# Brief for Respondent — St. Louis & San Francisco R. Co. v. Spiller > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_0682%3A08 ## Record - **Collection:** Supreme Court brief - **Document type:** Brief for Respondent - **Published:** January 1, 1927 - **Citation:** 274 U.S. 304 ## Text PriLE COPY APR 4 1997 ae WM. R. STANSBURY et CER “No. 877. SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1926. ST. LOUIS AND SAN FRANCISCO RAILROAD COM- PANY AND ST..LOUIS-SAN FRANCISCO RAIL- WAY COMPANY, PETITIONERS, , V8. _ B. B. SPILLER ET AL, RESPONDENTS. ON WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE EIGHTH CIRCUIT. BRIEF FOR RESPONDENTS. 4 S. H, Cowax, Davi A. Murpxy, V Jonn 8. Leany, ¥ Waurer H. Saunpers, Attorneys for Respondents. 8. H. Cowan, 512 ds Building, Fort Worth, Texas. Davm A. Murray, I. II. ITT. IV. SUBJECT INDEX ES ESTA OPES ee Pe usm. tae haa Points and Authoritie nt iimipnra Gt Ribot SEs Es Ree rae eee eee eee ey Te re The collection of said excess charges by the carriers from the intervenors in this case was under duress, or compulsion, the shippers being either required to pay such illegal exactions, or abandon their business (1) Seetion V1 of the Commerce Act requires all railroads to publish their rates so as to secure uni- formity a ‘ prevent discrimination among shippers, and as long as the published rate stands, the carrier must charge it and the shipper must pay it; but the mere publication of the rate does not determine its lawfulness under Section I of the act prohibiting un- just and unreasonable charges. If the published rates cannot be assailed because ‘‘lawful,’’ then a Frankenstein has been created to destroy the act . The railroad company unlawfully exacted from these intervenors and their assignors the excess charges, which formed the basis of this action, and became a trustee in invitum, or ex maleficio, for their benefit. These trust funds passed into the hands of the receiver, and therefore should be returned to these intervenors by a court of equity... Intervenors without reference to their other equi- ties are entitled to recover these excess charges from the new company, the St. Louis, San Francisco Railway Co., under the rule an- nounced in Northern Pacific Ry. Co. vs. Boyd, 228 U. S. 481 and other cases to the same effect under Point I, supra, relating to the right of a creditor to recover against a reorganized com- pany, where the stockholders of the original debtor 12 12 ee oath inde Set Y ESO I ANS VI. InDEXx company had been given an interest in the reorgan- ized railway company—in the instant case over $45,- 000,000 in stock without the payment of anything therefor. This is particularly true where, as in the instant case, the purpose of the receivership was to preserve the railroad property as a unit, and it was sold as such and bought in as such by stockholders and bondholders of the original railroad company in order to preserve the continuity of ownership Intervenors are entitled to recover said excess charges upon the theory of the rule, underlying the right of preferential payment of claims for labor, eS wey s gine va cds cows A court of equity, as a matter of public policy, will order said excess charges repaid to the intervenors, the shippers and representatives of shippers of live ER Pty ley ele te ns VII. Neither the reorganization nor the trust fund theo- ry is inconsistent with or abrogated by the remedy for the collection of overcharges, prescribed by See- tion 16 of the Act ......... VIII. The claims of intervenors for said excess charges IX. should be paid with interest from the date of their Eg ee ee Sinee the entire case is before the court upon the writ of certiorari, the court will decide the entire ease. Intervenors are entitled to reeover attorneys’ fees taxed as costs in the litigation in the District Court of the United States of the Western Division of the Western District of Missouri, because, pursu- ant to the order of the court, the receivers of the rail- road company contested the claims of these interven- ors in all the Federal District Courts and, thereafter, by the reorganized railway company for eleven years. In this way the costs were created, including attorneys’ fees, which, under Section 16 of the Act, 60 67 69 15 INDEX can be recovered as an incident to the enforcement of an order of reparation by judicial process. In equity there is no wrong without a remedy. ‘‘Equity will do complete justice.’’ ‘‘ Kquity delights to do justice and that not by halves.’’ ‘‘Kquity re- gards substance rather than form.’’ ‘Equity im- putes an intention to fulfill an obligation.””...... The intervenors are neither precluded by alleged laches from a recovery of the excess charges (held by the Commission to be 3¢ per ewt. in excess of a just and reasonable rate) and condemned by Section | of the Commerce Act as unjust and unreasonable and condemned by the common law, nor by any alleged bar arising out of the interlocutory decree or the Re SE a Gao gts beds LENO MOS Edy nrc an rn hooey The decision of the Cireuit Court of Appeals that intervenors’ claims ‘‘arose’’ after the entry of the tinal decree, and that they were not precluded by the final decree and the order of confirmation of sale from asserting said claims, is correct on this point. Opinion of the United States Circuit Court of Ap- peals (R. pp. 755-760) 14 Fed. 2d, 1. c. 291-293, where the court reviews the contention of petitioners on this point at length, states the applicable facts, holds that the purchaser of the property, the railway com- pany, expressly agreed, under the order of court, to pay the claims of intervenors if established, and cites many applicable authorities as to the meaning of the CONE I ce ae caus. sede baei takers) Cees T'abLE or Cases CIrep Affirmed 240 U.S., page 166... And cases cited, supra, under Points il and Vv Angle vs. Chicago, St. P. M. & O. R. Co., 151 U. 8. 125, 38 Law Ed. 55 .. Angle vs. Chicago, St. P. M. & O. R. Co., 151 U.S.1. IV INDEX Arkansas Fuel Co. vs. C. M. & St. P. Ry. Co., 16 I. C. C. OS EE eer ernie eer ee 14, 3 Arkansas Fuel Co. vs. C. M. & St. P. Ry. Co., 16 I. C. C. Reports 95, 1. ec. 96, 97, 98; (decided Apr. 5, 1909) Atkins vs. Railroad Co., 3 Hughes 307 ........... Baer Bros. Mere. Co. vs. D. & R. G. R. R. Co., 233 U. S. RE ha ree eee Barksdale et al vs. Finney et al, 14 Grattan 338 Barksdale et al., vs. Finney, et al., 14 Grattan, 338 Barksdale et al. vs. Finney et al., 14 Grattan, 338. Blake vs. Railroad, 19 Minn. 418.................... Blair vs. Railway Co., 22 Fed. 471... . Blake vs. Railroad, 19 Minn. 418................ a ee eS 8 OY ere ee . Broom on Legal Maxims, 8th Ed., p. 191... .. Burham vs. Bowen, 111 U. S. 776 an Coomes vs. Chicago, Milwaukee & St. rr. Ry. Co., 13 I. C, C. 192, 1. ec. 194 (decided March 10, 1908) .......... Crescent Coal & Mining Co. vs. Chicage & Kastern Illinois R. R. Co., XXIVLC.C. p. 149, 1. ¢. 156-158 (decided June 8, MN PRs rn se dig me pe ies Chapman vs. Douglass, 107 U. 8. 348.......... Central Stock & Grain ‘eed of Chicago vs. Bend- USS ee er ree Chapman vs. Douglas, 107 U. 5 ES er eere Central Stock & Grain Co. vs. Bedinger, 109 Fed. 926.. Central of Georgia Railway ew vs. Paul, 93 Fed. Rep. 878 (C. C. A,, ME os ot aw 3 Chicago Ry. Co. vs. Howard, 7 Wall. 392, 409, 74 =OUz« S. 392, 409, 19 L. Ed. 117. hi Chicago, B. & Q. R. R. Co. vs. Merriam Millard Co., gi 8k ee Chieago R. I. & P. Ry. Co. Vs. Howard, 74 U.S. (7 Wall.) 392, 409 (19 ee Mee. Central of Seersia Ry. Co. vs. Paul, 93 Fed. 878, 884 (Fifth Cireuit) . Ve Central Nat. Bank of Baltimore. vs. ‘Connecticut Mutual Life Insurance Co., 104 U. S. 54, 26 L. Ed. 693 12 16 12 15 19 INDEX Vv City of Litchfield vs. Ballou, 114 U. S. 190, 29 Law Leia shoawadt ties oak ree Hees etme e® 43 Converse vs. Sickles, 44 N. Y. Supp. 1080 (affirmed in Se ON oy vcs cna cnevencevecnscongn neues 74 Central — ement Co. vs. Cambria Steel Co., 210 Fed. - 690 . AEM etre es pate ss ied ee eS A he ee Central Improv coneut Co. vs. Cambria Steel Co., 201 Fed. "pet gates are earn Serer eC ere ee eee 19 Coal Co. vs. Doran, 142 U. S. Si mai cma sient Maps 7 Re 20 Converse Vs. — 44 N. Y. Supp. 1080 eauiciiais in 161 | pie eee eee ee 20 Co Beismas| ex rel vs. Scott, 112 Ky. 252 ........... 15 Central of Georgia Railway Co. vs. Paul, 93 Fed. Rep. om es ntanireoeher est nearer devasess ts. 0ne® Converse VS. Sickles, 44 N. Y. Sup. 1080, affirmed in 161 Se Ay Se ener eer ry ry ok 15 Chicago Ry. Co. vs. Howard, 7 Wall. 392, 409, 74 U.S. 392, 409, 19 L. Ed. 117 ... ae 20 Corpus Juris, p. 21.2... 6.0 ee eee eee 15 a, ) ee ce co 14 TT ht SG Serre ee ee ree ey Cet tr gt Persie 17 Darnell-Taenzer vs. Southern Pacific Co., 221 Fed. 1. “RSet ea: Pee hp rer eit. 12, 26 Darnell-Taenzer Co. vs. Southern Pacific Co., 221 Fed. OO | RS Sera are erry 14, 26 Dayton-Goose Creek Railway Co. vs. The United — ye ee OS oe Ce Gh ok ds be eee Oy eo 15 Doughty vs. Funk, 15 Okl. 643, 84 P. 484, 4 s R. A (N. 26 SS TT eee ree rie tis Rae Empire State Surety Co. vs. Carroll County, 194 Fed. 593 (U. S. C. C. A., 8th Circuit) hs, REM DD Pee ge Federal State Bank vs. McFarlin, 257 (U. S. C. C. A. 8th ON SIO Se ee eee ee et eee ee 47 First Opinion of Judge Sanborn, (R. p. 61) | ae >. French vs. Capen, 105 U. 8. 5309 ................- oe ea French vs. Gapen, 105 U.S. 509... «1. ee eee 78 Guardian Trust Company vs. Cambria Steel Company et al., 210 Fed. 696, 1. c. 721 (C. C. A., 8th Cir.).... 57 Guaranty Trust Company vs. Missouri Pacific Ry. Co., 238 Fed. 812, 1. c. 814-816 VI Inpex Guardian Trust Co. vs. Cambria Steel Co. et al., 210 Fed. tere noe ene rey 16 Guaranty Trust Co. vs. Missouri Pacific Ry. Co., 238 Fed. 812, 1. ¢. 814-16 16 Hale vs. Frost, 99 U. S. 389 ......... cece ee ween 16 Harrigan vs. Gilchrist, 99 N. W. 909 19 Harrigan vs. Gilchrist, 99 N. W. 909............... 1% Harrigan vs. Gilchrist, 99 N. W. 909 . 15 Ide vs. Trorlicht, Duncker & Renard Carpet Co., 115 Fed. UR ec is fat any os ees 19 In re Bogart, Fed. Cas. No. 1596....... - 80 Ins. Co. vs. M. Girr, 263 Fed. 847, L e. 855 20 Kansas City Southern Ry. Co. vs. Guardian Trust Co., 240 U.S. 164..... 19 Kansas City Southern R. R. Ce. vs. “May, 2 Fed. 2nd Series, OG Sor et 0) Love vs. North American Co., 229 Fed. l. ¢. 106. 12 Love vs. North American Co., 229 Fed. 1. ¢. 106. 14 Love, et al. vs. North American Co., et al., 229 F. 103, 106, Ff ee 3 eee a0) Love vs. North American Co., 299 Fed. 103, L ec. 107 16 Love vs. North American Co., 229 Fed. 1. ¢. 