#### NORTH CAROLINA RAILROAD COMPANY v. C. D. STORY, Sheriff of Alamance County, and P. M. KING, Admr. of MAGGIE BARBER, Deceased.

(Filed 20 February, 1924.)

1. Railroads — Carriers—Leases—Lessor and Lessee — Torts—Damages.

The North Carolina Railroad, as lessor of its railroad and equipment to the Southern Railway Company, is liable during the continuance of the lease for the torts and wrongs of the latter company, its agents and employees, committed in the use and operation of the railroad within the exercise of its franchise.

2. Same — Government—Courts — Jurisdiction — State Courts — Federal Questions— Judgments—Execution—Appeal and Error.

Where judgment has been entered against the lessor of a carrier under government control in the State courts and affirmed by the State Supreme Court on appeal, and in another action brought thereon the judgment is upheld on a second appeal, and in both the carrier has set up all its defenses under the' Federal Transportation Act of 1920, inclusive of denying to the plaintiff therein the right to issue execution against the property of the carrier, the judgment in the State court, not properly questioned by an appeal or writ of error upon the Federal defenses thus presented, is conclusive upon the lessor carrier, and valid; and the carrier’s suit in the State court to enjoin its enforcement by execution against the lessor’s property cannot be maintained.

*1853. Same.

Where the defendant in an action sets up Federal questions as a valid defense to his liability in the State court, the decisions of the United States Supreme Court are controlling on the subject; but where this right has been erroneously denied by final judgment in the State court, it is conclusive on the carrier until it is reversed ox modified by appeal or other writ in the orderly review of the case.

4. Same.

Under the facts of this case, Held, the position of the carrier seeking injunctive relief against execution under the final judgments rendered against it in the State court that the judgments were upon such grounds as to exclude its taking the case by liroper proceedings to the United States Supreme Court upon the Federal questions involved, is untenable.

5. Appeal and Error — Judgments—Defenses—Rehearings.

Where a carrier does not take the proper steps to have a final judgment rendered against it in the State court reviewed in the United States court upon a defense set up in denial of its rights under the Federal law, and seeks to enjoin the enforcement of the judgment by execution in the State courts, it is, in effect, an endeavor to obtain a rehearing of the case by means of a second suit, which is not permissible.

Civil ACTION beard on return to preliminary restraining order before bis Honor, Shaw, J., on 22 May, 1923, from AlamaNce.

Tbe action is for a permanent injunction restraining defendants from collecting or attempting to collect by execution and levy a certain judgment obtained by P. M. King, administrator of Maggie Barber, deceased, against tbe North Carolina Railroad Company, hereafter called plaintiff. On tbe facts presented, tbe application for further continuance of tbe restraining order was denied. Tbe court below, however, in tbe exercise of a discretion vested in it by a recent statute, chapter 58, Laws of 1921, adjudged that tbe preliminary order be continued pending tbe appeal to this Court. Prom so much of tbe judgment as refuses to continue tbe restraining order to tbe bearing, and also make tbe same permanent, plaintiff excepts and appeals, etc.

Wilson & Frazier and Manly, Hendren & Womble for plaintiff.

W. P. Bynum and B. 0. Strudwiclc for defendants.

Hoke, J.

As we understand, there is no substantial difference between tbe parties as to tbe facts affecting their rights, and from these facts contained in tbe present record, and by proper reference in tbe case of King v. R. R., reported in 184 N. C., 442, it appears that plaintiff is lessor of tbe Southern Railway Company, under a lease for 99 years, which is still existent, and, under tbe terms of said lease and our State decisions applicable, is liable for tbe torts and wrongs of tbe *186Southern Railway Company, its agents and employees, committed in the use and operation of plaintiff road, and in the exercise of its franchise. Mabry v. R. R., 139 N. C., 388, citing Aycock v. R. R., 89 N. C., 321, and Logan v. R. R., 116 N. C., 940, and other case's.

That in February, 1920, P. M. King, administrator of Maggie Barber, deceased, sued the plaintiff railroad, alleging that his intestate had been negligently run over and killed by the agents and employees of the Southern Railroad, “operating plaintiff’s railroad under the Director General of the United States, etc., pursuant .to the acts of Congress,” etc.

The plaintiff answered, denying liability and alleging that plaintiff’s road at the time was under the control of the Director General of the United States under the acts of Congress and executive orders appertaining to the subject, and denied that the intestate was killed or injured by the negligence of its lessee or any of its agents or employees, etc.

