156 F. 144 (N.D.W.Va. 1907), 696, Third Nat. Bank v. Jackson

Docket Nº:696.
Citation:156 F. 144
Case Date:August 10, 1907
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 144

156 F. 144 (N.D.W.Va. 1907)



JACKSON et al.

No. 696.

United States Circuit Court, N.D. West Virginia.

August 10, 1907

T. Moore Jackson, having assets consisting of bonds, town lots, and other real estate, stocks, notes, choses in action, and personal property aggregating, in estimated value, to about $1,183,000, and with liabilities, direct and indirect, amounting to about $1,035,000, on December 19, 1904, entered into a contract with his creditors, more than 85 per cent. of them joining therein, whereby he agreed to convey all his real estate and transfer all his personalty, except his home property in Clarksburg and the furniture therein, which was to be excepted and released, to Joseph E. Sands, Ira E. Robinson, and John W. Davis, trustees, with power to have full control of the properties, collect interest, rentals, dividends, and profits, to make sale, transfers, deeds, and conveyances, vote any and all shares of stock so conveyed in any meeting

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of stockholders of the corporations in which said stock was so held, and to convert said estate, real and personal, into money, and pay same to creditors. This agreement, carefully drawn, contains many other stipulations and matters of detail not necessary to refer to. In accordance with its requirements, said Jackson by deed of January 12, 1905, in which his wife joins, conveyed to said trustees all of his said real estate other than the excepted 'Home Property,' and on the same day he, in writing, assigned his personal property to said trustees, except that part excepted in the original trust agreement. The greater part of Jackson's assets and liabilities grew out of the fact that in 1893 the Ten Mile Coal & Coke Company, a corporation, with said Jackson and five others as stockholders, had acquired by purchase the coal underlying 33 tracts of land in Harrison county, aggregating 2,210.63 acres. Shortly after purchase, one of the stockholders died, and thereupon the surviving stockholders formed a partnership as T. M. Jackson & Co., and in the name of T. M. Jackson acquired about 1,600 acres more of coal and 184 acres of surface adjoining the first 2,210.63 acres. In 1901 this partnership was dissolved, all other members of it conveying their interests to Jackson for $101,360.84, evidenced by 104 notes given by him, due to said several partners January 1, 1907, and to secure which a deed of trust was executed by him on the property bearing even date, November 30, 1901, with the conveyances by said partners of their interests to him and of the Ten Mile Coal & Coke Company of the 2,210.63 acres standing in its name, which last conveyance was in consideration of $114,800.74 evidenced by 118 notes given by Jackson, due January 1, 1907, and secured by vendor's lien on the face of the deed. Jackson also assumed payment of the balance of purchase money due the farmers from whom the coal was originally bought secured in their deeds by vendor's liens. On December 17, 1903, Jackson formed the Dola Coal & Coke Company Corporation, and on the 28th he conveyed this coal field to it. Its capital stock issued was $600,000 of which Jackson took $500,000 and the other $100,000 was issued to other parties. On January 1, 1904, this Dola Coal & Coke Company executed to the Security Company of Wheeling, as trustee, a trust mortgage to secure bonds to the amount of $500,000. Of these bonds Jackson became the owner of $415,000; the other $85,000 being held by a Pittsburg bank. Jackson hypothecated his bonds or a greater part thereof to secure debts to various creditors of his, and on January 23, 1905, the Dola Coal & Coke Company by contract in writing constituted said trustees of Jackson said Sands, Robinson, and Davis, attorneys in fact to sell all said coal field with its mining rights and privileges, with power to enter into contracts, options, or negotiations, to execute all necessary conveyances, collect all proceeds of sale, and disburse proceeds to parties interested. The trustees under this power energetically sought to sell said coal field, first holding it at a price of $250 per acre, then reducing to $200 per acre, and finally, on September 17, 1906, they by circular letter to the creditors, informed them that they (said trustees) had received an offer of $145 per acre, $20,000 to be paid in cash, $80,000 upon date of execution of deed and the residue in $100,000 annual installments, and that unless a better offer was received on or before September 27, 1906, or they should receive before that date a united request from the holders of the bonds for a public sale of the property, accompanied by assurances that the bidding thereat should be started at not less than the par value of the bonds, they would on that date accept said offer. These conditions not being complied with, they did enter into the contract of sale referred to with C. E. Conaway, who it subsequently appears was acting for J. V. thompson. Thereupon the plaintiffs herein presented their bill to a judge of this court, in which they set forth the facts substantially as given above, allege themselves to be unsecured creditors of Jackson, holding none of the bonds of the coal company, yet vitally interested in the sale of its property at a fair price, because, from the surplus of the proceeds of such sale after payment of debts secured by the hypothecation of such bonds, they must look almost wholly for the payment of their debts; that at the price of $145 per acre little or nothing will accrue as such surplus, because $141.31 per acre would be required to pay the secured debts by reason of such hypothecation of bonds, and the 'farmer' and 'partners' liens upon the property; that said price is grossly inadequate as shown by the statement

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of the said trustees themselves in their circular letter to creditors; that a sale of such property ought not to be made until the liens and the holders thereof with the true amounts due each had been ascertained and fixed; that adjoining coal property of no better value had recently been sold at $300 per acre, and that, if the property was sold under the protection and direction of this court at public auction, it would bring not less than $200 per acre. The prayer of the bill is for an immediate restraining order against said trustees staying them from consummating said sale; for a full report and settlement of the transactions of said trustees; for full discovery from the trustee in the bond mortgage as to the holders of such bonds and of the stock of said company and the holders thereof with the considerations...

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