Summary
This was an appeal from tbe Circuit Court of tbe United States for the district of Indiana.
The facts of the case are stated in the opinion of the court.
As the decree of the Circuit Court was affirmed, and directed to be carried into execution, it may be proper to state what that decree was, viz:
“It is therefore ordered, adjudged, and decreed, that Jdhn McManaway be, and he is hereby, appointed a receiver of the tolls and revenues of the said Covington Drawbridge Company; that he enter upon, and, by himself, his agents, and servants, possess himself of and control the said bridge, absolutely, and tree from all let and hindrance of the said' Covington Drawbridge Company, their agents $nd servants, and other persons whatsoever. And it is further ordered, adjudged, and decreed, that during the time the said John McManaway shall be the receiver of the said tolls and revenues of said bridge, the said company shall in no wise molest or disturb the said receiver in the possession thereof, or in the reception of the tolls and profits thereof, and that said receiver may and shall receive the same tolls provided for in section three of the act of the General Assembly of the State of Indiana, approved January 15th, 1850, incorporating said company. Said receiver shall keep a daily account of- his receipts and expenditures, which shall be open to the inspection of the parties. It is further ordered, adjudged, and decreed, that it shall be. the duty of the said receiver, by himself and other qualified person or persons, during that time that th.e Wabash river may be navigable for steamboats, to raise or otherwise remove the draw in said bridge when boats are approaching, by night or day; (and it shall be the further duty of said receiver to cause lights to be placed on each side of the draw of said drawbridge, when the'said river is so navigable; and it shall be the further duty of the said receiver to keep the said bridge in suitable and necessary repairs, the expenses of which shall be paid and borne by the said receiver out of the tolls and income of said bridge, as well as his own fees and charges for the discharge of his said duty as receiver. And it is furthér ordered, adjudged, and decreed, that the said receiver shall, from time to time, at least as often as every three months, pay whatever sum of money.there may-then have accumulated in his hands of. thq tolls and- income of said bridge, over and above the expenses as aforesaid, to the complainants herein, in a pro rata proportion upon tbeir respective judgments in the complaint mentioned; and, further, that the said receiver do, at each succeeding term of this court, report thereto his entire actings and doings in and about his said receivership, provided, that before said receiver shall enter upon his said duties, and take possession of said bridge,- he shall take' an oath' well and faithfully to perform his said duties, to be endorsed on his bond next mentioned, and that he shall, with one or more freehold securities, to be approved by H. C. New-comb, master in chancery, within thirty days, enter into a penal bond in the sum of ten thousand dollars, payable to-the State of Indiana, conditioned for the faithful pei'formance of his duties and trusts imposed upon him by this order, which bond upon breach thereof shall be for the benefit of either party interested.”
The first point raised hy Mr. Smith was relative to the jurisdiction. Probably his argument was printed before the decision of this.court, as reported-in 20 Howard, 227, reached him. . ■ '
The novelty-of-the .question in.-this court, as'to the.power of a court'of chancery, has induced' thy‘reporter-to take-particular notice of the remaining point's in the case.
Third. Although the judgments and executions may not have been satisfied by the levy and sale stated in the return-at law, still they placed the property of the .execution defendants in the custody of the-laio,. sufficient in amount to satisfy the judgment, with ample legal powers to make the money, by process at law, and a court of citaneery will not entertain jurisdiction in aid of proceedings in a court of law until the legal remedy is exhausted. The remedy at law is ample, and a court of chancery will not take jurisdiction.
Coe v. Turner, 5 Conn. R., 86.
Wisnell v. Hall, 3 Paige, 313.
Reese v. Parish, 1 McCord, 59.
Bird v. Holaboard, 2 Root, 35.
"Wolcot v. Sullivan, 6 Paige, 117.
