Howe, Receiver v. St. Clair

GABBETT, Chief Justice. This action was brought by the appellee originally against M. G. Howe alone, as the receiver of the Houston East and West Texas Bailway Company, to recover damages for the death of appellee’s son, which was caused by injuries received by him while in the employ of said receiver in the operation of the line of railway belonging to said company, and to have an alleged statutory lien adjudged against the property in the hands of the receiver. The original petition was filed December 15, 1892. By a supplemental petition filed October 3, 1893, plaintiff averred, that since the filing of her original petition the said railroad “has been sold and bought in by E. S. Jameson, who is now the president of the properties of said Houston East and West Texas Bailway Company, which company is, or claims to be, the owner and in possession of the said property of the Houston East and West Texas Bailway Company as operated by the said M. C. Howe as receiver as aforesaid;” and prayed, “that said Houston East and West Texas Bail way Company as operated by the said E. S. Jameson” be cited to answer and show cause why judgment should not be rendered against said company *104 foreclosing the statutory lien on said property to satisfy such judgment as plaintiff might obtain against the said M. G. Howe as receiver as aforesaid. M. G. Howe pleaded in abatement of the cause of action as against him, that “by an order made on the 7th day of March, 1893, by the District Court of Harris County, Texas, in a cause pending in said court, entitled The Houston East and West Texas Railway Company et al. v. Jacob Binz et al., numbered 11,730 on the docket of said court, being the cause wherein he, the said Howe, was appointed and was theretofore acting as such receiver, he, the said Howe, was removed as such receiver, and has not since the said 7th day of March, 1893, been such receiver or acted in any way as such;” and prayed that he be discharged with his costs. The Houston East and West Texas Railway Company answered the original and supplemental petitions by a general demurrer, general denial, and a plea of contributory negligence on the part of the deceased. Upon trial, the demurrer of the defendant railway company having been overruled by the court, the jury returned a verdict against the defendant M. G. Howe, as receiver of the Houston East and West Texas Railway, in favor of the plaintiff for the sum of $2500; and thereupon the court rendered judgment in favor of the plaintiff for said amount against M. G. Howe, as receiver, etc., and adjudged the same to be a preference lien upon all property of the said Houston East and West Texas Railway Company, to wit, “the railroad bed leading from the city of Houston, Harris County, Texas, to the town of Logansport, in De Soto Parish, State of Louisiana, a distance of about 190 miles, together with the railroad iron and steel thereon,” which property was adjudged to have been in the possession of said receiver at the time the plaintiff’s cause of action arose. The original petition presents a good cause of action against M. G. Howe as receiver. • It sets out the manner in which the deceased was killed, and averred that the accident was caused by a pile of slabs which the defendant had negligently allowed to obstruct the side of the switch. The deceased was in the discharge of his duty as brakeman of the work train, and, under the circumstances alleged, his attempt to pass the slabs ought not to defeat the right of plaintiff to recover. If the receiver was negligent in permitting the side of the track to be obstructed by the slabs, and the accident was caused by reason thereof, without fault on the part of deceased, the right of plaintiff to recover would not be defeated by acts of negligence on the part of fellow servants of the deceased contributing to the injury. In this connection we will state also, that we think it doubtful if the order of the District Court of Harris County in the receivership is sufficient to support appellant Howe’s plea in abatement. The order is, “that M. G. Howe, Esq., receiver, be and is hereby removed as such receiver, and that upon his successor qualifying as such, that *105 said M. G. Howe deliver to such successor all the rights, property appurtenances, effects, money, records, hooks, claims, credits, and papers of the corporation, the Houston Bast and West Texas Railway Company, in his charge.” He was further ordered to filé within ten days a statement of all property on hand at the time of such successor qualifying, etc. ■ There is no evidence to show that his successor was ever appointed or qualified, or that the property ever went out of the hands of said M. G. Howe. If, however, the appellant Howe had been in fact removed and a successor appointed to whom the property was delivered, the action would abate as to him upon proper pleading and proof. And if no successor was appointed, but the receivership was closed and the receiver discharged, the action would still abate, unless the receiver should be retained in the suit to foreclose a lien upon the property as provided by the amendment of 1889 of the Act of the Legislature providing for the appointment of receivers, etc. Gen. Laws 1889, p. 55; Fordyce and Swanson, Receivers, v. DuBose, 87 Texas, 78. But the question arises whether or not the original and supplemental petitions show a cause of action that would entitle the plaintiff to have a lien adjudged and foreclosed upon the property .of the Houston Bast and West Texas Railway. From these pleadings, to which the demurrer of the defendant company was addressed, it appears that the property at the time of the injury and when the suit was brought .was in the hands of M. G. Howe as receiver; that after the cause of action in this case arose, the property was sold and bought in by E. S. Jemison, the president of the Houston Bast and West Texas Railway Company, which is or claims to be the owner thereof. Plaintiff does not seek to hold the defendant personally liable, but only to establish and foreclose a lien on its property. There are two reasons why she could not do this. The company in the first place is not liable for the negli-. gence of the receiver in operating its road under the direction of the court. Ryan v. Hays, 62 Texas, 42; Hicks v. Railway, 62 Texas, 38. Again, clearly in absence of a statute, the property at the sale would pass to the purchaser, E. S. Jemison, and the defendant company, freed from claims against the receiver. Hicks v. Railway, supra. The reacquisition of the property by the defendant by purchase at foreclosure sale would