separate and distinct from the municipality itself, and to have accounts kept accordingly; that, if this policy were followed, the city should pay the utility at a reasonable rate for all service rendered the city, in order to avoid unjust discrimination in favor of the taxpayers of the city as against consumers; and that the utility in turn should pay the city a reasonable amount as taxes and as interest on the city's equity in the property of the utility, in order to avoid unjust discrimination in favor of consumers as against taxpayers. And in Re Kenosha (1918; Wis.) P.U.R.1918D, 751, it is said that, in view of the fact that the city had virtually set the water utility (operated by it) apart as a separate entity, and was requiring it ultimately to carry its own financing, it appeared only reasonable that the city should pay the cost of the service rendered to it. And it was recommended that the city should provide for paying an increased hydrant rental. And, on an application for increased electric rates for a municipal plant, the commission in Re Argyle (1921; Wis.) P.U.R.1921E, 265, held that street lighting should bear its share of the cost of operation of the plant, and that a charge should be made for energy used to operate a municipal stone crusher. The provisions of the New York statute exempting certain institutions in New York city from charges for water furnished such institution by the city, the provisions of the act being expressly applicable to benevolent, charitable, and religious corporations, and other institutions of a benevolent nature, have been before the courts in a few cases for construction. See, for example, Re Y. W. C. A. (1913) 156 App. Div. 295, 141 N. Y. Supp. 138, affirmed, without opinion, in (1913) 209 N. Y. 534, 102 N. E. 1118, and Re Y. W. C. A. (1912) 141 N. Y. Supp. 260, affirmed without opinion in (1913) 158 App. Div. 908, 142 N. Y. Supp. 1151, holding that the statute did not apply to the Young Women's Christian Association; also Bay Ridge Reformed (Dutch) Church v. New York (1914) 162 App. Div. 49, 146 N. Y. Supp. 1014, holding that the statute obliged the municipality to furnish water for operation of a church organ free of charge. No attempt is made to cover cases of this class, in which the question is somewhat analogous to that of the construction of statutes exempting such institutions from taxation, and in which no question of municipal power is raised. As to whether an incorporated board of water commissioners of a municipality may be compelled to furnish water free of charge to a public institution of the city, in this instance a house of correction, attention is called to Detroit v. Water Comrs. (1896) 108 Mich. 494, 31 L.R.A. 463, 66 N. W. 377, holding that there was no obligation to furnish water free to such an institution, which was under the control for the most part of a board of inspectors, and not of the city council, although the city was obliged to pay the expenses so far as they exceeded the earnings of the institution,-since any such burden should be laid upon the whole body of taxpayers of the city, and not upon those only who were private consumers of water, the commissioners having no source of revenue for the running expenses of the waterworks except the water rates. Attention is called, also, to several additional cases, among possibly others of the kind, involving the question whether water must be furnished free from a municipal water plant for certain purposes. Water Comrs. v. Parks & Boulevards (1901) 126 Mich. 459, 85 N. W. 1132 (holding that the board of water commissioners of a municipality were not under obligation to furnish water for park purposes free of charge); Water Comrs. v. Board of Education (1904) 137 Mich. 245, 100 N. W. 455 (holding that a municipal water board was entitled to receive pay for water furnished to the school board of the municipality); Water Comrs. v. Detroit Citizens' Street R. Co. (1902) 131 Mich. 1, 90 N. W. 657, 91 N. W. 171 (holding that water commissioners of a municipal ity could not recover compensation for water furnished for street-sprinkling purposes). V. Miscellaneous. Attention is called below to several court or commission cases in which questions