Woods & McBroom v. Pittsburgh, Cincinnati & St. Louis Railway Co.

Chief Justice Sharswood

delivered the opinion of the court, January 2d 1882.

It is not to be questioned that the claim of the plaintiffs, as contractors of the Pittsburgh and Steubenville Railroad Company, under the resolution of the General Assembly of January 21st 1843, Pamph. L. 367, was paramount to the mortgage of McElrath under proceedings upon which the road was sold and the defendants claim title. The amount of their claim was ascertained by the decree of January 5th 1858, at least prima facie, though not conclusively as to McElrath, the mortgagee, who was not a party to it, though his mortgage was then in existence. It is clear also that if it had been paid in whole or in part when the decree of foreclosure and sale under the McElrath mortgage was made, the mortgagee and purchasers were entitled to the benefit of such payment.

It may also be that under the resolution no mere acquiescence or other acts in pais can operate as an estoppel. Nothing can avail but the written assent of the creditors to the mortgage first had and obtained: Shamokin Valley and Pottsville Railroad Co. v. Malone, 4 Norris 25. But it certainly cannot be maintained that there may not be an estoppel by matter of record. An adjudication at law or in equity against the claim of the contractor must be as conclusive against him as against any other claimant.

What then was the effect of the proceeding in this court upon the McElrath mortgage and the decree of sale thereunder? If the plaintiffs had not been made parties, their rights would have been entirely unaffected. But they were parties. The bill charged that “ they (Woods and McBroom) claimed to have a lien on the premises described in the mortgage, that they allege themselves to have been contractors with the said Pittsburgh and Steubenville Bailroad Company for the construction of said work, and that in pursuance of said contract they did some -work toward the construction of said railroad, and claim to have some lien or interest therein, of the nature of which the complainants are not advised but which they do not admit to be valid or that the same can in any wise affect the priority of lien of the said first mortgage or the rights of any of the holders of the bonds thereby secured.” The plaintiffs were thus distinctly called upon to come in and make known their claim, not as a lien merely on the fund to be produced by the sale, but some interest in the railroad. They were stated to be contractors for the building of the road, the holders, therefore, of a privileged claim — under the resolution of 1843 — something more than a lien, an interest in the road which could not be divested by a sale. The inference from all this uras too plain to be mistaken. It was not as mere holders of a lien which could come upon the fund, but as having an interest paramount to the mortgage, that they were summoned to appear and answer. The principal contention of the plaintiff here has been that there was no prayer in the bill that the road should be sold clear of all incumbrances. If these contractors had come in and established their claim, no such decree could have been made. The sale would have been necessarily subject to their claim. It might well be that the salo would not produce sufficient to pay them. The purchasers must then take cum onere. But no such contractors making defence, though summoned and appearing, the decree of sale could then properly be made, as it was clear of all incumbrances. If all that the bill sought was to ascertain who were lienholders to be paid from the proceeds, they were unnecessary parties. This they knew very well; they knew or ought to have known that they were made parties as having an interest in the road paramount to the mortgage. It is perfectly clear that the object and sole object in making them parties was to ascertain what claims the road would be subject to in the hands of the purchasers, so that bidders might know for what they were bidding. They appeared to the bill, they had the opportunity to prove their claim conclusively as against purchasers. They did not avail themselves of it. When ruled to plead, answer or demur, they suffered the bill to be taken pro confesso against them. What did this mean ? Surely that they had no such interest in the road as contractors as could be set up against the mortgage. They chose to adopt this course, and they must take the consequences. Generally, under a bill to foreclose a second mortgage, the first mortgagee is not a necessary, but he is a proper party, especially wherever a sale is prayed for, as it is certainly desirable that the proporty should bring a full and fair price, which cannot be, if there is any uncertainty as to what title the purchaser will take — free or incumbered: Story’s Eq. PI. §193; Jerome v. McCarter, 4 Otto 735. These plaintiffs, after suffering the bill to be taken pro confesso, for some reason best known to themselves, chose to go to sleep for eleven years, and then, when all the papers and vouchers of this long-dead-and-buried corporation are probably destroyed or lost, the witnesses dead or scattered to the four winds, so that payment of the claim before the decree could not be proved, they suddenly wake up and ask that the road in the hands of the purchasers should be made liable. It is a very stale claim, not to be favored, and ought not to succeed.

Judgment affirmed.

Gordon, J, dissents.