Moore v. Bank of British Columbia

• Decision Date: 05 October 1903
• Docket Number: 921.
• Parties: MOORE v. BANK OF BRITISH COLUMBIA et al. BANK OF BRITISH COLUMBIA et al. v. MOORE.
• Court: U.S. Court of Appeals — Ninth Circuit

125 F. 849

MOORE v. BANK OF BRITISH COLUMBIA et al.

BANK OF BRITISH COLUMBIA et al. v. MOORE.

No. 921.

United States Court of Appeals, Ninth Circuit.

October 5, 1903

Garber Cresswell & Garber and Smith & Pringle, for appellant.

Bishop Wheeler & Hoefler and Pringle & Pringle, for appellees. Chas S. Wheeler, for executor.

Sydney V. Smith, for Bank of British Columbia.

Appeal from the Circuit Court of the United States for the Northern District of California.

For opinion below, see 106 F. 574.

This suit was originally brought in the superior court of the city and county of San Francisco by Frances J. P. Moore against the Bank of British Columbia, a corporation, the Moore &amp Smith Lumber Company, a corporation, the Sanger Lumber Company, a corporation, and Walter Young, and was thereafter removed to the Circuit Court of the United States for the Northern District of California, where, after the death of Francis J. P. Moore, a bill of revivor was filed by A. D. Moore, the duty appointed, qualified, and acting executor of her estate, in pursuance of which bill, and upon stipulation of the respective parties, the suit was revived and continued by A. D. Moore, executor of the will of Frances J. P. Moore, deceased, as complainant, against the defendants Bank of British Columbia and Walter Young, the other defendants having been dismissed on motion of the complainant. The purpose of the suit was the recovery by the complainant from the defendant bank of 5,000 3/4 shares of the capital stock of the Sanger Lumber Company. A motion for the appointment of a receiver of the stock pending the litigation was made in and denied by the court below (106 F. 574), the court then being of the opinion that it did not appear that the complainant would probably prevail in the cause. After a trial upon the merits, however, the court below decreed that the defendant bank deliver to the complainant, A. D. Moore, as executor of the last will of Frances J. P. Moore, deceased, certificates for 5,000 3/4 shares of the stock of the Sanger Lumber Company, duly indorsed, upon the payment by the executor to the bank, within a stated time, of the sum of $70,231.01, with certain interest, aggregating about $98,000, and that, in case of the executor's failure to pay the whole of the principal sum and interest, all right, title, and interest of the said Frances J. P. Moore and of the said A. D. Moore, the executor of her last will, and of her estate, in the said shares of stock, be foreclosed and extinguished, and that neither the said A. D. Moore, as such executor, nor any other representative of her estate, have any further right to demand any stock of the Sanger Lumber Company from the defendant bank, nor any claim or right or demand whatsoever against the bank growing out of the matters in dispute. Neither party was satisfied with this decree, and from it both the complainant and the defendants appealed to this court, the former claiming the right to the stock in question absolutely, and without any payment or condition, and the latter contending that the complainant is not entitled to any of the stock upon any terms or conditions, and certainly not without making the payment required by the decree.

The case shows that on the 18th day of September, 1894, the following written agreement was executed by and between the Moore & Smith Lumber Company, A. D. Moore, H. C. Smith, and the defendant Bank of British Columbia:

'Agreement made this 18th day of September, 1894, between Moore & Smith Lumber Company, hereinafter called the Company, and A. D. Moore and H. C. Smith, and the Bank of British Columbia, hereinafter called the Bank.

'Whereas, the Company is indebted to the Bank in the sum of one hundred thousand dollars, secured by a mortgage of the Port Discovery Mill, and certain lumber lands in the State of Washington (which mortgage also secures the other indebtedness of the Company hereinafter mentioned), and in the sum of seventy thousand dollars, secured by pledge to the Bank of three notes of the Kings River Lumber Company each for the sum of fifty six thousand two hundred and fifty dollars, and in the sum of fourteen hundred and ninety dollars, secured by pledge to the Bank of a certificate of stock of the Pacific Pine Lumber Company, and whereas the Kings River Lumber Company is indebted to the Bank in the sum of ten thousand dollars and whereas it is proposed among certain creditors of the Kings River Lumber Company to form a new corporation to be called the Sanger Lumber Company and that such creditors of the Kings River Lumber Company shall assign their claim against the Kings River Lumber Company to the Sanger Lumber Company in exchange for the stock of the Sanger Lumber Company:

