Griffin v. International Trust Co.

• Citation: 161 F. 48
• Decision Date: 07 April 1908
• Docket Number: 1,494.
• Parties: GRIFFIN v. INTERNATIONAL TRUST CO.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

161 F. 48

GRIFFIN v. INTERNATIONAL TRUST CO.

No. 1,494.

United States Court of Appeals, Ninth Circuit.

April 7, 1908

John G Heid, William T. Love, R. F. Lewis, and Alfred Sutro, for appellant.

Shackleford & Lyons, John J. Boyce, and John A. Shackleford, for appellee.

Before GILBERT, ROSS, and MORROW, Circuit Judges.

MORROW Circuit Judge.

This was an action brought by the International Trust Company, a corporation, against the American Gold Mining Company, a corporation, Frank W. Griffin, and James M. Shoup, United States marshal. The purpose of the action was: (1) To foreclose two certain mortgages, the first executed December 15, 1891, by the Nowell Gold Mining Company, the predecessor in interest of the American Gold Mining Company, to the International Trust Company, trustee, to secure the payment of 300 bonds of the par value of $1,000 each; the second mortgage executed January 1, 1896, by the Nowell Gold Mining Company to the International Trust Company, trustee, to secure the payment of 500 bonds of the par value of $1,000 each. (2) To enjoin and restrain the defendants James M Shoup and Frank W. Griffin from proceeding with the sale of part of the mortgaged premises under a judgment entered in favor of Frank W. Griffin July 10, 1905, for $25,000 and interest, secured by the lien of an attachment levied November 24, 1893. The two mortgages are set forth in the bill of complaint. The first executed December 15, 1891, by the Nowell Gold Mining Company, was to secure the payment of 300 bonds of that date for the sum of $1,000 each, with interest at the rate of 7 per cent. per annum. It was provided that 60 of these bonds were to be paid on the 15th day of December of each year from the year 1893 to 1897, and upon a default for one year on payment of either principal or interest on any of the same, then the whole principal should become due and payable at the option of a majority of the bonds then outstanding. It is alleged in the bill of complaint that none of the 300 bonds secured by the mortgage of December 15, 1891, were paid, and on the 1st day of January, 1896, the Nowell Gold Mining Company, for the purpose of providing for and retiring said $300,000 of bonds and interest thereon, and for the purpose of providing means to aid in the purchase of additional mines and mining properties in the district of Alaska, and of acquiring and constructing milling plants and mining equipments and for other corporate purposes, issued its bonds to the amount of $500,000, being 500 bonds of the par value of $1,000 each, bearing interest at the rate of 7 per cent. per annum. Thirty-five of these bonds were to be paid on the 1st day of January of each year, from the year 1901 to 1913, and the remaining 45 bonds were to be paid on the 1st day of January, 1914. It is alleged in the bill of complaint that of the 500 bonds of $1,000 each 298 were to be issued at the special instance and request of the Nowell Gold Mining Company and sold and delivered, and thereby the payment and retirement of 298 of the bonds of the issue of 300 bonds of the mortgage of December 15, 1891, accomplished and the bonds redeemed; that two of the bonds of the denomination of $1,000 each of the issue of December 15, 1891, accomplished and the bonds redeemed; that two under and by virtue of the provisions of said mortgage; that the remaining 200 bonds of the issue of January 1, 1896, were executed and delivered, sold on the market, and the proceeds thereon were received by the Nowell Gold Mining Company; that at the same time, and as a part of the same transaction, the Nowell Gold Mining Company made, executed, and delivered to the International Trust Company its mortgage and deed of trust dated January 1, 1896.

In this mortgage it was provided that for the purpose of retiring the $300,000 of bonds of the Nowell Gold Mining Company dated December 15, 1891, with unpaid interest thereon, the holders of said bonds and interest being willing to exchange same for an equal amount of bonds of the issue of January 1, 1896, the Nowell Gold Mining Company should issue its bonds to the amount of $500,000, in denominations of $1,000 each, all dated January 1, 1896, and payable at the office of the International Trust Company of Boston, Mass., payment to be made of not less than 35 of said bonds on January 1st of each year from 1901 to 1913, both inclusive. It was also provided that said mortgage was subject only to the mortgage dated December 15, 1891, and given to secure the payment of said $300,000 of bonds of even date therewith, which were to be paid by exchanging the same for the issue of bonds of January 1, 1896.

