LOUISVILLE TRUST CO. ▾ COLUMBIA FINANCE & TRUST CO.1

(Court of Appeals of Kentucky. Dec. 22, 1900.)

"Not to be officially reported."

Dissenting opinion.

For majority opinion, see 59 S. W. 867.

HOBSON, J.

The sum of this case is that W. H. Thomas & Son conveyed to appellant, in trust for all their creditors, certain property, upon the agreement of appellant that it would make certain advances in cash deemed necessary to protect the estate from sacrifice; that appellant, pursuant to its agreement, made the advances, and after this appellee attacked the conveyances under which appellant holds as a preference of one set of creditors over another. On these facts, it is held by the court that, although appellant paid out the money innocently, in good faith, and properly, according to the light it then had, relying for reimbursement on the estate in its hands, its right to a lien on the property is defeated by the judgment in the action brought after its rights had vested. If the claim of appellant for the advances made by it as assignee is to be regarded as a debt or liability created simultaneously with the deed referred to in the petition, I am at a loss to understand why its rights are not saved by section 1910, Ky. St. While the money was not paid out at the time the deeds were made, it was paid out soon afterwards, and in pursuance to the agreement made before the making of the deeds, and in perfect good faith, without any notice of the claims of appellee. Appellant accepted the deed upon the distinct understanding that it would advance this money. It could not keep the property and not make the advances. If it had refused to make the advances it would have been liable to Thomas & Son for a breach of the contract, for it had obtained the property upon this express condition. Being liable to Themas & Son on the con

Reported by Edward W. Hines, Esq., of the Frankfort bar, and formerly state reporter.

60 S.W.-1

tract to advance the money, and this liability existing when the deeds were made, the liability of Thomas & Son to it to repay it the advances so made must, under every principle of equity, be treated as arising when the deeds were executed.

In discussing the maxim, "Equity imputes an intention to fulfill an obligation," Mr. Pomeroy says: "This principle is the statement of a general presumption upon which a court of equity acts. It means that whereever a duty rests upon an individual, in the absence of all evidence to the contrary, it shall be presumed that he intended to do right rather than wrong; to act conscientiously, rather than with bad faith; to perform his duty, rather than to violate it." 1 Pom. Eq. Jur. § 420. See, also, Id. §§ 365370.

The court certainly does not mean to decide that a liability created at the time of the transaction is never to be preferred when the transaction is set aside under the statute referred to, unless the liability is secured by a mortgage. If a man buys a horse for $1,000, and pays $500 in cash, and the other $500 in a note against the seller, in good faith and without notice, who would hold, if this transaction were adjudged within the act of 1856, that the purchaser would not be protected to the extent of the money he had in fact paid out innocently? A case exactly like this was before this court in Brooks v. Staton's Adm'r, 79 Ky. 174, where a commission merchant made advances from time to time, and it was insisted that a mortgage was the only thing excepted out of the operation of the statute. The court said: "The exception in the statute, that it shall not apply to any mortgage made in good faith to secure a debt created simultaneously with the mortgage, is not the only exception. For instance, the payment of the purchase price for the land when a lien has been reserved, and the delivery of a pledge as security for money at the time loaned, have been held not to be within the statute. So that we may not, in this instance, apply the familiar rule of construction that the expression of the one exception excludes,

by implication, every other. Instead of enlarging the operation of the statute, it appears to us that the best interests of commerce require that it should be restricted to the narrowest compass consistent with the letter and spirit. It is in conflict with the common law, and with the legislation of the great number of the states of the Union. This fact should not be overlooked in determining the cases embraced by it." But, if we disregard the parol agreement, certainly there can be no doubt that appellant's rights are saved under section 1913. This section is not a part of the statute regulating assignments for the benefit of creditors, as said in the opinion of the court, but is a part of the act under which appellee sues. It regulates the power of the court in actions of this character, where the transfer is set aside as provided in the preceding sections, and in express terms authorizes the court to compel every person "who shall acquire, by purchase, assignment, or otherwise, any property or effect from such debtor, after the suit contemplated by this chapter shall be instituted, to surrender the same to such receiver." This limitation has been held by this court to be exclusive, and that, upon setting aside a transfer under the preceding sections, the chancellor must not prejudice intervening rights acquired before the suit was brought. This was fully discussed in Southworth v. Casey, 78 Ky. 395; and this case was followed in Fuqua v. Ferrell, 80 Ky. 69, and Vinson v. McAlpin, 87 Ky. 357, 8 S. W. 872, 9 S. W. 165.

