making barb wire; it may be that a little more perseverance on the part of defendants would have developed for them an enterprise most profitable to all parties. But from their stand-point, and at that time, it must be affirmed that they acted prudently and in a business way. They were business men, not machinists or inventors. They invested their money on the faith of what he could do with his machine. They waited 13 months, and over, and he was still unable to do successful works. True, he continued his assurances of coming success, but "hope deferred maketh the heart sick." To have continued the experiment longer would have demonstrated that they were men who lived by faith and not by works. In one month and ten days their time for retreat would be gone. Thereafter they would have to divide their money with him, while he would only share with them this as yet unsuccessful machine. Prudence commanded what they did. Hence the complainant has failed to make out his case, and his bill must be dismissed at his costs. It seems that 65 shares of stock were in fact and as an accommodation issued to complainant. Hence defendants' cross-bill must be sustained, the stock ordered canceled and surrendered on delivery of machine, and complainant barred of all interest in other property of the company. As to the $2,000 advanced to complainant, I think, under the contract, it belongs to him, and no accounting or recovery is ordered as to that. UNITED STATES TRUST Co. of N. Y. v. NEW YORK, W. S. & B. Ry. Co. (Circuit Court, D. New Jersey. July 22, 1885.) RAILROADS-REVENUES-PAYMENT OF CLAIMS. Claims for equipment and supplies furnished on running account and under continuous contract, held payable out of net income; following Burnham v. Bowen, 111 U. S. 776; S. C. 4 Sup. Ct. Rep. 675. On Petition of the Pintsch Lighting Company. A suit to foreclose a mortgage on the West Shore Railroad was brought in the New York supreme court. Receivers of the railroad were appointed in New York. At the same time a bill was filed in the United States circuit court in New Jersey to foreclose the same mortgage, and the same persons were appointed receivers of the railroad in New Jersey. The greater part of the line of the railroad was in New York, and its principal office was there. On June 30, 1885, a petition was filed in New Jersey by the Pintsch Lighting Company alleging that on March 27, 1883, they entered into a contract with the railroad company to erect gas-works on the terminal property, with connections and apparatus in the stations and ferry-houses, and also to equip and furnish certain baggage and passenger cars with gas-holding and gas lighting apparatus according to the Pintsch method. The petition then continues as follows: That they were engaged in erecting said gas-works from July, 1883, to February, 1884, and during that time, and afterwards down to the month of June, 1884, a few days before the appointment of the receivers in this cause, they were engaged in furnishing necessary equipment and supplies for the stations, ferries, and cars of said company. That they have filed a mechanic's lien, and have brought a suit thereon by leave of this court, for the sum agreed upon for the erection of the gas-works, and they have received payment from the company for certain items, and have received certificates from the receivers for the supplies furnished after the first day of March, 1884, but there remain four items of their account, not included in the mechanic's lien, which have not been paid. These are as follows: 1883. Nov. 7. 66 21. "21. Payment to Moore & Carr on Syracuse Gas-works Equipping eight baggage cars "30. Equipping eight baggage cars For which amount the said company gave your petitioners their notes dated May 9, 1884: -That at the time these notes were given a general settlement of the unsecured claims of your petitioner was made by said company, and they paid all that was then due, partly in cash and partly in notes, without reference to the priority of the items in the account, paying in cash some of the later items and some of those accruing since the first day of March, 1884, and paying other recent items in notes which matured before the receivers were appointed and were paid, but giving these notes for those earlier items, and these did not fall due until after the appointment of the receivers, and were not paid. And your petitioners show and insist that these claims are for furnishing necessary equipment and supplies to the said railroad, which were essential to putting it in good running order, and these items formed a part of a continuous course of dealings which was carried on down to the time of the appointment of the receivers, and that by reason of settlement on May 9th, and the payment of the claims in notes without regard to priority, these claims should be regarded as a new debt arising out of said notes, and are entitled to be paid among the recent debts of the railroad incurred for its equipment and preservation for the benefit of the mortgagees at whose suit the receivers were appointed. The petition prayed that the receivers might be directed to pay the claim in money or certificates. J. B. Vredenburgh appeared for the receivers, and opposed the petition, but admitted the allegations of fact. A. Q. Keasbey, for petitioners. NIXON, J. The facts set forth on the petition, and which are not controverted by the receivers, would seem to bring the application within the principles that justify an allowance laid down by the supreme court in Burnham v. Bowen, 111 U. S. 776, S. C. 4 Sup. Ct. Rep. 675, and entitle the petitioners to an order upon the receivers to pay the claims out of the income of the road. If the road should have no income, after the payment of the running expenses, as I understand the fact to be, it may be doubtful whether an order should be entered to pay from the corpus of the property. But I express no opinion upon this last point, but respectfully refer it to the New York court, where the receivers were first appointed, and to which all such applications should be made. The relations of this court to the main controversy I regard as of rather an ancillary character. An order will be signed directing the receivers to pay the claim out of the income, but not out of the corpus except upon the order of the supreme court of New York by which the principal receivership was created. KING and others v. ОHIо & M. R. Co. and others. (Circuit Court, D. Indiana. November 10, 1885.) NEGLIGENCE-INJURY TO VESSEL PASSING THROUGH DRAW-PROXIMATE CAUSE. Former opinion, 24 Fed. Rep. 335, adhered to on rehearing. Motion for Rehearing. Ferd Winter, for petitioner. Harrison, Miller & Elam, for receivers. WOODS, J. For statement of case see original opinion, 24 Fed. Rep. 335. The motion for rehearing is predicated mainly on the proposition. that the failure to open the draw of the bridge was not the proximate cause of the injury. It is insisted that that cause was the breaking of the boat's chain. That this was