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Argument for Petitioners.
Before such conclusion was reached, however, the State was not only given an opportunity to test that matter through the operation of the road for more than a year by a receiver of its own choice, but was given every opportunity to prove the contrary. It was formally made a party to this cause on March 27, 1919, but had been actively engaged in the litigation for more than a year prior thereto.
In the opinion rendered upon the demurrer to the suggestion in the prohibition case, something is said to the effect that the State was not made a party to the suit until after the decree of foreclosure had been entered and the sale of the property made, but when the court came to settle the judgment to be rendered in the case, its ruling was not based upon any matter of procedure, but squarely upon the authority of the Circuit Court, which was prohibited "from exercising any further jurisdiction in said cause relating to the junking of said property" and "from undertaking by decree, order or otherwise to authorize the dismantling of said railroad, or the taking up and selling of the rails therefrom." And this view has expression by the same court in the subsequent case of Anderson v. Dent, 85 So. Rep. 151.
Under state statutes and constitution, the trustee's rights are limited to the rights of a lienor, that is, to the proceeds of the mortgaged property, and do not extend to the corpus, and enforcement of the lien can only be sought by foreclosure in the Circuit Court. Denial to a trustee of the right to subject the proceeds of the property to his lien is a deprivation of the very substance of his right. New York Trust Co. v. Portsmouth & Exeter St. Ry. Co., 192 Fed. Rep. 728; Jack v. Williams, 113 Fed. Rep. 823, affd. 145 Fed. Rep. 281; Central Bank & Trust Corp. v. Cleveland, 252 Fed. Rep. 530; Iowa v. Old Colony Trust Co., 215 Fed. Rep. 307; Brooks-Scanlon Co. v. Railroad Commission of Louisiana, supra.
Argument for Respondents.
254 U. S.
The Supreme Court of Florida has indicated no other means whereby a mortgagee can have relief than by foreclosure suit and the statutes make it clear that he must get his relief from the proceeds of the foreclosure sale or not at all. To deny him the right in the foreclosure case to have the property sold for the purpose of dismantling is to deny him the only redress that will permit him to subject all that is of any value to the lien of his mortgage. The statutes stand to-day precisely as they stood when the trust deed was made. Butz v. Muscatine, 8 Wall. 575. The holding of the Supreme Court of Florida affects the essential qualities of the plaintiff's lien. The J. E. Rumbell, 148 U. S. 1; Green v. Biddle, 8 Wheat. 76, 84; Bronson v. Kinzie, 1 How. 311; Gantly's Lessee v. Ewing, 3 How. 707; Barnitz v. Beverly, 163 U. S. 118; Bradley v. Lightcap, 195 U. S. 1.
The practical effect of the ruling of the court is to take from the plaintiff's security all that there is of any value in it that the property may be held for public use, and this is depriving plaintiff of his property without due process of law. Brooks-Scanlon Co. v. Railroad Commission of Louisiana, supra; Ochoa v. Hernandez, 230 U. S. 139, 161.
The effect of the judgment and writ of prohibition was to restrict the plaintiff's right to the sale of the property with this limitation upon its use: that it shall not be dismembered when its use means continuing loss. Under the decisions of this court that is confiscation. Smyth v. Ames, 169 U. S. 466; Northern Pacific Ry. Co. v. North Dakota, supra; Norfolk & Western Ry. Co. v. West Virginia, supra.
Mr. Dozier A. De Vane for respondents:
The authority of the State sustained by the Supreme Court of Florida neither deprives the trustee of his property without due process of law nor subjects private prop
Argument for Respondents.
erty to public uses without compensation. The decision merely holds that an inferior court is without jurisdiction to order dismantling of a carrier's property to satisfy a creditor's lien taken upon property then charged with a public duty, where the State is not a party to such suit. If the mortgage lien contracted for is ineffectual to secure the indebtedness, the mortgagee can not justly complain, since the lien was taken under the law governing the subject-matter of the lien, Barton v. Barbour, 104 U. S. 126; and "there is no statute in this State giving such authority to the courts or to other tribunals." 82 So. Rep. 866.
