Lane v. Macon & Atlantic Railway Co.

Lumpkin, Justice. This case arose out of litigation upon an intervention filed by the receiver of the United States Rolling-Stock Company, in the case of McTighe & Co. against several corporations and W. B. Sparks, who had been appointed — 644 — receiver of the same. The reporter’s statement sets forth such of the facts as will, in connection with the head-notes and this opinion, be sufficient for an understanding of the rulings made. 1. The first matter for consideration relates to a question of practice. Section 4208 of the code provides that the report of a master shall be subject to exceptions for such time as the court may allow. These exceptions, however, are not pleadings in the sense that they may be amended or added to as matter of right at any stage of the case. Suttles et al. v. Smith, adm’r, 75 Ga. 830. It may, nevertheless, be considered as very well settled, that even after the time for filing exceptions fixed by an order of the court has expired, it is still within the discretion of the judge to allow the filing of other and further exceptions. Bazemore v. Davis, 69 Ga. 745. This discretion, however, must be exercised upon proper cause shown, and the judge may not arbitrarily allow new and distinct exceptions to be filed after the expiration of the time originally limited. Arthur v. Gordon Co., 67 Ga. 220; Suttles et al. v. Smith, adm’r, supra. The amendment to an exception to the auditor’s l’eport dealt with in Poullain et al. v. Poullain, 76 Ga. 422, was not a new and distinct exception, but merely supplied defects in one already filed. In view of the foregoing decisions, we think the court erred in allowing the new exceptions filed in this case after the time fixed for filing exceptions by an order previously passed had expired. No reason for an extension of time was stated, nor any excuse given for failing to file the new exceptions at the proper time; and it is quite clear that the court, in allowing them to be filed after this time had expired, did not attempt any exercise of disci’etion. The error thus committed operated injuriously against the opposite party, for several reasons, not the least of which was that it resulted in a re-refer — 645 — ence to the master, and caused serious delay in the progress of the case. 2. As will have been seen from the official repoi’t above referred to, the rolling-stock company, whose receiver filed the intervention with which we are now dealing, delivered the cars the rental of which is in controversy to the Macon Construction Company, which delivered them to the Macon and Savannah Construction Company in part payment of a subscription to the capital stock of the latter company, and as a portion of the equipment to be by it furnished to the Macon & Atlantic Railway Company. Sparks subsequently took possession of these cars, as the receiver of the company last named. This explains how his possession as such receiver originated. The other facts pertinent in this immediate connection are sufficiently summarized in the second head-note. It must be understood that in speaking hereinafter of the owner of the cai’s, we refer to the receiver of the rolling-stock company, he standing in the place of such owner and representing its interests. It is quite certain that such owner was entitled to some rent for the use of these cars. We cannot see upon what principle this rent was to be estimated upon the basis of what was actually received for their use or hire by the receiver of the railway company. There was certainly no contract to this effect, and in the absence of one, the case, in view of all the facts disclosed by the record, falls within the rule that where one uses the property of another under circumstances entitling the owner to payment for its hire, the amount to be paid, unless controlled by contract, should be arrived at upon the basis of the actual value of the property for the use for which it was intended. We shall, before concluding, attempt, briefly, to show that the original lease contract under which the cars were delivered is not applicable in fixing the amouut to be paid for the rent of them. — 646 — 3. It was strenuously insisted here that the bondholders of the Macon & Atlautic Railway Company were not represented in this litigation by their trustee, the New York Security & Trust Company, and therefore neither resisted the restoration of the cars to their owner, nor in any manner participated in procuring the order of court by which such restoration was refused. Assuming, for the moment, that this contention is well founded, we still think that, in view of the facts of this case, the claim of the car-owner is, upon the general principles of equity jurisprudence, to be preferred to that of these bondholders. The expenses of a receivership— which, of course, include those incurred in the due administration by the receiver of the estate in his hands— may often with propriety be recognized as having a first lien upon the assets, extending even to those derived from a sale of the corpus. It appears that the receiver used these cars for the purpose of raising income for the Macon & Atlantic Railway Company;’ that it had no other source of income, and that this income was wholly devoted to preserving its property during the receivership. . If the receiver, under the court’s order and direction, had borrowed money for absolutely necessary expenditures in taking proper care of the property in his hands, — such as insurance premiums, indispensable repairs, and the like, — these charges would be classed as expenses of administration, and paid accordingly. Here, under such an order, he kept in his possession, and used for purposes of this nature, the cars of another, and the benefits derived from his so doing inured directly to the company and its creditors, the chief of which were these bondholders. Hence our conclusion that, under all these facts and circumstances, the rental of the