co. v. Cleveland Ry. Co., 125 U. S., 673. If the running of cars upon the road should be interrupted for want of such supplies, not only would the public, for whose convenience railroads are built, be discommoded, but the earnings wherewith to pay interest upon the bonds would cease. In view of the objects sought to be accomplished by the statute, and the fact that mortgagees can only be subjected to its terms by their own consent, it does not appear to be a case for strict construction, but rather one where the language is to be fairly interpreted so as to effect the legislative intent. This appears to have

. been the spirit in which it was considered by the Supreme Court of the United States in Jeffrey v. Moran, 101 U. S., 285, 288.

It is urged that as the plaintiff was no party to the former action, it is not bound by that judgment, and that the effect of the judgment can pot now be enlarged by extrinsic evidence'as to the nature of the cause of action for which it was rendered. The first of the two propositions is indisputable. Plaintiff is undoubtedly entitled to a day in court upon the question of priority, and as it was not a party to the former action, it remains to be ascertained whether that question can be properly determined in this. Plaintiff was neither a necessary nor a proper party to the former case, which was an action upon an account stated. The section in question neither conferred the right of action, nor created the judgment lien, both of which existed without reference to it. The whole effect of the section is to give preference to the lien of such a judgment, when obtained, over the other classes of lieus therein mentioned. It is of no effect until after judgment rendered, and hence could hardly be held to effect any change in the procedure necessary to obtain judgment. Nor can we assume that it was intended that in every action ai law upon a claim for labor, materials or supplies, all such lien-holders as the plaintiff should be made parties. They are in no way interested in such actions, and if made parties could have offered no deseose other than that which could as well be made by the company without them. It is only when the lien of a judgment so obtained is brought into conNict with the liens held by them, that they have a right to be heard.

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When a priority over them is asserted they may dispute not only the validity of the judgment, but, also, the cause of action upon which it was based. The usual method of asserting and determining priorities is in an equitable action to marshal liens, and such is the object of the cross-petition herein. As the other lien-holders were not proper parties to the former action, and yet bave the right to be heard upon the question of priority, there would seem to be no other way in which the judgment creditor can asscut his claim to priority than in the subsequent proceedings where the other lien-holders are parties, and as their right to be heard extends to the foundation of his claiin, there is thus thrown upon him the burden of proving both the nature of his original cause of action and the fact that a judgment thereon was rendered in his favor. I can perceive no reason why the B. & 0. Railroad Company should not assert and prove its claim to priority in this action, nor how the other lienholders can ve deprived of any advantage by permitting that to be done. Coming as that company does with the burden of proving both the nature of the original cause of action, and the rendition of the judgment thereon, the plaintiff has a day in court under circumstances as favorable as it could have had at any previous time.

The fact that a judgment was rendered is not disputed. The accounts submitted show beyond question that materials and supplies were furnished by various persons to the C., W. & B. Company; that the bills for the same were paid by the B. & O. Company and the claims assigned by the holders thereof to the latter company. On these facts two propositions are urged hy counsel for plaintiff. First, that the priority given by the statute to this sort of liens is in the nature of a personal right, as has been sometimes held of mechanic's liens, and, therefore, is not assignable, so that the B. & 0. Company can not stand in the shoes of the persons who originally furnished the materials and supplies. As I read the statute, it is not personal, but the right to priority is made to depend upon the nature of the claim upon which the judgment is based. It is not the person who has furnished materials and supplies who has a lien, nor is priority conferred upon the person who obtains a judgment for materials or supplies furnished by him, but the lien of judgments for materials and supplies is declared prior to other liens. Clairs of this sort have always been assignable in this state, and judgments thereon procurable by the assignees. In view of this wel known practice it is to be presumed that if the legislature had intended that the right to priority should be limited to the person who furnisher! the materials and supplies, language adapted to the purpose would have been used instead of words which ignore the person of the judgment creditor, and fix upon the nature of the claim as a test of the right to priority. See Union Trust Company v. Walker, 107 U. S., 596, and; Putnam v. News Co., 6 Dec. Re., 1231.

The other claim advanced iu behalf of plaintiff is, that the transaction was not in reality a furnishing of materials and supplies, but was a loan of money by one company to the other. This claim is based upon the fact that the purchases were made, pursuant to a previous arrangement, with money furnished for that purpose by the B. & 0. Company. The effect of the previous arrangement would, in this aspect of the case, seem to be that the supplies were furnished by the B. & 0. Company, acting through one of its own officers, and the officers of the C., W. & B. Company, or perhaps through the latter company itself. The authority was to purchase a specified class of articles, the bills to te paid by the B.

275

Loan and Trust Co. v. Railroad Co. et al.

& 0. Company. There was no advancing of money for general purposes, and no authority to use the credit of the B. & 0. Company in any way, except to make the purchases of supplies. All this would indicate that the C., W. & B. Company was the agent of the B. & 0. Company for the inaking of the purchases, and the fact that the supplies were for the use of the agent does not alter the case. Whether we regard it as a furnishing of supplies directed by the B. & 0. Company, or by other parties of whom the B. & O. Company is assignee, the result is the same. And it seems quite clear that it was one or the other, and not a mere loan of money.

