Page:Federal Reporter, 1st Series, Volume 7.djvu/391

 lAYLOR V. PHILADEIjJPHIA 4 EEADING B. CO. 379 �ftnd county of New York) the court, in appointing a receiver, ordered, amongst other things, that he sbould ascertain — �" ' The amount due by said companyi and unpaid, for current materMi and supplies purchased for the use and operation of the railroads of the said Company, within four months prier to the entry of this order, and he shall pay the amount found to be justly due ; but he shall not have power to pay such debts of longer standing without f urther order of this court. ' �" In the case of Olark v. The WUUameport e Elmira R. Co. (supreme court of Pennsylvania) that part of the order appointing the receiver, which had directed him to pay — �" 'Ail sums due or maturing to the employes of said railroad, and the amounts due and maturing for materiali and supplies about the operation for the use of said railroad,' — �— " was objected to ; but the court held that thia direction in the order ■was proper, and should ' e retained, notwithstanding the objection, iiirong, J.jSaying: �" ' There is obvions justice in paying out of the gross bills of the railroad the workingmen and material men who have kept it in use. Their labor and supplies have enured to the benefit of the mortgage bondholders ; and if they had been paid at the time when the la'ior and materials vi^ere fur- nished, as they should have been, even in preference ta the mortgagees, no one could have coraplained. Their preferment now places the mort- gage bondholders in no worse condition than they would have been if payment had been made when the debts were contracted. The equity of the employes was then superior, and I am unable to see why it is less now.' �" The learned judge thcn refers to several authorities, and overrules the raotion to amend the order to the receiver, either by striking out the direction which was complained of, or by addlng thereto a proviso that nothing therein contained should in any wise aSect or prejudice the rights at law or in equity of the flrst-mortgage bondholders. This opinion of Jus- tice Strong has not been reported, but we have examined a printed copy of it. It is amply supported by the supreme court of the United States in the case of Fosdick v. SchaXl, 99 U. 8. 235, hereafter referred to ; and see, also, Qurney v. The Atlantic e Qreat Western R. Go. 58 New York Court of Appeals, (13 Sickels,) 358. �" The rule followed by your honorable court, in its decree appointing these receivers, thus appears to be firmly established ; and the grounds upon which it is based, and which are set forth in the opinion of Justice Strong, to which reference has just been made, are also stated in the opinion of Chief Justice Waite in the case of Fosdick v. Schall, supra; and it may now be taken to be the well-settled doctrine of the American courts, that where the holders of railroad mortgage bonds obtain the appointment of a receiver, pending proceedings for foreclosure, the court will apply the net income, in its discretion, to the payment of the employes, and of the material men, who have furnished the, labor, materials, and supplies necessary for the operation of the road. In some of the cases, a limit as to the time within which the labor must have been performed, or the materials or supplies furnished, has been flxed ; but there is nodeflnite rule as to the time to be designated, and in every case it must depend upon ��� �