Holmberg v. Anchell

• Decision Date: 20 August 1938
• Parties: HOLMBERG et al. v. ANCHELL et al.
• Court: U.S. District Court — Southern District of New York

24 F. Supp. 594

HOLMBERG et al. v. ANCHELL et al.

District Court, S. D. New York.

August 20, 1938.

COPYRIGHT MATERIAL OMITTED

Franklin S. Wood, of New York City (George Z. Medalie, George Sylvester, and Louis Haimoff, all of New York City, Loring Staples, of Minneapolis, Minn., and Clarence Fried, of New York City, of counsel), for plaintiff.

Morgan & Lockwood, of New York City (Thomas A. Sully, of New York City, of counsel), for defendant Mabon & Co.

Abberley, Bryde, MacFall & Amon, of New York City (R. C. MacFall, of New York City, of counsel), for defendants Babcock Rushton & Co.

Mack, Macauley, Spiegelberg & Gallagher, of New York City (George A. Spiegelberg, of New York City, of counsel), for defendants J. & J. H. Gertler, Paul Fox and George A. Spiegelberg.

Lawler & Chambers, of New York City (James S. Lawler, of New York City, of counsel), for defendant Dr. E. Banta.

Schapiro, Wisan & Schapiro, of New York City (M. Horn, of New York City, of counsel), for defendant F. Zimmerman.

Shearman & Sterling, of New York City (H. Harfield, of New York City, of counsel), for defendant Hurley & Co.

David Klein, of New York City, for defendant Albert Wollheim.

White & Case, of New York City (A. H. deYampert, of New York City, of counsel), for defendants N. Y. Trust Co. and Merrick & Co.

Proskauer, Rose & Paskus, of New York City (Charles Looker, of New York City, of counsel), for defendant Silas M. Moorman.

Kaplan & Kaplan, of New York City (Louis Kaplan, of New York City, of counsel), for defendant William Farson.

Adrian J. O'Kane, of New York City, for defendants Leo F. and Mary C. Simpson.

Otto M. Buerger, of New York City, for defendant Margaret M. Blinn.

Adolph Feldblum, of New York City, for defendant Anchell.

Shattuck, Bangs & Davis, of New York City (W. Davis and C. Waldecker, both of New York City, of counsel), for defendants H. S. Davis and Blake Bros.

Jacob Fogelson, of New York City, for defendants M. J. and Sirma Devlet, E. J. Harling and F. Carr.

Knowles & Hack, of New York City (C. F. Kingsley, of New York City, of counsel), for defendant H. M. Day.

David Joyce, of Brooklyn, N. Y., for defendant Erna E. McCready.

Talman W. Van Arsdale, of Buffalo, N. Y. (R. E. Dee, of New York City, of counsel), for defendant John B. A. Noble.

Charles Grossman, of New York City (Paul Moskowitz, of New York City, of counsel), for defendant R. Schultz.

WOOLSEY, District Judge.

My decision is:

1. That this suit be dismissed as against defendant Spiegelberg without costs for the reason that he was made a party hereto solely for the purpose of discovery, and has complied with the prayer of the complaint in that respect, leaving no residuum of relief due from him to the plaintiffs.

2. That the suit be dismissed as against Jeanne Gertler and Sirma Devlet without costs.

3. That the cross suit for indemnity by Battelle, Ludwig & Co. against John H. Gertler and Michael J. Devlet be dismissed without costs.

4. That the complaint be dismissed without costs as to Mary Catherine Simpson and Leo F. Simpson, on the ground of infancy, and, as to 21 shares of the 31 shares on record in Edward J. Harling's name, on the ground that the said 21 shares were put in his name whilst he was an infant and duly disaffirmed by him.

5. That the complainants have, with costs, a decree, as hereinafter indicated in the following memorandum opinion, as against all the other defendants herein who have been served with process and still remain parties because they have not settled with the plaintiffs, or already had the complaint dismissed as against them for other reasons than settlement.