The lien of the judgment is prior to that of the mortgages and a decree may be entered accordingly.

Herbert B. Turner, Wheeler H. Peckham, Edward R. Bacon, for plaintiff.

Harmon Colston, Goldsmith & Hoadly, for B. &0. R. R. Co.

JUDGMENT IN DIVORCE CASES.

277

(Hamilton Common Pleas, April Term, 1889.)

TMULLANE ET AL. v. FOLGER ET AL. A decree in a divorce suit, allowing the wife alimony in gross and making the

same a charge upon the husband's lands, if not kept alive by issuing execırtions at proper times, becomes dormant like an ordinary judgment at law and

ceases to be a lien, MAXWELL, J.

This was a proceeding to partition lands. The commissioners reported that the lands could not be divided by metes and bounds, and thereupon an order of sale having issued, the lands were sold and the proceeds brought into court for distribution. One of the defendants is Virginia C. Webster, formerly Virginia C. Dennis. She was formerly married to Obed F. Dennis, but was divorced from him at the October term, 1874, of this court. The court, at the same time it granted the divorce, allowed her the sum of $1,000.00 as aliniony in gross and ordered that the same should be charged upon any lands or interest in lands that Obed F. Dennis might have, and that the lien should continue until the $1,000.00 was paid. No part of this sum has ever been paid, nor has anything been done to enforce the payment. Obed F. Dennis is dead, and his interest in the lands sold in th case will, it is said, be insufficient to pay his debts. Virginia C. Webster claims that the decree in lier favor for the $1,000.00 is still a valid and existing lien upon tlie interest of Obed F. Dennis in the lands sold, or the proceeds in court, while his other creditors claim that her decree has become dormant; that she has lost her lien, and must share pro rata with the other creditors.

The history of legislation on the subject of alimony as connected with divorce, in this state, is briefly as foilows:

The first act will be found in 1 Chase. 192, published July 15, 1795, to take effect October 1, 1795, and was adopted from the Massachusetts statute.

A contrary opinion is found ir: Web-ter i Dennis. 2 Circ. Dec.. 566.

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It reads—“the woman shall be allowed out of the man's personal estate such alimony as the court may think reasonable. The judges may use such kind of process to carry their judgment into effect as to theni shall seem expedient."

The second act will be found in 1 Chase, 493, passed Dec. 29, 1804. It reads –“the woman shall be allowed out of the man's real and personal estate such share as the court shall think reasonable.”

The third act will be found in 2 Chase 1210, passed January 11, 1822, and is in the same language as the second act.

The fourth act will be found in 2 Chase 1408, passed January 7, 1824. The only difference between this act and the second act is that the word “husband's" is substituted for "man's."

In 32 Ohio Laws, page 37, sec. 3, it is provided that divorce proceedings shail be as in chancery.

The next act will be found in 51 Ohio Laws, p. 379, sec. 7. It reads _"the wife shall be allowed such alimony out of her husband's real and personal property as the court shall think reasonable, which alimony may be allowed to her in real or personal property, or both, or by decreeing to her such sum of money, payable either in gross or in installments, as the court may deem just and equitable."

Section 5699, Rev. Stat., contains the same provisions as the act in 51 Ohio L.

A glance at the various acts will show that the legislature began with the idea of setting off to the wile, or dividing, the personal property of the husband; then they progressed to a setting off, or dividing, both personal and real property, and finally they gave the courts power in :0 many words, to decree or award, to the wife, a suin of money, payable either in gross or in installments. It would seem, however, from an examination of our Supreme Court Reports, that the court assumed the right to decree a sum of money to the wife before the legislature had reached that point.

The Supreme Court has also, in the case of Olin v. Hungerford, 10 Ohio, 268, held, that the court may make alimony a lien upon the rea! estate of the husband.

The syllabus of the case is, "a decree for alimony to be paid in installments does not operate as a lien upon the real estate of the defendant, unless made a charge thereon by the decree itself."

In the opinion, the court say, “that it is within the legitimate power of the court to make such a decree a charge upon real estate we have no doubt."

What the exact nature of that lien is, and how long it continues without any effort to enforce it, under the law as it is now, the Supreme Court has not decided, unless we may consider that certain expressions in various opinions are to have decisive weight.

In Mattox v. Mattox, 2 Ohio, 233, the court speak of a divorce proceeding as an equitable one. This case was decided in 1826, before the passage of the act providing that divorce proceedings should be as in chancery. Yet, in the case of Olin v. Hungerford, supra, the court say: “We consider liens of this description to be creatures of the statuie.” And again, it is a statutory proceeding throughout”; again, “prior to the amendatory act of March 1, 1834, there could be no more propriety in calling the proceedings in a divorce case, proceedings in chancery, than there would be in calling proceedings for the partition of real estate, under the statute regulating that subject, proceedings in chancery."

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