Baker, v. Biddle, Baldwin R., 394.,
Fourth. If the following question should be raised by tb’e appellees in their brief, as .it was in the Circuit Court, and this court should deem it material to be decided, then I maintain the affirmative as being the law:
Could the bridge be levied upon by the executions at law, the rents and profits appraised and sold, as was done in this case? Can there be any doubt about it? By the laws of the State of Indiana, all property of the execution defendants is subject to execution, unless especially excepted. The only legal question is, whether this drawbridge is property of the execution defendants. That is not questioned, in fact, by either side, but it may be said by the execution plaintiffs, that they could not enjoy the bridge by collecting tolls, without exercising the" franchise, which they could not do unless it could be sold with the bridge, and they become the purchaser. To this I answer, that the bridge, with the right to exercise the franchise and take tolls, would unquestionably be worth more than the bridge without that right; but this is only a question for the appraisers, before the sale, and does not affect the main question, whether the bridge, or the rents and profits, can be'levied upon, appraised, and sold, under an execution at law, for what it is worth. It may prove injurious to the execution defendants ; but so long as they do not complain, who shall be heard in a court of chancery, or in this court, to complain? If the appraisement was-too high, or took into consideration rights that did not belong to the bridge, as property, the execution plain tiffs could have moved the court at law to set aside the levy or appraisement. But they have not done so, and the levy and appraisement stand without objection, as a part of the record, authorizing the appellees to complete their purchase, or to, issue writs of venditioni, exponas, to sell the property again at law, and satisfy their judgments. Their remedy at law is com píete.
Fifth. But, as the further question may arise, and be deemed by the court important to be decided, although I cannot so consider it in this case, where the property levied upon is amply sufficient — that is, whether the franchise can be levied upon with the bridge, and the whole property appraised and sold upon the execution at law. .. I maintain the affirmative of this question, which I admit is one of much importan'ce to the credit of corporation securities, -as well as to the rights of their ci’editors. The 'question is, substantially, whether the general execution laws of the State of Indiana shall be applied in all cases between debtor and creditor, on judgments at law, including corporations, new cases as they arise, as well as old, or shall an exception, not in. Hie law, exempting from execution certain property of corporations,, be made by the court ? At common.law, real estate was not subject to- sale on execution, and has only been so subjected within the present century. In England, until within the time of the ■ present generation, there were no trading corporations of the sort to require such remedies. At common law, therefore,, in England, there are nb precedents to which we can refer, but there are principles that must govern the question.
1. All grants are subject to the law of the land in force at the time the grant is made. ■
2. What is a franchise? . A franchise is a portionoithe sovereignty, a part of the eminent domain, granted by the public for the public good, only to be used by the grantees, in the manner prescribed for the object of the grant, but not consecrated and placed as a sovereign above the ordinary laws and remedies of the land, as many seem to suppose. At common law, this franchise was also an exclusive privilege, as in the case, of manor, mills, and like, cases. All corporations are said' to have a franchise, but the ordinary rights of .corporations are n'ot parts of the eminent domain — the privilege to have a common name and common seal, a perpetual succession, and. by such common name to sue., to contract, to. hold real estate, and-to sell the same, qr to make by-laws for the government of the members. These privileges are no part of the eminent domain, but only extensions, to individuals collectively, of rights appertaining of common right to each.
.Mr. Justice "Woodbury, in 6 Howard 589, 540, West River Bridge v. Dix, says: The laws of the land are virtually a part and condition of the grant itself, as much as if inserted in' it ioiidem. verbis.
Town v. Smith, 1 Woodb. and Minot, 134.
1 Howard, 319.
2 Howard, 608, 617.
3 Story on Const., 1377, 1378.
It is on this principle that the exercise of the eminent domain over franchises has been sustained; otherwise, such exercise would be a breach of the contract implied in grant of the franchise, and a violation of thé Constitution of the United States.
West River Bridge Co. v. Dix, 6 Howard, 507.
Enfield T.oll Bridge Co. v. Harts and N. H. R., 17 Conn., ' 40 S. C.
2 Amer. R. R. Cases, 69 S. C., 95.
Beekman v. Sar. and Schen. R. R. Co., 3 Paige R., 45.
Billings v. Prov. Bank, 4 Peters, 514.