This

While appellant held the property in contest as assignee, it in good faith, and without notice, advanced the money now claimed by it. For this money, as things then stood, it undoubtedly had a lien on the property assigned to it, just as any other trustee would have a lien for money advanced by him for the protection of the estate. would be true even had the assignment been subsequently held void, where the assignee acted in good faith. Burrill, Assignm. § 375, and cases cited; 2 Pom. Eq. Jur. § 1085. The course of the assignee in advancing this money was approved by the chancellor, aud this decision was acquiesced in by the assignor and the creditors. Appellant, therefore, to the extent of its advances, was in equity the owner of the property in its hands as assignee after it advanced this money, and it paid out of its money and became such owner in good faith, without notice, and in the faithful discharge of the trust which it had undertaken. After all this, and after its right to a lien had vested and become perfect, this suit was filed, and, in the face of the express terms of the statute, it is now held by the majority of this court that the subsequent institution of this suit and the judgment therein destroyed its lien.

If soon after the assignment to it was made, and before it had notice of appellee's claim, appellant had put a new roof on the

house standing on the land in controversy, or had paid the taxes due upon the property to preserve the title, would any one suppose that it was not entitled to a lien now on the property for the money so advanced? And how can the case before us be distinguished from that? At the time the money in contest was advanced, all the property in appellant's hands as assignee stood exactly alike, and it had the same right to look to the entire estate held by it for reimbursement as to the particular property on which the expenditure was made, for it had no notice that such a suit as this would ever be brought. To the extent that appellant parted with value on the faith of the property, it stands just as any other bona fide purchaser without notice. Even a vendee under a deed void for fraud, where he has no notice of the fraud, is protected for advances made in good faith, according to repeated decisions of this court; and certainly there is no reason why the same rule should not apply under the statute before us, where the deed is not void, but valid, unless attacked by some one interested in six months, and intervening rights acquired in good faith before the suit is filed are expressly saved by the statute. I cannot give my consent to any such disregard of the statute or manifest violation of the well-settled priciples of equity. I therefore dissent from the opinion of the court.

HAZELRIGG, C. J., and DU RELLE, J., concur in this dissent.

LOUISVILLE & N. R. CO. v. HILTNER.1 (Court of Appeals of Kentucky. Dec. 22, 1900.)

MASTER AND SERVANT-CONTRIBUTORY NEGLIGENCE OF LOCOMOTIVE ENGINEER-FAILURE TO GIVE INSTRUCTION NOT ASKEDABROGATION OF RULE BY HABITUAL VIOLATION.

1. If a locomotive engineer injured in a rearend collision violated a rule of the company prescribing the distance at which he should follow the train in front of him, and but for that fact he would not have been injured, he cannot recover, notwithstanding the negligence of other servants of the company.

2. Defendant cannot complain that the instructions given on motion of plaintiff failed to tell the jury that plaintiff could not recover if he violated a rule of the company prescribing the distance at which one train should follow another, as the court by those instructions told the jury that plaintiff could not recover if by the exercise of ordinary care he might have prevented the injury, and, on defendant's motion, instructed the jury, in general terms, as to contributory negligence; no more specific instruction as to plaintiff's violation of the rule being asked.

3. Evidence that a rule of the company limiting the speed of trains was habitually disre garded was admissible to excuse plaintiff's violation of the rule.

Hobson, J., dissenting.

Reported by Edward W. Hines, Esq., of the Frankfort bar, and formerly state reporter.

"Not to be officially reported." Petition for rehearing. Granted. For former report, see 56 S. W. 654.

