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such court before any part thereof shall be payment of the debts of laborers or empaid. When any claim is excepted to, the ployés, which have accrued under the condiperson desiring to establish the same shall tions contemplated. With the right or preffile in said court his verified complaint as in erence thus clearly established, it remains an action at law, and serve the same upon to examine the manner of its enforcement, the person excepting and the principal debt- and to determine to what extent the remedy or, and thereafter the cause shall proceed to must be pursued as a personal privilege. final judgment between said parties as an Manifestly, the statute comprehends only action at law. Section 2 provides for the such debts as are owing to the laborers or adjustment of costs and attorney's fees, and employés at the date of the seizure or assection 3 that the assignee shall not be dis- signment, and these debts are denominated charged until every claimant presenting his "claims for wages.” Now, it is provided that or her claim under the provisions of the any such person desiring to enforce such a act shall have been paid in full or pro rata, claim shall, in case of an assignment, preor shall have consented to the discharge. sent a statement, made out and verified in

The act creates a new right, and prescribes the form and manner prescribed, to the asa remedy for its enforcement. In so far as it signee, within 30 days after the property imposes a burden upon specific property, it has been placed in his hands, and serve a should be strictly construed; but, where the copy upon the debtor. Such is the method right is clearly given, the interpretation by which a claimant may avail himself of should be such as will promote, rather than his preference. Thus far it would seem that impede or destroy, the remedy, so as to the privilege is personal to the laborer or meet, if reasonably within the terms of the employé, as he may adopt the remedy if he statute, the exigencies which impelled the desires within the statutory period, or he enactment. In other words, a remedy is may waive it as a debtor may waive his the concomitant of a right; and, where a exemptions from seizure upon execution, by new right is established, its usefulness de- not claiming them in due season from the pends upon the means of its enforcement, so officer having the property in charge. When that, when the legislature attempts to pre- a claim is thus presented, a duty is describe a remedy, it will be presumed that volved upon the assignee to report it to it intended to adopt such a one as will ef- the court, and upon the court to direct its fectuate the purpose, and the interpretation payment first, after the payment of the of the remedial enactment will be such as to

costs and expenses of the assignment, out promote the intendment as fully as the lan- of the proceeds of the sale of the properguage employed will admit. The undoubted ty. But it is further provided that any purpose of the act was to constitute the la- person interested may contest such a claim borer or employó a preferred creditor, as it by filing exceptions thereto, and thereaft

er it is made incumbent upon the claimseized upon by any process, or passing to a ant to establish the same by filing a verified receiver or assignee. Under all the condi- complaint, as in an action at law, and that tions enumerated, the property is placed in thereafter the cause shall proceed to judgcustodia legis, and thereafter it is adminis- ment between the parties. We take it that tered in pursuance of law; and the act in the matter which is here made the subject question imposes an additional burden upon of litigation and contest is the debt, and it it, and subjects it, first, after the payment is the province of the court to determine the of certain costs, to the payment of the la- nature, and what, if any, such debt has acbor claims designated. The enactment does crued and remains unpaid; but whether or not create a lien, but invests the laborer or not the claim has been properly made out or employé with all the rights and privileges verified or presented, and whether within the incident to the relation of preferred creditor, prescribed time, are purely questions of law, and directs the order of his payment out of that have necessarily to be passed upon, a fund which is already in the custody of whether there is a contest or not. So that the law, for the purpose of administration, the purpose of the contest is not to establish in subordination to its rules and regulations. the preference, but the claim. The preferThe act declares that hereafter, when the ence is established when the privilege is exproperty of any person shall be seized, etc., ercised by a due presentment of the verified such laborers or employés "shall be prefer- statement. Now, it will be conceded that red creditors, and shall first be paid.” Acts the claim, aside from the preference which 1891, p. 81, § 1. Thus, the legislature has may he denominated a “personal privilege," inseparably coupled the preference with the is assignable, and, under the code practice, event, which inures instanter upon the hap- may be sued upon by the holder in his own pening thereof, to the benefit of the desig- itame; but, when the privilege is exercised, nated classes. It is a substantive right, cre- the preference becomes an incident of the ated by edict, and not the right to acquire debt, which is thereby constituted a preit by the doing of certain things or the ob- ferred claim, and, when the debt is assigned, servance of any conditions. The property is the incident accompanies it. So, we see no charged, ipso facto the happening of the reason why the assignee of the debt may not seizure or the assignment, with the prior | file a complaint in his own name to establish