107 16 Love vs. North American Company, 229 Fed. 1. ¢. 106 33 Love vs. North Amr. Co., 229 Fed. 1.¢. 107......... 68, 69 Levee District vs. Pipe Line, 292 Fed. 474, 1. ce. 480 20 L. & N. R. R. Co. vs. Schloss Sheffield Steel & Iron Co., 269 U. S. 222, 70 L. Ed. 245. . 12 Louisville Cement Co. vs. Int. Com. Comm., 246 U. 8. 638, 38 S. Ct. 408, 62 L. Ed. 914. Louisville Trust Co. vs. L. N. A. & C. ‘Ry. Co., 174 U. 674. Se Peg sagas ce ae oe a ~ 37 Louisville &N BR. Co. vs. ieee: Sheffield S. & L. Co., 269 U. 8S. 217, 1. ce. 238, 239, 240 18 ae Trust Co. vs. L. N. A. & C. Ry. Co., 174 U. 674 . ; Louisville & N. R. Co. vs. Sloss- Sheffield S. & I. Co., 269 U. S. 217, 1. c. 238, 239, 240....... 75 Macon Grocery Co. vs. Atlantic Coast Line R. Co., 215 U. S. 501, 30 S. Ct. 184, 54 L. Ed. 300.. Inpex vir Mathieson vs. Craven, 247 Fed. 1. ¢. 226... eee Mathews vs. Forslund, 112 Mich. 591................ 74 Matthews vs. Forslund, 112 Mich. 591 _.. 19 Matthews vs. Forslund, 112 Mich. 591 ............ 15 Mercantile Trust Co. vs. St. Louis & San Francisco Ry. Co., 69 Fed. 193 . ME a Is dk bbe ee Cas hen 14 McDonald vs. Nebraska, 101 Fed. 171, L e. 177-182. . 60 Mercantile Trust Co. vs. St. Louis & San Francisco R. R. Co., ER Sa ory oy ae — Mercantile Trust Co. vs. St. Louis & San Francisco ‘Ry. Co., Ogden et al., Intervenors, 69 Fed. 193 . i Mercantile Trust Co. vs. St. Louis & San Francisco ee SS a a ay se kee Sanaawe 33 Mercantile Trust Co. vs. St. Louis & San Francisco Ry. Co., Ogden et al. Intervenors, 69 Fed. 193.... 74 Mills vs. Lehigh Valley R. R. Co., 238 U. 8. 473... 12 Mills vs. Lehigh Valley R. R. Co., 238 U. 8. 473 . .. 14,25 Moran vs. Moran, 144 Iowa, 451, 123 N. W. 202, 30 L. R. A. (N.S.) 898. eae Pons hs ak a 80 McDonald vs. Nebraska, 101 Fed. 171, % ¢. .177- 182 16 Montgomery-Web Co. vs. Dienelt, 133 Pa. 585, 19 Atl. tC cece aes ns Casa ous ceub sd «seas ke erks 38 Morgan vs. Louisiana, 93 U. 8. 217 16 Morgan vs. Louisiana, 93 U. 8. 217.. 68 North American vs. Lamont, 69 Fed. 496 . 16 North American vs. Lamont, 69 Fed. 496... .. Lee Northern Pacific Ry. Co. vs. Boyd, 229 U. S. 481 ...... 15 Northern Pacific Ry. Co. vs. Boyd, 177 Fed. 804 — Northern Pacifie Railway Co. vs. Boyd, 228 U.S. 481 .. 19 Northern Pacific Railway Co. vs. Boyd, 177 Fed. 804 19 N. Y. Guaranty Trust Co. vs. Railway Co., 83 Fed. has Siok Gre ibie th Biece pala cca» gk ie 16 Olrichs vs. Williams, 15 Wall., 291 L. Ed., |. ¢. 224 . 14 Opinion of the U. S. Cir. Court of Appeals (R. pp. 749. 754) . 19 Opinion of U. 8S. Cir. Court of Appeals (R. pp. 762- 63) 14 Fed. (2d) 284, 1. ¢. 294. . 12 Pennsylvania R. R. Co. vs. International Coal Mining Co., 230 U. S. 184 VIII INDEX Peters vs. Bain, 133 U. S. 670, 33 L. Ed. 696... 0 Phillips vs. Grand Trunk Ry. Co., 236 U. S. 662. 12 Phillips vs. Grand Trunk Ry. Co., 236 U.S. 662 . 14, 25 Pom. Eq. Jur., Vol. 1, Sec. 423 . pas 14 Poor Grain Co. vs. Chicago, Burlington & Quiney R. R. Co., 12 I. C. C. Rep., 418, 1. ¢. 421-423, 425 (decided July 8, 1907), and . 12 5 Pomeroy’s Eq. Jur., See. 35 . 19 3rd Pom. Eq. Jur., Sec. 1055 . Ter 14 Report of Special Master (R. pp. 152- 166 ; 168- 173) 19 Rice vs. Durham, 91 Fed. 1. c. 434...... re 78 Rice et al. vs. Durham Water Co., 91 Fed. 434 20 Richardson vs. New Orleans, 102 Fed. 782... 33 Richardson vs. N. O. Debenture Redemption Co., 102 Fed lL. c. 782 . “ 14 Robinson vs. Baltimore & Ohio R. R., 999 U. S., 506. 31 R. R. Co. vs. Lockwood, 17 Wall. 379 . 12 R. R. Co. vs. Lockwood, 17 Wall. 279 . 16 Seullin Steel Co. vs. North American Co., 255 Fed. 06 (U. B.C. C. A, Sh Civeuit) ..............-. 48 Sections I, VI, [X and XXII, Acts to Regulate Commerce 14 Sections I, VI, [IX and XXII, Act to Regulate Commerce 12 Section 15-A of the Act to Regulate Commerce . . 15 Smith vs. Mottley, 150 Fed. 266 (6th Circuit) 1. c. 268 42 Spiller vs. St. Louis & San Francisco R. R. Co., Opinion of the U. S. Cir. Cowrt of Appeals (R. pp. 764, 767) 14 Fed. 2d, 284 1. c. 295, 296 17 Southern California Railway Co vs. Rutherford, ef al., GS Wedd, b. @. FOU-Oe cc . cc ceccsessess 14 Southern Pacifie Co. vs. Daradil- Taenzer Lauber Co. ef er a Or) ped ae ds ues CaRek oo CUT 14, 24 Southern Pacific Co. vs. Darnell-Taenzer Lumber Co., et al., 245 U. S. 531... ; 12 Southern Pacific Co., et al. vs. Darnell, 245 U. Ss. 531, 38 S. Ct. 186, 62 L. Ed. 451 . Southern Pacific Co. vs. Goldfield Consolidated Milling & Transportation Co., 220 Fed. 1. ¢. 18 Southern Pacific Co. vs. Bogert, 250 U. S. 482, 1. ¢. 488- 89-90; 61 L. Ed. 1107 — Southern Ry. Co. vs. Carnegie, 76 Fed. 496. ie Southern California Ry Co. vs. Rutherford, “et al., (Cireuit Court, Southern District of California, June 30, 1894), 3. eas. & Meer Southern California Railway Co. vs. Rutherford, 62 Fed. 797 . ah epined sees a Southern Railway Company vs. Carneate, 76 Fed. 496 So. Pac. Co. vs. Adjustment Co., 237 Fed. 1. ¢. 962 . So. Pac. Co. vs. Adjustment Co., 237 Fed. 1. ¢. 962 Spiller vs. St. Louis & San Francisco R. R. Co., et al., Opinion of U. S. Cir. Court of Appeals (R. pp. 760- 764) 14 Fed. (2d) 284, 1. ¢. 293, 295 . Spiller vs. St. Louis & San Francisco R. R. Co. et al. State ex rel Barker vs. R. R. Co., 216 Fed. 564 ........ Sugar Refining Company vs. Fancher, 145 N. Y. 552, l. e. 561 Sugar Refining Company vs. Fancher, 145 N. Y. 552, a eat a Pee eR et oe peg nn a ee ee es Sugar Refining Co. vs. Fancher, 145 N. Y. 552, 1. e. 561 Sweet vs. The Montpelier Savings Bank & Trust Co., 69 Kan. 641 (77 Pac. 538) Sweet vs. The Montpelier Savings Bank & Trust Co., 69 Kan. 641 (77 Pac. 538)... See leg et ee Swift & Co. vs. Black, 224 Fed. 20. . Swift & Co. vs. Black Panther Oil & Ges Co., 294 Fed. 20 Sweet vs. Montpelier Savings Bank & Trust Co., 69 Kan. 641. Terre Haute and I. R. Co. vs. Cox, 102 Fed. Rep. 825 (7th Cireuit) . PC aca bans ee eee Texas & Pacific R. R. Co. vs. Abilene Cotton Oil Co., 204 me a. 2h seeue. Sheer es ail 17 So. Pac. Co. v. Adjustment Co., 237 Fed. 1. ¢. 962. State ex rel Barker v. R. R. Co., 216 Fed. 564. U. S. & Mexican Trust Co. v. Kansas City M. & O. Ry. Co., et al, 240 Fed. 505. White v. Delano, 270 Mo. 1. ¢. 38. And cases cited, supra, under Points III and V. 4. ete >. obe VIL. poy t Neither the reorganization nor the trust fund theory is 7 inconsistent with or abrogated by the remedy for the collec- +o tion of overcharges, prescribed by Section 16 of the Act. a Spiller v. St. Louis € San Francisco R. BR. Co. | met Opinion of the U. 8. ‘ir. Court of Appeals (R. ovary pp. 764, 767) 14 Fed. 2d, 284 1. ¢. 295, 296. a ex ORS, Citing and applying T. & P.R.R. Co. v. Abilene Cotton © SOME Oil Co., 204 U. S. 426 1. c. 466, discussing Section 22 of the then act and the present act, providing : ‘And nothing in this act contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this act are in addition to such remedies.’’ The court added, 1. c. 295, that since the intervenors fol- lowed the only remedy provided by the act, to reduce the reparation order to judgment against the recalcitrant car- rier, there could be no election, citing 20 C. J., 21, and adding (1. ¢. 295-6) : ‘‘Further, as said in 39 Cye. p. 591: ‘As a general rule the jurisdiction of equity in establishing and enfore- ing trusts is in addition to and concurrent with any reme- dies at law the party may have.’ See, also, 6 L. R. A. (N. 8.) 793; Fitegerrell v. Federal Trust Co., (Mo. App.) 187 S. W. 600; Krippendorf v. Hyde d Another, 110 U. S. 276, 4 S. Ct. 27, 28 L. Ed. 145.”’ See, also cases cited, infra, under Point IX. 18 VITl. The claims of intervenors for said excess charges should be paid with interest from the date of their illegal collection, Louisville € N. R. Co. v. Sloss-Sheffield 8. & I. Co., 269 U. S. 217, 1. ¢. 238, 239, 240, where the court holds: ‘*Tt has been the uniform practice of the Commission to recognize as an element of the damages, loss of inter. est on charges unlawfully exacted; and, in ordering rep- aration, it has usually included as a part of the damages such interest from the date of the payment.”’ Citing many cases of this court and of the Commission in the decision and in Notes 10 and 11 supporting this con- clusion. This case conclusively settles the question of in- terest. IX. Since the entire case is before the court upon the writ of certiorari, the court will decide the entire case. Intervenors are entitled to recover attorneys’ fees taxed as costs in the litigation in the District Court of the United States of the Western Division of the Western District of Missouri, be- cause, pursuant to the order of the court, the receivers of the railroad company contested the claims of these interven- ors in all the Federal District Courts and, thereafter, by the reorganized railway compai.y for eleven years. In this way the costs were created, including attorneys’ fees, which, under Section 16 of the Act, can be recovered as an incident to the enforcement of an order of reparation by judicial process. In equity there is no wrong without a remedy. ‘‘ Equity will do complete justice.’’ ‘‘Equity delights to do justice and that not by halves.’’ ‘‘Equity regards substance rather SOL AE La DVIS VTE INT OOF: ARICA RS $ MRR peosoting tenisiam: & Paee Aye “Ges Jipee tor as Agent, et al, opinion ty full Cusmission, 92 ToC Ces ete vaper Coe ve ireotor General, as Agent, 10) I.0-% the shreveport creeseting Company sion to and co and un any all final d Fanbt AROS ee * PE YEN wy ACER ARERR). ORR RRS Re 19 than form.’’ ‘‘Equity imputes an intention to fulfill an ob- ligation.”’ Harrigan v. Gilchrist, 99 N. W. 909. Mercantile Trust Co. v. St. Louis & San Francisco Ry. Co., Ogden et al., Intervenors, 69 Fed. 193. Sweet v. The Montpelier Savings Bank & Trust Co., 69 Kan. 641 (77 Pace. 538). Matthews v. Forslund, 112 Mich. 591. Barksdale et al., v. Finney, et al., 14 Grattan, 338. X. The intervenors are neither precluded by alleged laches from a recovery of the excess charges (held by the Commis- sion to be 3¢ per ewt. in excess of a just and reasonable rate) and condemned by Section I of the Commerce Act as unjust and unreasonable and condemned by the common law, nor by any alleged bar arising out of the interlocutory decree or the final decree. First Opinion of Judge Sanborn, (R. p. 61). Report of Special Master (R. pp. 152-166; 168-173). Opinion of the U. S. Cir. Court of Appeals (R. pp. 749-754). Mathieson v. Craven, 247 Fed. |. ¢. 