OPERATING EXPENSES. They are, broadly speaking, those which it is reasona bly necessary to incur for the purpose of keeping up a railroad (to which the term is commonly applied) as a going concern, or, as it is sometimes expressed, those which conduce to the conservation of the property. Short, Railw. Bonds § 653.
The term, when used in a reorganization plan, does not include money spent on steel rail betterments, or on steamers owned by the company to make them more efficient, or on the purchase of freight engines and coal cars; Mackintosh v. R. Co., 34 Fed. 582. Un der a Massachusetts statute, it was held that damage to property at a railroad crossing must be considered as operating expenses ; Smith v. R. Co., 124 Mass. 154. Judgments against a receiver for damages to persons by negligence are a part of the operating ex penses; St. Louis S. W. R. Co. v Holbrook, 73 Fed. 112, 19 C. C. A. 385. All outlays made by a receiver in the ordinary course, with a view to advance and promote the business of the road and render it profitable and successful, are fairly within the receiv er's discretion ; this will include not only keeping the road and rolling stock in repair, but also providing such additional accommo dations, stock, and .instrumentalities as the necessities of the business may require; Cowdrey v. R. Co., 1 Woods 331, Fed. Cas.
No. 3,293. The court will authorize the pur chase of new rails; Phinizy v. R. Co., 62 Fed. 771; and the payment of reasonable office rent ; Cowdrey v. A. Co., 1 Woods 331, Fed. Cas. No. 3,293 ; and the payment of interest on money which a receiver has been obliged to horrow ; id.; and of traffic balances on connecting roads ; Meyer v. Johnston, 64 Ala. 603; and rebates on freight; Cowdrey v. R. Co., 1 Woods 331, Fed. Cas. No. 3,293.
Damages paid to the owners of goods lost, in transportation and for injury to property during a receivership will be allowed in the receiver's account of earnings; Cowdrey v. R. Co., 93 U. S. 352, 23 L. Ed. 950; such claims stand upon the same footing as the other expenses of administration; Short, Railw. Bonds § 669 ; Mobile & 0. R. Co. v. Davis, 62 Miss.' 271; Kain v. Smith, 80 N. Y. 458.
Earnings diverted to the payment of in terest on receiver's certificates made payable out of the corpus, or tO the costs or allowanc es in the foreclosure suit or any other matter not properly operating expenses, must be returned to the current earnings fund ; Blair v. R. Co., 25 Fed. 232. See MORTGAGE ; RE ORGANIZATION.