pertains to the property of his employer et

the claim, as he might do upon the simple be made by plaintiff, and that the proceeds, demand, and, if established, the preference when collected, should be distributed or paid abides with it still, as an incident. The to the assignors under the supervision and question whether statutory liens are assign- control of the attorney, and also another paable, or, if so, whether the action should be per, purporting to be a notice of attorney's prosecuted in the name of the assignor, has lien filed in the cause, which were received but little to do with the present case. It is over the objections of the defendant. Theremerely a question here whether a preferred after the court instructed the jury touching claim of the class created by the enactment the alleged settlement and allegation of fraud is assignable, so as to entitle the assignee in relation thereto as follows: "When parto prosecute the action in his own name to ties have gone to law about a matter, they establish the debt, its nature and amount, if may settle between themselves without the contested; and we are of the opinion that intervention of an attorney on either side, or it is. The right of exercising the privilege with an attorney on one side, if they see fit to in claiming the preference we hold to be per- do so; but after an action is commenced, and sonal, but, when exercised by the presenta- the parties appear with an attorney in court, tion of the statement, the preference be- any settlement of the claim out of court withcomes an incident of the debt or claim for out the knowledge or consent of the attorney wages, and may be assigned; and hence- is to be viewed with suspicion. If there is forth the action may be prosecuted in the any fraud in the case, such a settlement may name of the legal owner and holder of the be set aside." This the derendant excepted claim if contested. This interpretation is to, and these constitute the two remaining manifestly in consonance with the spirit of questions to be disposed of. The agreement the act. It was designed to protect a de- and the notice of lien were properly admitted serving class of individuals, who are usually in evidence. The issue was whether the setdependent upon their recent earnings for the tlement was fraudulent, having been, among sustenance of themselves and those dependent other attendant circumstances, negotiated in upon them, and it was undoubtedly the pur- the absence of the attorney, who was, under pose of the legislature to make the wages of the agreement, directly charged with the sulabor speedily available, and the assign-pervision of the distribution of the proceeds ment of their preferred claims would more

after collection. The agreement tended to frequently promote the purpose than other- show the plaintiff's position and authority in wise. We cite the following authorities as the premises, and it and the notice of lien tending to support the view we here enter- were pertinent to disclose the relations and tain: The Victorian Number Two, 26 Or. interest of the attorney in the transaction. 194, 41 Pac. 1103; Duncan v. Hawn, 104 Cal. And it appearing that the defendant had 10, 37 Pac. 626; Murphy V. Adams, 71 Me. knowledge of the existence of these instru113; Skyrme v. Mining Co., 8 Nev. 220; Rail- ments, and even of their contents, prior to the road Co. v. Sturgis, 44 Mich. 538, 7 N. W. alleged settlement, they were significant in 213; Day v. Vinson, 78 Wis. 19S, 47 N. W. this connection as tending to show an appar269; Kinney v. Ore Co. (Minn.) 60 N. W. 23; ent disregard of the rights of interested parKerr V. Moore, 54 Miss. 286; Phil. Mech. ties. Nor was the instruction objectionable. Liens, $ 55. That the claims were assigned In Bussian v. Railway Co., 56 Wis. 335, 14 N. for collection does not destroy their validity, W. 456, Taylor, J., says: "We think that no nor deter the holder from suing in his own release obtained from the plaintiff after an name. Roberts v. Parrish, 17 Or. 583, 22

action has been commenced and counsel emPac. 136; Young y. Hudson, 99 No. 102, 12 ployed, in the absence of the plaintiff's counS. W. 632; Allen v. Brown, 44 N. Y. 229; sel, and without his consent or knowledge, White v. Stanley, 29 Ohio St. 423; Boyd v. should bind the party, unless the utmost good Corbitt, 37 Mich. 52.

