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"fraudulently," and "surreptitiously” neither informs the conscience of the court of the facts of the case upon which it is asked to act, nor enables the defendant to meet the accusation of wrongdoing made against him. The pleading is open to the further objection that it is lacking in certainty and positiveness, and its charges are contingently and alternatively stated. It is not enough to denounce and opprobiously characterize the party or transaction assailed, but the facts should be so stated that the nature of the matter in issue will prima facie warrant the relief sought. Brooks v. O'Hara, 8 Fed. 531; Hazard v. Griswold, 21 Fed. 178; Lafayette Co. v. Neeley, Id. 738; Fogg v. Blair, 139 U. S. 118, 11 Sup. Ct. 476. “A court of equity, when examining a bill of complaint to find a grievance which will justify its interposition, looks to the substantive facts averred in it, not to the adjectives or adverbs which may be added to qualify them.” Per Grier, J., in Magniac v. Thomson, 2 Wall. Jr. 254, Fed. Cas. No. 8,957. Such epithets are merely allegations of conclusions of law, which a demurrer does not admit. Ambler v. Choteau, 107 U. S. 586, 591, 1 Sup. Ct. 556; Fogg v. Blair, supra; Dillon v. Barnard, supra; U. S. v. Ames, 99 U. S. 35, 45; Pullman's Palace-Car Co. v. Missouri Pac. Ry. Co., 115 U. S. 587, 6 Sup. Ct. 194.
Whether the bill makes a case for relief on the ground of mistake of fact, it is not necessary to decide. Accepting its statements as sufficient for that purpose, it seems clear that plaintiff's failure to promptly repudiate the settlement is fatal to his claim for rescission. He suffered severe pain in the injured shoulder at the time he executed the release. Without reproaching him for accepting the opinion of the surgeon that the pain was sympathetic, merely, and proceeded from the fractured arm, it appears that it continued and increased in severity from that time; that he was advised by an eminent surgeon as early as March, 1891, that there was a fracture of the right shoulder and atrophy of the muscles in its vicinity on that side, and that his injuries were permanent. His only action on this knowledge and advice was a notification to the defendant's surgeon, mailed several months after the accident, that he should insist that he was not bound by the receipt of the $75 paid him, and that he would “insist on his rights in the premises." He made no offer to return the money paid him, nor did he further assert his purpose to rescind until he brought suit in the state court in March, 1894. His excuse for this inaction, and the failure to return what he had received, is that his poverty prevented. Having discontinued that suit to avoid the objection that he had not returned the money paid him by defendant, he brought his action in this court in September, 1894, after tendering back the amount. Unfortunately for plaintiff, his pecuniary condition will not avail to condone his delay. Hayward v. Bank, 96 U. S. 611, 617; Leggett v. Oil Co., 149 U. S. 294, 13 Sup. Ct. 902. It was his duty to pursue his claim promptly, and not by empty words. Clegg v. Edmondson, 8 De Gex, M. & G. 787, 810. Even the institution of a suit does not of itself relieve a party from the charge of laches. His failure to prosecute it with diligence subjects him to the same consequences as if it had never been brought. Johnston v. Mining Co., 148 U. S. 360, 13 Sup. Ct. 585. He should
have announced his purpose to enforce his claim, and adhered to it. Grymes v. Sanders, 93 U. S. 55; McLean v. Clapp, 141 U. S. 429, 12 Sup. Ct. 29. Instead of this, he remained passive for more than 37 years after the settlement, before he brought his first action, and for over 3 years after he was advised and convinced that his injuries were permanent and entailed total incapacity to labor, and he permitted nearly 5 years to run before filing this bill. The retention of the money paid plaintiff, and his long acquiescence in the settlement, are not excused by any matter alleged in the bill. He knew in March, 1891, all the facts he now urges for the cancellation of the release, except the exact terms of that instrument, which he made no effort to learn, though he seems to have known its substance and effect. These facts constitute a ratification of the settlement, from which he cannot at this late day recede. The complainant's case is certainly pitiable, but it is impossible to afford him relief consistently with the principles of equity. He has by his own remissness erected an insuperable obstacle to the aid of the court. The demurrer must be sustained, and the bill dismissed.
FARMERS'' LOAN & TRUST CO. v. DETROIT, B. C. & A. R. CO.
In re KEATING.
(Circuit Court, E. D. Michigan. October 1, 1895.) 1. RAILWAY MORTGAGE-STATE REGULATIONS.
In the absence of a decision upon the question by the supreme court of the state, the court will follow the decision of the supreme court that railway mortgages are not within the purview of state statutes regu
lating mortgages of chattels. 2. SAME-PREFERENCE OF CLAIMS-RECEIVERSHIP.
