under the laws of this state, any fuel, ties, materials, supplies, or any other articles or thing necessary for the construction, maintenance, operation, or repair of such roads by contract with said corporation, or who shall have done and performed, or shall hereafter do and perform, any work or labor for such construction, maintenance, operation, or repair by like contract, shall be entitled to be paid for the same as part of the current expenses of said road; and in order to secure the same shall have a lien upon all the property, real, personal, and mixed, of said railroad corporation as against such railroad, and as against all mortgages or other liens which shall accrue after the commencement of the delivery of said articles, or the commencement of said work or labor: provided suit shall be commenced within six months after such contractor or laborer shall have completed his contract with said railroad corporation, or after such labor shall have been performed, or materiał furnished."

The rolling-mill company began to deliver to the Illinois River Railroad Company on September 1, 1874, iron rails and other material to be used in the construction of its road, and continued such delivery until November 11, 1874. The material so furnished, of the value of $107,785.09, was used in the construction of the railroad. Within less than six months from November 12, 1874, the date when the last material was delivered, the rolling-mill company filed in the proper court its bill of complaint to enforce its lien under said statute. The lease of its road made by the Illinois River Railroad Company to the Alton Railroad Company and its deed of trust to George Straut were not executed until March 1, 1875, long after the delivery of said material had been commenced. The lien of the rolling-mill company under the statute would therefore seem to be complete and superior to that of the trust deed and lease.

The appellants, however, contend that the rolling-mill company waived its lien by the contract between it and the construction company and the Alton Railroad Company of August 7, 1874, by which, it was stipulated that the rails and other materials furnished by the rolling-mill company should be used in the construction of the rail-' road of the Illinois River Railroad Company, and that until fully paid for the rolling-mill company should have a lien thereon, and that the possession thereof by the railroad company should be the possession of the rolling-mill company. We do not think that this stipulation shows any purpose on the part of the rolling-mill company to waive its statutory lien. When the contract was made, the railroad for which the materials were to be furnished was in contemplation only. The survey of its route had not been completed, nor had the right of way been obtained. The evident purpose of the stipulation was to secure a specific lien on the materials furnished, and to require them to be used in the construction of the railroad where they would be subject to the statutory lien, and the facts of this case show that this was a wise precaution. The contract therefore, so far from showing a waiver of the statutory lien, shows a purpose on the part of the rolling-mill company to retain it. The statutory lien was therefore not lost. On this question the case of Clark

v. Moore, 64 Ill. 279, is in point. In that case the supreme court of Illinois says:

"It is also insisted that appellees waived their rights when they sold the property, by reserving a lien upon it in a written contract; that they thereby received and held additional security that operated to destroy any lien that would otherwise have attached. It is true that where a laborer or materialman receives security collateral to the property improved, whether the security be personal or a mortgage on or a pledge of other property or chose in action, the law presumes that it was intended to waive or release the lien upon the premises. In their effort to retain a lien on the machinery furnished by appellees, they took no collateral or independent security. It was but a futile effort to retain a superior lien on the property furnished over and above other lienholders. Had these parties taken a mortgage on these lots and the building, which the law would have adjudged void, would any one claim that they could not assert their lien? The lien attaches to and incumbers the property, to improve which the material is furnished, and the effort to acquire a more specific and exclusive lien in nowise manifests intention to release the property from all liens and look to other security for payment, but it shows the very opposite intention, an intention to hold, if possible, the property liable for the payment of their claim."

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This authority decides the question in hand against the appellants, and is entitled to great, if not conclusive, weight in this court.

