Lamoille Valley R. R. v. Bixby , 55 Vt. 235 ( 1882 )

The opinion of the court was delivered by

Redfield, J.

This bill is founded upon the claim of the superior rights of the creditors of a partnership in its property to the individual creditors of one member of the firm.

The bill alleges that the line of railroads now known as the “ St. Johnsbury and Lake Champlain Railroad,” consisted of three corporations, viz., the two made orators in this bill, and the Montpelier and St. Johnsbury Railroad Company ; that while operated by the three roads jointly under a written contract, the defendant Bixby recovered judgment for a personal injury against the latter railroad company while a passenger on the line of its road, occasioned by want of care in operating said railroad; and has levied an execution founded on such judgment upon a locomotive, tender and baggage car which was the property of the three railroad companies. . Bixby was enjoined and restrained from selling the property by the chancellor.

• The defendant Bixby answers, and brings a cross-bill denying the equity of the orators, and claiming a superior right under his levy. Further details in the pleadings pr proof do not seem important in the determination of the case.

I. It is settled law that the partnership creditors have in equity a superior right to the property of the firm, to insure the payment of its debts over the attaching creditor of one member of the partnership; And this is based upon the supposed lien whicli the partners have among themselves upon the assets of .the firm. But the embarrassment in this case arises upon the application of these principles to the casé in hand.

The principle invoked obtains only in equity, and at law the defendant Bixby might attach and sell one third the property in question, without regard to the equities of others. Bardwell v. Perry, 19 Vt. 292; Reed v. Shepardson, 2 Vt. 120.

II. It does not clearly appear by allegation or proof that the partnership indebtedness existed at the time the property was seized on execution; if not, the bill is without foundation. Bardwell v. Perry, supra. In Brewster v. Hammet, 4 Conn. 540, where it was shown that the partnership had become insolvent, and its property by foreclosure or otherwise had gone out of its hands, the court refused such application on the ground that it felt no assurance that the partnership creditor would be benefitted. These corporations' have undergone many changes and transformations. The joint mortgages upon their railways and property have been foreclosed, and titles to the same have passed toothers under decrees of the court; and now the whole line of these railroads is operated under a different name ; and how far the claims of creditors have been satisfied by their decrees of court, is not known. In this condition of the property there would seem no equitable ground for interfering with the legal rights of Bixby under his levy. Yet'we should hesitate to dispose of this case upon these grounds without a more careful examination of the evidence and authority.

But the statute of 1855, which is section 3448 of the R. L. of this State, declares that “ when the property or person of another is injured through the default of a railroad corporation, its agents or employes, the cars, engines, and other property, which at the time of such injnry are subject to use. in the running and management of such road, and which at any time have been owned by said corporation, shall be held to be the property of such corporation for the purpose of furnishing indemnity for such injury ; and may be attached and levied upon as such'at the suit of the party injured.” The defendant Bixby obtained judgment against the Montpelier and St. Johnsbury Railroad Company for a personal injury suffered while a passenger on said road, through the alleged default of said corporation. The alleged default of the corporation and the damages occasioned by the injury to Bixby, are conclusively established by the judgment. It is now proved that all the engines and cars were owned and the trains run by the three corporations, under a written contract between them, but this was unknown to Bixby until after he obtained his judgment. He found the franchise granted to this corporation being used in a train of cars on a track in the line of its road. He had a right to presume that all this was done by it in the exercise of its lawful franchise. And every participator in the act of running the train of cars is presumed to have knowledge of the law. It is not important, as we think, whether each corporation runs the train over its own section of the line, or, whether by mutual contract they jointly run the whole line; the property attached to the extent of defendant corporations’ ownership, is by the statute made subject to attachment to respond and “ indemnify ” the passenger for the injury suffered. And such passenger has, by this statute, a special right in his attachment of the engine and car superior to the general equity of the partners in the partnership property. If the equities were equal, the defendant having attached the property should be permitted to pursue it. Bardwell v. Perry, supra; Ex-parte Ruffin, 6 Ves.

As to the cross-bill. The sale of the engine “ Swanton,” tender and passenger car attached, which were bid in and purchased by Lamson, is a matter entirely foreign to the subject-matter of the original bill. Lamson, though he acted in the purchase as agent for Bixby, was vested with the legal title and no decree could be made affecting that property unless he were made party ; besides, the validity of that sale would seem wholly a matter of law. The introduction into a cross-bill of a distinct and independent subject of controversy, and not within the scope of the original bill, is incongruous and not allowable. This is not strictly a cross-bill, but a bill in the nature of a' cross-bill introducing additional parties ; and the defendant Bixby seeks not only to defend against the orator’s bill but to obtain affirmative relief.

The defendant levied his execution upon the property ; the orator by his bill seeks to release ■ the property from the defendant’s lien created by the levy, and has enjoined proceedings to perfect and enforce it. By the mutations of title incident to foreclosure, receivership and decrees of court, intervening claims to the property levied upon are now supposed to subsist; and we .think the rights and interests of the parties, as we find them, so far as practicable, should be made effectual.

It is therefore ordered and decreed that the orator in the cross-bill, Bixby, obtained by his levy of the execution, in his favor against the Montpelier and St. Johñsbury Railroad Company, a •valid lien upon one third of the engine, called Hyde Park, tender and baggage car attached thereto ; and such lien is declared to continue and subsist. The decree of the court below is reversed and causo remanded, with directions to enter a decree for the orator in the cross-bill, Bixby, for the amount of the execution levied upon such property with interest; and if the parties do not agree, the matter will be committed to a master to report'the value of such property levied upon at the time of the injunction in this cause, viz.: the 16th of October, 1877; and the amount of one third of such valuation with interest therein from the latter date to the present time, which sum to be paid to the clerk of Caledonia county court for the benefit of said Bixby within sixty days from the final decree in this cause, and in default, execution shall issue on this decree, and the property so levied upon sold by the sheriff of said county to satisfy said one third valuation of said property with interest and the costs of sale. And the orators in the cross-bill aré to recover their costs.

Decree reversed and cause remanded with a mandate.