of discrimination in the operation of municipal plants are presented which are of a kind not apparently distinctive to this class of utilities, the cases, therefore, being cited merely for illustrative purposes. And in Consolidated Ice Co. v. Pittsburgh (1922) 274 Pa. 558, 118 Atl. 544, where a consumer of water from a municipal plant, supplied on a meter basis, brought suit against the municipality for relief on the ground. that the meter rates were excessive and, as against the flat rate, discriminatory, the court recognized the right to relief in case the rates in question did unfairly discriminate in favor of the flat-rate users; but held that discrimination was not shown merely by the fact that, owing to the wasting of water by consumers having flat rates, their rates per gallon were lower than the meter rates. The decision, also, in such cases as Richardson v. Greensboro (1917) 174 N. C. 540, 94 S. E. 3, to the effect that there is not necessarily any discrimination because meter rates for water are charged against certain consumers and flat rates against other consumers of the same class, is not apparently distinctive to cases of ownership and operation of municipal plants, although in this case the applicant for a flat rate contended that the refusal of the municipal authorities to grant him such a rate was an unlawful discrimination against him in the operation of the plant. In Youngman v. Waterworks Comrs. (1920) 267 Pa. 490, 110 Atl. 174, the court said that proper classification of patrons by water corporations, municipal or otherwise, is permitted; and held that the classification attacked in this instance was justifiable, where waterworks commissioners of a municipality, who were empowered to extend the public service under their charge beyond the city limits, adopted regulations requiring users of water residing beyond the limits of the municipality to pay an advance of 25 per cent over the city rates, and, in addition, the actual cost of extension of the service to their respective properties, which charge was not made against patrons within the city. And in Re Fennimore (1915; Wis.) P.U.R.1916A, 848, it was held that a municipal electric utility may be permitted to charge a higher rate to consumers without the municipality than to residents, where the rate to the former is not unreasonably high in comparison with the cost of service and other conditions affecting rates. In Re Laurel (1921; Mont.) P.U.R. 1921D, 817, where a municipality permitted persons residing beyond its boundaries to connect their premises to the city water system, and was voluntarily furnishing such persons with water, the commission said that, having voluntarily assumed this exterritorial service, the city's plant was placed in much the same position as a privately owned public utility, and nondiscriminatory treatment of all persons served was required. It was held, however, that, while consumers within and without the city must be treated alike, yet that, in order that the consumers living without the city limits might properly share in the taxpayers' burden, resulting from the construction and installation of the system, it was necessary to fix a differential which should equalize the disparity between rates and taxes. That a higher minimum rate may be made to patrons of a municipal electric light and power plant residing in the country than to resident consumers in the municipality, see also, for example, Re Pendleton (1921; Ind.) P.U.R.1921E, 602. In Re Brodhead Municipal Electric Utility (1917; Wis.) P.U.R.1915B, 524, a municipal electric utility was ordered to discontinue certain discriminatory practices, as the supplying of certain users with free meters, and the granting of special rates to large power customers which yielded it less then the cost of supplying the service. R. E. H. CONTINENTAL & COMMERCIAL TRUST & SAVINGS BANK et al. V. MUSCATINE, BURLINGTON, & SOUTHERN RAILROAD COMPANY et al. CHICAGO, ROCK ISLAND & PACIFIC RAILROAD COMPANY et al., Interveners, Appts. (— Iowa, 210 N. W. 787.) Receivers, § 59 priority diversion of income to operating expenses. 