226. Ide v. Trorlicht, Duncker & Renard Carpet Co., 115 Fed. |. ¢. 148. Texas & Pacific R. R. Co. v. Abilene Cotton Oil Co., 204 U. D. 426. Southern Pacific Co. v. Goldfield Consolidated Mill- ing & Transportation Co., 220 Fed. 1. ¢. 18. Northern Pacific Railway Co. v. Boyd, 228 U. 8. 481. Northern Pacific Railway Co. v. Boyd, 177 Fed. 804. 5 Pomeroy’s Eq. Jur., See. 35. Central Improvement Co. v. Cambria Steel Co., 210 Fed. 696. Central Improvement Co. v. Cambria Steel Co., 201 Fed. 811. Kansas City Southern Ry. Co. v. Guardian Trust Co., 240 U. S. 164. men Co. v. Black Panther Oil d& Gas Co., 224 Fed. IT NON, ENT ARS RE 20 French v. Capen, 105 U. S. 509. Rice et al. v. Durham Water Co., 91 Fed. 434. Southern Pacific Co. v. Bogert, 250 U. S. 482, 1. ¢, 488-89-90; 61 L. Ed. 1107. Coal Co. v. Doran, 142 U. S. 417. Kansas City Southern R. R. Co. v. May, 2 Fed. 2nd Series, 680. Ins. Co. v. M. Girr, 263 Fed. 847, 1. e. 855. Levee District v. Pipe Line, 292 Fed. 474, 1. ¢. 480, Williams v. Young, 81 Atlantic 1118, Trader’s Bank v. Fraser, 162 Mich. 315, 1. e. 318, Converse v. Sickles, 44 N. Y. Supp. 1080 (affirmed in 161 N. Y. 666). —— ig Company v. Fancher, 145 N. Y. 552 . c. 561. ’ XI. The decision of the Circuit Court of Appeals that inter- venors’ claims ‘‘arose’’ after the entry of the final decree, and that they were not precluded by the final decree and the order of confirmation of sale from asserting said claims, is correct on this point. Opinion of the United States Circuit Court of Appeals (R. pp. 755-760) 14 Fed. 2d, 1. ¢. 291-293, where the court reviews the contention of petitioners on this point at length, states the applicable facts, holds that the purchaser of the property, the railway company, expressly agreed, under the order of court, to pay the claims of inter- venors if established, and cites many applicable authorities as to the meaning of the term ‘‘arise.’’ 21 ARGUMENT. I, Ul, I. The rates collected by the railroad company from these intervenors to the extent that they were unreasonable and unjust were unlawful and the exactions made by the railroad company from these intervenors over and above just and reasonable rates were unlawful exactions. The Circuit Court of Appeals did not, as stated by peti- tioners’ counsel, on page 22 of their brief, decide that the collection of legally-established rates becomes unlawful be- cause such rates are subsequently found by the Commission to be unjust and unreasonable. The Circuit Court of Appeals decided that ‘‘The charging of an excessive and unreasonable rate is ipso facto unlawful.’’ The correctness of its ruling in this regard is abundantly sustained by the decisions of this court, by reason and by the act to regulate commerce it- self. At common law unjust and unreasonable charges made by the carrier for transporting passengers or property were unlawful. By Section I of the Acts to Regulate Commerce it is pro- vided : ‘All charges made for any service rendered or to be rendered in the transportation of passengers or prop- erty, as aforesaid, or in connection therewith, or for receiving, delivering and handling of such property shall be reasonable and just, and every unjust and un- reasonable charge for such service is prohibited and de- clared to be unlawful.’’ Section VI of the Act to Regulate Commerce requires all railroads to publish their rates. As long as a rate is a 22 published rate a carrier cannot charge or demand or collect or receive a greater or less rate than the published rate. The published rate is the rate which the carrier must charge and the shipper must pay. It is contended by the petitioners that if a rate is pub- lished in accordance with Section VI of the act, no matter how unreasonable or unjust it may be, it is a lawful rate. They announce the novel theory that the act of a carrier in collecting an unjust and unreasonable rate from a shipper is lawful when committed, but assumes the nature of a tort because of a subsee -nt finding of the Commission that the rate was unjust and unreasonable. They do not try to ex- plain how an act, entirely lawful when committed, can there- after, become unlawful and tortuous. It is difficult to under- stand what they mean when they say that the act assumes the nature of a tort. How can a rightful, lawful act ‘‘as- sume’’ any other nature than that of a rightful and lawful act. Of course, their whole contention is without merit. The collection of an unreasonable and unjust rate is an unlawful act at the time the collection is made. Petitioners’ counsel quote from the opinion of Judge Sanborn filed in the district court (288 Fed. 612, Brief page 25) and say that the language of that learned judge is pe- culiarly apt. Let us analyze this excerpt from Judge San- born’s opinion: ‘“‘The prohibition of Section I and that of Section 6 must be read and interpreted together, and the correct construction of them is that the specific prohibition of Section 6 constitutes an exception from the general pro- hibition of Section T.’’ How can this be? Section 6 requires all carriers at all times to publish all of their rates. How, therefore, can the prohibition of Section 6 be an exception ‘o the prohibition of 23 Section 1. How can the universal ever be an exception? The reasoning of Judge Sanborn in that part of the opinion im- mediately following the portion just quoted is equally fal- lacious. The carrier is not bound to publish an unjust and unreasonable rate. When it does publish such a rate it pub- lishes it under the admonition of Section 1, which declares its act to be unlawful. In enacting the Act to Regulate Commerce Congress had at least two principal objects in view, the prohibition of un- reasonable and unjust rates and the prevention of discrimina- tion of all kinds. These two objects are accomplished in Sec- tions 1 and 6 of the act and full effect may be given to both of them. This same question has been before the Interstate Commerce Commission many times. In those cases it was urged by the carriers that since the published rate was the legal rate the carrier in charging it was doing something that it had a lawful right to do, and that, therefore, in collecting that published rate they were not injuring the shipper and, therefore, since the shipper had suffered no wrong, he could not be entitled to reparation. In passing on the proposition the Interstate Commerce Commission in Arkansas Fuel Co. v. C. M. & St. P. Ry. Co., 16 I. C. C. Reports, p. 97, said, citing its two earlier decisions, Poor Grain Co. v. C. B. € Q. Rd. Co., 12 I. C. C. 418, 1. e. 425, and Coomes v. C. M. € St. P. Ry. Co., 13 I. C. C. 192, 1. ¢. 194: ‘It has been said that the word ‘legal’ looks more to the letter and ‘lawful’ to the spirit of the law; that ‘legal’ imports rather than the forms of law are observ- ed and the rules prescribed obeyed, and the word ‘law- ful’ that the act is rightful in substance. The two words may aptly be used as illustrative of the distinction that we have attempted to draw in the cases cited. It is pro- vided in Section 6 of the act that no carrier shall 2ol- lect or receive a greater or less compensation than the 24 rates specified in the tariff in effect at the time of the movement. Other provisions of law make it a misde- meanor for the carrier to depart from the published rate. In dealing with shippers the carrier is therefore required to conform the freight charges actually col- lected to the amount fixed in its published tariffs. In that sense the published rate in effect at the time of the movement is, therefore, the legal rate. It is what the letter of the law requires the shipper to pay and the carrier to collect. ‘‘But the first section of the act, following the rule of the common law, declares that all charges for services rendered by carrier in the transportation of passengers or property shall be reasonable and just. It also de- clares every unjust and unreasonable charge for such a service to be unlawful. In publishing a rate or schedule of rates the carrier therefore acts under this admission of the statute. * * * While it may be, and indeed is, the legal rate—the rate that must be paid by the shipper and collected by the carrier because it is the published rate—the mere publication cannot make a rate lawful that is unreasonable and excessive.”’ This same question has been decided by this court and by the Circuit Court of Appeals on several occasions. The case of Southern Pacific Company v. Darnell-Taen- zer Co., 245 U. S. 531, was a reparation case. In that case the excessive freight charge had been passed on by the shipper to the consumer and it was contended by the rail- road company that the shipper had suffered no loss. Mr. Justice Holmes said, page 534: ‘“‘The plaintiffs suffered losses to the amount of the verdict when they paid. Their claim accrued at once in the theory of the law and it does not inquire into later events. * * * The carrier ought not to be allowed to retain his illegal profit, and the only one who can take it from him is the one that alone was in rela- tion with him, and from whom the carrier took the sum’’ (italics ours). 29 If the exactions had not been unlawful, the claims could not have accrued at the time the exactions were made. The carrier receives the illegal profit when the exaction is made. In this same case the court said: ‘‘But here the plaintiffs have paid cash out of pock- et that should not have been required of them, and there is no question as to the amount of the proximate loss.”’ In the case of Mills v. Lehigh Valley R. R. Co., 238 U.S. 473, which was a reparation case, the Interstate Commerce Commission had found that the shipper was entitled to the excess charges as reparation. It was contended by the rail- road company in that case that this was not a finding that the shipper had been damaged. Mr. Justice Hughes, on page 481, said: ‘‘What the Commission decided was that the ship- pers were entitled to reparation, that is, to be made whole, to be compensated for a loss because of an il- legal and unreasonable exaction.’’ In the ease of Phillips v. Grand Trunk Ry. Co., 236 U. §. 662, a case in which recovery was denied because suit had not been filed within the time fixed by the statute, the court, through Mr. Justice Lamar, said: ‘‘But while every person who had paid the rate could take advantage of the finding that the advance was unreasonable, he was obliged to assert his claim with- in the time fixed by law. When the overcharge was col- lected a cause of action at once arose and the shipper at once had the right to file a complaint or to intervene in proceedings instituted by others.”’ The cause of action at once arose because the exaction was unlawful at the time it was made. 26 The Circuit Court of Appeals, in the case of Darnell- Taenzer Co. v. Southern Pac. Co., 221 Fed. 1. ¢. 894 said: ‘‘Cases of excessive and unreasonable rates differ from discriminating charges in the fact that in the lat- ter there is nothing unlawful in the charging and re. ceiving of the higher or published rate on which the demand for reparation is based; the unlawfulness is in giving a lower rate to someone else. On the other hand, the charging of an excessive and unreasonable rate igs ipso facto unlawful.’’ In the case of Texas and Pacific Ry. v. Abilene Cotton Oil Co., 204 U. S. 426, the court said: ‘*Although an established schedule of rates may have been altered by a carrier voluntarily or as the re- sult of the enforcement of an order of the Commis- sion to desist from violating the law, rendered in ae- cordance with the provisions of the statute, it may not be doubted that the power of the Commission would nevertheless extend to hearing legal complaints of and awarding reparation to individuals for wrongs unlaw- fully suffered from the application of the unreasonable schedule during the period when such schedule was in force’’ (italics ours). A wrong cannot be unlawfully suffered if the act which causes the wrong is a lawful act. A carrier cannot be ordered by the Commission to desist from violating the law, if it is not violating the law. All of these cases hold that the exaction of an unjust and unreasonable rate is an unlawful exaction, and unlawful at the time it is made. It can make no difference that in the interest of uniformity, a shipper, before he can bring his action to recover, must secure a finding of the extent to which the rate is unreasonable and unjust. The basie act itself is unlawful. The prescribed procedural steps eannot affect the situation. 27 Petitioners in their brief seem to blow hot and cold on this proposition. As we have seen they say that the act was lawful when it was committed; that the exaction of an unjust and unreasonable rate was lawful when it was committed, but assumed the nature of a tort after the Com- mission found that it was unjust and unreasonable. In discussing the question of laches, later on in their brief (page 50) they say, that intervenors’ claims arose in November, 1908 and prior thereto, that is, when the unjust and unreasonable rates were collected. They are right in their latter contention, and intervenors’ causes of action accrued when the exactions were made, because the exac- tions were ipso facto unlawful. Aside from Section 1 of the Interstate Commerce Act, we have a legislative declaration of the unlawfulness ‘‘of an unjust and unreasonable rate.’’ Paragraph 17 of Section 15-A, which was added to the Interstate Commerce Act February 28, 1920, and which is commonly known as the recapture section of the act provides : ‘‘The provisions of this section shall not be con- strued as depriving shippers of their right to repara- tion in case of overcharges, unlawfully excessive or discriminatory rates.’’ A rate is excessive when it is unreasonable and unjust. When it is unreasonable and unjust it is unlawfully ex- cessive, Counsel for amicus curiae, Missouri Pacifie Ry. Com- pany, say that a railroad company, publishing a rate in good faith should not be penalized simply because it is an unjust and unreasonable one, by having its illegal profit declared to be a trust fund. Of course there is no merit in this contention. Why should a railroad company, regard- less of its motives, be allowed to retain its ‘‘illegal profits’’? 28 Have the shippers no rights? The bondholders have no right to the ‘‘illegal profits’’ because they did not contract for such security. The stockholders and general creditors have no right to such profits. Why should not a court of equity in a receivership prearranged for the benefit of the bondholders and stockholders, give to the shippers what is their own by the impressing of a trust? It is immaterial what the carriers’ motives may be in publishing an unlawfully excessive rate. When it collects such a rate, it collects some- thing that it is not entitled to, and it, as was said by this court in Southern Pacific Company v. Darnell-Taenzer Co, supra, ‘‘ought not to be allowed to retain its illegal protu.” In this case it ean hardly be said that the Railroad Company was acting in good faith. In August, 1905, the Interstate Commerce Commission, after a full hearing, found that the rates involved in this case were unjust and unreasonable to the extent of three cents a hundred pounds and were, therefore, unlawful. The unlawful exactions in- volved in this ease were collected between August 29, 1906, and November 17, 1908. Therefore, this Railroad Company continued to make these unlawful exactions, not only in the teeth of Section 1 of the Act, but in the teeth of this positive finding of the Interstate Commerce Commission. This does not seem to us to comport with the good faith talked about by counsel. However, the motives of a carrier in publishing a rate are wholly immaterial. The cases cited by petitioners in support of their con- tention that the Cireuit Court of Appeals erred in its decision in this regard are either not applicable at all or they sus- tain the circuit court of appeals. As we have already seen the ease of Texas and Pacific Ry. v. Abilene Cotton Oil Co., 204 U. S. 426, recognizes the principle that the exaction of an unjust and unreasonable rate under the protection of a 29 published schedule is an unlawful exaction, and a violation of the law. The question involved in that case was whether or not a shipper, under Section 22 of the Act, which provides: ‘‘Nothing in this act contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this act are in addition to such remedy.’’ could bring and maintain a suit in court, before first obtain- ing from the Commission a finding that the rate complained of was unreasonable and unjust and a finding as to the extent to which such rate was unreasonable and unjust. The court points out that one of the primary objects of the act to regulate commerce ,was to obtain uniformity and to prevent discrimination of all kinds; that, if such a suit could be maintained, then one shipper in one court could get one result and another shipper in another court another result; that by collusive action between some shippers and the carriers favorite shippers would be_ really charged one rate and other shippers another rate, and that thereby this primary object of the act would be totally destroyed. The court held, therefore, that, under Section 22 of the Act, only those common law remedies of the shipper were preserved to him which were not inconsistent with the primary purpose of the act, and that to preserve uniformity and to prevent discrimination all shippers would, before they could bring a suit in court, have to have a finding of the Commission that the rate complained of was unreason- able and unjust and the extent to which it was unreasonable and unjust. In the case of Pennsylvania R. R. Co. v. International Coal Mining Co., 230 U. S. 184, the plaintiff sued to recover 30 the difference between the published rate they paid and the lower rates which other shippers had paid because of re- bates allowed to them on coal shipped between the same termini. The court held that in such case, previous action by the Interstate Commerce Commission was not a condition precedent to the maintenance of an action in the courts, There was no question as to whether or not the published rate was a reasonable rate or a just rate. The court said that it was extremely doubtful whether at common law a ship- per, who had paid a reasonable rate, had a right of recovery because a lower rate was charged to another shipper, but that the statute had given the shipper such right, and that the measure of his recovery was the pecuniary loss suffered by him. While the court used the language quoted in the brief, that language was directed to the facts involved in that ease and does not touch this case top, side or bottom. In that part of the opinion preceding the excerpt quoted in peti- tioner’s brief the court said: ‘‘Under the statute there are many acts of the car- rier which are lawful or unlawful, according as they are reasonable or unreasonable, just or unjust. The deter- mination of such issues involves a comparison of rate with service and calls for an exercise of the discretion of the administrative and rate regulating body, for the reasonableness of rates and the permissible discrimina- tion based upon differences in conditions are not mat- ters of law. So far as the determination depends upon facts, no jurisdiction to pass upon the administrative questions involved has been conferred upon the courts. That power has been vested in a single body so as to secure uniformity and to prevent the varying and some- times conflicting results that would flow from the dif- ferent views that might be taken by different tribunals” (italies ours). This case really sustains the decision of the Cireut Court of Appeals in the case at bar. If acts of the carrier om guite Meee n Cua ag 31 are lawful or unlawful according as they are reasonable or unreasonable, just or unjust, then when the carrier exacts an unjust and unreasonable charge for transportation, its exac- tion is unlawful. The case of Robinson v. Baltimore & Ohio R. R., 222 U. S., 506, involved the question as to whether or not under Section 22 of the Act, a shipper could have recourse to the courts because of an alleged discriminatory rate between coal loaded from wagons and coal loaded from a tipple without a prior determination by the Commission as to whether or not the rate was discriminatory and the extent to which it was discriminatory. The court, applying the rule laid down in the Texas & Pacific Railway case, supra, held that, since a right to appeal to the courts in such a ease would bring about the same results as the right to appeal to the courts in ad- vance of a finding by the Commission in cases of unreason- able rates, the plaintiff could not maintain an action in the courts without first obtaining the necessary findings