In 4 Peters, 514, it is said by Chief Justice Marshall: “The great object of an incorporation is to bestow the character and; properties of individuality on a collected and changing body of men; any privilege which may exempt it from the burdens common to individuals do not flow necessarily- from the charter, but must be expressed, in it, or they do not exist.” . In other words, corporations, unless expressly exempted, are subject to all the burdens imposed by.thelaws'of-the land bn individuals. The rule, is not to be confined-to cases within the eminent domain,-or to. the taxing powers, ft applies to -all cases "which, in the opinion of the legislative 'power, its. application is necessarily for the "public'good’; • " A franchise may- or. may not be a. portion of the eminent donmin. v .But a franchise, is property: “We. are" aware of nothing-peculiar to-a-franchise, which "can class it higher .or render it more sacred than -other property. A franchise is property, and nothing more. It is incorporeal property, and is so defined by Blackstone, '2 Com., chap. 8, p. 20.”
West River Bridge Co. v. Dix, 6 Howard, 534.
See the opinion of Justice Woodbury, same ease, 541, 542.
As property, a franchise may be divided, leased, mortgaged, sold; (Gunning on Tolls, 106, 110; 6 Barn, and Cress., 703, 5, 875; B Maulé and Sel., 247; 1 Comp, and Jervis, 57;) and it is property by grant, taken subject to the general laws of the land, in force at the time of the grant, at least.
The question now arises: “Is a.franchise subject to execution at law by the laws of Indiana?” ■ “The property, rights, credits, and effects, of the defendants, are subject to execution.”' (2 vol. Rev. Stat. of 1852, sec. 134, 433.) There is only one exception, and that does not exempt a corporation debtor or its franchise. By sec. 438, a debt can be levied upon and sold only when “given up by the defendant;” but no property, either corporeal or individual, is exempted, except a limited amount of personal property, in favor of families; and such has at all times been substantially the law'of the State of Indiana. Franchises are not personal property, and of course could not be sold in England by a ft. fa. as goods and chattels. But undoubtedly the rents* and profits of ferries, and markets, and mills, and the rents and profits of other real estate, have always been subject to seizure in England.
In Indiana, on a judgment against the owner of a ferry, if you sell the land, the' ferry right will pass to the purchaser, with the land, as it is appendant thereto, and cannot exist without it. So with the sale of a mill, where the seat has been condemned, the purchaser takes the property with the privileges of keeping up the dam and taking tolls under the State law. But in Indiana there must be an appraisement of the property, and that assessment will be of the real estate and the right to exercise the franchise, the rents and profits being first valued, and first sold, as the franchise held by an individual, in a mill or ferry, is subject to sale with the property, and descends to heirs. Why does not the same principle apply to a toll bridge, held by á corporation, where the legal tolls are fixed by law, as in this case? The decision of the court in the ease of the West Eiver Bridge, (6 How., 533,) is referred'to as directly in point.
If it were shown that corporations in Indiana are exempt from the execution laws of the State, and as' such protected in their property from levy and sale, and that consequently they form an exception to the general laws that govern other debtors,, relieving them from the payment of their debts, there would be an end of the question; but as such is not the case, it is submitted that their property, including the franchise, is subject to appraisement and sale, as was done in this case at law, and therefore the appellees have no equity on that ground alone, and the decree of the Circuit Court should have dismissed the bill at the cost of the complainants below.
I maintain, further, that the appellants, being the execution defendants at law, are the only party that can raise the question, whether this property'can be sold at law; and as they insist that it shall be so sold, and as it has been so sold, it does not lie with the appellees, the execution plaintiffs, to say that the property in question was not subject tó be sold at law. They do not deny but that it has been levied upon at their instance, and appraised and sold, and the levy and appraisement returned; nor is it material to the question whether the purchaser shall pay for the property and receive a deed or certificate of purchase, or not, as a venditioni exponas can issue upon the return, at any subsequent time, pending.which, and before another sale, the levy, appraisement, and return, are a prima facie satisfaction of the judgments. Therefore there can be no equity in the case, and the decree of the Circuit Court should be reversed, with directions to the court to dismiss the bill.