1. Claims of railroads permitting a receiver of another road to use interline freight balances for operating expenses have no priority over judgment lien claimants who were not parties to the receivership proceedings, or estopped by their conduct to claim their priority. [See annotation on this question beginning on page 146.] Appeal, § 212 exception to judgment. 2. Exception to a judgment cannot be considered on appeal where there is a denial of exception taken and no record of exception is pointed out. [See 2 R. C. L. 139; 1 R. C. L. Supp. 409; 4 R. C. L. Supp. 84; 5 R. C. L. Supp. 73; 6 R. C. L. Supp. 68.] Judgment, § 232 liens. 3. A judgment debtor cannot by its own act displace statutory liens held by judgment creditors. Constitutional law, § 502 confiscation of railroad property. 5. Railroad property is private, and cannot be subjected to unreasonable requirements or to confiscation. [See 22 R. C. L. 751; 5 R. C. L. Supp. 1215.] Carriers, § 690 right to compel operation of railroad. 6. A railroad company cannot be compelled to retain its franchises and to continue to operate at a loss, when there is no reasonable prospect of future profitable operation. [See 22 R. C. L. 908, 909; 4 R. C. L. Supp. 1479; 5 R. C. L. Supp. 1219; 6 R. C. L. Supp. 1342. See also annota- 7. A court will not require the receiver of a railroad to continue the operation of the road at a loss, and, if attempted operation shows a loss, it should not be continued unless expenses are guaranteed. [See 23 R. C. L. 73; 4 R. C. L. Supp. 1491. See also annotation in 12 A.L.R. 292.] Receivers, § 59 charging property with operating expenses. 8. Holders of liens on railroad property, by asking for a receivership and operation of the property for their benefit or for the preservation and benefit of the property, may thereby bind the corpus of the property as against themselves for the payment of operating expenses. Receivers, § 58 when property charged with operating expenses. 9. The power of the court to authorize receivers to raise money for the preservation and management of property under their control, and charge it as a lien on the corpus in preference to prior liens, should be exercised with great caution, and, if possible, with the consent and acquiescence of those interested in the fund. Receivers, § 381 continuing operation. conditions for 10. Before decreeing the continued operation of a railroad by a receiver, APPEAL by interveners and a judgment creditor from a judgment of the District Court for Muscatine County (Jackson, J.) denying their claims of priority in a suit to foreclose a mortgage on certain railroad property. Affirmed. Statement by Morling, J.: Railroad mortgage foreclosure. Interveners appeal from a decree denying their claim of priority for alleged operating liabilities during receivership over the lien of prior judgments obtained in actions for personal injuries. One of the judgment creditors appeals from denial of priority of lien on the railroad property in counties other than that in which the original judgment was recovered but in which transcripts of his judgments were docketed. Messrs. J. G. Kammerer, J. G. Gamble, A. B. Howland, and Hughes, Taylor, & O'Brien, for interveners appellants: Claims for traffic balances between connecting carriers of freight, interline freight account, car rentals, and similar items, are operating expenses of a railroad company, and entitled to classification and payment as such. Shugart & Barnes Bros. v. Atlantic Northern & S. R. Co. 161 Iowa, 351, 143 N. W. 90. When the court expressly authorizes the receiver of a property to continue the operation of a business and to inoperating expenses of the receivership cur indebtedness in such operation, all become a lien upon the corpus of the property superior to that of pre-existing encumbrances or judgments against the principal defendant. High, Receivers, 394B, p. 504; 34 Cyc. p. 353; 1 Elliott, Railroads, § 580; State Cent. Sav. Bank v. Fanning BallBearing Chain Co. 118 Iowa, 698, 92 N. W. 712; Union Trust Co. v. Illinois Midland R. Co. 117 U. S. 434, 29 L. ed. 963, 6 Sup. Ct. Rep. 809; Kneeland v. American Loan & T. Co. 136 U. S. 89, 34 L. ed. 379, 10 Sup. Ct. Rep. 950; Wallace v. Loomis, 97 U. S. 146, 24 L. ed. 895; St. Louis Union Trust Co. v. Texas Southern R. Co. 59 Tex. Civ. App. 157, 126 S. W. 300; Union Petroleum Co. v. Indian Petroleum Co. 192 Iowa, 1373, 186 N. W. 439; Gallagher v. Gingrich, 105 Iowa, 237, (— Iowa, —, 210 N. W. 787.) 