faith is shown on the part of the defendant in As a defense to the action, the defendant obtaining the same. When a party has empleads a settlement with the plaintiff touching ployed an attorney to prosecute an action, the claims in question, and full payment and such attorney ought to be consulted if a comsatisfaction in accord therewith. The plain- promise of such action be sought, and ordinatiff, replying, denied the settlement, but al- rily it would be an act of bad faith on the leged that, if any such was had, it was obtain- part of the client and the opposite party to ed by fraud and without consideration. Aft- compromise the action without the consent of er the defendant had given evidence touching or without consulting such attorney." The the settlement, the plaintiff, for the purpose language of the instruction is no stronger than of showing that, when defendant was at

this. It is evident the defendant knew of the tempting to negotiate the settlement, he had attorney's employment, and of the supervisory full notice and knowledge of the capacity in control over the distribution of the proceeds of which plaintiff was acting as touching such

the collection accorded him under his agreeclaims, offered in evidence an agreement be- ment with the plaintiff; and it seems to us tween M. J. MacMahon, the attorney engaged that the language of the learned judge, that to prosecute the claims, and himself, where- “any settlement of the claim out of court . by it was agreed that no assignment, sale, or without the knowledge or consent of the attortransfer of any interest in said claims should ney is to be viewed with suspicion," was es.

48 P.-15


pecially adapted to the controversy. See, al- funds whatever in the hands of the receiver so, Watkins v. Brant, 46 Wis. 419, 1 N. W. with which to pay it; and we take it (al82. Judgment affirmed.

though not directly averred in the petition) that the receiver had exhausted his power to

float receiver's certificates. Prior to this time, (31 Or. 237)

several unsuccessful attempts had been made FARMERS' LOAN & TRUST CO. V. ORE

to dispose of the road under the decree in the GON PAC. R. CO. et al.

foreclosure suit rendered on the 27th of April,

1891. In this condition of affairs, some of (Supreme Court of Oregon, May 1, 1897.)

the employés despairing, and with reason, as RAILROADS-RECEIVERS-WAGES OF EMPLOYES.

the sequel showed, of ever being able to ob Employés of a railroad in the hands of a re

tain payment of their wages from either the ceiver pending foreclosure have no claim plaintiff mortgagees for their wages where the

earnings or the corpus of the mortgaged propincome and corpus of the property are insufficient erty, filed a petition on January 26, 1891, setto pay the same, unless such liability on the ting out substantially the facts hereinbefore part of plaintiffs was imposed by the court as a

detailed, and praying an order of the court recondition to the appointment of the receiver.

quiring the plaintiff in the foreclosure suit to Appeal from circuit court, Benton county; deposit in court sufficient money for the par. J. C. Fullerton, Judge.

ment of their wages. This petition was de Foreclosure proceedings by the Farmers' nied, and hence this appeal. Loan & Trust Company, as trustee, against the Oregon Pacific and the Willamette Valley G. G. Bingham, for appellants. H. C. Wat& Coast Railroad Companies. From an or

son, for respondent. der denying the petition of certain employés of the receivers of the first-named company BEAN, J. (after stating the facts). This is. that plaintiff mortgagee be required to pay so far as we can ascertain, the first recorded the wages of petitioners, the latter appeal. instance in the judicial history of railroad reAffirmed.