On issues submitted, the administrator recovered judgment for $2,500 for the negligent, and wrongful killing of the intestate by the lessee, and plaintiff excepted and prayed an appeal; but failing to prosecute the same, the judgment for said amount stands unchallenged and unquestioned by any writ of error or other process looking to a modification or review of the same.

That said judgment not being paid, the administrator instituted an action thereon, alleged the existence of the judgment, its nonpayment, etc.; and thereupon plaintiff answered, admitting the recovery of said judgment, but denied any and all liability thereon, setting forth its defense in effect as follows:

“To this complaint defendant answered, admitting the recovery and existence of the judgment sued on, but alleged that same was not a valid or binding judgment because it was obtained for the wrongful death of intestate caused by the negligence of the employees and agents of the Government of the United States while the properties of defendant were being operated and controlled by the Director General of Railroads under and by virtue of the acts of' Congress and the orders of the President of the United States, and for that reason said judgment is illegal and void. Defendant alleged further, in effect, that this alleged negligent killing took place when its road and all equipment, etc., was in control and charge of the Government under the acts of Congress and orders aforesaid, and at a time when none of the agents and employees, etc., of defendant or its lessees were engaged in operating said road or in any way responsible for said death; and to hold it liable for such an injury under such circumstances would be to take defendant’s property without due process of law, etc. And in supplemental answer, filed by leave of court, alleged further that the present action on the judgment in behalf of defendant was in the endeavor to *187evade in some way the provision contained in the act of Congress known as the Transportation Act of 1920, sec. 206 (g), in terms as follows:

> “ No execution or process, other than on a judgment recovered by the United States against -a carrier, shall be levied upon the property of any carrier where the cause of action on account of which the judgment was obtained grew out of the possession, use, control, or operation of any railroad or system of transportation by the President under Federal control.’

> “And defendant pleads further provisions of said Transportation Act in bar of recovery on the judgment.”

And the administrator having demurred, there was judgment sustaining the demurrer in terms as follows: “This cause coming on to be heard upon plaintiff’s demurrer to the answer of defendant, it is now considered and adjudged by the court that said demurrer be and the same is hereby sustained. It is further considered and adjudged by the court that the plaintiff have and recover of defendant $2,500, with interest thereon from 21 March, 1921, and the further sum of $95.65, with interest from same date, and the cost of this action, to be taxed.”

From this judgment plaintiff excepted and appealed to this Court, where the judgment sustaining the demurrer was affirmed. See. case of King v. R. R., 184 N. C., 442. And the opinion having been certified down, there was further judgment as follows:

> “In this action, it appearing to the court that judgment was recovered by plaintiff against defendant at April Term, 1922, of this court, in the sum of $2,595.65, with interest and costs; that defendant appealed from said judgment to the Supreme Court, and that on said appeal the said judgment was affirmed, and that the certificate of the determination of said appeal has been received, and is now on file.

> “It is now considered and adjudged by the court that execution of said judgment do proceed.”

And these judgments stand unquestioned by writ of error or other > process looking to their review or modification, and under and by virtue of the same the execution has been issued and levy made which plaintiff now seeks to enjoin.

Upon these, the facts chiefly pertinent, we must approve his Honor’s ruling in denial of the injunction, and are of opinion that the plaintiff is concluded by the judgments against it as to the protection and immunity it now endeavors to invoke. In the original action against the plaintiff, the fact that the road had been taken over by the Government under the acts of Congress and executive orders appertaining to the subject was directly presented, and the question of liability was decided against plaintiff. This was under the position then prevailing here and in some of the other State courts under these acts of Congress *188and executive orders; by correct interpretation tbe companies, in tbis instance plaintiff’s lessee, were in charge of and operating tbe roads under tbe supervision and control of tbe Director General, and in proper instances botb could be beld liable. True, tbe position was later disapproved by tbe Supreme Court of tbe United States, tbe final authority on these questions, in Miss. Pacific R. R. v. Ault, 256 U. S., 554, and other cases, but tbis only serves to show that tbe judgment in question was erroneous, and binds tbe parties unless and until it is reversed or modified by appeal or other writ in tbe orderly review of tbe case. See tbe decisions cited in tbe case of King v. R. R., 184 N. C., 442, among others, Grignons, Lessee, v. Astor et al., 2 Howard U. S., 319, 340.

In tbis last case tbe Court, among other things said: “Tbe purchaser is not bound to look beyond tbe decree. If there is error in it of tbe most palpable kind, if tbe court which rendered it,, in tbe exercise of jurisdiction, disregarded, misconstrued or disobeyed tbe plain provisions of law which gave them tbe power to bear and determine tbe case before them, tbe title! of tbe purchaser is as much protected as if tbe adjudication would stand tbe test of a writ of error, and so where an appeal is given but not taken in tbe time allowed by law.”