PAYNTER, J. Appellee, Norman Hiltner, instituted this action to recover for personal injuries received by him while in the service of appellant as a locomotive engineer on one of its freight trains between Guthrie and Earlington, Ky. On the day on which he was injured he left Earlington with his train to take it to Nashville, but, on arriving at Guthrie, received orders to abandon his trip to Nashville and to return to Earlington that night. The train on the return trip consisted of his engine, two empty cars, and a caboose. A passenger train known as "No. 56," or the "Hopkinsville Accommodation," was due to leave Guthrie for Hopkinsville at 8 p. m., and he was ordered to follow it. This train, however, was late that night, from having to wait for a connection, and did not leave there, according to the register, until 8:15 p. m., or, as shown by the evidence, some minutes after this, from the fact that the conductor, after registering, was delayed a few moments by some passengers who had not tickets. Four miles north of Guthrie this train stopped at a flag station known as "Moore's" to put off three passengers for that point, and, just as it started from this station, appellee, following it with his train, ran into it with his engine, injuring several passengers, and wrecking the rear coach of that train. When appellee saw that a collision was inevitable, he jumped from the engine, sustaining injuries necessitating the amputation of one of his legs, and causing him great pain and suffering. He alleged that Moore's was not known as a station, and that he never knew it as a station or stopping place; that those in charge of the passenger train took no precautions to warn him of its stop there; and that his injuries were due to gross negligence on their part in stopping there, and knowingly permitting him to run upon the passenger train with his engine, without notice or warning to him of the danger. He also alleged that in order to warn engineers and conductors where they might expect trains to stop, to guard them against accidents, it was the rule of appellant, and its duty, to furnish them a time card containing the time of the running of all its trains, and the places at which they would stop, but that appellant, by gross negligence, furnished him a time card which did not show Moore's as a station, and in no way notified him that any of its trains stopped there, or that it was a station at all. Appellant, by its answer, denied any negligence on its part or those in charge of the passenger train, and pleaded, in substance, that the collision was due to the fault of appellee, and thereby a great loss was inflicted on it. There have been three trials of the case. the first trial the jury failed to agree. On the second they found a verdict for appellee for $8,500, which, on motion for a new trial,

On

the court set aside. On the third trial the jury found a verdict for appellee for $7,500, and, the court having overruled a motion for a new trial, the railroad company prosecutes this appeal, and appellee a cross appeal, insisting that the court erred in setting aside the verdict for $8,500.

Appellee testified that he left Guthrie at 8:20, which was his leaving time, as shown by the register, and that the collision occurred at 8:30, when, according to its running time, the passenger train should have been nearly at Trenton, a station some four miles north of Moore's, where in fact he supposed it was until he suddenly saw it about six car lengths in front of him; that it was a dark, rainy night, and the smoke from the passenger train prevented him from seeing the red lights at its rear until then. The schedule time of the passenger train was 35 or 40 miles an hour. According to this, it could have run to Moore's in about six or seven minutes, and, if it left Guthrie at 8:15, it should have reached Moore's about 8:21 or 8:22. There was a rule of the company requiring a flagman to be sent back to give notice to a following train in case a stop of over three minutes, and no flagman was sent back on this occasion by the passenger train. Appellee also testified that he did not know that Moore's was a station, or that any trains stopped there, and that it was not on the time card furnished him by the company to inform him where trains stopped.

It is clear from the proof that Moore's had been a flag station at which the local trains stopped for something like 20 years. There had been at one time a shed there, but it had rotted down, and there was at the time of the collision no shed or platform to indicate a station. Appellee had been running on the road about three years, but a part of this time had been on another branch. The proof for appellee showed that the passenger train left Guthrie at 8:20, and that the collision occurred at 8:27. There was a rule of the company forbidding a freight train from leaving a station to follow a passenger train until five minutes after its departure. The rules required passenger trains running in the saine direction to keep not less than ten minutes apart. Freight trains following each other were also required to keep not less than ten minutes apart, and a train of inferior class, it was provided, must in all cases keep out of the way of a train of superior class. The rules also limited the speed of freight trains to 25 miles an hour, and passenger trains to 50 miles an hour; but the proof showed that the rule as to speed was habitually violated by trainmen, with the acquiescence of the company. The evidence tends strongly to show that appellee left Guthrie within less than five minutes after the departure of the passenger train, although there is some testimony to support his statement that he did not leave until five minutes after its departure. This testimony is given by some persons