ceiverships in which the trust fund was insufThis is an appeal from an order of the cir- ficient to pay the employés of the receiver encuit court of Benton county denying the peti- gaged in the operation of the road; and hence tion of certain employés of the receivers of

we are unaided in the determination of the the Oregon Pacific Railroad Company for an question before us by any judicial decision đi. order requiring the plaintiff in the foreclosure rectly in point. The contention of the peti. suit in which such receivers were appointed

tioners seems to be that a receiver of a railto pay the wages of the petitioners. On Oc- road appointed in a suit to foreclose a morttober 28, 1890, the Farmers' Loan & Trust gage on the road, and clothed with authority Company, as trustee for the bondholders of to operate it, is as much the representative of the Oregon Pacific Railroad Company and the the plaintiff as a sheriff who levies upon propWillamette Valley & Coast Railroad Com- erty under a writ of attachment, and that the pany, commenced a suit in the circuit court operating expenses incurred by him are costs of Benton county to foreclose a mortgage on or fees of the litigation, and, like the fees of the franchise and property of the defendant

the sheriff in the case referred to, are colcorporations, to secure the payment of the lectible from the plaintiff. But this argubonded indebtedness thereof, amounting, as ment is based upon an entire misapprehenalleged, to $15,000,000; and, on its motion, T. sion of a railroad receiver's position and duEgerton Hogg, the president of the corpora

ties. He is not, like a sheriff in an attachtions, was appointed receiver, and clothed by ment action, the agent of the plaintiff in the the court with authority to operate the rail- litigation, nor does the plaintiff have any conroad, and receive the income and earnings trol or authority over him whatever. He is thereof; and, to that end, he was empowered the agent and executive officer of the court, from time to time to time to employ and dis- which, by virtue of its high prerogative powcharge all needful assistants, managers, ers, lays. its judicial hand upon the property clerks, servants, agents, and employés, at which is the subject of controversy, and consuch salaries and compensation as he might trols and operates it for the use and benefit, deem advisable. Under this appointment, not of either of the parties to the litigation. Hogs operated the road as receiver until but for the public and whomsoever in the end March 6, 1893, when he was removed, and one it may concern. His acts and possession are Hadley appointed in his place, who continued the acts and possession of the court. His conthe operation thereof until January 6, 1994, tracts and liabilities in contemplation of law when he was also removed, and another re- are the contracts and liabilities of the court. ceiver appointed. Under the management of The parties to the litigation have not the least Hogg and Hadley, the earnings of the road authority over him; nor have they any right were wholly insufficient to pay the expenses to determine what liabilities he may or may of the receivership, and, as a consequence, the not incur. His authority is derived solely wages of the employés were allowed to fall from the act of the court appointing him, and greatly in arrear, so that, at the time of Had- he is subject to its order only. “A receirer of ley's removal, there was due the petitioners a railroad,” says Mr. Justice Caldwell, "is a berein a very large sum for wages, and no person appointed to receive and preserve the

