Missouri, Kansas & Texas Railway Co. v. McFadden Bros.

The defendants in error on the 6th day of January, 1891, instituted two suits against John Martin, W.B. Wise and Frank Fitzhugh, composing the firm of Martin, Wise Fitzhugh, and against Eddy and Cross as receivers of the Missouri, Kansas and Texas Railway Company; one for the recovery of the value of 82 bales of cotton and the other for the value of 25 bales. Subsequently it was agreed between the parties that the two suits should be tried as one; and thereafter the plaintiff filed an amended petition in the consolidated suits, in which they made the Missouri, Kansas and Texas Railway Company a party defendant. A trial was had before the court without a jury, and resulted in a judgment in favor of the plaintiffs, both against Martin, Wise Fitzhugh and against the railway company, for the value of the 82 bales, and in favor of the latter against Martin, Wise Fitzhugh in the event that it discharged the recovery. It was also adjudged that as to the 25 bales of cotton the plaintiffs should recover against the defendant corporation, but that they should take nothing against Martin, Wise Fitzhugh as to that cause of action. The plaintiffs recovered nothing against the receivers. Both the partnership and the corporation appealed to the Court of Civil Appeals, where the judgment was in all things confirmed. Both have sued out a writ of error to this court.

We will first dispose of the assignments here made by the Missouri, Kansas and Texas Railway Company. It is alleged in the petition, in the consolidated case, that the cause of action arose while the property of that company was in the hands of Eddy and Cross, as receiver's appointed by the United States Circuit Court for the District of Kansas and confirmed by the United States Circuit Court for the __________ District of Texas; that the contract for the carriage of the cotton was made with them as such receivers; and that, since the institution of the suits, they had been discharged, and the property had been restored to the company. It was also alleged, that pursuant to a special act of the Legislature, approved April 16, 1891, the Missouri, Kansas and Texas Railway Company of Texas had purchased all the railroads of the Missouri, Kansas and Texas Railway Company. In an agreement signed by the attorneys for all the parties to the suit, it was admitted in substance that these facts, as alleged, were true.

It is insisted in this court, as was insisted in the Court of Civil Appeals, that the facts, as alleged and admitted, did not warrant the trial court in holding the railway company liable for the acts of the receivers, and we are of the opinion that the position is well taken. It was held, in the case of the Texas Pacific Railway Company v. Johnson, 76 Tex. 421, and in subsequent cases, that where a railroad had been placed in the hands of a receiver, and had been operated by such receiver at a profit, and net earnings in an amount sufficient to pay the claims incurred by the receiver as operating expenses had been invested in betterments upon the property, and the road had been returned to the company, the latter was liable for such claims. When a court of equity takes charge of a railroad and causes it to be operated, it holds the operating expenses a first charge upon the earnings of the road; and, since the lien follows the fund, if it be paid out upon improvements upon the road, and such expenses remain unpaid, the property becomes charged with their payment. In the case of Texas and Pacific Railway Co. v. Gay,86 Tex. 571, and in the same case in 30 S.W. Rep., 543, it was also held that when a receiver takes charge of a railroad under a void judgment with the connivance of the company, the latter will be responsible for the torts committed by his servants in operating the road. Further than this this court has never gone. A receiver is the agent of the court and not the agent of the owner of the property which is placed in his charge, and it is well settled as a general rule that the owner is in no manner responsible for the receiver's acts. The court appointing a receiver to take charge of and control a railroad may make the liabilities incurred by him a charge upon the corpus of the property, and upon sale may direct their payment from its proceeds. (Ellis v. Vernon Ice, Light and Water Co.,86 Tex. 109.) But the charge so created proceeds from the order of the court and does not arise by operation of law. It is to be presumed that the receivers in question were properly appointed, and we cannot hold that, from the mere fact that upon their discharge the company took charge of its property, it made itself liable either for a breach of their contracts or for their torts.

Again, as to the 82 bales of cotton, we are clearly of opinion that no case was made against the receivers. They received the cotton from Martin, Wise Fitzhugh and gave them therefor a through bill of lading from Fort Worth to Liverpool. The bill of lading was transferred to the plaintiffs, and the cotton was placed upon the platform of a compress in Fort Worth for the purpose of being compressed. The compress was leased and was operated by the plaintiffs. While at the compress it was in the custody of their agents. A fire having occurred, and some confusion having seemingly arisen in regard to the cotton that was saved from the conflagration, the plaintiffs' agents delivered the 82 bales in controversy to Martin, Wise Fitzhugh. Here we have the anomaly of the plaintiffs recovering for the wrong of their own agents, seemingly upon the theory that, because the agents did not know that the cotton had been sold to the plaintiffs and believed that it belonged to Martin, Wise Fitzhugh, to whom the bill of lading had been issued, the plaintiffs were not responsible for their acts. Notice to the agent is usually notice to the principal. In determining the limitations of that rule some courts place it upon the ground of the identity of the two, while others base it upon the theory that the principal, by acting through an agent, should be in no more favorable a position than if he acted for himself. The latter has been recognized as the true ground by this court. (Taylor v. Taylor, 29 S.W. Rep., 1057.) Upon neither theory can the plaintiffs in this case avail themselves of the want of knowledge on the part of their agents. The act of the agent is the act of the principal, and it is the latter's knowledge that is involved. If the agent may do a wrong by reason of a want of notice of a fact affecting his principal's business it is negligence for the principal not to inform him; and therefore to permit a recovery against the carrier in such a case would be to permit the plaintiffs to recover for their own neglect. Mayhew v. Eames, 3 Barn. Cress., 601.

Since upon a new trial a case may be made fixing a liability upon the railroad company for the acts of the receivers, it is proper to pass upon the question of the responsibility of the receivers for the 25 bales of cotton, for the value of which suit was also brought. That cotton was also under a through bill of lading, and had been deposited by the receivers at the compress for the purpose of being compressed. After being compressed they permitted it to remain there several days, when it was destroyed by fire. Under the bill of lading the receivers were not liable for the loss of the cotton unless it occurred from their negligence. The trial judge found that the cotton was permitted to remain at the compress an unreasonable length of time after being compressed, and that this was negligence in the receivers. It is claimed, however, that the negligence was not a proximate cause of the loss. The Supreme Court of the United States in Milwaukee Ry. Co. v. Kellogg,94 U.S. 469, say: "It is generally held that, in order to warrant a finding that negligence or an act not amounting to a wanton wrong is the proximate cause of an injury, it must appear that the injury was the natural and probable consequence of the negligence or wrongful act, and that it ought to have been foreseen in the light of the attending circumstances." It appears from the evidence in this case that this cotton, together with many other bales, was upon the platform, and that it was exposed to ignition by sparks from engines engaged in carrying to and from the compress. It ought to have been reasonably anticipated, under the circumstances, that the cotton would probably be destroyed by fire. It was negligence to leave it so exposed an unreasonable length of time, and we think the loss ought to be deemed a proximate result of that neglect.

As to the recovery for the value of 82 bales of cotton against Martin, Wise Fitzhugh, we find no error. The action was not barred by limitation. The original petition against them for the value of that cotton and the amended petition set up the same cause of action. The only difference was that in the former the cause of action was defectively pleaded, while in the latter it was well pleaded.

We also think there was evidence to sustain the finding that they received and converted the cotton.

The judgment is reversed and the cause remanded.

Reversed and remanded.