'Now, if said new corporation is formed and said arrangement goes into effect among the creditors of the Kings River Lumber Company, the Bank hereby agrees to take stock in the Sanger Lumber Company at its par value to the amount equal to said three notes of the Kings River Lumber Company, and said $10,000 debt of the Kings River Lumber Company, and said $1,490 debt of the Company, in all amounting to $180,240; and will assign all of said notes and debts to said Sanger Lumber Company in payment of its stock, such assignment to be without recourse against the Bank or any indorsers on said notes, including the Moore & Smith Lumber Company, and the assignment of the note evidencing the $1,490 debt to bear upon its face the stipulation that the Sanger Lumber Company shall look for its payment only to the said certificate securing it; and the interest on said three notes of the Kings River Lumber Company to be indorsed

thereon as paid up to the time of their delivery to the Sanger Lumber Company, and will deliver said certificate to the Sanger Lumber Company.

'The company will convey by a deed absolute to the Bank or its nominee the said Port Discovery Mill and said lands in Washington, and the Bank will cancel and deliver up to the Company said $100,000 note and said $70,000 note.

'The Bank shall then open an account with the Company in which the Company shall be debited with said sum of $100,000 and all taxes, insurance, and expenses connected with said mill and timber lands and the sum of eighty-one thousand four hundred and ninety-one dollars, being the actual cost to the Bank of the stock of the Sanger Lumber Company, and with interest on such amounts at the rate of six per cent. per year from July 1st, 1894, and shall be credited with any dividends on said stock of the Sanger Lumber Company, and with the proceeds of any sales of said stock made under the permission hereinafter given, and with the proceeds of any sales of the said mill property or timber lands made under the permission hereinafter given, and with all sums paid to the credit of said account by the Company, and with interest on all such credits at the rate of six per cent. per year, the interest so to be charged and credited to be adjusted and charged and credited at the end of each six months.

'The Bank shall hold said stock of the Sanger Lumber Company and said mill and timber lands as security for the amount due to it as shown by said account, and may any time sell said mill or any part of the whole said timber lands for any price it pleases, provided that if at any time it can sell said mill and lands for $100,000, it shall be bound to do so; and it may at any time sell not more than one-half of said stock of the Sanger Lumber Company for any price it pleases, giving the Company, however, the preference of purchasing at the price the Bank is willing to accept.

'At any time within five years from the date thereof, the Company may pay the Bank the balance of debt shown by said account, and on such payment the Bank shall cause to be conveyed to the Company all then remaining unsold of said mill and timber lands, and shall transfer and deliver to the Company all then remaining unsold of said stock of the Sanger Lumber Company.

'At the end of five years from the date hereof the balance of debt shown by said account shall be due and payable by the Company to the Bank, and if not paid, the Bank may foreclose its lien for the same against said mill and timber lands, and in any action of such foreclosure shall be allowed a counsel fee at the rate of five per cent. upon the amount found due, and may sell any or all of said stock of said Sanger Lumber Company then remaining unsold at either public or private sale with or without notice and without any previous demand upon or notice to the Company, and at any such sale may itself become a purchaser, and shall render any surplus of the proceeds of such sale to the Company.

'The said A. D. Moore and H. C. Smith, jointly and severally, hereby guarantee to the Bank the payment by the Company at the end of five years of the balance due on said account, waiving all demand on the Company and all notice to them of nonpayment, and any defense arising out of any delay on the part of the Bank in enforcing its debt or realizing on its security, or arising out of any extension or renewal of the debt by the Bank, or the taking by the Bank of any further security for the same, and waiving notice of any such extension or renewal, meaning to guarantee the debt until paid and whether renewed or not.

'The Company will deliver to the Bank and cause to be transferred to it or its nominees on the books of the corporation sufficient stock of the Sanger Lumber Company to give the Bank, with the stock of the corporation which it is to take as security as aforesaid, a majority of the issued stock in its possession and control. This latter stock so to be delivered to the Bank is not to be held by it as security for said account, but only in trust for the purpose of...