property of a railroad company, and is clothed session had taken place. Fosdick v. Schall, with authority to operate the railroad and re- 99 U. S. 251; Railroad Co. v. Humphreys, 145 ceive the earnings and income therefrom dur- U. S. 82, 12 Sup. Ct. 787 et seq. A receiver reping the pendency of the foreclosure suit. In resents no particular interest or class of incontemplation of law, the railroad is in the terests. He holds for the benefit of all who custody of and operated by the court appoint- may ultimately show an interest in the proping the receiver. The receiver is the agent of erty. He stands no more for the creditor than the court. He is an officer of the court, and the owner. They are not assignees, and the his possession of the property is the posses- principles of common law applicable to assion of the court. He is not the agent of either signees do not define or determine the charparty to the suit, and neither party is re- acter of a receiver's possession, or its effects sponsible for his contracts or for his malfeas- upon the rights of those interested in the ance or misfeasance in office. * * The property in their possession. Receivers ought liabilities incurred by the receiver in the oper- not to be appointed to represent the peculiar ation of the road are, strictly speaking, the interests of one class." To the same effect, liabilities of the court appointing the receiv- see Railroad Co. v. Rust, 17 Fed. 275; Central er." 30 Am. Law Rev. 161. And in Railroad Trust Co. v. Wabash, St. L. & P. Ry. Co., 23 Co. v. Humphreys, 145 U. S. 82, 12 Sup. Ct. Fed. 863; Ames v. Union Pac. Ry. Co., 60 Fed. 787, the court, speaking of the Wabash receiv- 966; and Union Trust Co. v. Illinois M. Ry. ers, said: “They were ministerial officers, ap- Co., 117 U. S. 455, 6 Sup. Ct. 809. pointed by the court of chancery to take pos. A railroad receiver is therefore more than session of and preserve, pendente lite, the a mere custodian of the property, like a sherfund or property in litigation; mere custo- iff holding under a writ of attachment or exedians, coming within the rules stated in cution. He is, in effect, the hand of the Union Bank of Chicago v. Kansas City Bank, court, which holds the property while it op136 U. S. 223, 236, 10 Sup. Ct. 1013, where erates the road pending the litigation for the ibis court said: 'A receiver derives his au- benefit of the general public, as well as the thority from the act of the court appointing creditors of the insolvent corporation. It is him, and not from the act of the parties at for this reason that the expenses of the rewhose suggestion or by whose consent he is ceivership are chargeable as a lien upon the appointed; and the utmost effect of his ap- property superior to all other liens. The pointment is to put the property from that plaintiff, at whose instance the receiver is aptime into his custody as an officer of the court, pointed, thereby consents to the absolute confor the benefit of the party ultimately proved trol and management of the mortgaged propto be entitled, but not to change the title or erty by the court and its agents, and to the even the right of possession in the property.'priority of claims for the expenses incurred So, also, in the case of New York, P. & 0. R. in its operation and management; but it is not Co. v. New York, L. E. & W. R. Co., 58 Fed. perceived upon what ground it can be claimed 208, it is said: “Receivers are but officers that, because the expenses of the receivership and agents of the court. While, necessarily, are allowed without any fault of his to exmuch is committed to their judgment and dis- ceed the value of the mortgaged property, cretion, yet their power depends upon the de- thus entirely destroying his security, he must, crees and directions of the courts appointing in addition to the loss of his debt, be comthem. Receiverships of railroad properties pelled to make good the deficit, unless the are in a large part peculiar appointments. order of appointment was made upon that Railroads, as public carriers, are charged with condition. He has no control over the acts of great public duties, and the public are inter- the receiver, and if, without his consent, he ested that their operation shall be continuous. is to be held responsible therefor, he is liable Creditors are likewise interested that there to absolute bankruptcy and ruin. Such a shall be no suspension in their maintenance as rule would render the plaintiff's position so a going concern, because their value as prop- uncertain and precarious as practically to preerty depends upon the active use of the line. clude him from any protection whatever These considerations have developed the pres- through the appointment of a receiver pendent well-settled proposition that such receiv- ing the foreclosure suit. But the inquiry is ers are the mere custodians of the property, made, shall not a railroad mortgagee who apand hold for and as mere agents of the court. plies for and obtains the appointment of a reSpeaking of the character of such trustees, ceiver, with authority to operate the road, be and the effect of such holding upon the inter- held responsible for the liabilities incurred by ests procuring the appointment, Chief Jus- such officer when they cannot be made out tice Waite said: “The possession taken by the of the property itself? We think not, unless receiver is only that of the court, whose officer such responsibility was imposed as a condihe is, and adds nothing to the previously ex- tion to the appointment or the continuance isting title of the mortgagees. He holds pend- of the receiver in office. The appointment of ing the litigation for the benefit of wliomso- a receiver in a suit to foreclose a railroad ever, in the end, it shall be found to concern; mortgage is not a matter of strict right, but and in the meantime the court proceeds to de- rests in the sound judicial discretion of the termine the rights of the parties upon the court; and it may, as a condition to issuing same principles it would if no change of pos- the necessary order, impose such terms as

