1881. January son's V. W. C., V. S. R. R. Co. and Abbott V. Same. enlightened commerce. They have under the law Term. public duties to perform, the neglect of which involves a forfeiture of their chartered privileges and incalcuWilliam-lable misfortunes to the country. The personal safety adm'r and the lives of thousands of people are daily and hourly dependent upon their proper equipment and M. & G. management. It is stated in one of the briefs filed in this cause that at the commencement of the past year there were more than ten thousand miles of railway Iron Co. in the United States being operated under the control, more or less immediate, of the courts. The assertion might safely be hazarded that nine-tenths of these companies were at the time indebted for necessary expenses incurred in operating their roads. When we consider the magnitude of the interests and the meritorious character of the claims thus involved, it is not at all suprising that the chancery courts, in the appointment of receivers for railroad companies have modified in some measure the rules applicable to ordinary mortgages of real estate. It has been said that this is a new departure. It may be so. Such departures are constantly occurring in the changing conditions of society. More than two hundred years ago the doctrine was established in England that the admiralty jurisdiction was limited to the ebb and flood of the tide. And that doctrine was adopted and followed in the United States until the year 1851, when it was deliberately abandoned by the supreme court of the United States, and it was then held that the admiralty and maritime jurisdiction granted to the Federal gov ernment was not limited to tide waters, but extended to all public navigable lakes and rivers where commerce is carried on between the different States. 12 How. 443. The whole law of insurance is not more than a century old, and more than half of its important principles and distinctions is of recent growth and son's V. development. In the memorable language of Lord 1881. January Cottingham, it is the duty of courts of equity to adapt Term. its practice and course of proceeding as far as possible. to the existing state of society, and to apply its juris- Williamdiction to all those new cases which, from the progress adm'r daily making in the affairs of men, must continually w. C., V. arise, and not from too strict an adherence to forms M. & G. and rules established under very different circumstances decline to administer justice and to enforce rights for which there is no remedy. Tyler v. Salmon, 4 Myl. & Iron Co. Cr. R. 137, 619, 635; Mare v. Mulany, 1 Myl. & Cr. R. 559; Red. on Railroads 477. For these reasons I think we ought to follow the decisions of the supreme court of the United States as laid down in the cases mentioned, and for the additional reason it is most important and desirable that upon such a question as this the Federal courts and the State courts within the same territorial limits shall adopt the same rules, and administer these trusts upon the same recognized principles of equity jurisprudence. Upon the whole case my opinion is that the claims which are the subject of this controversy ought to be paid out of the net income of the road in the hands of the receiver. If this income has been used under the instructions of the circuit court for other purposes, the proceeds of the sale of the road itself may be used pro tanto to satisfy such claims. To this no well founded objection can be urged. It is a mere restoration of what has been diverted since the receivership; and the result is precisely the same to the parties concerned. If as between the mortgage creditors themselves a portion of them have received, in the way of interest, that which they were not justly entitled to; or if expenditures have been made which ought not to have been made, it is no fault of the petitioners and the other like creditors. The existence of these was known as S. R. R. and Abbott v. Same. 1881. early as November, 1876, and it was no doubt underJanuary Term. stood they would be asserted in this suit. The decree of the circuit court of Alexandria must be reversed, William- and the cause remanded for further proceedings in that adm'r court, in conformity with the views herein expressed. son's V. W. C., V. Co. and Abbott The decree was as follows: The court having maturely considered the transcript Iron Co. of the record of the decrees aforesaid and the argu 'v. Same. ments of counsel, is of opinion for reasons stated in writing and filed with the record, that the claims of the appellants for sevices rendered and for supplies furnished the defendant corporation previous to the appointment of the receiver, have priority over the claim of the mortgage or trust created in the proceedings mentioned, and the said circuit court erred in not so holding by its decrees of the 25th of September, 1878, and the 13th of February, 1880. Whereupon for the error aforesaid, it is decreed that so much of the said decrees as is in conflict with this decree be reversed and annulled and that the appellants recover their costs incurred in the prosecution of these appeals to be paid out of the funds under the control of the said circuit court. It is further ordered and decreed that these causes be remanded to the said circuit court to be there proceeded with to a final decree in conformity with this decree and the principles laid down by this court in its opinion aforesaid. DECREE REVERSED. Richmond. GIBERT V. WASHINGTON CITY, VIRGINIA MIDLAND AND January 13. Absent Moncure, P. 1. At the time a receiver is appointed at the suit of trust creditors to take possession of a railroad and carry it on, there are a number of executions against the company in the hands of the sheriff; and there are funds derived from income and balances due from employees, in the hands of or due to the company. HELD: The execution creditors are entitled to have these funds and balances applied to the satisfaction of their debts in preference to the trust creditors. 2. If these funds or balances have been applied under the order of the court to other debts, they will be replaced out of the revenues received by the receiver since his appointment. This is another branch of the case of Graham v. The Washington City, Virginia Midland and Great Southern Railroad Company, then pending in the circuit court of the city of Alexandria. Whilst the cause was pending in that court a number of persons who had recovered judgments and sued out executions against the company before the appointment of a receiver, came into the cause, and claimed that their executions were liens upon the funds in the hands of the company or to which the company had claim at the time of the appointment of the receiver. By the decree in the cause made on the 25th of September, 1878, the court held that the execution liens, 1881. January Term. V. M. & G. Co. 1881. which existed at the time of the appointment and January Term. qualification of the receiver, attached to all funds in hand, and balances outstanding, which belonged to the Gibert defendant corporation, and that such funds and balW. C., V. ances were subject thereto; and that where such balS. R. R. ances and funds have been heretofore otherwise appropriated by the receiver under the orders of the court, the same should be made good out of funds and receipts of the company which have since or may hereafter come into the hands of said receiver, to the extent to which said balances and funds were so appropriated. And the commissioner was directed to report the amount of said funds and balances, and what executions were liens thereon, and their priorities. The commissioner made his report, showing the amount of said funds and balances at the time of the appointment of the receiver to be $21,217.90, and he also reported the execution liens and their priorities. And the cause coming on again to be heard on the 30th of May, 1879, the report of the commissioner was confirmed, and the receiver was directed, out of the assets in his hands or to come into his hands, and on account of the said sum of $21,217.90, to pay to the said execution creditors-naming them-each a certain sum of money. And thereupon Frederick E. Gibert, one of the mortgage bondholders, applied for and obtained an appeal to this court. F. L. Smith and W. W. Gordon, for the appellant. J. Alfred Jones, William H. Payne, C. M. Blackford and H. R. Garden, for the appellees. STAPLES, J., delivered the opinion of the court. |