fishing about a half mile from the railroad, and others who were in bed, or had no timepiece, and only guessed at the interval be tween the two trains. On the other hand, there is testimony by a number of witnesses of a much more satisfactory character. Appellee says he was running from 30 to 35 miles an hour. Other witnesses say he was running as fast or faster than the passenger. When he left Guthrie he himself says he could still see the red lights on the rear of the departing passenger train. A witness who lived 2 miles from Guthrie was approaching the railroad track, and stopped for the passenger to pass the crossing. Immediately after it passed he went upon the track, and the freight following it was then at a road crossing between him and Guthrie, and about a mile from him. It passed him before he left the railroad. Another witness, who lived nearer Moore's, and heard the passenger train whistle for the station, heard at the same time the freight train whistling for a road crossing a mile and a half south of the station. There were three passengers for Moore's,-colored people,-sitting about the middle of the front half of the passenger coach, next to the engine. As soon as the train stopped they got off, and when the first one of them got to the ground he saw the freight train just in the rear of the passenger, and the collision occurred before any of these passengers got away from the train, although they saw the danger and tried to climb up the bank. The conductor had not finished taking up his tickets, and as soon as these men got off went back to finish, but before he got to the passenger the collision occurred. The rear brakeman called out for passengers to alight, but says before he could do anything else, after the train stopped, the freight was upon him. This testimony is substantiated by persons remaining on the train, as well as those who got off. One witness, who testifies very intelligently, saw the passenger train pass his house, and heard it whistle for Moore's, and then noticed the freight so quickly following it that he anticipated a collision, and listened to hear the passenger train start from Moore's. If the stop at Moore's was no longer than shown by this evidence, it was impracticable to have sent back a flagman to give the freight notice of the stop, and unnecessary to do so; it being only a usual stop, and the station being a regular stopping place when necessary.

On this evidence the court instructed the jury as follows: "No. 1. It was the duty of the defendant to give to the plaintiff such information respecting the movement and stopping place of the other trains on the road where plaintiff was acting as engineer as would enable him, by the use of ordinary care, to escape a collision with any of such trains; and if they believe from the evidence that the plaintiff did not have such information, and was injured as the direct and natural consequence of the negligence of the

defendant in failing to give such information to him, if there was any such negligence, they must find for the plaintiff, unless they further believe from the evidence that the plaintiff by the use of ordinary care could have escaped injury, notwithstanding the said negligence of the defendant, if it was so negligent. And if they find from the evidence that as a consequence of such negligence aboye stated, if there was any, the plaintiff was placed in a position which a man of ordinary prudence and fortitude would have considered as one of immediate danger to his life, he had the right to jump from his engine to escape such apparent danger, though it might not have been real danger. No. 2. If the jury believe from the evidence that on the occasion in controversy plaintiff was injured, and that his injury was the direct and natural result of the gross negligence of defendant's agent and servants in charge of train No. 56, they should find for him such compensatory damages as will fairly and reasonably compensate him for such injuries, not to exceed $20,000, unless they further believe from the evidence that, in receiving his injuries, plaintiff was himself negligent, and that his said negligence, if any, so far contributed to his injuries that he would not have been hurt but for his own negligence, if any. No. 3. 'Negligence,' as used in the instructions, means, when applied to plaintiff, a failure to exercise ordinary care to protect himself from injury; and ‘ordinary care' means such care as an ordinarily prudent man would exercise to protect himself from injury under the same or similar circumstances."

It was clearly gross negligence in the railroad company to run two trains as close together as these were, and have those in charge of the rear train ignorant of the stops to be made by the one in front; and, as to third persons, it was liable for the consequences of such neglect, without regard to the question who was to blame for this state of things. But appellee was running the rear train. Upon his management of it the lives of the passengers on the other train depended. The law, in its regard for human life, required him strictly to follow the rules, and not to leave Guthrie within five minutes after the departure of the other train, and to run that much behind it. In addition to all other precautions to prevent rear-end collisions, this was incumbent on him; and, however negligent others may have been in observing other precautions, appellant is not liable to him, if he was himself at fault, but for which the accident would not have occurred.

To this point the opinion delivered by Judge HOBSON in this case has been used.

The principal alleged acts of negligence relied upon by the defendant in its effort to show that the plaintiff was guilty of contributory negligence were that the train upon which the plaintiff was engineer started within less than five minutes after No. 56 had left