may, under the drcumstances of the particular case, appear to be reasonable, and, if not acceded to, may refuse to make the order. 30 Am. Law Rev. 161; Fosdick v. Schall, 99 U. S. 235. If, therefore, upon an application for the appointment of a railroad receiver, it appears probable that the income and corpus will prove insufficient to pay the expenses and liabilities thereof, we have no doubt that the court may require of the plaintiff, as a condition to such appointment, a guaranty of the payment of the expenses of such officer. And if, at any time after the appointment has been made, it becomes apparent to the court that it will be unable to pay and discharge the present or future liabilities incurred by its executive officer and manager, It should refuse to continue the operation of the road under the receiver, unless its expenses are guarantied. No court is bound or ought to engage or continue in the operation of a railroad or any other enterprise without the ability to promptly discharge its obligations; and, unless it can do so, It should keep out, or immediately go out, of the business. But, unless such terms are imposed as a condition of the appointment or continuation in office of the receiver, his employés must look to the property in the custody of the court and its income for their compensation. They have no claim whatever on any of the parties to the litigation. They are the employés and servants of the court, and not of the parties. Their wages are in no sense costs of the litigation; and, although incurred during the progress of the suit, they are not incurred in the suit. They are neither expenses of the plaintiff, nor of the defendant, and are not fees or costs which can be charged against the successful party to the litigation, as is sought to be done in this case. It follows that the order appealed from must be affirmed, and it is so ordered.

owner of lot 7 and the north half of lot 8 in block 5 in the city of Corvallis, erected a building thereon, but, being unable to pay the cost of its construction, various liens were filed against the property. The plaintiffs, being lien claimants, commenced a suit to foreclose their lien, in which Wilkins and others, including F. E. Beach, were made parties defendant; and thereafter Beach commenced a suit against the same parties, including J. R. Smith & Co., to foreclose his lien. The court ordered that these suits be consolidated in the name of J. R. Smith & Co. v. M. W. Wilkins et al., and heard and determined under the reference theretofore wade in the original cause. That, J. R. Smith & Co. having filed an amended complaint, Beach filed an answer thereto, in the nature of a cross bill, in which, after denying the material allegations thereof, he alleged, in substance, that Wilkins was the owner of said real property, and that be tween October 1, 1891, and April 1, 1893, he erected thereon a structure known as the “Hotel Corvallis," during which time he furnished material to him to be used in its construction of the reasonable value of $1,709.33, no part of which had ever been paid except the sum of $140; that on March 29, 1893, and within 30 days from the time the last material was so furnished, he, “in pursuance of the statute in such cases made and provided," filed in the office of the county clerk of Benton county a verified statement of his claim of lien upon said structure and lots,and prayed a decree foreclosing the same; for the recovery of $1,509.33, together with attorney's fees and costs and disbursements. No reply or other pleading to this answer having been filed, the referee took and reported the testimony to the court, which, after making certain findings, decreed that Beach's suit be dismissed, from which he appeals.

Beach having failed to allege in his cross bill that the claim of lien so filed by him contained a true statement of his demand after deducting all credits and offsets, the name of the owner or reputed owner of the said land and building, the name of the person to whom said materials were furnished, or a description of the property to be char. ged with said lien, sufficient for identification, it is contended by counsel for the respondents that his pleading does not state facts sufficient to constitute a cause of suit. The right of the appellant to the relief prayed for must be determined by the allegations contained in his answer. He should therefore have alleged therein all the facts necessary to show the statutory right to a lien upon the property. Phil. Mech. Liens, $ 40. A claimant, to avail himself of the remedy prescribed by statute for the perfection of a lien upon property, must file in the proper office, and within the prescribed time, a claim containing a true statement of bis de mand, after deducting all just credits and

SMITH et al. v. WILKINS et al. 1 (Supreme Court of Oregon. May 1, 1897.)

MECHANICS' LIENS-PLEADING. A complaint by a lien claimant must atfirmatively show that the claim of lien filed by him contained all the statements prescribed by Hill's Ann. Laws, § 3673; an averment that, "in accordance with the statute," he filed a claim of lien, being insufficient.

Appeal from circuit court, Benton county; J. C. Fullerton, Judge.

Action by J. R. Smith & Co. against M. W. Wilkins and others; being a consolidation of several actions to foreclose mechanics' liens against defendant Wilkins. From a decree dismissing his cross bill, defendant F. E. Beach appeals. Affirmed.

G. G. Gammans, for appellant. H. C. Watson, for respondents.

MOORE, C. J. This is a suit to foreclose certain mechanics' liens. The facts are: That the defendant M. W. Wilkins, being the Rehearing pending

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