Syllabus. stitution. In the act of 1881, the legislature of New York did not profess to undo anything which had been done under the act of 1869, and certainly did not begin de novo in dealing with the improvement. On the contrary, they took that portion of the old assessment for the expense of regulating, grading, and preparing the street for travel which remained unpaid, and which had been declared to be void, and revived it by a mere act of legislation as against the parties who had been judicially declared not to be bound by it, adding interest upon it from the time when it was first charged to the State by virtue of the cancellation, as well as a part of the expenses incurred in making the original assessment. Such an act of the legislature seems to me to be in violation of that provision of the Fourteenth Amendment to the Federal Constitution which declares that no State shall deprive any person of his property without due process of law. I am authorized by MR. JUSTICE HARLAN to say that he concurs in these views. SAGE v. MEMPHIS AND LITTLE ROCK RAILROAD COMPANY. MEMPHIS AND LITTLE ROCK RAILROAD APPEALS FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF ARKANSAS. Nos. 126, 127. Argued January 6, 9, 1888.- Decided March 19, 1888. Whether a receiver of the property of a railroad company shall be appointed by a court of equity, is a matter within the discretion of the court, and this discretion is to be exercised sparingly, and with great caution, and with reference to the special circumstances of each case as it arises. A bill in equity, brought by a judgment creditor of a railroad company against the company, which alleges in substance that the property of the company is so heavily mortgaged that if the plaintiff should attempt to enforce payment of his debt by seizure and sale on execution there would Statement of the Case. be no bidders at more than a nominal amount, while, if the property were placed in the hands of a receiver by the court, and held together and carefully used in transporting passengers and freight, there would be a large surplus each year for the payment of the plaintiff's debt, contains ample averments to give a court of equity jurisdiction to appoint a receiver of the property: but this point is decided on the facts of the present case, and the court does not mean to say that one or more of the judgment creditors of a railroad company can, as matter of right, require such a property to be put in the hands of a receiver merely because the company fails or refuses to pay its debts. The fact that a judgment creditor filing a bill in equity to obtain the appointment of a receiver of the debtor's property did not first sue out execution and have a return of nulla bona is immaterial, if not objected to by the debtor, and if it appears on the admitted facts that so doing would have been an idle ceremony. If a court of equity is induced by imposition to appoint a receiver of the property of a railroad company when one would not have been appointed had the court been aware of the exact situation, and the receiver is discharged on learning the imposition, and during the receivership a fund has accumulated from surplus earnings, trustees, representing mortgage creditors of the corporation, who did not intervene in the suit pending the receivership and set up no claim to the fund during the receivership and had no claim to it except as mortgage trustees out of possession, are not entitled to the fund. It is again held that the mortgagor of a railroad is not required to account to the mortgagee for earnings, even though the mortgage covers income, while the mortgaged property remains in the mortgagor's possession, and no demand has been made for it or for surrender of its possession under the provisions of the mortgage. Mortgage bondholders of a railroad company who obtain judgment on their bonds or coupons and intervene individually and without the appearance of their trustees in a suit brought by a judgment creditor of the company whose debt is not secured by the mortgage, in which a receiver has been appointed, do not thereby deprive the plaintiff creditor of his priority of right in the accumulating income from the property in the hands of the receiver. THE case was stated by the court as follows: The decree from which these appeals are taken relates to the distribution of a fund in the registry of the Circuit Court arising from the operation, by its receiver, of the Memphis and Little Rock Railroad Company (as reorganized). The decree directed it to be paid to the surviving trustees in a certain mortgage executed by that company, for distribution Statement of the Case. among the beneficiaries under said mortgage. Sage and the railroad company each complain of that decree; the former insisting that the money should have been applied in satisfaction of a judgment obtained by him against the company, while the latter insisted that it was entitled to receive it. The history of the claims of the respective parties is as follows: On the 24th day of June, 1882, the Memphis and Little Rock Railroad Company (as reorganized) in an action brought by Russell Sage, on that day, in the Circuit Court of the United States for the Eastern District of Arkansas, confessed judgment in his favor for the sum of one hundred and twentyfive thousand nine hundred and twenty-one dollars and thirteen cents, that sum being the aggregate amount, principal, and interest, of a demand note for $115,479.03 executed by that company, June 20, 1882, to the president of the Missouri Pacific Railway Company, and indorsed by him to Sage, and of another note of $10,000 held by the latter against the same defendant. On the same day on which this judgment was entered, Sage commenced in the Chancery Court of Pulaski County, Arkansas, a suit in equity against the Memphis and Little Rock Railroad Company (as reorganized). The bill, after setting out the judgment, alleged that the entire tangible property of the company consisted of its railroad-extending from its junction with the St. Louis, Iron Mountain, and Southern Railroad, through the counties of Pulaski, Lonoke, Prairie, Monroe, St. Francis, and Crittenden to the Mississippi River an inclined track used to transfer its rolling-stock across that river to Memphis, a steamboat, certain lands and depot in that city, locomotives, cars, and other property, such as are usually employed in the management of a railroad; that the defendant by deed of May 1, 1877, duly recorded, mortgaged its property to trustees to secure the payment of bonds, amounting to $250,000, and maturing in instalments of $50,000 each, on the first day of May in the years 1879 to 1883, inclusive, of which instalments four were then due and unpaid; that by deed of May 2, 1877, duly recorded, defend Statement of the Case. ant mortgaged its property, rights, and franchises of every description to secure the payment of other bonds with coupons attached, amounting to $2,600,000, payable July 1, 1907, and bearing interest, after July 1, 1882, at the rate of eight per cent per annum; that both of said mortgages authorized the trustees to take possession of and sell the mortgaged property upon the non-payment of any of the bonds or interest at maturity; that the aggregate amount of the mortgages exceeded the salable value of the property and franchises of every description owned by the company, or, at least, the sum for which they would sell under execution; that by reason of the existence of the mortgages no bidders could be found at more than nominal amounts for the property; that a large part of the bonds secured by the mortgages being due and unpaid, the trustees would interfere with the sale of any part of the property under execution if the plaintiff should attempt, in that mode, to enforce payment of this judgment; and that for these reasons the suing out of execution upon such judgment would cause useless expense and delay, and result in no benefit whatever to plaintiff. The plaintiff also alleged that if the company's property was held together, and carefully used in the transportation of passengers and freight, it would produce a large income, sufficient to pay all operating expenses and necessary repairs, leaving each year a large surplus to pay off and discharge plaintiff's debt; that such income could be made only by working the property as a unit, for purposes of transportation; consequently, the seizure and sale of it, or of any material part thereof, would destroy its capacity to produce such income, without benefit to the plaintiff, and at the same time incommode the public by destroying the use of the road in the manner contemplated by the State. The bill further alleged that the company had hitherto failed and refused to apply its surplus income to the payment of its debts, and unless prevented would continue in that course, and apply its surplus to other uses to his great injury and loss. The relief asked was that the court take possession of and Statement of the Case. operate the road, by a receiver, and, in that manner, seize upon the only means in reach of the law for satisfying the plaintiff's demands; such relief to be subject to all the rights and equities of the holders of bonds or of said trustees. The railroad company appeared and waived notice, and the court being of opinion that the relief asked was necessary, for the protection of the plaintiff's interests and rights, E. K. Sibley was appointed receiver. He was directed to take possession of the entire railroad, with the inclines, connections, tracks, depots, rolling-stock, books, papers, and all other property of the company of every kind. The company was ordered to surrender possession and the receiver directed to operate the railroad, in the usual manner, in the carriage of passengers, freights, and express matter, keeping account of all receipts and expenses, and making report of all his acts and doings, as might be required. Such surrender was made, and possession was taken by the receiver. John L. Farwell and Robert K. Dow, as stockholders of the company, respectively intervened, October 14, 1882, and November 1, 1882, as defendants, and assailed the proceeding in which the receiver was appointed as being merely a financial expedient, by which Sage and others could make a successful speculation in the stocks and securities of the company. They charged that the company was not really indebted to Sage in any sum, and, among other things, they asked that he be enjoined from prosecuting his judgment, and that the receiver be discharged. On the 10th of November, 1882, they filed their respective petitions for the removal of the cause to the Circuit Court of the United States, and it was so removed. On the 1st of December, 1883, Dow and many others, holding judgments rendered by default upon preferred mortgage and general mortgage coupons, filed their claims. These judgments aggregated nearly $200,000. Two days thereafter, December 3, 1883, an order was entered requiring the receiver at once to surrender to the railroad company all the property of whatever kind in his custody as receiver; to pay out of the money in his hands all sums and dues authorized by the order appointing him; to retain the balance subject to |