Concurring fully in what has been said by the circuit judge, I shall add but one or two suggestions. An insuperable objection to granting the prayer of the petitioners, in my judgment, lies in the fact that such action would materially modify the terms of the decree under which the purchasing committee have bought, and, in effect, compel the committee to take the property on different terms than were proposed at the time of the sale, and this after the contract of sale has been partially executed. There are no reservations in the decree, when fairly construed with reference to the main purpose had in view by the court when the decree was entered, to protect the obligations assumed by the receivers, or created by them in the course of their management, which are broad enough to authorize us at this time to issue receivers’ certificates for surplus earnings of the main line east, and compel the purchasing committee to pay the same, or give bond for their payment, or take the property purchased subject to such new obligations. This feature of the case has already been sufficiently alluded to, however. I merely emphasize the point that we have no legal right at this time, the decree having been settled after mature deliberation, and with full opportunity to all parties to be heard, to modify its provisions, or take any action that would in effect change the terms of the sale'.
But, taking a different view of the matter, — looking at the case purely from an equitable stand-point, and as if we were free to act in this matter, — I cannot see that any inequitable result is liable to follow from refusing the prayer of the petitioners. If the outcome of these complicated foreclosure proceedings could have been foreseen, — if it had been possible, from the outset, to withhold all interest payments on underlying mortgages without causing the total disruption and wreck of the *343wliole system, — perhaps tbe fairest course to have pursued would have been to limit the disbursements by the receivers to current operating expenses, and to the indebtedness for past operating expenses existing when the receivers took charge, which was clearly a first lien and charge on all the property of the consolidated company, treating it as a unit. I say, perhaps that would have been the wiser course, because no one can say with certainty what the result might have been on the interests of all concerned, whether for the better or the worse.
Suppose, however, that such course had been pursued. Availing myself of the report which has been used on both sides by counsel pending this argument, which I suppose is substantially correct, it appears that the net earnings of the lines east and west, exclusively of interest disbursements, have been, in round numbers, in the neighborhood of §3,850,000; that the total of preferred claims (deducting available assets outstanding when the receivers took charge) were in the neighborhood of §3,047,000, — showing that, if no interest charges on underlying mortgages had been paid, the sum of about $800,000 would now be available to be distributed, on some equitable basis, in interest payments on bonds upon the lines east and west.
Now, the report shows that there has been paid out for interest on lines east the sum of about $700,000. It is fair to assert that on no basis of distribution would the lines east be entitled to $700,000 for interest, if the surplus of $800,000 applicable to that purpose was now on hand for distribution, and if no interest disbursements whatever had thus far been made. If out of the gross earnings of the property in the receivers’ hands money has in fact been taken to pay interest on underlying mortgages which might more properly have been applied to that class of claims, aggregating over $3,000,000, as before stated, that were a prior lien on all the property of the consolidated company, the result has simply been that such prior lion claims are now outs landing and unpaid to the amount of about $2,200,000; and it is this outstanding claim that the purchasing committee arc required, under the decree, to liquidate or secure, as a condition of being let into possession of the property purchased. And I may further add that under the decree the court holds the lines west, being the only ones now within its actual custody, as security for such payment. The fact is obvious, however, that the lines east (now out of the court’s actual custody) have had more than their share of the total surplus earnings that would have been applicable to interest if the total net earnings of the consolidated company had been applied, as they might legally and equitably, and, as I think, they might more properly, have been applied, solely to the payment of what was confessedly a preferred charge against its entire property, superior to the petitioners’ incumbrance.
In view of the consideration last mentioned, that the lines east have received more than their ratable proportion of the net surplus applicable to interest charges, if interest on all the lines had heretofore boon withheld, and in view of the fact that we have no assurance that the property of the lines east is not amply sufficient to pay petitioners’ bonds and *344accrued interest in full, and in view of the fact that'the trustees in the mortgages represented by petitioners have been parties to this suit, and have hitherto taken no exceptions to the application of surplus earnings as heretofore made by the receivers, I am clearly of the opinion that it would be the duty of the court to deny the prayer of the petitioners, even if we felt it to be fairly within our power under the decree to grant the same.
I accordingly concur in the order dismissing the petition.