from the Commission. In the ease of Chicago, B.d Q. R. R. Co. v. Merriam Millard Co., 297 Fed. 1, the Interstate Commerce Commission made an order that the rate complained of would be unjust in the future to the extent stated in the order. The Commis- sion did not order the inauguration of a new rate, but ex- pressly stated that it expected that the carriers would put the new rate into effect. The carriers did not do so, and later on the Commission made another order establishing the rate for the future and gave the carriers thirty days to pub- lish it. No application was made by the plaintiff for an order of reparation and no order of reparation was made by the Commission. The court held that without first having obtained an order of reparation the plaintiff could not main- EERE CAN Cag 32 tain the suit. The statement of the court in that case that ‘the duly filed and published tariff rate while it was in force was the only lawful rate’? was unnecessary to the decision of that case under the views announced by the court, and is obiter, and in our judgment, is in conflict with the decisions of this court and with the Commerce Act itself. The excessive charges, collected by the railroad company in this case being unlawful, the railroad company, when it obtained the money of the shipper, became a trustee er maleficio of the excessive charges and held the shipper’s money, so collected, as a trustee for the shipper. It is well settled that where one wrongfully obtains the possession of another’s property by fraud, duress or by taking advantage of another’s weakness, the person thus taking the property holds it in trust for the other as a trustee ex maleficio. In 3 Pom. Equity Jur., Section 1053, the rule is thus stated: ‘‘In general, whenever the legal title to property, real or personal, has been obtained through actual fraud, misrepresentations, concealments or through un- due influence, duress, taking advantage of one’s weak- ness or necessities, or through any other similar means or under any other similar circumstances which render it unconscientious for the holder of the legal title to re- tain and enjoy the beneficial interest, equity impresses a constructive trust on the property thus acquired in favor of one who is truly and equitably entitled to the same.’’ That a railroad company and a shipper are not on an equal footing is too plain for argument. That a shipper who pays to a railroad company a rate in excess of a reasonable rate, is as to such excess, acting under practical duress is equally plain. A railroad company, therefore, which collects from the shipper an unreasonable rate is, as to the excess over a reasonable rate, a trustee ex maleficio for the shipper. 33 The rule announced in Pomeroy is universally approved. It is adopted in the following decisions: Angle v. Chicago, St. P. M. & O. R. Co., 151 U. 8. 125, 38 Law Ed. 55. Chapman v. Douglas, 107 U. S. 348. Love v. North American Company, 229 Fed. 1. ¢. 106. White v. Delano, 270 Mo. 216. Mercantile Trust Co. v. St. Louis & San Francisco R. R. Co., 69 Fed. 193. Central Stock € Grain Co. v. Bedinger, 109 Fed. 926. Richardson v. New Orleans, 102 Fed. 782. The authorities relied upon by the petitioners and cited in their brief relative to the tracing of trust funds had to do with cases of actual insolvency and with the actual distribu- tion of the assets of those insolvents among their creditors. This is not such a case. This is a reorganization through the offices of a court of equity by means of a_ receivership to carry out and effectuate a prearranged plan under which the stockholders and bondholders of the old company were to own the property after the usefulness of the receivership ceased. However, the respondents in this case, in the tracing of the moneys illegally exacted from them, have measured up to the rigid rule announced in those cases. Let us examine the agreed statement of facts filed in this case (Record pp. 329-333). The parts of that stipula- tion relevant to this issue may be stated thus: Ist. That, at all times from June 1, 1906 to May 27, 1913, the Railroad Company had in cash on hand an amount of money in excess of the claims of intervenors with interest thereon. ond. That the overcharges constituting intervenors’ de- mands were not kept by defendant in a separate or designat- ed account or fund, nor were they separated from other 34 gross receipts of the Railroad Company derived from opera- tion of its lines of railroad. 3d. That the moneys so collected by the railroad com- pany were deposited in banks by the defendant in defend- ant’s general account and that said banks did not keep said moneys in a separate account. 4th. That the Railroad Company checked out of its de- posits in each of said banks during each year from June 1, 1906 to May 27, 1913, sums of money largely in excess of said overcharges. 5th. That said Railroad Company deposited in said banks during each of said years sums of money largely in excess of said alleged overcharges. 6th. That upon the appointment of the receivers, the Railroad Company turned over to said receivers, and said receivers received from the Railroad Company in cash, the sum of approximately $334,000.00. We say that these are the relevant parts of the stip- ulation because it is wholly immaterial what instructions the banks had and it is wholly immaterial whether these over- charges were separated from the other gross receipts of the Railroad Company, derived from the operation of its lines of raiload, and it is immateial whether the banks kept said moneys ima sepanate account. Petitioners seem to lay great stress upon the agreed fact that the Railroad Company paid out, during the period in question, large sums of money for current expenses in- eurred in the ordinary. operation of its property. We think that under the undisputed other facts in the ease, this fact is wholly immaterial. It would be presumed, if the fact had not been stipulated, that the Railroad Company paid out large sums of money for current expenses incurred in the ordinary PLIERS EIN I IOI SIL EEA ELE OID SR AEAE STOLE LIED REA AREY RM ELLIE YONGE LIE TEE 35 operation of its property. Current expense, of course, is op- erating expense, and there was not a year from June 30, 1906, until May 27, 1913, except one, that the operating income of the Railroad Company did not exceed its operating expense, including taxes, by over eleven million dollars. The only year that its excess of operating income over operating expense did not amount to over eleven million dollars was the year ending June 30, 1908, when the excess amounted to $9,944,- 600.89 (Record p. 163). The facts, therefore, as established by this stipulation are these—that from June 30, 1906 to May 27, 1913, the Rail- way Company at all times had on hand, in cash, an amount of money in excess of intervenors’ claims with interest; that the illegal exactions from the shippers were aeposited by the Railroad Company in banks, with moneys of the Railroad Company in defendant’s general account; that, during all of said time, the Railroad Company checked out of its deposits in said banks sums of money largely in excess of the over- charges and during all of said time deposited in said banks sums of money largely in excess of said overcharges, and had on hand and turned over to the receivers at the time of their appointment, on May 27, 1913, $334,000.00. The only inference, without straining the meaning of the language used in order to arrive at an inequitable result, that can be drawn from these agreed facts is that in none of the banks, in which the overcharges illegally exacted from the shippers were deposited, was the balance ever less than the amount of the overcharges deposited in that bank. The Railroad Company always had on hand more than the over- charges with interest. The overcharges were deposited in the banks with which the Railroad Company did business with moneys which actually belonged to the Railroad Company. 36 The deposits made from time to time equaled the withdrawals made from time to time and, therefore, the balances were never less than the amount of the overcharges. On these facts and under the well-known rule approved by the authorities cited in the petitioners’ brief, it will be presumed that the Railroad Company drew out of the banks its own money and left the trust company belonging to the shippers intact. But, why should the strict rule applicable to actual in- solvents, whose assets are actually being distributed by the court among the creditors of the insolvents, apply in all its strictness to this case? The railroad’s operating income ex- ceeded its operating expenses, including taxes, for a great many years by considerably over eleven million dollars. It had acquired two lines of road which, because of temporary conditions, were losing money, the Chicago & Eastern Illinois and the New Orleans, Texas & Mexico Railway Company, and it wanted to get rid of them (Bill of Complaint, Record pp. 2-4). A plan for the reorganization of the road, leaving these two roads out was agreed upon. A friendly creditor, who alleged that for the purpose of preserving the unity and in- tegrity of the property of the Railroad Company it was neces- sary to have a receivership, brought an action in the Federal Court and prayed for the appointment of receivers. On the same day the Railroad Company joined with the complainant in a motion that the prayer in the bill for the appointment of receivers be granted (Record p. 11). The receivers took charge and operated the properties profitably. In order to improve the property generally dur- ing the first two years of their operation, they increased the expenditures for maintenance of way and maintenance of equipment over three million dollars per year over what had been expended during the two years preceding the receiver- a - sts Ba MOTKRR HNN RD ROPER BAN IIIT) NYY TMG RETIREE DONNY APR AIG TGS OE Lak Sy NERS rome oe — ship (Record p. 478). They expended $8,155,939.24 in redemp- tionship of equipment trust obligations and for improvements and additions to property which was not taken into capital account. They turned over to the new company in excess of five million dollars in cash. The preferred stockholders of the old company participated share for share in the new com- pany without paying anything for their new stock. The com- mon stockholders received stock in the new company