It is alleged in the bill of complaint that in the year 1898 the Nowell Gold Mining Company amended its charter and legally obtained a change of its name to the American Gold Mining Company; that on December 11, 1902, the plaintiff caused foreclosure proceedings to be instituted for the foreclosure of the mortgage of December 15, 1891, with respect to two of the bonds of the issue of that date, and for the foreclosure of the mortgage of January 1, 1896, with respect to the 498 bonds of the issue of that date; that such proceedings were had in the matter that a decree was entered in favor of the plaintiff in the sum of $745,582, and the property covered by said mortgage was thereunder and thereby foreclosed and sold on the 31st day of March, 1903, and was at the sale bid in by the plaintiff for the sum of $382,000, and plaintiff believed in bidding in said premises it would leave the same free and clear of all incumbrances. The bill of complaint recites the commencement of an action by one M. W. Murray against the Nowell Gold Mining Company on the 11th day of November, 1893, in the district court of Alaska to recover the sum of $25,000, the issuance of a writ of attachment and its levy upon certain property of the defendant on the 24th day of November, 1893. It is alleged that such property was at that time and subsequently subject to the lien of the plaintiff's mortgage of December 15, 1891; that Frank W. Griffin, one of the defendants named in the bill of complaint, was substituted for the said M. W. murray and as his successor in interest in the attachment suit, and thereafter, on the 10th day of July, 1905, judgment was entered in favor of the said Griffin and against the American Gold Mining Company for the sum of $25,000 and interest; that an order of sale was thereupon issued out of the court upon the judgment, and the property attached was ordered sold by the court. Thereafter a notice of sale was given and published by the defendant Shoup as United States marshal. It is alleged in the complaint that, if the sale is allowed to proceed, the property will be in danger of being sold to parties who have no knowledge of the equities and lien of the plaintiff; that prior to November 3, 1905, plaintiff had no knowledge or notice of the facts pertaining to the attachment suit, but had prior to that time been informed by the officers of the defendant corporation, and believed and relied upon said information and representation, that there were no liens or claims intervening between December 15, 1891, and January 1, 1896.

It is further alleged that in plaintiff's foreclosure suit commenced December 11, 1902, neither Murray nor Griffin was a party to that action, and that the decree of foreclosure against the property of the defendant corporation was entered by the plaintiff in entire ignorance of the existence of the attachment suit by Murray and his successor, Griffin. It is alleged that plaintiff herein is without speedy or adequate remedy at law; that defendant Frank W. Griffin threatens to sell the property mentioned in the complaint and described as having been attached by the plaintiff in the attachment suit; that said property is a part of the property subject to the mortgage of December 15, 1891, by and through which Shoup, as United States marshal, will sell the same unless previously enjoined, to the irreparable loss and damage of the plaintiff.

The prayer of the bill of complaint is that the holders of the 298 bonds issued under the mortgage of January 1, 1896, be subrogated to the rights of the holders of the 298 bonds issued under the mortgage of December 15, 1891; that an account be taken of the moneys due of principal and interest owing on said bonds and mortgage, and that a decree be entered for the sale of the mortgaged premises for the payment to the plaintiff of the moneys found to be due the defendants and all persons claiming under them subsequent to the commencement of the suit; that the premises described in the mortgage of December 15, 1891, be sold to satisfy said sum of $300,000 and interest thereon, and upon the sale of the premises the sum bid be credited upon the amount due under the mortgage, and that plaintiff have judgment for any deficiency there may be for the difference between the amount so bid and the amount found due under the mortgage; that the mortgage of January 1, 1906, be foreclosed in like manner for the sum of $200,000 and interest thereon, and that the premises covered by that mortgage be condemned and sold to satisfy the said sum of $200,000 and interest, and that defendants Shoup and Griffin be enjoined and restrained during the pendency of the suit from the sale of the premises as described in the writ of attachment and published notice of sale; and that further proceedings under said order and notice of sale be stayed and enjoined until final judgment decree in the action. Upon the verified bill of complaint, the court issued an order restraining the defendants Griffin and Shoup from proceeding with the sale of the property described in the complaint. The temporary restraining order was...