cars was chargeable to the fund arising from the sale of the property, as expenses of administration; and, like costs, receiver’s fees, attorney’s fees, and other similar charges — 647 — with which all property legally administered is burdened* took preference over the claims of the bondholders. But suppose that, independently of the alleged resistance by the trustee of these bondholders of the-return of the cars, this conclusion is not sound and cannot stand upon the reasons just given in its support,, we are very certain that the record before us plainly shows that the New York Security and Trust Company was before the court in its capacity as trustee for the bondholders of the Macon & Atlantic Railway Company, and that as such trustee it participated in procuring the order of refusal above mentioned. If this; is true, it must necessarily follow that both the trustee and the bondholders represented by him are estopped from denying that the rental of the cai’s is an expense of the receivership of superior dignity to the lien of the bondholders’ mortgage. This proposition is too plain for argument, and therefore will not be discussed. ¥e shall simply endeavor to show that the assumption of' fact upon which it is to be supported is the truth of this, matter. As already shown, the main case in which the intervention now under consideration arose was begun by McTighe & Company against several corporations. Among them were the Georgia Southern & Florida Railroad Company, the Macon & Birmingham Railroad Company, and the Macon & Atlantic Railway Company.. The original petition did not pray for process against, any trustee of any of the bondholders of any of these companies. Afterwards, however, on the 13th day of June, 1891, the judge passed an order in the following words: “This intervening petition having come on for a hearing before me this day, and the petitioner having amended the same by prayer asking that the trustees of the bondholders of the defendant railroad companies, be made parties and served: It is ordered by the court, that the petition be set for a hearing befoie me at Ma — 648 — ■pon, Georgia, on the 27th instant at 9 a.m., and that eight days notice of - the petition and amendments thereto, and of this order, be given to Messrs. Hoke & Burton Smith, solicitors for the trustee of the bondholders of the Georgia Southern & Florida Railroad Company, and that a copy of the same be served by the petitioner, or his duly authorized agent, upon the New York Security & Trust Company, 46 Wall street, New York, trustee of the bondholders of the Macon & Birmingham Railroad Company and the Macon & Atlantic Railroad Company, eight days before said hearing. Further ordered that the receiver, upon said hearing, make report to the court concerning the matters about which the amended prayer of the petitioner prays for.” It will be seen that service was ordered to be made upon Messrs. Hoke & Bui’ton Smith, who were design nated as solicitors of the trustee of the bondholders of the Georgia Southern & Florida Railroad Company, and that service was also ordered to be made upon the New York Security & Trust Company, trustee of the bondholders of the other two companies. On the 20th of June, 1891, “upon motion of Messrs. Hoke -& Burton Smith, counsel for trustee of bondholders, the New York Security & Trust Company,” it was ordered that the hearing of this very intervention be set for July 4th. It was not then heard; but, on the 15th of that month, the trust company filed two brief papers in the nature •of answers to the intervention. They are in the following words: “The New York Security & Trust Company, trustee for the bondholders, having been made a party in the above stated case, comes and denies all the statements in the petition of intervener, and prays that strict proof be had. Hoke & Burton Smith, “Attys. for New York Security & Trust Co., “Trustee for the bondholders.” “The New York Security & Trust Company, trustee for the bondholders, disclaim any responsibility for the use of said cars by the receiver; while it denies the right of the receiver to part with said cars, it disclaims — 649 — all responsibility for their use, whether on acct. of rental or breakage, which can constitute a lien superior on the coupons or net earnings of the road to the lien of the bondholders. Hoke & Burton Smith, attys.” And further, this same trust company, by its same -counsel, filed a written objection to the right of the court to finally dispose of this intervention without a jury. The Messrs. Smith undoubtedly represented the trust company. It certainly was the trustee of the bondholders of two of the corporations above named, including the Macon & Atlantic Railway Company. It was, beyond question, a party to the case in the character of trustee for each set of these bondholders,.and it appeared, everywhere and every time it shows up in the record, as “trustee for the bondholders.” What "bondholders? It seems indisputably clear that the answer should be: All the bondholders of the two companies. This is the logical sequence of its making the general appearance above stated. Otherwise, it should have limited its appearance and specified for what class or classes of the bondholders it intended to appear or did appear. There is not in the record even a hint or suggestion that anything of this kind was done or attempted.