Stratton v. European & North American Railway

This is a bill in equity, before the court upon exceptions. The presiding justice " ruled pro forma that upon the facts stated in the bill, it is not sustainable.” The answer is made a part of the case, but no proof has been put in, and there is no occasion for any, for in considering these exceptions, we must assume the facts stated in the bill as true.

The case shows a claim for damages done to the complainant’s land, over which the railroad was located, by fire communicated from the locomotive engine in use upon the road at the time. The road was in the possession of and operated by the defendants, Hamlin and Hayford, as trustees, under a mortgage given by the original corporation to secure bonds issued by' that company'. The trustees had commenced proceedings for a foreclosure which was completed October 3, 1880; and on the thirteenth of the same month they " conveyed the road with its appurtenances and all the rights of said trustees ” to the defendant company, a *274corporation organized by such of the bondholders for whose benefit the mortgage was given, as chose to come in.

It has been decided that neither of these parties are personally liable in an action at law for the damages claimed. Stratton v. E. & N. A. Ry. 74 Maine, 422. Are they or either of them liable in equity and to what extent ?

That equity is a proper, if not the only remedy, there can be no doubt. It is expressly given by the act of 1877, c. 197, which is an amendment of E. S., 1871, c. 77, § 5, p. 6, providing for equity jurisdiction " in cases arising out of the law, providing for the application of receipts and expenditures of railroads by trustees under mortgage.”

The foundation of the plaintiff’s claim rests upon E. S., 1871, c. 51, § 32, which is in these words : " When a building or other property is injured by fire communicated by a locomotive engine, the corporation using it is responsible for such injury,” This provision first enacted in 1842, c. 9, § 5, was with some change of language incorporated into the E. S., of 1857, and has been continued in the form in which we now find it, up to the present time. If we consider this act as a part of the charter under which the plaintiff’s land was originally taken, it gives him no vested rights as against these defendants. As it originally stood, the provision was that for an injury done, " by fire communicated by a locomotive engine of any railroad corporation, the said corporation shall be held responsible,” &c. This was the provision when the charter was granted and when the land was taken. This gave the claim against the corporation owning the railroad, and against that alone. In this case the injury occurred before the foreclosure was completed, and hence while the original corporation was the mortgagor and the owner against all, except the mortgagee. But before the injury the change was made, the party using the engine became liable, and that change is recognized as valid. If then, it may be changed in one respect, it may be in another. But this change has been more comprehensive than that already referred to. In 1857, c. 57, provisions were made by which the trustees might take possession under a mortgage, in which the covenants had been broken, and under *275■which the liability of the trustees was limited to the funds ins their hands, and personally to malfeasance and fraud, as now.. This was long previous to the injury complained of. Thus,, thpugh the law upon which this claim rests has not been repealed,, it has been materially changed, and by other sections modified’ from time to time without any questions raised as to the right of' the legislature to do so, although in many instances such change and modifications must have interfered with vested rights, if the original provision was so a part of the charter as to render this-liability to pay for such injury a part of the consideration for the land taken, or for the license for running over the land.

But in the strict sense this law was not a part of the charter,. or of any charter, but rather a public law affecting the public generally, and, therefore, within the control of the legislature. That it is within the power of the legislature to grant railroad charters with the right of eminent domain, making provisions-for the payment of damages for private property taken, must now be conceded; In this, as well as other charters, provision for such payment, independent of this act, providing for the payment of." injury from fires, had been made and payment received or waived by the land owner. This act was passed in consideration of the hazard arising from the use of the engine, not to the land owner particularly, or chiefly, but to the citizens generally, and without a consideration moving from any citizen, except that general, right of protection which all may claim from the sovereign power, which gives no vested right to any one, but rests in the-discretion of the legislature. What is conclusive upon this point is the fact that the law does not apply exclusively to the owner of land taken, but as well to every person who owns property liable to be burned, and within the reach of fire that may be-communicated by the engine, though not entitled to damages, on account of the location of the railroad. The legislature may then modify or even repeal the law if it sees fit.

