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Opinion of the Court.

ration to pay its current coupons and the interest upon the scrip; that the corporation has notified the trustees, that it was no longer necessary to retain any portion of the proceeds of sales for the payment of the interest coupons to mature hereafter; that the net earnings of the road would, in all probability, be ample for that purpose, and, by reason of the increased earnings, will continue to be more than ample to pay the coupons as they severally become due and payable; and that the price of the bonds has greatly risen in value, and the premium thereon has varied the past year from thirteen to serenteen per cent., so that under the mortgage the trustees are no longer able to purchase such bonds, being limited by the mortgage to the payment of ten per cent. premium.

The bill also alleges that 623,000 acres of the lands of the company remain unsold ; that the trustees hold contracts for lands sold, upon which partial payments have been made, but upon which deeds are not to be executed until the purchase money and interest are fully paid, amounting in the aggregate to more than the sum of $128,691 ; and that in the ordinary course of business, the trustees and their successors will have large amounts of money from sales thereof, which must be applied by them in accordance with the provisions of the inortgage, and in the order of priority, before the moneys can be invested, as provided therein; that the trustees have refused to apply any of the said money to the payment of the outstanding coupons for which the scrip mentioned was given; that such coupons draw interest at the rate of seven per cent., and any investment of such moneys by the trustees can only be made so as to obtain a much smaller rate of interest, and that, therefore, it would be greatly to the advantage of the corporation, and to the bondholders, that such moneys should be applied to taking up the outstanding coupons. The trustees, in their answer to the demand of the corporation that the moneys be so applied, have expressed a willingness to so apply them, but they entertain doubts as to their authority so to do, unless directed by order of the court.

The mortgage, as is seen by its terms, contemplates that the proceeds of sales of lands shall be applied to the payment

Opinion of the Court.

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of the interest coupons to the extent that the earnings of the
road are insufficient for that purpose. The contract, by which
the time to pay those coupons, for which the scrip was issued,
was extended for ten years, does not release the corporation
from its obligation, provided it is in funds from the earnings
of the road and the sales of its lands. The coupons are not
cancelled, but are still held as collateral security for the scrip
issued. The inability of the company to pay such coupons
from the earnings of the road, combined with the proceeds of
the sales of the lands, which led to the contract for the scrip,
no longer exists, and there is no legal impediment in the way
of the trustees taking up such coupons, notwithstanding the
contract deferring their compulsory payment for ten years.
The money received from the sales of the lands cannot be
used in purchasing the bonds of the company, which are now
at more than ten per cent. premium, and the trustees are
restricted in their payment to that premium. Any invest-
ment under the law of Massachusetts would bring them only
a moderate interest, probably not exceeding four per cent.
The coupons draw seven per cent. There is, therefore, a
manifest propriety and justice in the demand of the corpora-
tion that the surplus money from the sales of its lands, instead
of being thus invested, should be applied to taking up the
outstanding coupons. And it is the plain duty of the trustees,
in the execution of their trust, to make the proceeds of the
sales of lands as available as possible for the extinction of the
indebtedness of the corporation, first on its coupons, and then
upon its bonds, so long as the same can be bought at a
premium not exceeding ten per cent.
The decree of the court is, therefore, reversed, and the cause

remanded with directions to enter a decree in accordance with this opinion.

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Opinion of the Court.

HIBERNIA INSURANCE COMPANY V. ST. LOUIS

TRANSPORTATION COMPANY.

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR

THE EASTERN DISTRICT OF MISSOURI,

Argued January 17, 1887. - Decided January 31, 1887.

In a suit in equity by an insurance company against a transportation com

pany, and the transferee of its property, to recover the amount paid by the insurance company, as insurer of goods alleged to have been lost, in transportation, by the negligence of the transportation company; lleld: without passing on any other question, that negligence was not proved, and that the loss happened by perils excepted in the contract of trans. portation.

Tuis was a bill in equity. The court below dismissed the bill, and plaintiff appealed. The case is stated in the opinion of the court.

Mr. 0. B. Sansum for appellant.

Mr. Given Campbell, for appellees, submitted on his brief.

MR. JUSTICE BLATCHFORD delivered the opinion of the court.