This presents no question reviewable by this court. The State has maintained throughout this proceeding that the trustee has no right to have determined in a foreclosure suit the question of dismantling of a carrier's property and that this was especially true where the State was not a party to the proceedings. The rights of the purchaser at the foreclosure proceedings are not involved in this case and can not be considered. Neither is the right of the owners of the property to discontinue operation and dismantle.
"Upon principle it would seem plain that railroad property once devoted and essential to public use, must remain pledged to that use so as to carry to full completion the purpose of its creation; and that this public right is superior to the property rights of corporations, stockholders and bond-holders." And, "a corporation has no right as against the State to abandon the enterprise." Gates v. Boston & New York R. R. Co., 53 Connecticut, 333.
See also Thomas v. Railroad Co., 101 U. S. 71; Central Transportation Co. v. Pullman's Palace Car Co., 139 U. S. 24.
This duty of a carrier is most frequently defined in the following language: "Such corporations may not by any
Opinion of the Court.
254 U. S.
act of their own, without the consent of the State, disable themselves from performing the functions the undertaking of which was the consideration for the public grant." Thomas v. Railroad Co., supra; King v. Severn & Wye R. R. Co., 2 Barn. & Ald. 646; and many other
Persons in private business may abandon it at their whim or pleasure. Not so with a railroad. It is a public highway. It is created by the State for the public use. It exercises the State's great power of eminent domain for the public good. Barton v. Barbour, 104 U. S. 135; Ellis v. Tampa Water Works Co., 57 Florida, 533; Ellis v. Atlantic Coast Line R. R., 53 Florida, 650; Gainesville v. Gainesville Gas & Electric Power Co., 65 Florida, 404.
MR. JUSTICE HOLMES delivered the opinion of the court.
This is a proceeding by the relators seeking a prohibition forbidding a State judge of a lower Court to confirm a sale of a railroad "for the purpose of and with the privilege on the part of the purchaser of dismantling the same" as authorized by a foreclosure decree. The trustee of the mortgage under foreclosure was made a party to the proceeding and demurred upon the ground that the prohibition would deprive him of his property without due process of law contrary to the Fourteenth Amendment of the Constitution of the United States. The Supreme Court of Florida granted the prohibition, 82 So. Rep. 866, and thereupon this defendant sued out a writ of error and filed a petition for a writ of certiorari from this Court. Action upon the latter was postponed to the hearing on the writ of error. Certiorari being the only remedy the petition is granted, as the case is deemed a proper one to be reviewed.
The road concerned is that of the Ocklawaha Valley Railroad Company. It succeeded by foreclosure of a
Opinion of the Court.
previous mortgage to a logging road, and gave the present mortgage to Hood, one of the plaintiffs in error, in trust for the bondholders. The bonds are held by the Assets Realization Company. Before the present bill for foreclosure was filed the Railroad Company had applied to the Railroad Commission for leave to cease operations, had been refused, and the State, by the Railroad Commission, had obtained an injunction forbidding the dismantling of the road and requiring it to go on. It ceased operations however on December 7, 1917. On December 10, 1917, the bill to foreclose was filed. On the same day the State filed a bill in the same Court, ancillary to its other bill, asking for a receiver to operate the road until further order, and a few days later sought to have its bill consolidated with the foreclosure suit. This was denied and the State's bill was dismissed. The decree of foreclosure complained of was entered on December 24, 1917, but on January 22, 1918, in deference to the State's contention that the road could be run at a profit, although the State had not been admitted formally as a party, H. S. Cummings was appointed a receiver, he being the most available man and being able by his connections to give the road a good deal of business in the way of carrying lumber. After nearly a year's trial the Court was satisfied that the road could not go on and thereupon ordered a sale which was made on February 3, 1919. On March 27, 1919, the Court admitted the State as a party and informed counsel that if it turned out, as the receiver and State insisted, "that the road was operating so as to pay expenses of operation and the taxes and had some reasonable show for business the sale would not be confirmed." On May 5, 1919, the Court entered an order finding that the road was hopelessly insolvent and could not be operated so as to have any net income whatever but postponing confirmation of the sale until May 12, before which time the proceedings for prohibition were begun.