- We have, therefore, seriously and deliberately reached the conclusion that this trust company, as a party to this litigation, represented the interests of all these bondholders, including those of the Macon & Atlantic Railway Company. In perfect candor, we would not have devoted so much space to this particular matter, but for the fact that able counsel, evidently with perfect sincerity, earnestly contended in the argument made before us that the bondholders of this company were not before the -court through or by this trust company, and also asked for a rehearing on the ground that this court had fallen into a misapprehension on the subject. The rehearing was denied, because after further examination and re — 650 — flection we felt satisfied that our former view of this matter was correct, and for the additional reason that we did not think it made any substantial difference, in adjusting the true equities of this ease, whether the trust company, as the trustee of this set of bondholders, contested the return of the cars to their owner or not. Our decision in this case was not made hastily, but after much thought and deliberation. As to that branch of it to which the present division of this opinion relates, we based our judgment upon both the reasons assigned. We are still satisfied that both are sound, and especially that one of them which rests upon the assertion that the trust company was before the court as the trustee of the bondholders of the Macon & Atlantic. Bailway Company, and in that capacity represented and acted for these bondholders in the present litigation. 4. We have not passed upon those exceptions to the master’s report which the court improperly allowed to-be filed, and to which reference has already been made. In the view we take of matter, they are not in the case, and should have no effect upon its determination by us. It is apparent from the undisputed facts, that after the receiver had taken possession of the cars, the court, upon the application of the owner, ought either to have-adopted and carried out the lease contract, or to have-ordered the restoration of the cars. It did neither, but peremptorily ordered the receiver to retain and use the cars; and the receiver did in fact retain and use the cars-until, after the lapse of a considerable period of time, he was finally ordered by the court to return the cars to-their owner. None of the parties excepted to the order of the court refusing a surrender of the cars, and may therefore be treated as acquiescing in it. Consequently, the equities between the owner of the cars and the railway company should be adjusted just as if they had voluntarily done what was accomplished by the court’s action in the premises. — 651 — In this view of the matter, the final return of the cars under the court’s direction was the same thing, in effect, as would have been a final rescission of the lease contract by the parties to it; and consequently, as stated in the second division of this opinion, it is not applicable in fixing the amount of rent to be paid for the cars. Its terms should not be referred to for this purpose, because it was practically canceled by what occurred, and thereafter had no legal or equitable bearing upon the question of the receiver’s liability in the premises. We have, upon the basis which we think is the true and just one, arrived at our conclusion as to what are the exact equities in the case, so far as these parties are concerned. (a) The time for which the rental of the ears is chargeable to the assets of the railway company is obviously that during which the company and its receiver had possession of and used them. (b) As a general rule, compensation for the ordinary wear and tear of a thing rented is included in and covered by the rental charge; and no reason occurs to us why this rule should not apply in the present instance. But depreciation arising from careless use, or from abuse, and which is greater than that caused by ordinary and proper use, is a different matter, and ought to be paid for, or else the owner will get nothing for the injury to his property thus occasioned. (c) The expenses incurred in returning the cars as the court ordered ought not to fall upon the owner; for it seems clear that the latter cannot be fairly charged with the' cost of a delivery which it was manifestly the court’s duty to effectuate. (d) We have said that interest should be allowed on all the above claims from the date upon which the cars were returned to the owner. The claim for the rental was certainly due not later than the day on which the owner received back the cars, and ought at least to bear — 652 — iuter.est from that time, if not from a previous date. As it would be very difficult to fix with absolute fairness-upon an earlier date, we designate the day of delivery as that from which to compute interest on this item; and surely no injustice thus results to the company or its other creditors. As the cars ought, in justice, to have been returned uninjured, save as to the usual and ordinary wear and tear, the claim for depreciation arising from the fact that they had been otherwise and more seriously damaged, ought to have the force of a demand existing at the date of their restoration. If one injures the property of another under circumstances entitling the owner to compensation, he can recover the same, even if he never repairs the injury, and the demand is usually due when the injury is done. Moreover, it would seem that, relatively to the extra damages, immediate repairs were necessary to render the cars capable of producing a fair income; and therefore, presumably, the repairs would be made at once, or at any rate, in legal contemplation, the owner was entitled to have them made without delay, and to be promptly supplied by the party therefor with the means essential to this purpose. Hence we say, interest should be computed on this item from the date of the delivery to the owner. It needs, we think, no argument to show that this is also the date from which interest should begin to run on the amount paid by the owner as expenses incurred in the making of the delivery ordered by the court. (e) The account of the car-owner based on all these claims should, of course, be credited with all payments on the lease contract. In the light of the foregoing, we hope the true balance of principal and interest can be fairly ascertained, and this controversy finally adjusted and brought to a conclusion. Judgment on main bill of exceptions reversed. On cross-bill of exceptions, affirmed.