Buncombe County Commissioners v. Tommey

delivered the opinion of the court. He recited the facts as above stated, and continued :

The erst question to be considered is whether the act of 1870 gives a lien to mechanics or contractors upon the property of a railroad corporation, for work performed or materials fur

Apart, however, from these considerations, we are of opinion that a law, giving to mechanics and laborers a lien on buildings, including the lot or ground upon which they stand, or a lien^ upon a lot or farm or other property, for work done thereon, or for materials furnished in the construction or repair of buildings, should not be interpreted as giving a lien upon the roadway, bridges, or other property of a railroad company, that may be essential in the operation and maintenance of its road. In North Carolina, as in most, if not in all the States, railroads, although constructed for the private emolument of those engaged in such enterprises, are highways which have been established, under the authority of law, primarily for the convenience and benefit of the public. The general statute of February 8, 1872, authorized the formation of corporations to construct, maintain, and operate railroads “for public use in the conveyance of persons and property, or for the purpose of maintaining and operating any unincorporated railroad already constructed for the like public use.” Battle’s Revisal, ch. 99, § 1. The pecuniary profit derived by those who project and operate them is the reward which they receive for maintaining a public. highway. Municipal taxation to aid in their construction has been maintained only upon the ground that they are, in a large sense, instrumentalities or agencies for the purpose of accomplishing public ends. Upon that ground rests the authority of the State to invest them with the right of eminent domain in the condemnation of private property, and to prescribe from time to time, in the interest of the public, reasonable regulations for their control and management. Taylor v. Ypsilanti, 105 U. S. 60 , 68-9. Such being the relations exist

There is nothing, it may be observed in this connection, in Brooks v. Railway Co., 101 U. S. 443 , in conflict with the. views here expressed. The decision in that case rests upon the construction given to the mechanics’ lien law of Iowa, by the Supreme Court of that State. Besides, the Iowa statute, in terms, included, among those entitled to the lien it gave, “contractors, sub-contractors, material furnishers, mechanics, and laborers engaged in the construction. of any railroad or other work of internal improvement.” Iowa Rev. Stat., 1860, § 1846. The legislative will was there expressed so dearly as to leave no room for interpretation of the statute.

It is, however, contended that the proviso of the third section of the act of March 1,1873, is sufficient to sustain the lien asserted by such of the appellants as were contractors and mechanics. That act, as we have seen, regulates sales under deeds of trust or mortgages “ executed by any company on all its works and property,” and provides for the purchaser Becoming a corporation, with all the franchises, rights, and conveyances of, and subject to the duties imposed upon, the original corporation. In connection with a general provision for the disposition of the assets of corporations which shall expire or be dissolved, or whose corporate rights and privileges shall cease, it is declared “ that all debts and contracts of any cor- ■ poratior., prior to or at the time of the execution of any mort

It must be admitted that the broad language of this act gives some support to the proposition that it was intended to apply to all corporations, including those formed for the construction and operation of railroads. But there are reasons of great weight that have brought us to the conclusión that such is not its proper interpretation. The language of the proviso in question is fully satisfied by restricting its operation to merely private corporations, which may be formed by three or, more - persons. And to this may be added the important consideration, that any other interpretation might defeat the express power given to railroad corporations to raise money for completing and finishing or operating their roads, upon bonds to be secured by mortgage upon their property and franchises; for, such bonds, in the very nature of things, could not be readily, if at all, disposed of, if the lien given by the railroad mortgage is subordinate to a lien for “ all debts and contracts,” of whatever nature, “ existing prior to and at tiro time of the execution ” of such mortgage. Bid the legislature intend that the power óf a railroad corporation to mortgage all of its property and franchises for money with which to complete or operate a road for public use should be exercised, subject to the condition that every creditor it had at the time of the mortgage, no matter how his debt originated, nor whether there was an agreement for a lion, should have a first lien upon the corporate property and franchises? Tf this c*instruction should bo adopted, it would follow that mechanics and laborers would acquire, as between them and the holders of mortgage bonds, a first lien for work done or materials furnished to the railroad company without filing a claim therefor, as required by the act of 1870 ; and this, although the legislature had in that act refrained from using language that necessarily gives them a lien upon railroad property and franchises. We are of opinion that the proviso of the third section of the act of 187B has no application to deeds of trust or mortgage given by ra,ilr< >ad corporations.

In view of what has been said, the issue made by the County of Buncombe, as a stockholder of the company, in reference to Inman’s conduct as trustee, need not be examined. Upon the facts disclosed, the county does not seem to be in any position to question the decree in favor of the appellees. There is no error in the record, and the decrees are

Affirmed:

Mr. Solicitor 'General, on behalf of the plaintiffs in error thereupon filed a petition for a rehearing, accompanied by a brief, citing State v. Rives, 5 Ired. 297 , Gooch v. McGee, 83 N. C. 59 , to the contention that the general lien law of North Carolina of 1868, created a lien upon the railroad, to- be enforced by judgment and execution. In the latter case, he said, will be found a sketch of the executions at law now valid in that State. The policy which prevails in connection with judgments for unsecured debts, protects as well judgments upon debts previously secured by lien; and.the fact that certain liens can bear their fruit only in the way that unsecured debts do is a complete answer to a suggestion that these liens are against the public policy of the State which appears to grant them. The lien law operates in this instance but as it does in others, i. <?., only in the anterior securitjr which it affords. It follows that if the general words of the 'lien statute would otherwise cover the case of all debtors owning real estate, there is. nothing in the character of the fruit of the lien to indicate a public policy to exclude therefrom such debtors as are railroad companies. It is, of course, according to public policy in North Carolina that debtor railroad companies,upon failing to pay, &c., shall be sold out at law in the way referred to in 83 N.C., cited above. In common cases, therefore, an unsecured creditor of a railroad company would sue, and, having obtained judg

It is submitted, therefore, in the first place, that the act of 1868, by adding after certain enumerations the words: “ or any kind of property not herein enumerated, shall be subject to a lien for the payment of all debts contracted for work done on the same or materials furnished,” includes property owned by railroad companies.

