Central Trust Co. v. Chattanooga S. R.

NEWMAN, District Judge. The only question discussed on this demurrer has beén the right of intervener to priority over the lien of the mortgage debt. So far as that question is concerned, I am clear that the intervener does not make a case by his petition such as makes his claim one to be preferred over the mortgage indebtedness. The case of Cutting v. Eailroad Co., 9 C. C. A. 401, 61 Fed. 150, decided by the circuit court of appeals for this circuit, following Fosdick v. Schall, 99 U. S. 235, decides that, in order to make such a claim preferential, it must appear that there was an order of court, at the time the receivers were appointed, providing for its payment, and evidence that the current earnings before or after the appointment of the receivers were diverted to paying interest on the bonded debt. Neither is shown by this intervening petition. It is true that about a month after his appointment the receiver was authorized to borrow a certain amount for paying the claims of employés within sis months. But, even if this petitioner was such an employé as was embraced in the order, and if the order itself is such as comes within the decisions of the supreme court and the circuit court of appeals, there is no pretense that the earnings were diverted from their proper channel for the benefit of the bondholders in any way. So that it is clear that, so far as the petition seeks to establish priority, the demurrer to it is good. I see no objection to the special master ascertaining the amount of the claim, if that will be of any benefit to the intervener. He probably does not care for this, however, from what has been said on the argument, unless given the preference he seeks. The demurrer, so far as it goes to the question of his right to have his claim established as a preferred claim, is sustained.