Page:Federal Reporter, 1st Series, Volume 4.djvu/200

 18G FEDERAL REPORTER. �said gifts and advances, to be expended bj said receiver, to complete Baid road and bridge, will not exceed the sum of $30,000. It is now ordered that he (the receiver) do expend Buch Bum for the purpose aforesaid, and that he be empowered to enter into ail contracta and agreements that shall be re- quired for the purpose of the extension aforesaid. And as to ail the moneys that may be expended, and ail liabilities incurred, by said receiver in carrying ont the provisions of thia order, the eaminga of said road are charged as with a first lien, prior to ail encumbrances on said road." �The application of the city of Logansport is (the raUway Company kaving been sold under the order of this court on the foreelosure proceedings of the mortgagees) that a portion of the purchase money, which is now in the possession of the court, shall be appropriated towards the payment of the penalty which is imposed by thia contract of August 1, 1874, on both the railway contracting parties; and, of course, on this railway, whose property bas been sold. The proceeds of the sale being now in the hands of the court, the question ia whether this can be done. I think it cannot, and that the court cannot make this order, nor grant the city of Logans- port the relief which it asks. This is a penalty in the nature of liquidated damages, which the city of Logansport imposed on each of these contracting parties as a consideration for which it agreed, on its own part, to issue these bonds, and which bave been iasued. There can be no doubt, I think, as to what is the true construction of this order of the court : that it intended simply that the earnings of the road should be held and become a prior lien as against ail encumbrances upon the road for the $30,000, or whatever sum was necessary overandabove the $95,000 which was given by the other parties to complete this work. This being an expenditure of money made by the receiver, under the direction of the court, it would be an unreasonable construction of the order to hold that it included not only the money which the receiver might spend, but that which had been appropriated by the city of Logansport, and by the Detroit, Eel Eiver & Illinois Eailroad Company. The provisions of the order which the receiver ����