not render the company liable for any claims against the receiver, except such as might be imposed by the terms of the sale. In a number of cases, the Texas & Pacific Railway Company has been held liable for claims against its receiver arising during the operation of its railroad by him; but the recovery in these cases was based upon the ground that the property was delivered back without sale, and the earnings of the road during the receivership, which were primarily liable for the expenses thereof, were expended in the betterment of the property. But in no case that we are aware of has it been finally held that a claim against the receiver follows and attaches to the property *106 in the hands of the purchaser at a sale thereof made in the receivership as a lien thereon. Evidently plaintiff relies in support of her lien upon the statute of 1889 above referred to. An analysis of the provisions of that act fails to disclose any intent to change the well fixed principle, that the purchaser at a sale of the property administered by a court in a receivership takes • the property discharged of all claims arising during the receivership. If such a lien is given, it must be found in the amended section 6. This section first classifies all claims, and declares that they “shall have a preference lien on all of the moneys coming into the hands of the receiver which are the earnings of the property in his hands,” etc. It afterwards declares, that (1) “all judgments against a receiver for cause of action arising during the receivership shall be a preference lien upon all the property in his hands as such receiver superior to the mortgage lien; and if a receiver is discharged pending suits against him for causes of action growing out of and arising during the receivership, the cause of action shall not abate,- bnt may be prosecuted to final judgment against the receiver, and the plaintiif in the action may, if he sees proper, make the party or corporation to whom the receiver has delivered the property that was in his hands as receiver a party to the suit, and if judgment is finally rendered in favor of the plaintiff against the receiver, the court shall also enter the judgment in favor of the plaintiff against the party to whom the property was delivered by the receiver.” Also, (2) “All judgments rendered against a receiver for causes of action arising during the receivership shall be a lien upon all of the property in the hands of the receiver superior to the mortgage lien; and if the property should be turned back into the possession of the party or corporation who were owning the same at the time of the appointment of a receiver, or any one else for them, or as their assigns or purchasers, the party or corporation so receiving said property from said receiver shall take said property charged with all of the unpaid liabilities of the receiver occurring during the receivership, to the value of the property delivered by the receiver,” etc. Again, (3) “All judgments rendered against a receiver 'on causes of action arising during the receivership shall be a lien on all of the property in the hands of said receiver superior to the mortgage lien. All parties and corporations whose property has been placed in the hands of a receiver by order of court, and which was not sold by the receiver, and which property has been redelivered back to the original parties or corporations without any sale of said property, shall be liable and held to pay all of the unpaid liabilities of the receiver in causes of action arising,” etc.; and authorizes judgment and foreclosure of liens against such party or corporation. And again, (4) “If at the date of the discharge of the receiver there are any judgments or claims remaining not sued on against the receiver arising during the receivership, and which judgments and claims not sued on are unpaid at the date of the discharge of said *107 receiver, said unpaid judgments and unpaid claims not sued on shall be a preference lien on all the property that was in the hands of the receiver superior to the mortgage lien, and the person or corporation to whom the receiver has delivered the property that was in his hands as receiver shall be liable for all unpaid judgments and unpaid claims not sued on to the value of the property that was delivered by the receiver to said person or corporation.” Delivered September 13, 1894. It will be observed, that in the four several provisions of the act creating the lien on the property delivered by the receiver to the party or corporation receiving the same, the remedy against the party or corporation obtains only for such unpaid liabilities as there may be at the date of the discharge of the receiver. It does not appear from the petition in this case that the receiver has been discharged. From aught that appears, even from the evidence, the receivership may still be open and either Howe or his successor still acting, and if not in charge of the railroad, still have proceeds of the sale and earnings in his hands with which to pay any judgment plaintiff may obtain. But the law does not declare that the claims specified shall continue to be a lien upon the property after it has been sold by direction of the court in the hands of the purchaser at such sale; and in order to change a rule of law so well settled that the purchaser would take the property freed from claims against the receiver, the act should do so in express terms, and not by doubtful construction. We are of the opinion, that it is the purpose of the act to make the expenses of the receivership a lien upon the corpus of the property, and to hold the owner or his assigns where it has been redelivered without sale liable for such claims without proof of betterments, and plaintiff in a proper ease would be entitled to personal judgment, as well as the establishment of a lien. We do not assent to the construction of appellants, that the lien is given by the statute only upon the earnings. The demurrer to the petition should have been sustained, because the plaintiff showed no cause of action against the Houston East and West Texas Eailway Company. No facts were alleged that would make the company liable or charge the property in its hands with a lien; nor does it appear from the petition that the receiver has been discharged. We shall not pass upon the numerous assignments of error based on the charge of the court, because the errors, if any, may not arise at another trial. The evidence of the witness Henning was properly excluded. For the reasons indicated, the judgment of the court below will be reversed and the cause remanded. Reversed and remanded.