The fourth assignment of errors, that the court erred in overruling the demurrer to the original bill, in effect raised for the consideration of the court the whole question in the case, viz: Has the court of chancery jurisdiction to appoint a receiver of the rents and profits of a corporation defendant which is insolvent, or has no available real estate except that which ia derived from, the use of its franchise ? That the court has such power, and that it has at all times been exercised for the' advancement of justice, the repeated decisions of the courts will show.
The case of Eripp v. The Chard Railway Company, is an authority for all we ask here.
21 Eng. R. and Eq. Rep., 53. .
It appears from the bill in this case, and it is not denied, that all the possible ways or means which the complainants have of making their debt or judgments is out of the defendants’ bridge. That is all the property.the defendants have. They say, “there is the bridge; take it.” If it was clear that the plaintiff could regard the bridge as real estate, and sell it under the Indiana execution laws, by exposing the rents and profits to sale, and that the purchaser could enjoy those rents and profits, upon the purchase; or, if the purchaser of the bridge could keep it up, and receive the tolls, then the plaintiffs might have an adequate remedy at law.
Nebeker, in his answer, put in under'oath, states that the company has no right to the soil upon which the bridge stands; it is at most in the allegation of the bill but a mere easement — nothing that the execution or plaintiffs could make out of it, by sale. If the bridge is real estate, then the rents and profits are to be sold; if personal, then the rents and profits could not be sold. What kind of property is it?
The complainants say that the bridge is valueless, except in connection with the franchise — the right to take tolls. Nebeker answers, that he is advised and believes that the franchise cannot be sold nor exercised by third persons, except by consent'of the corporation.
The Circuit Court of Indiana has adopted the statute of that State, requiring the appraisement of property upon execution sales. If the property is real 'estate, the rents and profits have to be appraised as well as the fee; and the fee cannot be offered as long as the rents and profits are sufficient, at two-thirds their appraised i alue, to pay the debt. If the bridge is personal property, then two-thirds of $70,000 would have to be paid for the bridge, which the purchaser could not lawfully maintain one hour over or upon that public highway, the Wabash river. So that the court can see that this bridge, company has brought the complainants to a “dead lock,’and they have no other adequate remedy but a receiver.
The grant in this case being to three persons, if they sell out their bridge, or it is sold out by execution, the bridge becomes the property of a private individual, and the charter of the defendants is forfeited, and the existence of the company will be, by the act, terminated.
In the matter of Highway, 2 New Jersey, 298.
In- the case of Macon and Western Railway y. Parker, (9 Geo., 377,) it is doubted whether a railroad is subject to levy and sale. It is said it would expose the property to sacrifice, be detrimental to the interests of creditors, and defeat the objeets and intentions of the Legislature in granting the charter. In North Carolina (State v. Rives, 5 Iredell, 297) it is held, that the tangible property of a railroad could be sold, but that its franchise could not. A turnpike road cannot be' sold on execution.
Ammans y. New Alexander Turnpike Co., 13 Rawle, 21Ó. In this case, the grant was to the corporators for the benefit of the public. The public were to use the bridge, and these corporators were intrusted with the important duty of keeping and maintaining it over the navigable waters of the Wábásh river, so as not to obstruct the navigation thereof. •
There is no equity with the defendants. -It is evident they were baffling and.trifling with the complainants. They are in the possession of a large annual sum of rents and profits, worth, in the opinion of the appraisers, $7,000 per annum, and sworn by Nebeker to be from $620 to $1,817 per quarter.. ■ With these. moneys the plaintiffs’ judgments could readily be paid, were it not for the unconscientious resistance of the defendants..
The decree of the court, in appointing the receiver, was of the most favorable character to the defendants. It provided for conforming, in every respect, with the charter of the defendants; and by it the complainants were constrained to wait for their pay until it wa& earned in tolls at the bridge. Not many debtors can impose upon théir creditors such delay as that; but so it is, by tbeir peculiar charter the plaintiffs have no other remedy.
Syllabus and headnotes are prepared by the reporter or publisher, not the court, and are not part of the opinion.