I. My subject matter jurisdiction in this cause is based on the fact that the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000, and arises under the laws of the United States, Title 28, United States Code, Section 41 (1) (a), 28 U.S.C.A. § 41 (1) (a).

Subject matter jurisdiction herein on this basis has been sustained, and a remedy in equity for the relief herein sought has been approved by the Circuit Court of Appeals of this Circuit in Brusselback et al. v. Cago Corporation et al., 85 F.2d 20.

II. The following defendants have been served with process and have appeared and answered: Dr. Edward W. Banta; Frederick F. Carr; Edward J. Harling; Mabon & Co.; Merrick & Co.; Silas M. Moorman; Albert P. Wollheim; Frederick A. Morrell, Jr.; Raymond Schulze; John V. A. Noble; Margaret May Blinn; Leo F. Simpson, Jr.; Mary Catherine Simpson; Harold E. Jewell; Erna E. McCready; Ota Corporation; Jeanne Gertler; John H. Gertler; Paul Fox; Sirma Devlet; Michael J. Devlet.

III. The following defendants have been served with process, and have defaulted, and in respect of them the trial herein constituted an inquest: Doris Schumacker; Jacob Zeller; Mabel L. Morgan; Frank F. Swift; Harold W. Holden; Frank R. Vose; Julius Weber.

IV. The following defendants have settled with the approval of the Court and as to them the cause was severed and dismissed or discontinued: Dominick & Dominick; J. Barkley Eakins; Mrs. Elise VanVranken; Lillian Ahlers; Frank R. Vose; Maplewood Assets Corporation; Kenneth K. McKenzie; Gilbert, Elliott & Co.; Blake Bros. & Co.; Albert A. Crea; Henry R. Tibbitts; Annie Anchell; Morton Anchell; Battelle, Ludwig & Co.; Hurley & Co.; Redmond & Company; Margaret May Blinn; Hyman Katz; William Farson & Co.

V. The following defendants were served but as to them the suit was dismissed for various reasons other than settlement: Harold E. Jewell; Jeanne Gertler; Sirma Devlet.

VI. The following defendants were served, but the suit was discontinued as against them, but only insofar as they are alleged to be beneficial owners of shares of the Southern Minnesota Joint Stock Land Bank of Minneapolis which were transferred to the defendant Minnesota Corporation—a Delaware corporation— for their benefit and in respect of which suit is now proceeding against them in the District of Delaware: Minnesota Corporation; Jeanne Gertler; Gertler, Devlet & Co.; Sirma Devlet; Edward J. Harling; Michael J. Devlet; Frank Zimmerman; Merrick & Co.; J. H. Holmes & Co.; Babcock, Rushton & Co.; Mackey & Co.; Blake Bros. & Co.; Edward D. Sadler.

VII. The following defendants named herein were not found and so have not been served with process, and, therefore, they are not parties to this cause, and the suit has been discontinued as to them without prejudice to a renewal of suit against them if and when they are found: Charles Armbrecht; Maude D. Dumont; Ida Fullerman; John W. Jones; Russell L. Katz; Estate of Charles M. Manley; Abraham Mayer; Boris Ruben; Sophia Breschel; Samuel L. Smith; Helen M. Lavelle; Helen Levy; Laurence Loring; John A. Pearlman; Jacob Rosenstock; Elizabeth M. W. Fay; Della Gordon; Estate of Thomas J. Shanley; John S. Watkins; Laglo Corporation; Mary J. Stoll; Joseph Goetchius; S. Mayo Boyd; Peter F. Patte; Edw. H. Squibb, Trustee; Jacob Schwartzberg; Howard Sanborn; Tripp & Andrews; Thomas Riker; Otis W. Barker; Schmidt & Co.; Henry S. Bartow; William M. Blain; Thos. G. Flaherty; S. L. Adler; Percy M. Layman; C. Vincent Armstrong; Mary B. Chamberlain; