Covington Drawbridge Company v. Shepherd (62 U.S. 112)

THIS was an appeal from the Circuit Court of the 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 John 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 free from all let and hindrance of the said Covington Drawbridge Company, their agents and 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 the 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 further 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 the tolls and income of said bridge, over and above the expenses as aforesaid, to the complainants herein, in a pro rata proportion upon their 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. Newcomb, 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 performance 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.'

An appeal from this decree brought the case up to this court where it was submitted on printed arguments by Mr. O. H. Smith for the appellants, and Mr. Thompson for the appellees.

The first point raised by 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 the reporter to take particular notice of the remaining points in the case.

Mr. Smith contended:

''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 law, sufficient in amount to satisfy the judgment, with ample legal powers to make the money, by process at law, and a court of chancery 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 the 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 plaintiffs 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 complete.

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 importance to the credit of corporation securities, as well as to the rights of their creditors. 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 the 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 no 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 portion of the 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 not 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, or 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 539, 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 totidem 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 the Constitution of the United States.

West River Bridge Co. v. Dix, 6 Howard, 507.

Enfield Toll 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 the laws of the land on individuals. The rule is not to be confined to cases within the eminent domain, or to the taxing powers. It 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 domain. 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. 3, p. 20.'

West River Bridge Co. v. Dix, 6 Howard, 534.

See the opinion of Justice Woodbury, same case, 541, 542.