equal to 85% of their holdings in the old company without paying anything for it (R. p. 529). We do not contend that the Railroad Company did not have a right to effect a reorganization with the aid of a court of equity. We do contend that the same strict rule relating to the tracing of trust funds should not apply to such re- organization as applies to actual insolvents actually distribut- ing their assets among their creditors through a court of equity. Rules of equity are supposed to be rules of con- science and they vary with varying conditions and circum- stances and cases. It is not so long ago that a trust could not be impressed upon money which the trustees had commingled with his own funds because the identical dollars could not be traced. Under modern conditions that rule was inequitable and it was modified accordingly. The rule commonly known as the six months rule relating te the payment for necessary supplies is a rule of very modern origin. This court has pointed out the differences between these two kinds of re- ceiverships—Louisville Trust Co. v. Louisville, etc., Ry., 174 U.S. 674, 43 L. Ed. 1130. In that case, it was said: 37 ‘“‘We must therefore recognize the fact, for it is a fact of common knowledge, that, whatever the legal rights of the parties may be, ordinarily foreclosures of railroad mortgages mean, not the destruction of all in- ede POISE AAG TS MEPIS ET BUREN, Dm OES 38 terest of the mortgagor and a transfer to the mortgagee alone of the full title, but that such proceedings are carried on in the interests of all parties who have any rights in the mortgaged property, whether as mortgagee, creditor, or mortgagor. * * * Assuming that fore- closure proceedings may be carried on to some extent at least in the interests and for the benefit of both mort- gagee and mortgagor (that is, bondholder and _stock- holder), we observe that no such proceedings can be rightfully carried to consummation which recognize and preserve any interest in the stockholders without also recognizing and preserving the interests, not merely of the mortgagee, but of every creditor of the corporation.” In the case of Chicago, R. I. & P. Ry. Co. v. Howard, 74 U.S. (7 Wall.) 392, 409 (19 L. Ed. 117), it is said: ‘‘Equity regards the property of a corporation as held in trust for the payment of the debts of the cor- poration and recognizes the rights of creditors to pur- sue it into whatsoever possession it may be transferred, unless it has passed into the hands of a bona fide pur- chaser; and the rule is well settled that stockholders are not entitled to any share of the capital stock, nor to any dividend of the properties until the debts of the corpora- tion are paid.”’ To the same effect are the following cases: Montgomery-Web Co. v. Dienelt, 133 Pa. 585, 19 Atl. -428, 430. Central of Georgia Ry. Co. v. Paul, 93 Fed. 878, 884 (Fifth Cireuit). In the ease of Mercantile T'rust Company v. St. Louis, San Francisco Railroad Co., 69 Fed. 193, which arose under an earlier receivership of this same railroad, the court said: ‘‘Two-fifths of all the money that went into the treasury of the company for fares of passengers rep- resented unlawful and illegal exactions. That money it still has. No portion of it has been returned to the persons who were illegally forced to pay it. The sums DBE TE NESE MIL IETS POLLEN SE LOS ITE IEP, ESI ARTI SSR: NSS TER NC NAG FE EE 39 illegally exacted from the interveners have never been returned or tendered to them. It required eight years of litigation for the interveners to establish their own and the rights of the public in the premises. * * * When, as sometimes happens, a railroad company desires to avoid the payment of debts and obligations incurred in the operation of its road, or to reduce the wages of its employes below a fair and reasonable compensation for their services—there are not many such companies, but occasionally there is one—it seeks the aid of a friend- ly creditor, through whose agency it is quickly placed in the hands of a receiver, and immediately a court of equity is asked and expected to do the mean things which the company itself was unable or ashamed to do. But it is believed this is the first instance in which a court of equity has been asked to become, in effect, some- thing bordering very closely on a receiver of stolen goods, and urged to hold the ill-gotten gains in trust for the guilty party, and refuse to make restitution even of the smallest portion of them to the persons from whom they were unlawfully taken. High considerations of pub- lic policy, not less than the plainest principles of equity and justice, demand that the property of the defendant company in the custody of the court as a trust fund should be made to respond to the payment of these judg- ments.’’ In commingling this trust money with its own money, the railroad company violated its duty as trustee aud the courts, in order to correct this situation, indulge every presumption for the beneficiary. The proposition that no such narrow doctrine as that contended for by counsel for the petitioners is applicable to the receivership in the in- stant case is shown by the case of Terre Haute and I. R. Co. _y. Cor, 102 Fed. Rep. 825 (7th Cireuit). In that case, the railroad company leased from another railroad company a line of road on a profit sharing basis. The court held that the share of the gross earnings reserved to the lessor in that lease was a trust fund and that the bond- hoiders of the lessor company, the interest on whose bonds 40 the lessee company was required by the terms of the lease {o pay from such gross earnings, were entitled to have the reserved percentage of the earnings, misapplied by the lessee company, restored by the receiver notwithstanding the fact that the lessee company had commingled those funds with its own and had operated the railroad at a loss. The court said: ‘*But it is insisted by the Indianapolis Company that the excess of operating expenses over the earnings of the Peoria Railroad necessitated and justified the withholding of the thirty percentum, and the record shows that a large sum of money came into the hands of the receiver as a part of the estate at the time of their appointment. We may, therefore, we think, safely assume that that portion of the earnings which otherwise would have gone to the Peoria Company came into the hands of the Receivers, either as money at the time they took possession of the road, or as a benefit in virtue of the fact that they were consumed in the general operating expenses of the Indianapolis Company.’’ In that case, the court quoted from Peters v. Bain, 133 U. 8S. 670, 33 L. Ed. 696. In this sort of a case, if in no other, the rule that where a trustee mixes trust funds with his own, the whole will be treated as a trust property, except so far as he, the trustee, may be able to distinguish what is his own, should be applied. In the case of Central National Bank of Baltimore v. Connecticut Mutual Life Insurance Co., 104 U. S. 54, 26 L. Ed. 693, this rule is stated thus: ‘“‘That, so long as trust property can be traced and followed into other property into which it has been converted, the latter remains subject to the trust, and FN IE EAP ET TN ME TENT AEE ION: PR, NIE PST Oe ek" STILL Ly os ERI 41 that if a man mixes trust funds with his own, the whole will be treated as the trust property, except so far as he may be able to distinguish what is his own, are established doctrines of equity and apply in every ease of a trust relation, and to moneys deposited in a bank account, and the debt thereby created, as well as to every other description of property.’’ The court, in this last cited case, reviews the English cases on this subject and points out that the original doctrine, requiring money to be earmarked, or specifically identified, had been abandoned in cases of trust relation- ship, and quotes from the opinion of Vice-Chancellor Sir W. Page Wood, as follows (1. c. 67): ‘Vice-Chancellor Sir W. Page Wood, in Firth v. Cartland, 2 Hem. & M. 420, said that Pennell v. Defell rested upon and illustrated two established doctrines. One was that ‘So long as the trust property can be traced and followed into other property into which it has been converted, that remains subject to the trust.’ The second is, ‘That if a man mixes trust funds with his own, the whole will be treated as the trust property, except so far as he may be able to distinguish what is his own.’ ”’ And again the court (1. c. 70 0», (after quoting from the opinion of the Master of Rolls, Sir George Jessell), says: ‘‘He adopts the principle of Lord Ellenborough’s statement in Taylor v. Plumer, 3 M. & S. 562, that ‘It makes no difference in reason or law into what other form different from the original the change may have been made, whether it be into that of promissory notes for the security of money which was produced by the sale of the goods of the principal, as in Scott v. Surman, Willes 400, or into other merchandise, as in Whitcomb v. Jacob, 1 Salk. 161, for the product or substitute for the original thing still follows the nature of the thing itself, as long as it can be ascertained 42 to be such, and the right only ceases when the means of ascertainment fail.’ But he dissents from the applica- tion of the rule made by Lord Ellenborough when the latter added, ‘which is the case when the subject is turned into money and confounded in a general mass of the same description,’ for equity will follow the money, even if put into a bag, or an undistinguishable mass, by taking out the same quantity. And the doc- trine that money has no earmark must be taken as subject to the application of this rule. The court of appeals had previously applied the very rule as here stated in the case of Birt v. Burt, reported in a note to Ex parte Dale & Co., L. R. 11 Ch. D. 773.”’ This case of Central National Bank of Baltimore vy. Connecticut Mutual Life Insurance Co., has been cited and followed by this court, by the lower federal courts and by nearly all of the state courts. It would be useless to at- tempt to give this vast mass of citations. We desire, how- ever, to call the court’s attention to the case of Smith v. Township of Au Gres, 150 Fed. 257, 1. ¢. 