In a suit to foreclose a mortgage on the property and net earnings of a railroad company, a receiver was appointed, to whom the company voluntarily paid over earnings received before his appointment. Held, that a holder of a judgment, on account of personal injuries rendered before the bringing of the foreclosure suit, could not claim such earnings as against the receiver, he having failed to proceed against them before their payment to the receiver, or to obtain an injunction against
such payment. 8. SAME.
A judgment against a railroad company for personal injuries is not entitled to payment out of moneys in the hands of a receiver before bonds
secured by a previous mortgage. 4. SAME-RIGHTS OF BONDHOLDERS--SUBROGATION.
Where the receiver by order of court pays, out of moneys to which the bondholders are entitled, the wages of the employés, and likewise taxes constituting a first lien on the property, the bondholders are en.
titled to be subrogated to the priorities of the employés and the state. 5. SAME-FORECLOSURE SUIT-EFFECT.
After the institution of a suit to foreclose a mortgage covering all the property and net earnings of a railroad company, no lien on such eardings can be acquired by a general creditor. Suit by the Farmers' Loan & Trust Company against the Detroit, Bay City & Alpena Railroad Company to foreclose a mortgage. Op petition by Thomas Keating, by his next friend, to have a lien de clared in his favor on certain funds in the hands of the receiver appointed in the suit.
C. A. Jahraus and N. J. Connine, for petitioner.
SWAN, District Judge. On the 1st day of January, 1883, the Detroit, Bay City & Alpena Railroad Company, a corporation or ganized and existing under the laws of the state of Michigan, for the purpose of obtaining money for the completion of its road, executed its bonds to the sum of $2,500,000 for moneys loaned by the Farmers' Loan & Trust Company, a corporation organized under the laws of New York, and a citizen of the state of New York, and, to secure said bonds, executed a trust deed of even date therewith upon the property of the railroad company therein described as follows, viz.:
"All the railroad and all the railroad property of the Alpena Company lying and being in the state of Michigan; that is to say, the entire main line of railroad owned by it, extending from Au Sable to its junction with the Michigan Central Railroad at the station called 'Alger,' and all the branches and sidings of the Alpena Company's railroad, as the same are used in the working of said railroad, amounting, in all, to about twelve miles, and all the property of every kind and nature now owned, or which may hereafter be acquired by, in the name, or on behalf, of, the Alpena Company, as part of, or for use in connection with the construction, maintenance, working, and operation of, said railroad, main line, extensions, branches, and sidings from Alger to Alpena, in Alpena county, and also all rights, privileges, and franchises of the Alpena Company, and all the net income and revenue arisiŋg from the use and operation of its said railroad and property."
On the 7th day of June, 1887, by way of confirmation and further assurance of the mortgage or deed of trust of January 1, 1883, the railroad company in the body of both said deeds of trust or mortgages designated, for brevity, as the "Alpena Company') conveyed to the Farmers' Loan & Trust Company, as trustee, all its property and franchises in said second trust deed or mortgage particularly described by the route of the railroad company, and specifying with more particularity the sidings and branch lines, as well as the main line; the length of the railroad, inclusive of these, being stated in said second trust deed as follows: "Making, in all, main and branch lines, and sidings built to date, about 18334/100 miles of track, more or less." Said second trust deed also contained the following further description of the property conveyed:
“And all the property, of every kind and nature, now, or which may hereafter he, acquired by, in the name or on behalf of, the Alpena Company, as a part of, or for use in connection with the construction, maintenance, working, and operation of, said railroad, main lines, extensions, branches, and sidings from Alger, in Arenac county, to Alpena, in Alpena county, and also all rights, privileges, and franchises of the Alpena Company, and all the net income and revenue arising from the use and operation of its said railroad and property."
By the first trust deed above mentioned it was provided that: "If the mortgagor company should fail to pay the interest or principal of any of the bonds issued thereunder and secured thereby, or any part thereof, when the same should be due and payable, or in due time, all taxes or assessments lawfully imposed upon the premises and property thereby granted, and should remain in default, in either or any of these particulars, for the period of sixty days, then, and in such case, it should be lawful for, and, upon the request in writing of the holders of at least onetenth in amount of said bonds then outstanding and unpaid, it should be the duty of, the trustee, its successor or successors, to enter upon and take possession of said railroad, and its personal and other property, and any part thereof, and either the said premises and property, and every part thereof, in its own right, or as the agent of the said mortgagor company, or the complainant, or its successor or successors, as its discretion might, and, on the request in writing of one-tenth in amount of said bonds then outstanding, should, cause said mortgage to be foreclosed, either by proper proceedings therefor to be taken in a court of competent equity jurisdiction, or by advertisement and sale under the statute of the state of Michigan in that behalf made and provided, as the trustee should elect.”.