And in tbe second action, wherein judgment was rendered on tbe suit in tbe first, tbe plaintiff set up in bis defense botb tbe statutes and executive orders by which tbe roads were taken over by tbe Government, and also tbe Transportation Act of 1920, being chapter 91, 41st U. S. Statutes at Large; and tbis attempted defense having been beld insufficient and disallowed, judgment was rendered against plaintiff; and, as heretofore stated, stands thus far unquestioned by appeal, writ of error, or otherwise.

Tbe appellant does not contend that tbe defenses be is now attempting to make were not presented, discussed and determined against it in these former suits, and that judgments were therein entered establishing bis liability, but it is insisted that tbe proceedings and judgments have not been such as to enable it to obtain a review of tbe Federal question presented, for tbe reason that in tbe opinion in tbe last suit there are grounds advanced sufficient to uphold tbe judgment which do not involve tbe Federal question relied upon, and therefore no right of review having been afforded, a remedy is still open to him under and by virtue of tbe provisions of tbe Transportation Act, 41 Statutes at Large, ch. 41, sec. 216 (g), forbidding tbe levy of an execution on tbe property of tbe carrier where tbe cause of action in which it was obtained grew out of tbe operation of tbe road, etc., while in possession and control of tbe Government. Tbe general principle; as stated, is undoubted and has been expressed and approved as late as April, 1923, *189in tbe case of The People ex rel. Doyle v. Atwell, 261 U. S., p. 590, but in our opinion tbe position will not avail tbe appellant.

Recurring again to tbe facts presented in tbe first action by tbe administrator, plaintiff baying pleaded tbe acts of Congress and executive orders taking over tbe roads by tbe Government in bar of relief, tbe defenses were disallowed and verdict and judgment were bad establishing liability, notwithstanding these alleged defenses. This judgment, it will be noted, having been entered more than twelve months after tbe Transportation Act went into effect.

In a second suit on this judgment, as heretofore stated, tbe statutes and executive orders taking over tbe roads by tbe Government, and tbe Transportation Act by which they were restored to tbe owners, were all set up by plaintiff in its defense, and, for reasons stated in tbe opinion of tbe State Court (184 N. C., p. 442), these defenses were disallowed and final judgment entered establishing liability.

True, in tbe opinion, tbe Court, referring to tbe language of tbe Transportation Act more directly applicable (section 2069), said: “It might suffice to say, in answer to this position, that plaintiff thus far has not undertaken to levy any process or execution against tbe property of defendant road, and bis proceeding does not therefore come within tbe literal terms of tbe provision on which be here relies.” But tbe Court, putting aside this view, deals directly with the defenses presented, bolding that they were not available to plaintiff, and that tbe former judgment in favor of tbe administrator established an enforceable liability.

From tbe force and effect of these two judgments, unchallenged and unquestioned by writ of error or other process looking to their modification, we are of opinion, as stated, that plaintiff is concluded on tbe question of liability, and that its application for an injunction against final process has been properly refused. So far from appellee’s endeavoring to evade tbe effect of tbe Federal regulations on this subject, as suggested in appellant’s brief, it would seem that appellant, having lost bis right to review tbe judgments bad against it, is endeavoring to obtain a rehearing of tbe case by means of a second suit — a course that is uniformly condemned under our decisions applicable. Hospital v. R. R., 157 N. C., p. 460, and cases cited.

Speaking to tbe two inhibitions appearing in tbe Federal legislation and executive orders protecting tbe roads while in tbe control of tbe Government, tbe Court, in King v. R. R., among other things, said: “Tbe first inhibition, as stated, being to protect tbe roads from physical interference by third persons, creditors, or other, while in possession and control of tbe Government, and tbe second to protect tbe carriers in tbe possession and control of their own roads from physical *190interference by reason of any actions or judgments provided for and allowed by the government, but this legislation, in our view, was never intended to protect the carriers from judgments in independent suits by claimants where they have failed to plead or properly insist on the immunity from liability which had been provided for their protection. The Government has made provision by its legislation to protect the carriers from molestation by reason of any judgments it has authorized and provided for, but it has not undertaken, as guardian ad litem, to avoid or destroy the force and effect of independent judgments against which the carrier has neglected or failed to interpose his proper defenses.”

We find no error in the judgment appealed from, and the same is

Affirmed.