This is a suit in equity, brought in the Circuit Court of the United States for the Eastern District of Missouri, by the Hibernia Insurance Company, a Louisiana corporation, against the St. Louis and New Orleans Transportation Company and the Babbage Transportation Company, two Missouri corporations, and IIenry Lowery, a citizen of Missouri.

The bill alleges that in August, 1879, the Babbage Company, of which Lowery was president and director, being engaged in transporting merchandise for hire on the Mississippi River from St. Louis to New Orleans by means of certain steam tow-boats and barges which it owned, contracted with the firm of Gordon & Gomila to transport for it from St. Louis to New Orleans a quantity of wheat, “the dangers of the river, fire, and collision only excepted;" that it loaded a part

Opinion of the Court.

of the wheat on the barge Sallie Pearce, which it took in tow by its tow-boat John Means; and that, by negligent navigation on the part of the Babbage Company, the barge broke away from the tow-boat, and was allowed to drift down the river until she brought up against a steamboat which was lying at rest along the bank on the Missouri side of the river, and was broken and crushed, so that some of the wheat was lost in the river and some of it was damaged by water.

The bill also alleges that, in September, 1879, one Pleasants owned certain rye, corn, oats, and hay, which were at St. Louis, on the barge Colossal ; that the Babbage Company contracted with Pleasants to carry those goods on that barge from St. Louis to New Orleans, “the dangers of navigation, fire, explosion, collision, bridges, and all other known ạnd unknown obstructions excepted ;” and that the company, by its tow-boat E. M. Norton, took the barge in tow, and the towboat was so negligently managed that she drew the barge against an obstruction then visible and known to the master, pilot, and officers of the tow-boat, and the barge was broken, and allowed by them to remain, without any attempt to rescue the goods, and nearly all of them were lost.

The bill also alleges that the plaintiff, as insurer of the goods in both cases, paid to Gordon & Gomila and Pleasants, $19,633.16.

The bill also alleges that, in January, 1880, the Babbage Company, by Lowery, as its president, sold all its property, consisting of four steam tow-boats and thirteen barges, to the St. Louis Company; that such sale was without consideration, and fraudulent as against the rights of the plaintiff as a creditor of the Babbage Company ; and that Lowery and the St. Louis Company had notice of the fraud.

The bill waives an answer on oath, and prays that the court will decree payment of said debt to the plaintiff, with interest ; that the St. Louis Company be restrained from disposing of any of said property until the plaintiff's debt shall be paid; and that until that time the plaintiff have a lien on said property.

The defendants demurred to the bill for want of equity; for want of privity between the plaintiff and the defendants; and

Opinion of the Court.

for multifariousness. The court, 3 McCrary, 368, dismissed the bill as to Lowery, and overruled the demurrer as to the other defendants, with leave to them to answer, holding that it was not necessary that the plaintiff should recover a judgment at law against the Babbage Company before bringing this suit.

The defendants then put in a plea to that part of the bill which relates to the transfer of the property and asks for relief by a lien and an injunction, denying the fraud and alleging the bona fides of the transaction. They, at the same time, put in an answer to the part of the bill not covered by the.plea, denying the negligence, and averring that the losses were due to the perils of navigation. There were special replications to the plea and the answer.

Proofs being taken on the plea, the court, 4 McCrary, 432, overruled it, on a hearing, holding that the allegations of the bill involved in the plea were established, and that the debts of the Babbage Company could be enforced in equity against the other company to the extent of the property received by the latter.

The case was afterwards brought to a hearing on proofs on the issues raised by the answer, and the court, 5 McCrary, 397, dismissed the bill. The plaintiff has appealed. The Circuit Court held, as to the Sallie Pearce, that the contract was that of a common carrier; that, as to the Colossal, it was immaterial whether the contract was that of towage merely, or that of a common carrier; and that each disaster was caused by an inevitable accident, falling within the excepted dangers of the river and of navigation, alleged in the bill as forming part of each contract. We concur in this conclusion. In the first case a sand reef had been recently formed in the channel; the pilot of the tow-boat had no reason to suppose it was there; and she was being handled with skill and care when the accident occurred. In the second case, the Colossal wa unsea worthy when she started. The tow-boat was prudently navigated, but the river bank had shortly before caved in, and a tree from the land had fallen into the river, its presence being unknown, and the Colossal struck it under water, caus

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