Ketchum v. Pacific R.

Since the demurrer to- the petition of the county was determined. the adverse parties in interest have answered, a reply has been filed, and proofs taken. The facts, as reported by the master, have been accepted by both parties as correct, and upon the question whether, under the legislation applicable to this transaction and upon these facts, the county has an equitable lien or charge upon the property sold under the decree, or upon the earnings of the railroad which was thus sold (all rights of the county having been fully reserved in the decree), elaborate arguments were filed at a late day in the term, too late to allow opportunity for an extended examination or deliberate reflection. As our judgment will not be conclusive, and will not be accepted as such by the parties, it is, perhaps, of little consequence what that judgment may be. We rest it upon what seems to be the manifest and undoubted intrinsic equities arising out of the legislation and peculiar circumstances of the case, without a very close and thorough examination as to whether there are legal obstacles in the way of recognizing and giving effect to these equities.

Upon consideration of the demurrer, we held that the effect of the legislation of the state applicable to this transaction and the acts and contracts of the parties, was to give to the county a lien, statutable in its origin and equitable in its nature, upon the “earnings” of the railroad and upon the road and franchises of the company, as (so to phrase it) the mother of the earnings. We refer to our opinion at that time for a more full expression of our views. Aside from this, and on general principles, if the doctrine laid down by Lord Chancellor Thurlow in Legard v. Hodges. 3 Brown, Ch. 531, 538, “that where parties come to an agreement as to the produce of land, that the land itself will be affected by the agreement,” and equity will specifically enforce the *429agreement against tine party who makes it and all persons with notice — if this doctrine is sound to the extent stated and applied in that ease (see same case, 4 Brown, Ch. 421), the county is entitled to have the “earnings” arising from the property specifically applied as provided in the second section of the act of January 7, 18G5.

It would become a lien or charge upon the earnings and the road, out of which the earnings must necessarily come, effectual against the company and subsequent mortgagees and purchasers with notice. '2 Story, Bq. Jur. § 1231. Whether the county acquired such a lien, and, if so, whether it would take precedence of the rights of subsequent mortgagees, or be liable to be defeated by a sale under a decree foreclosing such mortgages, are close and difficult questions; and, as above remarked, our judgment is given in favor of the county at this time, that the final disposition of the question may not be delayed, and in accordance with what appears to us to be the equities of the case', without being able, in the pressure of other business, to examine the question, in the light of the facts presented in the report, with that care and-deliberation which we would be glad to do if it were practicable. Bet an order or decree be entered declaring that the county has a right to have the earnings appropriated to pay the interest on its bonds, as provided in the second section of the act of January 7, 1865, and that this charge attaches to the property sold under the decree of foreclosure. Decree accordingly.