DocketNumber: No. 4262
Citation Numbers: 30 Colo. 337
Judges: Campbell
Filed Date: 9/15/1902
Status: Precedential
Modified Date: 7/20/2022
delivered the opinion of the court.
Appellees have not appeared in this court. Appellants do not traverse any allegation of fact set up in the petition of the receiver, but question the power of the court to enter the order. It appears in this petition that in the ordinance of the city of Boulder granting to the railway company the rights and franchises to construct and operate a street railway in the city of Boulder, there was a requirement that the
Appellants do not question the power of the court, through its receiver, to operate a street railway and, if the income from the business is inadequate for that purpose, to make the ordinary expenses of operation a lien upon the corpus of the property superior to that of prior mortgagees. But they contend that it is beyond its jurisdiction to build extensions of a railroad which comes under its management in proceedings brought by mortgagees to foreclose their liens on the mortgaged property.
In Kennedy v. St. Paul & Pac. R. R. Co., 2 Dillon, 448, the United States circuit court, in order to prevent a valuable land grant in favor of a railroad from lapsing, authorized its receiver, who was appointed at the instance of bondholders of the coni
In Jerome v. McCarter, 94 U. S. 734, 738, under peculiar circumstances an order authorizing the finishing of a ship canal in order to preserve, both for the lien creditors and the mortgagors, valuable lands was upheld, because otherwise the lands would have reverted to the United States government. The court observed in this connection that whether the notion of the trial court which made the order could make the receiver’s mortgage, given to secure advances made to finish the canal, superior in right to the mortgages which existed when it was made, it was needléss to inquire, because that question was not before the court.
In Kent v. Lake Superior Canal Co., 144 U. S. 75, 89, the doctrine of the McCarter Case was approved. In Bank of Montreal v. C. C. & W. R. Co., 48 Ia. 518, such an order directed to the receiver to construct and complete a line of railroad under his charge, and which made the receiver’s certificates which he was directed to issue therefor a lien superior to that of the mortgage, was also upheld. The court remarked that the order was assumed to he
• In Morán et al. v. Lydecker, 27 Hun, 582, a similar order was sustained upon the ground that it was necessary to complete the road within a certain time fixed by statute in order to save its franchises: In Fidelity Ins. &c. Co. v. Roanoke Iron Co., 68 Fed. 623, it was said that a court of equity has no power to make an order of this kind unless it is necessary to preserve the existence of the corporate property and its franchises. In Shaw v. Railroad Co., 100 U. S. 605, instead of accomplishing the end desired, viz, the building of an additional line of road through the instrumentality of a receiver and receiver’s certificates, another method, which the 'court deemed preferable was adopted, viz, an agreement between the parties concerned, by which the enterprise was reorganized on the basis of existing mortgages as stock, and by a new mortgage with liens superior to the old, whereby the money was obtained without asking the court to engagé in the building of railroads. That was apparently a case where all parties concerned agreed, and so is not strictly applicable to the question now before us.
In Miltenberger v. Logansport Ry. Co., 106 U. S. 286, 308, the validity of an order is recognized which, among other things, authorized the receiver to construct six additional miles of road and to give a preferential lien therefor upon the ground that the petitions upon which the orders were based furnished ample reasons for making it. In chapter 13 of Beach on Beceivers and in High on Beceivers (3d ed.) chapter 11, 4th subdivision, are to be found other citations.
The foregoing cases are cited as the ones which
First, we observe that a court should rarely, if ever, exercise this extraordinary jurisdiction even if- the consent of all the parties be obtained. We think the better practice is, as declared in Hand v. Railroad Co., 10 Richardson (S. Car.) 406, to refer the application to a master or referee, and only upon his report showing the necessity therefor,'or after a hearing of all the facts by the court itself, attended with like result, should the order go. That was not done in this case. No evidence at all was taken. The only ground upon which the present order can be justified is that it was necessary to save a forféiture of the franchise of the railway company, but the petition fails to disclose an overwhelming and irresistible necessity therefor. It is true that it contains an allegation that by the ordinance of the city the railway company was required to build during each calendar year an additional mile of road until the aggregate mileage was eight, and that the right of way which had been granted for such additional - mileage might be forfeited
While it is the duty of the court in such cases to protect the rights of both mortgagor and mortgagee, we are of opinion that no sufficient showing for the order in question was made; and if it be conceded that in a proper case, and on a proper showing, it becomes the duty of a court of equity to engage in the business of building railroads, the necessity therefor in the present case has not been made to appear. International Trust Co. v. United Coal Co., 27 Colo. 246, is not a case exactly in point, but some observations in the opinion throw light upon the attitude of this court in its disinclination to extend the unusual power which was asserted in the court below
Such power, even if it exists, should rarely, if ever, be exercised when in so doing the lien of a
The judgment is therefore reversed and the cause remanded for further proceedings, if any, in accordance with the views herein expressed.
Reversed.