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Opinion of the Court.

This is another phase of the controversy set forth at large and discussed in the case just decided of Lant v. Morgan's Administrator, ante, p. 623. The bill in the court below was filed by Edward D. Kinne and Otis C. Johnson, as executors of the estate of Lucy W. S. Morgan, to enjoin the enforcement by execution of the same attachment lien therein considered upon the lands in the possession of Kinne and Johnson as such executors, and to remove the cloud upon their title caused by the attachment and levy. The bill avers that the lands attached were conveyed by E. W. Morgan, against whom George Lant, Sr.'s, judgment was rendered, to Lucy W. S. Morgan in 1874 for full consideration, and that from that time until her death in 1887 Lucy W. S. Morgan remained in the possession and enjoyment of the same; that after her death the complainants, with Franklin L. Parker, became seized of the property as executors and trustees duly qualified under her will, which was probated in Washtenaw County, Michigan, and that they are the true owners of the same in their trust capacity; and that Elijah W. Morgan and his creditors had no interest in the same during his lifetime, after 1874 and that neither his representatives nor his creditors have any interest therein since his death. By his answer, Lant, Sr., denied that E. W. Morgan had conveyed the real property attached to Lucy W. S. Morgan for a full consideration, and made as part of his answer the averments of his bill filed in the suit of Lant v. Morgan's Administrator, in which we have just pronounced judgment on appeal. No replication to the answer was filed by the complainant and the record does not disclose that any proof was taken.

In this condition of the record the following decree was entered: "This cause coming on for hearing was argued by counsel for the respective parties, and it being admitted by complainant that the property described in complainant's bill was conveyed by Elijah W. Morgan to Lucy W. S. Morgan, that the title of record of said property stood in the name of said Lucy W. S. Morgan at the time of her decease, that the said property was at the time of the levy of the attachment and execution in said bill mentioned, made thereVOL. XLIII-41

Opinion of the Court.

on, in the possession of said Edward D. Kinne, Otis C. Johnson, and Franklin L. Parker, as executors and trustees of the last will and testament of said Lucy W. S. Morgan, deceased, and that they held and hold the same under letters testamentary issued out of the Probate Court for the County of Washtenaw, and the court being of opinion that by reason of said conveyances and the possession of said property as aforesaid by said Kinne and Johnson and Parker, as such executors and trustees as aforesaid, the levy of said attachment and execution was illegal, null, and void: It is ordered, adjudged, and decreed that the levy of said writ of attachment with the levy of execution in said cause be, and the same is hereby, vacated and set aside and held for naught, and that the said complainant shall forthwith cancel and discharge the same of record in the office of the register of deeds of Washtenaw County, and that in default thereof this decree shall stand and avail as a discharge and release thereof, and that the complainant recover costs to be taxed."

This mode of disposing of a case not at issue on the proof, and not set down for hearing on bill and answer, is quite anomalous. The anomaly arose, doubtless, from the circumstance that the court below treated this cause and the suit against Morgan's administrator as one controversy,— as in fact they were; - and thus the defects in this record escaped attention. We think that the two actions should be consolidated, and that the bill below should be treated as a cross bill in the suit against Morgan's administrator. Rev. Stat., sec. 921; Evans v. Evans, 23 N. J. Eq. 180; Conover's Ex'rs v. Conover, 1 N. J. Eq. 403.

We do not deem it necessary, however, to base our ruling on the irregularity of practice, because it is apparent from an examination of the decree that it rests on a view of the law which in the case just decided we have held to be er roneous. The relief was granted on the theory that because the executors of Lucy W. S. Morgan were in possession of the land in question, claiming under her title and acting under orders of the probate court of Washtenaw County, no attachment could be levied thereon as the property of E. W. Morgan

Syllabus.

out of the United States court. We have discussed this question at some length in the case just decided and have pointed out that such an adversary proceeding against executors and administrators is expressly permitted by the statutes of Michigan.

The decree is erroneous and must be

Reversed and the cause remanded for further proceedings.

WHITELY v. CENTRAL TRUST COMPANY OF NEW YORK.

CENTRAL TRUST COMPANY OF NEW YORK v.

WHITELY.

APPEALS FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF KENTUCKY.

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When one becomes a surety on a supersedeas bond at the request of an apparently solvent corporation, he does so presumably as a matter of accommodation and upon the personal credit of the corporation. Whoever has dealings with a railroad company whose property is mortgaged must be presumed to have dealt with it on the faith of its personal responsibility, and not in expectation of subsequently displacing the priority of the mortgage liens; it is the exception and not the rule that such priority of liens can be displaced.