the direct and immediate cause there can be no doubt, and unless that breaking was attributable, proximately, to the negligence or fault of the respondent the motion ought to be granted. It was held on the former hearing that the managers of the boat were not bound to anticipate the breaking of the chain, and it is now insisted that the keeper of the bridge likewise had a right to suppose that the boat's machinery was in good condition, and sufficient to carry 'the boat safely to the Illinois shore. This argument tends to deny the negligence, rather than to show that it was not the proximate cause of the injury. It seems to me, however, to be fallacious in assuming that the conduct of the bridge-keeper and that of the managers of the boat must be viewed from the same stand-point, and that each was in this respect entitled to act on the same presumptions. It will not do to say that the latter had a right, either purposely or negligently, to keep the draw closed, on the supposition that the boat was staunch and manageable, and could be safely taken out of the danger to which his act was exposing it. He had no right to try, or negligently to force others to try, such experiments. He knew, or ought to have known, that the boat was approaching in the reasonable expectation that the draw would be opened seasonably; and that a sudden and unexpected necessity for turning the boat about would involve (needlessly) a severe and perhaps unwonted strain upon the boat's machinery. It was, of course, an act of negligence, under the circumstances, to subject the boat to such a test of its powers, and the disastrous result was so plainly a natural consequence that the negligent party ought to have anticipated it, and therefore, under the doctrine of any of the various cases cited in argument, is responsible for the damages. No new and independent cause intervened, which, in itself, caused the injury. Motion overruled, and matter referred to master to assess damages. UNITED STATES TRUST Co. v. NEW YORK, W. S. & B. R. Co. (Circuit Court, D. New Jersey. December 19, 1885.) 1. RAILROAD COMPANIES - MORTGAGE BY INSOLVENT — APPOINTMENT OF RE CEIVER. Where a railroad company borrows money and gives a mortgage upon all the property it then has or may thereafter acquire, the mortgagees are entitled to be protected as against all other and subsequent claims. But the courts, in appointing a receiver to take charge of the affairs of an insolvent company, impose conditions such as they deem just, respecting the payment of claims; and may require that the current earnings be applied to the payment of the running expenses, and the like. 2. SAME EQUITABLE LIEN-PAYMENT OUT OF THE EARNINGS OF THE ROAD. Where a person has a claim against a railroad company for articles furnished to be used in the operating of the road, sold subsequent to the giving of the mortgage, which claim was not secured at the time of the appointment of the receiver, he will not be entitled to a decree of court declaring such claim to be an equitable lien upon the earnings of the road superior to the lien of the mortgagees, and to an order directing the receiver to pay same from such earnings. On Petition of Howard Watch & Clock Company. Mr. Cromwell, Mr. Miller, and Mr. Hey, for petitioners. NIXON, J. The petitioner in this case has a claim against the defendant corporation, amounting to $1,705.68, for clocks furnished to the company from October 1, 1883, to January 9, 1884, and prays the court to make an order that the said claim shall be decreed to be an equitable lien upon the revenues and property of said company, prior to the complainant's mortgage and all other liens, and shall be paid as soon as practicable out of the revenues of the said railway company, as the same may be received, or out of the mortgaged property of the corporation when sold on decree of foreclosure. As was remarked by Judge BROWN, of the supreme court of New York, in his opinion filed October 23, 1885: "It is a fact well known to every one connected with the litigation that the income from the operation of the railroad by the receivers has not been sufficient to pay the operating expenses." It hence results that this is practically an application to the court to order the payment of the claim from the corpus of the property, and the simple question to be determined is, to what extent should the court impair and diminish the fund, pledged to the bondholders in the mortgage, in order to satisfy the current debts contracted in operating the road by the receivers, or before their appointment? It is a question new in some of its aspects, and somewhat unsettled, and requires grave consideration. It appears in the case that the New York, West Shore & Buffalo Railway Company, the defendant corporation, by virtue of the authority and power vested in it by its charter of incorporation, on the fifth of August, 1881, executed and delivered to the United States Trust Company, of New York, a mortgage upon all its property, then held or afterwards to be acquired, to secure to the bondholders the payment of fifty millions of dollars, represented by bonds, issued and to be issued to pay its subsisting indebtedness, and to aid in the construction of a railroad from Weehawken, New Jersey, to Buffalo, in the state of New York. It is a fact worthy of notice, in this connection, that in the tenth paragraph of said mortgage the corporation agreed with the persons holding said bonds that, "upon filing of a bill in equity, or other commencement of judicial proceedings to enforce the right of the trustee and of the bondholders, the said trustee shall be entitled to the appointment, by any court of competent jurisdiction, of a receiver or receivers of the property hereby mortgaged, and of the earnings, income, rents, issues, and profits thereof pending such proceedings, with such powers as the court making such appointment shall confer." * The railway company first defaulted in the payment of the interest due upon the bonds on January 1, 1884, and continued in default until January 6, 1885, when the trustee, exercising the option conferred by the fifth section of the mortgage, duly elected that the entire principal sum secured thereby should be become due immediately. On the ninth of June, 1884, the trustee for the bondholders had filed a bill in this court for the foreclosure of the mortgage, and under its provisions had applied to the court for the appointment of receivers. An order was made of that date, following the supreme court of New York, appointing Horace Russell and Theodore Houston, who at once entered upon the discharge of their duties as receivers, and have since continued to discharge the same under the direction of this court. A provision was inserted in the order for their appointment to the effect that "the receivers, as speedily as the same can be done without prejudice to the property in their hands, may pay all the debts and balances due to the laborers and other persons heretofore employed by v.25F,no.14-51 |