The appellants further contend that the rolling-mill company, by the contract of August 7, 1874, gave credit for the materials to be purchased by it, which extended beyond the time within which suit would have to be brought to fix and enforce the statutory lien, and that this fact shows conclusively that the statutory lien was waived. It is well settled that an agreement for the extension of credit by receiving a note of the party, or the independent security of a third person, falling due at a day beyond the period within which the lien must be asserted, will be no waiver when the agreement to give the note or security has not been performed by the promisor. To hold otherwise would be to say that the builder or material-man must have intended to waive his lien in the event of a refusal to comply with the agreement. On the debtor's refusal to keep the agreement, the builder or material-man ought not to be bound by it, but should be remitted to his rights, independently of the contract. The Highlander, 4 Blatchf. 55. It is clear from the terms of the contract that the rolling-mill company never agreed to extend credit for the materials furnished unless notes were given therefor, with the stockholders of the construction company as indorsers, and with the bonds of the construction company secured by the deed of trust to Norton as collateral security. The contract to give credit was clearly conditioned upon the delivery of the notes and bonds. It would be absurd to hold that on the failure to deliver them the rolling-mill company had nothing to show for its iron rails and other materials but the promise of an insolvent railroad company and an insolvent construction company to deliver the notes and bonds. They were as impotent to deliver the notes and bonds as they were to pay


Such could not have been the intention of the parties to the contract. On the failure of the companies to deliver the notes and bonds according to the contract, the rolling-mill company was entitled to immediate payment and to its statutory lien to secure it, because the credit was conditioned upon the giving of security, and the security was not given. It has been so held by the supreme court of Illinois in the case of Gardner v. Hall, 29 Ill. 277. Gardner filed his petition to enforce a mechanic's lien on a contract for doing certain work. The contract provided that payment of a certain installment, due upon a day named, should be postponed for a period extending more than a year after the completion of the work, in case a mortgage in the premises should be given to secure said installment. The petition was demurred to, and the demurrer was sustained. On appeal this decree was reversed, and the supreme court said: “An agreement was made to give a mortgage which would have destroyed the lien, but no mortgage was given, and hence the lien remained. So was an agreement made to extend the time of payment which would destroy the lien. But the mortgage was not executed, hence the time was never extended and the lien never waived thereby." See, also, The Highlander, ubi supra. We are of opinion, therefore, that as the purchasing companies did not perform the condition upon which credit was to be given, no credit at all was given, much less a credit extending beyond the time for the enforcement of the statutory lien.

It follows from these views that the contention of appellant that the suit begun May 10, 1875, by the rolling-mill company to fix and foreclose its statutory lien, was brought before the cause of action accrued, and cannot, therefore, be treated as a compliance with the statute, cannot be sustained, for at that date the debt was due and the lien in force. In our opinion the rolling-mill company had, under the statute of Illinois, a lien upon the railroad and its appurtenances, of the Illinois River Railroad Company, for the value of the materials furnished by it and used in the construction of the railroad, superior to the lien of the trust deed executed to George Straut on March 1, 1875, and to the lease of said railroad, executed on the same day, to the Chicago & Alton Railroad Company, and that the decree of the circuit court ordering the railroad to be sold to pay the sum due for said materials so used was just and right.

It is, lastly, assigned for error, that the circuit court rendered a personal decree against the Alton Railroad Company in favor of the rolling-mill company, and awarded execution thereon. The personal decree complained of was for $29,796.30. This sum was the value, with interest, of certain iron rails, etc., sold and delivered by the rolling-mill company to the Illinois River Railroad Company and the construction company, under the contract of August 7, 1874, which were not used in the construction of the railroad, but were sold by the purchasing companies to the Alton Railroad Company, and by it


converted to its own use. The circuit court found that the rolling. mill company had a lien upon said materials; that the Alton Railroad Company bought said materials with notice thereof, and had never paid for the same, and had alleged, as a reason for its failure to pay, the want of title in the companies from which it purchased. The facts so found are clearly shown by the record, and do not seem to be disputed. The Alton Railroad Company, however, insists that there was no lien on said materials under the contract of August 7, 1874, because the contract was not acknowledged and recorded as required by the law of Illinois relating to chattel mortgages. That act provided as follows:

"That no mortgage, trust deed, or other conveyance of personal property, having the effect of a mortgage or lien upon such property, shall be valid as against the rights and interests of any third person, unless possession thereof shall be delivered to and remain with the grantee, or the instrument shall provide for the possession of the property to remain with the grantor, and the instrument is acknowledged and recorded, as hereinafter directed; and every such instrument shall, for the purposes of this act, be deemed a chattel mortgage." Rev. St. Ill. c. 95, § 1.