260-265, (6th Cireuit) and Standard Oil Company of Kentucky vy. Haw- kins, 74 Fed. 395 (7th Circuit). The case of Smith v. Township of Au Gres contains an excellent diseussion of the doctrine above announced and quotes from the opinion of Chancellor Kent in Hart v. Ten Eyck, 2 Johns, Ch. 62, 1. ce. 108, as follows: “Tf a party having charge of the property of others so confounds it with his own that the line of distinction cannot be traced, all the inconvenieuce of the confusion is thrown upon the party who produces it, and it is for him to distinguish his own property or lose it.’’ In the case of Smith v. Mottley, 150 Fed. 266 (6th Cireuit) 1. ¢. 268, the court refers to the Au (res case, decided by it (150 Fed. 267) and reannounces the same doctrine, citing additional cases in support thereof. OE OCT OTE NIETO LED CDS CLINI A ENE EL ITER TEL “MLE TALES TERETE PETER SE EERO ROGET 43 The court said (1. c. 268) that it was shown that three times the amount of the trust fund claimed remained in the bank from the time of payment to the time of the assignment and came to the trustee. The court added: ‘“‘The burden of showing that his property has been wrongfully mingled in a mass of the property of the wrongdoer is upon the owner; but, when this is done, the burden shifts to the wrongdoer. It is for him to distinguish between his own property and that of the innocent party.’’ To revert a moment to the agreed statement of facts, and applying the rule announced in these cases, it was certainly the duty of the railroad company, if the balances in any of the banks were reduced below the amount of the overcharges deposited therein, to show such fact. This it did not do, but conceded that it always had on hand more than the amount of the overcharges, with interest, and that the deposits made from time to time in each of the banks into which overcharges had gone were equal to the withdrawals, and that it turned over to the receivers more than ten times the amount of the overcharges. It alone had the evidence and it is a fair inference that if the balance in any bank had been reduced below the amount of the overcharges in that bank, it would have shown that fact. The cases cited by counsel for petitioners are not in conflict with the decision of the circuit court of appeals in this case or with the decision of the cireuit court of appeals in the case of Love v. North American Company, 229 Fed. 103. In the case of City of Litchfield vy. Ballou, 114 U. S. 190, 29 Law Ed. 132, the city had issued bonds which this court held to be void, because they were issued in viola- Mgrs eee 44 tion of the state constitution. Thereupon, the purchaser of the bonds brought a suit in equity on the theory that, notwithstanding the bonds were wholly invalid, the city was in possession of the money, received for the bonds, or its equivalent in property identified as having been procured with the proceeds of the bonds. The evidence showed that the money represented by the proceeds of the bonds had long since passed out of the hands of the city. However, the evidence showed that some of the proceeds of the bonds had gone into a water works plant. A large part, however, of the money, which had gone into the water works plant, was obtained by taxation, or from other resources of the city. It was not ascertainable how much. The land, on which the work was constructed, was pur- chased before the bonds were issued. The streets, through which the pipes were laid, were public property into which no money of the complainants had entered. In connection with the allegations in the bill that the city was in posses- sion of the money, the court said (1. c. 133): ‘“‘The money received by the city from Ballou has long passed out of its possession and cannot be restored to complainant. Neither the specific money nor any other money is to be found in the safe of the city or anywhere else under its control.’ Speaking about the tracing of the money into the water works property, this court used the language set out in petitioners’ brief. In this case respondents have traced their money into the treasury of the railroad company and from the treasury of the railroad company into the hands of the receivers, and from the hands of the receivers into the hands of the railway company, and have showed that the stockholders of the old railroad company obtained over forty-five million ($45,000,000.00) dollars of the stock 45 of the new railway company without paying anything for ¥ Here respondents’ money can be recleimed and deliver- ed without taking others’ property with it and withovt in- jury to other persons, or interfering with others’ rights. Moreover, the decree of the lower court appealed from in this Ballou case did not proceed upon the trust fund theory. It found a debt from the city to Ballou and impressed a lien upon the water works plant for the payment of that debt. This court held that that was as much within the condemna- tion of the constitutional provision as the express contracts evidenced by the bonds. The case of Schuyler v. Littlefield, 232 U. 8. 707, 58 Law Ed. 806, simply anonunces the familiar doctrine: ‘“‘Trust funds deposited by a trustee in his indi- vidual bank account are dissipated if the mingled fund is at any time wholly depleted, and cannot be treated as reappearing in sums subsequently deposited to the same account.’’ The next case cited is Empire State Surety Co. v. Car- roll County, 194 Fed. 593 (U. 8. C. C. A., 8th Circuit). In this case Judge Sanborn (1. c. 604-605) undertakes to announce the rules governing the enforcement of a_ trust against the proceeds of an insolvent estate in the hands of a receiver. After announcing the general rule: ‘‘It is not sufficient to prove that the trust property or its proceeds went into the general assets of the in- solvent estate and increased the amount and the value thereof which came to the hands of the receiver’’ (cit- ing |. ec. 604 and a number of cases), the court stated (1. ¢. 605) the second rule on this subject, which is as follows: 46 ‘‘Proof that a trustee mingled trust funds with his own and made payments out of the common fund is a sufficient identification of the remainder of that fund coming to the hands of the Receiver, not exceeding the smallest amount the fund contained subsequent to the commingling. (Board of Com’rs v. Strawn, 157 Fed. 49, 51, 84 C. C. A. 553, 555, 15 L. R. A. (N. 8S.) 1100; Weiss v. Haight & Freese Co., (C. C.) 152 Fed. 479; American Can Co. v. Williams, 178 Fed. 420, 423, 101 C. C. A. 634, 637) as trust property, because the legal presumption is that he regarded the law and neither paid out nor invest- ed in other property the trust fund, but kept it sacred (Board of Com’rs v. Patterson, (C. C.) 149 Fed. 229, 232; Spokane County v. First National Bank, 68 Fed. 979, 16 C. C. A. 81).’’ The next case cited is the case of Winfield v. Alva Se- curity Bank, 232 Fed. 847 (U. S. C. C. A., 8th Circuit). In this case the complainants had purchased forged notes from the cashier of the Alva Bank. The complainants had credit- ed the Alva Bank with the purchase price of these notes. Subsequently, these credits were entirely exhausted by drafts and there was no evidence that any part of the fund ever reached the Alva Bank. What was said by the court in this Alva Bank case, after finding that there was no evidence that any of the proceeds of the forged notes ever reached the bank, may have been right on the facts in that case, but is not authority on the facts in this case. What- ever may have been the principles announced in that case, they are clearly inapplicable to a reparation case like this, the principles governing which have been stated by the United States Circuit Court of Appeals in this and the Love case. Certainly the robust morality of the opinion of the United States Circuit Court of Appeals in the instant case must appeal to all fair-minded persons. One of the deep-seated convictions of Congress, as reflected by its legislation name- 47 ly, the Carmack Amendment, and the Elkins Act, designed “ty eut up by the roots every form of discrimination, favor- itism, and inequality’? (U. S. v. Koenig Coal Co., U. S. S. C. Ady. Opinion, May 1, 1926, No. 12, p. 488, 1. c. 490), and by the provisions of the Commerce Act, was to protect the ship- per in the wholly unequal fight with the carrier. It is very easy for the carrier to get the shipper’s money, and Congress, as shown by its legislation, as construed by this court, is determined that the shipper shall get it back, and has even gone to the extent of authorizing the assessment of attor- neys’ fees in favor of the defrauded shipper. It is the clear intent of Congress, as shown in the Commerce Act, to restore to the shipper all unjust and unreasonable charges, plus in- terest from the date of payment, and attorneys’ fees, there- by penalizing the carrier and predisposing the carrier to treat the shipper fairly and not litigate bis just claims with him, in season and out of season, day and night, Sundays and holidays, for a period of twenty-two years, during which time an opportune financial receivership is invoked to en- tirely defeat the shipper, though the stockholders of the rail- road company in receivership are enriched at the expense of its creditors to the extent of over forty-five millions of dollars. The next case cited is the case of Federal State Bank v. McFarlin, 257 (U.S. C. C. A. 8th Cir.). This case involved the distribution of assets of a bank- rupt grain company and announces the proposition, citing the Carroll Company and Alva Bank cases, supra, that a claimant, whose property has helped to swell the general assets of a party, subsequently becoming bankrupt, has no prior right in those general assets without specific identifi- cation or tracing of the claimant’s property. 