162 F. 170 (E.D.N.C. 1908), Metropolitan Trust Co. of City of New York v. North Carolina Lumber Co.

Citation:162 F. 170
Party Name:METROPOLITAN TRUST CO. OF CITY OF NEW YORK v. NORTH CAROLINA LUMBER CO. et al. AMERICAN BOX CO. et al. v. SAME.
Case Date:April 13, 1908
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 170

162 F. 170 (E.D.N.C. 1908)

METROPOLITAN TRUST CO. OF CITY OF NEW YORK

v.

NORTH CAROLINA LUMBER CO. et al.

AMERICAN BOX CO. et al.

v.

SAME.

United States Circuit Court, E.D. North Carolina.

April 13, 1908

Day, Bell & Dunn, Jno. W. Hinsdale and Murray Allen, for receivers and creditors.

Womack, Hayes & Pace, for North Carolina Lumber Co.

F. H. Busbee, Jno. Larkin, and T. McIlvaine, for Metropolitan Trust Co.

PURNELL, District Judge.

The master after setting forth the different hearings in New York, etc., reports the following findings of fact:

I. That the plaintiff, Metropolitan Trust Company, was at the time of the filing of the bills herein, and now is, a corporation organized under the laws of the state of New York, and has its principal office in said state, and is a citizen thereof, under the laws fixing the jurisdiction of this court.

II. That the defendant the North Carolina Lumber Company is a corporation organized under the laws of the state of North Carolina, having its principal office at Tillery, N.C., in Halifax county, and is a citizen and resident of North Carolina and the Eastern district thereof, under the laws defining the jurisdiction of this court.

III. That the defendants Burgwyn, Leary, and Travis are all residents and citizens of the state of North Carolina, under the laws defining the jurisdiction of this court, the said Burgwyn living in Weldon, N.C., the said Travis in Halifax, N.C., and the said Leary, at the time of the original and amended bills were filed herein, resided at Tillery, Halifax county, in the state of North Carolina, but is now a resident of the state of New York, and that the amount in controversy in this suit largely exceeds $2,000, exclusive of interest and costs.

IV. That the North Carolina Lumber Company on or about the 1st of June, 1893, executed a deed of trust to the Atlantic Trust Company of New York City, in which was conveyed its entire property, real and personal, wherever situate, then owned by it or to be after acquired by it, and its franchise (said deed of trust having been duly registered in said county of Halifax), and securing an issue of 75 bonds of the said company, payable to the bearer or the registered holder thereof, each in the sum of $1,000, payable in gold, on the 1st of June, 1903, with interest at 6 per cent., payable semiannually, in gold. coupons attached, and that 60 of said bonds were sold and delivered to the purchasers thereof, at par, in money, and 15 thereof were hypothecated with creditors for loans of money, and the proceeds of the sales and of the loans used in the purchase of timber land and timber rights and in the operation of the plant, and that H. H. Fries, A. J. McDonald, and A. De Bary, purchasers

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of 5 bonds each, were both stockholders and directors of the said lumber company.

V. That on or about the 29th of January, 1895, the North Carolina Lumber Company executed a deed of trust or mortgage to the said Atlantic Trust Company, covering its entire property, wherever situate, and such other property as it might thereafter purchase and its franchise (said deed of trust being duly registered in said Halifax county), purporting to secure an issue of 100 bonds of the said company, payable to the bearer, or, if registered, to the registered owner thereof, each in the sum of $1,000, payable in gold, on the 29th of January, 1905, with interest at 6 per cent., payable semiannually in gold, coupons attached, and the said deed of trust containing similar provisions as to right of possession of the property by the lumber company until default, the accumulation of a sinking fund, rights of receivership and foreclosure, and the right of sale of lumber and personal property and unimproved lands as are set forth in a certain deed of trust executed by the said lumber company to the said Atlantic Trust Company in January, 1897, and registered in the register's office of Halifax county, N.C.