The theory of the appellants is that the Illinois River Railroad Company and the construction company, being the owners by purchase of the iron rails, retained possession of the same, and by the contract of August 7, 1874, gave to the rolling-mill company a chattel mortgage thereon, which was never acknowledged and recorded, and that consequently the lien fails. But the facts of the case are not in accord with this theory. When the contract referred to was made the iron rails were not the property of the purchasing companies. It does not appear that the rails were at that time in existence, and they were certainly not in possession of the purchasing companies. So that this is not the case contemplated by the Illinois \statute, which clearly refers to a mortgage on personal property, of which the mortgagor is owner, and of which he is in possession, and of which he wishes to retain possession. The case is that of the owner, namely, the rolling-mill company, of personal property, who sells it and delivers the physical possession to to its vendee, and by the bill of sale retains a contract lien thereon. In such a case it is clear that the original vendor can enforce the lien against a subsequent purchaser who had actual notice of the lien and had not paid for the property, and refuse to pay for it on the ground that the first vendee from whom he bought had no title thereto. The chattel mortgage law above quoted can have no reference to such a case. Such an application of it would be unjust, inequitable, and unreasonable. The law has never been so applied by the courts of Illinois.

We find no error in the proceedings and decrees of the circuit court. They are therefore affirmed.

Massachusetts Mut. Life Ins. Co. v. Union Rolling-mill Co. is an appeal from the same decree affirmed in the preceding case. The

(109 U. S. 446)

insurance company, by leave, filed an intervening petition, claiming to be the owner of 45 of the bonds secured by the trust deed to George Straut. It has never proved its *possession or ownership of any of said bonds, either before the master or the court. If it had it would be in the same position as any other holder of said bonds, all of whom, so far as the questions raised by this appeal are concerned, were represented by Dumont, the complainant in the original bill. These questions have all been decided in the preceding case.

In this case also the decree appealed from must therefore be affirmed.

CUNNINGHAM v. MACON & B. R. Co. and others.1

Appeal from the Circuit Court of the United States for the Southern District of Georgia.


* HARLAN, J., dissenting. The bill in this suit was filed by Cunningham, a citizen of Virginia, in behalf of himself and all holders of the second series of the bonds of the Macon & Brunswick Railroad Company, indorsed by the state of Georgia, who may choose to be made parties to the suit and share the expenses thereof. The defendants The Macon & Brunswick Railroad Company, a corporation of Georgia; Edward A. Flewellyn, W. A. Lofton, and George S. Jones, citizens of Georgia, and styling themselves "Directors of the Macon & Brunswick Railroad;" J. W. Renfroe, treasurer, and Alfred H. Colquitt, governor, of the state of Georgia, both citizens of that state; the First National Bank of Macon, a corporation created under the laws of the United States and located at Macon, Georgia; and John H. James, a citizen of Georgia. The suit relates to the Macon & Brunswick Railroad, of which Flewellyn, Lofton, and Jones, as directors aforesaid, are in possession, and which they are managing and operating in entire disregard, as the bill alleges, of the rights of complainant and other holders of the before-mentioned bonds. But the suit has other features of which no notice is taken in the opinion of the court. The bill alleges that on or about July 2, 1873, the then governor of Georgia not only seized the railroad and all other property of the company, but certain other property embraced in a deed of trust to one Whittle, which was not covered by the statutory and executed mortgages, so far as the $1,950,000 series of indorsed bonds is concerned, because acquired by the company, after the last of that series had been indorsed, with funds other than the proceeds of the bonds, but which was covered by the mortgages so far as the $600,000

1See majority opinion, ante, 292.


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