48 The next case cited, Scullin Steel Co. v. North American Co., 255 Fed. 945 (U. S. C. C. A., 8th Circuit) merely an. nounces the proposition that, where there is collusion and fraud between the agent of the shipper and the agent of the carrier, and the carrier had no notice of such fraud and was not enriched by it, the money so siphoned from the shipper could not be treated as a preferred claim over other credi- tors of the carrier. The next case cited is Weideman v. Newton Arms Co, 271 Fed. 302, 304 (C. C. A., 2nd Cireuit), in which the court held that, where a trust claim was asserted on the ground that money had been secured from claimant by the false repre- sentations of a corporation, it was necessary to show, first, that such representations were relied on, and, second, trace their money into some particular property or fund which came into the hands of the receiver; and it is not sufficient to show that it was used by the corporation generally in its business. In that case the court pointed out (1. c. 303) that the cash on hand had fluctuated down to zero, with liabilities of $400,- 000.00, and that all that claimants could prove was that their money was spent in carrying on the business or procuring certain articles of machinery and the like which ultimately passed into the receiver’s hands (1. ec. 304). How can this holding fit the facts in the instant case? The next case cited is Titlow v. McCormick, 236 Fed. 209, 1. ec. 214, 215. This case involved the distribution of the assets of an insolvent bank, where a trust was asserted by one claimant. This case cites and follows (1. c¢. 211) the Schuyler case, 232 U. S. 707, analyzed supra. This case also announces the doctrine (1. c. 214) that, where a trust fund has been commingled with other funds, still claimant is en- my a ay bs & s ss TO The cases just cited also announce the proposition that a judgment at law is, in many cases, not such an election of the remedy as will preclude a bill in equity to impress a trust, because there is no inconsistency whatever between the two proceedings. In pursuing the remedy pointed out by Section 16 of the Interstate Commerce Act, intervenors manifestly made no election, because that was the only remedy available, and be- cause that remedy had to be pursued to its final conelusion before any other remedy became available (Southern Pac. Co. v. Goldfield Co., 220 Fed. Rep. 14, 1. c. 18). Since there was no freedom of choice, the doctrine of election of remedies cannot apply in this case (20 C. J., p. 21). These points are so well demonstrated in the opinion of the United States Cireuit Court of Appeals (R. pp. 764-767) that no further discussion is needed. VIII. The claims of intervenors for said excess charges should be paid with interest from the date of their illegal collection. Louisville & N. R. Co. v. Sloss-Sheffield S. & I. Co., 269 U. S. 217, 1. ¢. 238, 239, 240, where the court holds: ‘*It has been the uniform practice of the Commis- sion to recognize as an element of the damages, loss of interest on charges unlawfully exacted; and, in order- ing reparation, it has usually included as a part of the damages such interest from the date of the payment.’’ Citing many cases of this court and of the Commission in the decision and in Notes 10 and 11 supporting this con- clusion. This case conclusively settles the question of inter- est. This rule applies both to the trust fund theory and the a reorganization theory of liability. Petitioners’ cases cannot apply because in this case, after a three-year receivership, a delay of eleven years has been caused by the present railway 76 company. IX. Interveners are entitled to recover attorneys’ fees taxed as costs in the litigation in the District Court of the United States for the Western Division of the Western District of Missouri. For the reasons assigned in Point IV of this brief, in- tervenors are entitled to payment of these costs from the de- fendant railway company. They are also entitled to recover payment thereof for another reason. When the receivers were appointed they were, by the order of the District Court, authorized to ‘‘institute and prosecute such suits in their own names as receivers or in the name of the company, as their at- torneys may advise; to defend such suits as may be brought against them and those now pending or hereafter brought against the company which affect or may affect the property of which they are now or may become re- ceivers.’’ Pursuant to this order the receivers, through their at- torneys, appeared in the cases in the District Court of the United States for the Western Division of the Western Dis- rict of Missouri and conducted the defense of the cases therein. They appealed from the judgment of the District Court at Kansas City to the Cireuit Court of Appeals. About the time of the appeal to the Circuit Court of Appeals the Railway Company took charge of the litigation and through its attorneys conducted the defense to these cases. Hither ‘the receivers or the railway company caused a surety com: fee etasy xs ia Waky Stee te eae Pe eek TTR nL eR Re . " BLE LR as tik Rae OT ES Ge 17 pany to make an appeal bond in the name of the defendant railroad company for thirty-five hundred dollars ($3500.00), conditioned that the defendant would answer for all costs if it failed to make good its appeal. All of the costs in these eases taxed against the defendant railroad company were in- curred and made by the action of the receivers. Under these circumstances ought these costs in equity be paid by the re- eeivers and, therefore, by the railway company? We submit that these costs should be treated as part of the expense of the administration of the estate. ‘‘Equity delights to look behind the forms in which things are clothed, at the real substance of them.’’ While it may be that technically the receivers did not in- cur these costs, yet they did cause them to be incurred. They did this under the provisions of the order of their appoint- ment. To all intents and purposes the district court, in which the receivership case was pending, conducted this litigation and caused these costs to be incurred. We earnestly insist that it would be very inequitable for a court of equity to cause these costs to be incurred and then refuse to compel its of- ficers to pay them. Of course, if the receiver should pay them, then the railway company should pay them: X. The intervenors are neither precluded by laches from the recovery of these illegal exactions nor by any bar arising out of interlocutory orders or the final decree. We cannot add anything to the argument of the Master (R. pp. 167-173) or to the argument of Judge Ken- yon in the opinion of the circuit court of appeals (R. pp. 749, 755) on the question of laches. 78 So far as any bar arising out of the interlocutory or- ders or the final decree is concerned, counsel for petitioners mistate the rule (Petitioners’ Brief pp. 49, 50). It is true that one who intervenes in an equity suit is bound by all previous orders to the same extent as if he had been a party to such suit when such orders were made, but that is not all. Such an intervenor has the same rights as if he had been a party at the time the orders were made. In the case of Swift € Co. v. Black Panther Oil Gas Co., 224 Fed. 20, 1. c..29, the cireuit court said: ‘‘This general rule is that the intervener is in the same situation, bound by the same orders, has the same right, and is subject to the same estoppels as though he had been a party from the commencement of the suit’’ (italics ours). In the case of French v. Gapen, 105 U. S. 509, this court said of an intervention filed after the sale and after the final decree: ‘To their intervention no exception is taken by any of the parties. They are, therefore, to all intents and purposes now to be treated as though they had origmally been made defendants and_ set up their dememds’’ (italics ours). In the case of Rice, et al. v. Durham Water Co., 91 Fed. 1. ¢. 434, the court said: ‘*Leave to intervene was by order and after inter- vention the new parties are treated, to all intents and purposes, as if they had been original parties to the suit’’ (italies ours). If intervenors have the same right and are subject to the same estoppels as though they had been parties from the commencement of the suit, then, of course, they have the right to have their cases tried as if their interventions i Rigi ee cg sen See 79 had been filed on the day the bill was filed by the North American Company. They are in exactly the same position as they would have been in had ‘their interventions been on file but undisposed of at the time the orders referred to by counsel and the final decree were entered. The order grant- ing them leave to intervene was not excepted to and if, as was stated by this court in the French case, supra, they are now to be treated as though they had originally been made defendants and set up their demands, they are, of course, unaffected by the interlocutory orders or the final decree. Judge Kenyon, in the opinion of the United States Cireuit Court of Appeals erroneously decided this proposi- tion and his opinion is in conflict with the case of Swift € Co. v. Black Panther Oil Gas Co., supra, and with the ease of French v. Gapen, supra, decided by this court. XI. Construction of the word ‘‘arise’’ in the final decree. The decision of the cireuit court of appeals that in- tervenors’ claims ‘‘arose’’ after the entry of the final decree, and that they were not precluded by the final de- eree and the order of confirmation of sale from asserting said claims, is correct on this point. Opinion of the United States Cireuit Court of Appeals (R. pp. 755-760) 14 Fed. 2nd, 1. ¢. 291-293, where the court reviews the con- tention of petitioners on this point at length, states the applicable facts, holds that the purchaser of the property, the railway company, expressly agreed, under the order et each aaa 80 of court, to pay the claims of intervenors, if established, and cites many applicable authorities as to the meaning of the term, ‘‘arise.’”’ We can add nothing to the opinion on this point. United States v. Heth, 3 Cranch, 398, 413 (2 L Ed. 479). Van Meter v. Coal Mining Co., 88 Iowa, 92, 98, 55 N. W. 106, 108. Doughty v. Funk, 15 Okl. 643, 84 P. 484, 4 L. R. A (N. S.) 1029. Macon Grocery Co. v. Atlantic Coast Line R. Co., 215 U. S. 501, 30 S. Ct. 184, 54 L. Ed. 300. In re Bogart, Fed. Cas. No. 1596. Moran v. Moran, 144 Iowa, 451, 123 N. W. 202, 30 L. R. A. (N. 8.) 898. Love, et al. v. North American Co., et al., 229 F. 103, 106, 143 C. C. A. 379, 382. Southern Pacific Co., et al. v. Darnell, 245 U. 8. 531, 38 S. Ct. 186, 62 L. Ed. 451. Louisville Cement Co. v. Int. Com Comm., 246 U. S. 638, 38 S. Ct. 408, 62 L. Ed. 914. Conclusion. We respectfully submit that the judgment of the United States Circuit Court of Appeals in this case should be affirmed. Respectfully submitted, S. H. Cowan, Davin A. Murpry, Joun S. Leany, Water H. Saunpers, Attorneys for Respondents. LOI A AE LOA EEA ot EMD a oe re ~ Fee TORE STE be EERE TEE f ee * y DE --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_0682%3A08. Public record. Not legal advice.