The appointment by a Circuit Court of the United States of a receiver of railroad property vests in the court no absolute control over the property and no general authority to displace vested contract liens. When the consideration for a conveyance of real property is the entering into an agreement to do or not to do certain things, and the remedy for a breach of such agreement consists in an action for unliquidated damages, the parties will be presumed not to have intended that the land should remain charged with a vendor's lien to secure such unliquidated damages, damages which may never accrue and which are unascertainable by third persons dealing with the land. The consideration for the deed is deemed to be the entering into the covenants. When this is done, the covenants are deemed a substitute for the price. Indefinite, continuing covenants in a conveyance of real property constituting the principal consideration for the conveyance cannot be held to be a definite statement of the part of the consideration remaining un

Syllabus.

paid, entitling the grantor, as against bona fide creditors and purchasers, to a vendor's lien under the provisions of section 24 of article 1 of chapter 63 of the General Statutes of Kentucky.

A railway company was sued in a circuit court of Kentucky in an action at law for damages for the breach of covenants contained in a conveyance under which it had acquired a right of way through the lands of T., and judgment was rendered against it therein. No vendor's lien was reserved in the conveyance. In order to obtain a review of the judgment in the Kentucky Court of Appeals an appeal was prayed for and allowed, and a supersedeas bond executed on which W., at the request of the railway company, became bound as surety. The Kentucky Court of Appeals affirmed the judgment of the circuit court. The railway company pending the appeal, having become insolvent, passed into the control and management of a receiver appointed by the court below under proceedings instituted therein by general creditors. Subsequently two foreclosure bills were filed by the trustee under two mortgages covering the entire road and its equipments, and the receivership was extended to these suits. When W. became bound as surety on the supersedeas bond the said mortgages were in existence; moreover, at that time the railway company was not in default as to its interest on the said mortgages, and was rightfully and legally in the complete control and management of its property. W., as surety, having been obliged by reason of the insolvency of the railway company to pay the judgment of the state court, intervened in the foreclosure suits, claiming payment out of the corpus of the mortgaged property in preference to the mortgagees. The court below gave W.a priority as to a large part of his claim, on the theory that certain of the covenants in the conveyance ran with the land and were to be deemed a charge thereon in the nature of a vendor's lien, and held that so much of the judgment as was for damages for the breach thereof constituted an equitable vendor's lien entitled to payment out of the corpus of the mortgaged property in preference to both the mortgages. W. and the trustee under the mortgages appealed to this court, the former contending that priority of payment should be accorded his claim, (a) because his act as a surety on the supersedeas bond operated to keep the property together and to keep the railway as a going concern, the mortgagees being indirectly benefited, and (b) because the covenants in the conveyance collectively constituted the consideration for the convey. ance, the money value of which was fixed by the judgment, for which money value an equitable vendor's lien was implied, which was entitled to a preference over the mortgages subsequently executed with record notice of the existence of the covenants set out in the title of the company. Held, (1) That it was to be presumed that W., in becoming a surety on the supersedeas bond, did so as a matter of accommodation and upon the personal credit of the company; (2) that the covenants in the conveyance constituted the principal consideration therefor and were to be deemed a substitute for the price; (3) that as the considera

Opinion of the Court.

tion was unliquidated and ascertainable only by an action sounding in damages, no equitable vendor's lien could be implied for the performance of the covenants; (4) that, therefore, no such lien arose in favor of T.'s judgment to which W. might be subrogated; and (5) that, even assuming that the mortgagees through their trustee had notice of the covenants in the conveyance, W. was not entitled to the relief sought, because the conveyance itself did not expressly state what part of the consideration remained unpaid, as required by section 24 of article 1 of chapter 63 of the General Statutes of Kentucky.' Union Trust Company v. Morrison, 125 U. S. 591, distinguished. The Dayton, Xenia and Belpre Railroad Company v. Lewton, 20 Ohio St. 401, distinguished.

Before TAFT and LURTON, Circuit Judges, and HAMMOND, District Judge.

The case is stated in the opinion.

Mr. David W. Fairleigh (Mr. J. D. Atchison, Mr. Charles S. Walker, and Messrs. Fairleigh & Straus were on the brief) for William E. Whitely.

Mr. Edmund T. Trabue (Messrs. Pirtle & Trabue, Messrs. Butler, Notman, Joline & Mynderse and Messrs. Alexander & Green were on the brief) for the Central Trust Company of New York.

LURTON, Circuit Judge, delivered the opinion of the court.

William E. Whitely, at the request of the Louisville, St. Louis and Texas Railway Company, became its surety upon a supersedeas bond executed on November 5, 1892. The railway company had been sued in a circuit court of Kentucky in an action at law for damages for breach of covenants contained in a conveyance under which it had acquired a right of way through the lands of one E. P. Taylor, situated in Daviess County, Kentucky. The circuit court rendered judgment against the railway company for the sum of $6,406.55, with costs and interest from October 29, 1892. In order to

1 In this case a petition for a rehearing was denied on October 19, 1896, without an opinion.

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