But the law has not been repealed. It still stands, but the corporation to which it originally applied in its full force, and which would have been liable as the owner of the road, is not now liajfle, for at the time of the injury it was not in the use of *276"the engine. Nor was the defendant corporation in any legal .■sense, operating the road at the time of the injury, for it was mot then in being. The trustees were operating the road, and were so far within the terms of the statute. But in a subsequent ■section of the same chapter their duties and liabilities are fixed. 'The old corporation which would otherwise have been liable to ¡pay this-claim, had become insolvent, unable even to pay the ¡lien upon the road. It was, therefore, taken under the mortgage in accordance with these provisions of law, but as the road is of -comparatively small value, unless it can be continued in use, and as the mortgage covered the franchise, and as it is a matter of ‘public interest the. legislature saw fit to authorize the trustees, mot- only to take possession, but to run it in the interest of all -concerned. The trustees, though selected by the bondholders, were affirmed by the court, and may be deemed similar to assignees :in insolvency and the property in the keeping of the law. It was, therefore, not only competent but necessary for the legislature to provide for the duties and liabilities of the trustees, while :in possession of and operating the road. This it has done, and while all liens are preserved, as the road is operated very largely to preserve these liens and make them valuable, provision is made for the running and other expenses to be paid from funds which might otherwise belong to the mortgagees and be applied in the reduction of their debt. But this liability of the trustees is •expressly limited to funds or property in their hands, except for malfeasance or fraud; for that they would be personally liable, ¡as well as when they assume any liability by contract or otherwise. They are to " keep an accurate account of the receipts and expenditures of such road.” "They shall from the receipts, keep the road, buildings and equipments in repair, furnish such new rolling stock as is necessary, and the balance, after paying running expenses, shall be applied to the payment of any damages arising from misfeasance in the management of the road, and after that according to the rights of the parties under the mortgage.” The plaintiff’s claim is equally a lien upon the receipts, whether arising with or without misfeasance or carelessness even. If is, in fact, incidental to the running of tjie road, *277and may be considered a part of the running expenses, as the ordinary repairs of the road or equipments made necessary by wear or accident. If it had been paid by the trustees and charged in their account rendered the new company, it would have been allowed as a 'legal expenditure. Whether it is a lien upon the property of the road specifically covered by the mortgage, it is not necessary now to decide. If there is any of the money or property now in the hands of the trustees, upon which there is this equitable lien, they are liable to account for it under this pi’ocess.

The bill alleges that the trustees " duly accounted to said bondholders for all income and proceeds ” of the road, and that upon the organization of the bondholders into a new corporation, which is the defendant company, they conveyed to said corporation, "the said railroad and its appui’tenances, and all the rights of said trustees.”

In the answer the respondents say, "that in October, 1880, when they, said Hamlin and Hayford, as trustees, as aforesaid, did give possession of said railroad and make conveyance as aforesaid to said new corporation, they did pay, give and deliver all the property, moneys, accounts in their charge to said new corporation, and thereupon said trustees, were discharged.”

This would be a discharge of the trustees from their trust, but leave them liable still to account for their stewardship to whomsoever, by the terms of the trust, had a right to call upon them. But what is, perhaps, of more importance in this case, is, that if this is not a direct statement of the fact, it affords a very strong inference that the trustees have paid money or conveyed property, or done both, to the defendant corporation which in equity should have liquidated this plaintiff’s claim. If so, by a familiar and wide spreading principle of equity, the corporation is liable in this process to account for it to the extent to which it has been so received, whether it has been appropriated to reduce the bonded indebtedness, which under the circumstance so far as, relates to money received by the trustees as income from the road, is secondary to this claim, or to any purpose which has not a priority to it. This principle of equity is sustained and *278illustrated in Amory v. Lowell, 1 Allen, 504, and cases there cited.

But the difficulty in this case is, that the fundamental facts upon which the plaintiff’s claim must rest, are not alleged in the bill. The decree cannot go beyond the allegations and proof. The liability of the trustees rests upon the fact that when the injury complained of occurred, and a demand made upon them for the payment they had in their hands, or under their control, money or property, which under the principles herein laid down, should have been appropriated to' the payment of the damage. In the bill we find no such allegation. The only allegation in reference to this matter is the statement that the "trustees continued to operate said road and run the engines and trains . . . .over the lands of this complainant, until the thirteenth of October, 1880, they, said trustees, duly accounting to said bondholders for all income and proceeds thereof.” There is nothing in this statement tending to show any delinquency on the part of the trustees, but the inference would rather be that they have in all respects performed their duties.

The liability of the defendant corporation must depend upon its having received money or property from which the plaintiff is entitled to receive his pay. No such allegation appears. The ■only statement is that " upon such organization, the trustees conveyed the said railroad and its appurtenances, and all the rights of the said trustees to said corporation, thus newly formed.”

Hence, as the bill now is, the ruling of the presiding justice was correct, and the exceptions must be overruled, unless upon motion at nisi jorius the bill is amended.