Vanderbilt v. Central Railroad

Dixon, J.

(dissenting).

I think that the decree appealed from should be reversed, but not for the reasons stated in the opinion of the majority of this court.

The statute under which Receiver Lathrop was acting provides “ that whenever any incorporated railroad company in this state shall become insolvent, and the property of such company shall have passed into the hands of a receiver by order of the chancellor, * * * the receiver shall, and he is hereby empowered to operate said railroad for the use of the public, subject, at all times, to the orders of the chancellor; and all expenses incident to the operation of said railroad shall be a first lien on the receipts, to be paid before any other encumbrance whatever.” Rev. p. 196 § 106.

I regard this law as conferring directly upon the receiver the power to operate the railroad in his possession, and consequently, to make all contracts necessary for its operation. Although, in the exercise of this power, the receiver is subject to the orders of the chancellor, yet the power is derived, not from the chancellor, but from the statute, and, unless there is some order of the chancellor to curtail it, the power is as broad as the terms of the act make it. I see no adequate reason for placing this power upon a footing different from that upon which derivative powers to contract stand generally, and I therefore think that all dealings of the receiver which have the form of contracts, which are free from fraud, and which are within the scope of his statutory power, are valid contracts, and possessed of the usual incidents of contracts.

The petition in the present case sets up no equitable grounds for substantial relief, but relies upon the dealings between the *697 petitioners and the receiver as legal contracts. Whether such contracts were made, whether they were broken by the receiver, and what damages should be awarded to the petitioners as compensation for such breaches, are legal questions which should be settled in actions at law, according to legal rules.

I think, therefore, the chancellor should have directed such actions to be brought, and if there was any technical difficulty in the way of maintaining them against Receiver Little, who succeeded Receiver Lathrop (which I do not believe), he should have directed Receiver Little to waive the objection.

To hold that receivers of this class must go into the market for railroad supplies, with the understanding that the fairness of their contracts must be demonstrable to the chancellor whenever they are brought into question, or else they will not be obligatory upon the receivers, or with the understanding that, on breach by the receivers of their contracts, the other contracting parties shall only be indemnified against actual loss, and shall not have such damages as they would be entitled to recover from other delinquent purchasers, seems to me to be a doctrine without solid foundation, either in reason -or policy.

Decree unanimously reversed.