2. The act of 1872, in its enforcement, would probably be regulated by the provisions in the act of 1868. In any event it operates upon' railroad companies as well as upon other corporations. The language of the act is “ That all debts and contracts of any corporation, prior to or at the time of the execution of any mortgage or deed of trust by such corporation, shall have a first lien upon the property, rights, and franchises of said corporation, and shall be paid off or secured before such mortgage or deed of trust shall be registered.” It was argued before that inasmuch as the Legislature of North Carolina in 1871-2 had passed two statutes, one upon .Corporations and the other. upon Railroad Companies, the circumstance that an act passed by the next legislature was entitled Corporations indicated that it was intended as an amendment of the former of the two acts of 1871, and that this presumption is fortified by the circumstance that in Battle’s Revisal the act of 1872 is incorporated into that former act. As regards the influence of Battle’s Revisal upon the present question, the facts are that the act was passed at the same session that the Revisal was reported, and that it was incorporated therein after the session had ended under-directions affecting akt the legislation of that session. See Battle’s Revisal, p. 863, top, passage beginning: “ In the volume shall also be published the acts of a public and general nature passed at this session, and not included in the Revisal,” &c. That act is ch. 74 of the session, whilst the act upon which the reviser’s arrangement is supposed to have effect was enacted afterwards, being chapter 131. It will thus

It is submitted, therefore, that its arrangements of acts and provisions adopted at that session must, a fortiori, be to no purpose whatever, as ground for arguing upon the meaning of such provisions.

Work incorporated into a railroad track, and thus making the mortgaged property more valuable, raises, in point of reason, as much equity against the mortgagee as against the mortgagor. Whoever gets the benefit of that mingling of labor and land should, upon first principles, take it cum onere, unless he purchases for value without notice; and the circumstances under which the labor is done, or fact that the lien therefor is recorded, makes provision for that exceptional case.

delivered the opinion of the court.

In the opinion in this case it was stated that in North Carolina, as in most, if not in all, the States, railroads, although constructed by private persons or corporations for their own emolument, are highways, established under the authority of law, primarily for the benefit of the public. For that reason, in the absence of an express statutory declaration to the contrary, we were not willing to presume that the legislature of that State intended to subject railroads within her limits, and established by her authority, to the operation of ordinary lien laws; for, such a construction of her statutes would enable creditors to enforce their liens upon distinct portions of a railroad, and thereby easily destroy a highway and defeat the important public objects intended to be subserved by its construction. The petition for rehearing suggests that the court is in error as .to the policy of the State with reference to the

In the first of these cases it was decided that, under the law of North Carolina as it then was, the writ of fieri facias lay against the land on which a railroad is laid out. Ini support of that view reference was made to an act passed in 1820. But, from the decision in Gooch v. McGee, determined in 1880, it is apparent that the court was not satisfied with the correctness of that decision; for, it said that, “ so far as the opinion, except by force of' the statute, extends the liability to the estates of corporations for public purposes,* indispensable to the exercise of the conferred franchise and to the performance of correlative duties, it is not in harmony with adjudications elsewhere of the highest authority, and we are not disposed to enlarge the sphere of its authority.” After citing several adjudged cases, including Gue v. Tide Water Canal, 24 How. 257 , the court proceeds: “ In our researches we have met with a single case (Arthur v. Bank, 9 S. & M. 394 ) recognizing the authority and approving the decision in State v. Rives, and in opposition to the current of judicial opinion. The general words of the statute, which to some extent influenced that decision,-may, without violence .to their meaning, admit of a narrower scope, and be restricted to the property of private corporations, and to that of public corporations which may be replaced and is not indispensable to the exercise of their necessary functions, and the discharge of public duties, upon the distinction taken in the cases cited.” It is difficult to resist the conclusion that the Supreme Court of North Carolina intended, by their opinion in Gooch v, McGee, to intimate that State v. Rives was wrongly decided, even with reference to the statutes in force when (1844) the latter case was determined.

It is suggested that § 9, ch.. 26 of the Revised Code of North Carolina, adopted in 1855, indicated a public policy in that State in harmony with the decision in State v. Rives ; for, it is claimed, by that section, the franchises and property of railroad corporations having the right to receive fare or tolls may be

In the original opinion we Avere in error in supposing that the act of 1873 was passed at a session previous to that at Avhich the act Avas passed approving Battle’s Revisal, and directing its publication under the supervision of the compiler. Both acts, it seems, Avere passed at the same session. The incorporation of the act of 1873 into that part of the Revisal Avhich related to private corporations was, therefore, -the work of Mr. Battle and not in pursuance of any previous express direction by the legislature. Making this correction in the statement of a fact to Avhich Ave attached but little weight in our interpretation of the act of 1873, Ave perceive no sufficient ground for extending its provisions to the property of corporations operating a public highway.'

. The rehearing is denied.