VI. That the said bonds and deed of trust described in paragraph V were executed under the following authority, to wit:

(1) A resolution of the stockholders of the company held on November 30, 1894, as follows:

'Resolved, that this company request the holders of its first mortgage bonds to surrender the same to the Atlantic Trust Company of New York, and receive in lieu thereof an equal number of first mortgage coupon bonds for a like amount and payable at the same time, with interest at the rate of 6 per cent. per annum, payable semiannually, to be issued under a like new first mortgage made to secure the payment of 100 first coupon bonds for $1,000 each, and in case all the holders of the present first mortgage bonds so consent and as in fact surrender to the said trustee the said bonds, with all the coupons thereon not yet due, so that the first mortgage now existing can be canceled and satisfied of record.

'Resolved. that the company execute and deliver to the Atlantic Trust Company of New York a new first mortgage on all the property, real and personal, in the same general form as the present mortgage, but with such changes therein in relation to the sale by the company from the time of said mortgage of its unimproved real property within the limits of the town of Tillery as the counsel of the company may advise to secure the payment of 100 first mortgage bonds for $1,000 each, payable at the same time as the present bonds, with interest thereon at the rate of 6 per cent. per annum, payable semiannually, such bonds to be in all respects like the present bonds, save in date of execution and other formal changes consequent on account of the increase in the number of the bonds from 75 to 100, and that this company make and execute such 100 bonds, for $1,000 each, and that the said trust company be requested to certify and deliver to the company the whole of the said new 100 bonds.'

(2) A resolution of the board of directors of the lumber company, of date February 25, 1895, as follows: 'Resolved, that the Atlantic Trust Company be, and it is hereby, requested to deliver to each of the persons, including this company, who have deposited with it any of the former first mortgage bonds of this company, an equal amount of the new first mortgage bonds of this company, issued under the mortgage dated January 29, 1895.'

VII. That under the powers and authority recited in the next above two paragraphs the company executed the bonds and deed of trust of date January, 1895, and delivered 75 of the same to each of the persons who held the 75 bonds of the company under the issue and deed of trust of 1893, who in exchange for the 75 bonds of 1895 surrendered the bonds of 1893, and that the 75 bonds of the issue of 1893 were destroyed and the deed of trust securing the same was canceled and marked 'Satisfied' on the registry of said Halifax county, and that 15 of the bonds of the issue of 1895 were sold and delivered to the purchasers thereof, at par, for money.

VIII. That the money derived from the sale of the bonds in part and the hypothecation of others of the issue of 1895 was necessary for the company to improve its property and to operate its plant, and that it was so used.

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IX. That on or about the 1st day of January, 1907, Harold H. Fries, president of the North Carolina Lumber Company, with the seal of the company attached, and Fritz Von Bernuth, Jr., secretary of said company, signed and executed 150 bonds, known as the first mortgage bonds of the North Carolina Lumber Company, numbered consecutively 1 to 150, both numbers inclusive, in which the company promised to pay to the holder of each bond, or, in case the bonds should be registered, then to the registered owner, on the 1st of January, 1907, the sum of $1,000 United States gold coin of or equal to the then present standard of weight and fineness of the gold coin of the United States, at the office or agency of the said lumber company in the city of New York, and also interest on the said bonds at the rate of 6 per cent. per annum, payable in gold coin at the same place semiannually on the 1st days of July and January in each year.

X. That at the time of the execution of the bonds of 1897, mentioned in the next preceding paragraph, a deed of trust or mortgage to the said Atlantic Trust Company, known as the first mortgage of the North Carolina Lumber Company, was signed and executed in the name of the said company, with the corporation seal affixed, and by the president and secretary of the said company, in the manner and form following, viz.: 'The North Carolina Lumber Company (Seal), 'Harold H. Fries, President, Fritz Von Bernuth Jr., Secretary. Atlantic Trust Company, L. V. F. randolph, President, J. S. Suydam, Secretary'-- the purpose being to secure the payment of the said 150 bonds and the interest; that in the said mortgage or deed of trust is embraced all of the property of the said North Carolina Lumber Company, both real and personal, including its franchise, wherever situated, then owned by it, or which might thereafter be acquired by it, all of which property then owned by the company being particularly described in said deed of trust; that said deed of trust was duly registered in Halifax county, N.C., a true and correct...

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