Both of these trust deeds contain the usual detailed provisions of such instruments declaratory of the rights and obligations of the respective parties. These trust deeds were duly recorded in the offices of the register of deeds of the several counties through which the road ran, as early as July 7, 1887, but neither was ever filed as a chattel mortgage. The mortgagor failed to pay the interest upon its bonds which fell due July 1, 1893, and having remained in default for more than 60 days, on the 4th day of September, 1893, complainant filed this bill, praying that it might be placed in possession of the mortgaged premises personally, or that a receiver might be appointed of the rights, franchises, and property conveyed by the trust deed, with the usual power and authority to operate the railroad, and praying, also, the usual decree of foreclosure and sale of the mortgages, with the proper and customary incidental relief to that end. No appearance was entered for the mortgagor, and a decree pro confesso in favor of complainant was duly entered.
In accordance with the prayer of the bill, complainant, on September 5, 1893, applied for the appointment of a receiver, and the parties were heard upon this motion. The court took under advisement the names of the persons suggested for the receivership, and on the 23d day of October, 1893, with the consent of all the parties in interest, Don M. Dickinson was appointed receiver. In September, 1891, while the railroad company was operating its road, the petitioner, Thomas Keating, a minor, while riding as a passenger upon one of its trains, was injured through the negligence of the railroad company, and by William Drager, his next friend, brought an action for damages against the company in the circuit court for the county of Iosco on the 5th day of April, 1892. The cause came on for trial in August, 1893, and the plaintiff obtained a verdict and judgment therein for the sum of $10,000 against the mortgagor corporation. For this sum, and the costs in said cause, taxed at the sum of $143.30, an execution was issued out of the said circuit court for the county of Iosco August 31, 1893, returnable October 31, 1893, in favor of the plaintiff, against the goods, chattels, lands, and tenements of the railroad company. This writ was levied by the sheriff of the county of Iosco on the 12th day of September, 1893, upon 3 locomotives and 450 tons of soft coal, the property of the railroad company. The property seized was duly appraised, and a notice of the sale thereof posted, as required by the
laws of Michigan. Upon the petition of the receiver, reciting the levy upon said property, the purpose and threat of the sheriff to sell the same under his levy, and praying that the sale of the property might be restrained, on the ground, among other things, that the same, at the time of the levy, was in the custody of this court, under the bill filed herein, and was not subject to be taken under process of any other court, an order was issued and served, calling upon Keating, his attorneys and counselors, and the sheriff, to show cause why said sale should not be enjoined, and the seizure of the property taken under execution be punished as a contempt of this court. A hearing was had upon the petition and the re, spondent's answer thereto on the 13th of November, 1893, when it was adjudged and decreed as follows:
""(1) The engines and coal described in the petition are included within the lien of the mortgage under foreclosure in this cause, and that the receiver is entitled to the possession of the same; (2) that T. P. Coe, sheriff of Iosco county, be, and he is hereby, commanded to surrender forthwith to the said receiver the possession of the said three engines and the four hundred and fifty tons of coal levied upon by him, as set forth in said peti.' tion; (3) that said T. P. Coe, sheriff of Iosco county, and said Thomas Keating, by William Drager, his next friend, be, and they are hereby, perpetually enjoined from attempting to sell any or all of the said engines and coal, and from attempting in any manner to interfere with the possession or control of the same by said receiver."
No appeal was taken from this decree and order, and the same still stands in full force and effect.
On the 28th of December, 1893, the receiver filed his petition in this court, setting forth that September 29, 1893, petitioner, Keat. ing, had taken out a writ of garnishment in said cause in the circuit court for the county of Iosco, and on the 21st day of October, 1893, a second writ of garnishment in the same cause and court, against Nelson and Barney Mills, of Marysville, St. Clair county, Mich., and that these writs were served, respectively, on the 2d and 230 days of October, 1893. Garnishees, Nelson and Barney Mills, had filed written disclosures to said writs of garnishment, admitting that, at the time of the service of the first writ, they were indebted in the sum of $1,329.07 for freight bills rendered the said garnishees by the railroad company, and that, at the time of the service of the second writ, they were indebted, for a like consideration, to the railroad company, in the sum of $1,688.88, making a total indebtedness upon the two writs of $3,017.95; that the garnishees, on filing these disclosures, obtained in the state court an order citing the receiver to interplead in the garnishment proceeding, and to file its claim to the moneys garnished. The receiver, insisting that all the indebtedness of the said Nelson and Barney Mills to the railroad company accrued at and after the filing of the bill in this cause, and became due and owing to him as receiver, and denying the right of Keating to interfere, by said garnishment proceedings, with said indebtedness owing from the garnishees to the railroad company, prayed and obtained an order of the court that the garnishees show cause why they should not be ordered to pay the amount disclosed by them to the receiver, and that Keating and Drager be restrained and enjoined from taking any further proceedings under said writs