74 N. W. 763; Gulf Pipe Line Co. v. Lasater, Tex. Civ. App. 193 S. W. 774; Craver v. Greer, 107 Tex. 356, 179 S. W. 862; 8 Fletcher, Corp. p. 8987, 1924 Supp. §§ 5396, 5397; First Nat. Bank v. Ewing, 43 C. C. A. 150, 103 Fed. 168; McLane v. Placerville & S. Valley R. Co. 66 Cal. 606, 6 Pac. 748; Savannah, F. & W. R. Co. v. Jacksonville, T. & K. W. R. Co. 24 C. C. A. 439, 52 U. S. App. 51, 79 Fed. 35; Traction Materials Co. v. Pittsburgh, McK. & W. R. Co. 261 Pa. 153, 104 Atl. 552; New York Trust Co. v. Detroit T. & I. R. Co. 163 C. C. A. 508, 251 Fed. 514. Messrs. Thompson & Thompson for appellant Kelly. Messrs. H. O. Weaver, Clapp, Richardson, Elmquist, Briggs, & Macartney, and Nichols, Tipton, & Tipton, for appellees Guthrie and Johnson: The allowance of priority to claims against the receiver of a railroad as such out of the corpus, over the rights of vested lien holders, is a matter of sound equitable principles, applied to each case as it arises. Kneeland v. American Loan & T. Co. 136 U. S. 89, 34 L. ed. 379, 10 Sup. Ct. Rep. 950; Wallace v. Loomis, 97 U. S. 146, 24 L. ed. 895; Union Trust Co. v. Illinois Midland R. Co. 117 U. S. 434, 29 L. ed. 963, 6 Sup. Ct. Rep. 809; Miltenberger v. Logansport, C. & S. W. R. Co. 106 U. S. 286, 27 L. ed. 117, 1 Sup. Ct. Rep. 140; Van Valkenburgh v. Ford, Tex. Civ. App., 207 S. W. 405; Farmers' Loan & T. Co. v. Burbank Power & Water Co. (D. C.) 196 Fed. 539; Merchants' Loan & T. Co. v. Chicago R. Co. 86 C. C. A. 87, 158 Fed. 923; Von Boston v. United R. Co. (C. C. A. 8th) 8 F. (2d) 826; Traction Materials Co. v. Pittsburgh, McK. & W. R. Co. 261 Pa. 153, 104 Atl. 552. The law imposed no obligation upon the appellants as connecting carriers to extend credit to a bankrupt carrier. Chicago & A. R. Co. v. United States & M. Trust Co. 141 C. C. A. 64, 225 Fed. 940; Vital v. Kerr (C. C. A. 2d) 297 Fed, 959. The judgment of appellee for personal injuries was a prior lien upon the aliquot part of the property of the road lying in Louisa county, where Mrs. Guthrie's action was tried. Southern R. Co. v. Bouknight, 30 L.R.A. 823, 17 C. C. A. 181, 25 U. S. App. 415, 70 Fed. 442; North American Co. v. St. Louis & S. F. R. Co. (D. C.) 246 Fed. 260. Messrs. Lane & Waterman and J. F. Devitt for other appellees. Morling, J., delivered the opinion of the court: On July 1, 1916, defendant railroad company mortgaged its property to the defendant American Trust Company. On July 1, 1919, a mortgage was made to the plaintiff, which by arrangement between the parties interested was given priority over the former mortgage. On November 20, 1920, Nellie Guthrie recovered in Louisa county a judgment against the railroad company for personal injuries. On November 27, 1920, Howard Kelly recovered in Louisa county a judgment against the railroad company for personal injuries, and later transcribed it to Muscatine and Des Moines counties. On October 6, 1921, Cornelius B. Johnson recovered in Muscatine county a judgment against the railroad company for workmen's compensation. On November 30, 1921, P. W. Keefover recovered in Muscatine county a. judgment against the railroad company for personal injuries. On May 20, 1921, in an action brought by J. F. Cullen against the railroad company, a receiver was appointed and directed to take possession of all of the railroad company's property and operate the railroad. On October 13, 1921, the present suit was brought to foreclose the 1919 mortgage. The receiver appointed in the Cullen suit, Cullen, the American Trust Company, and the judgment lien creditors were made defendants. The American Trust Company filed a cross-bill for foreclosure of its mortgage. On May 8, 1923, decree of foreclosure of both mortgages was entered by which the proceeds of the foreclosure sale were ordered to be applied, first, to payment of unpaid taxes; second, to costs; third, to a fund to make good diversion of current earnings; fourth, to the judgment liens; fifth, and subsequently to payment of the mortgage indebtedness. Modifications of the decree on petition of various parties |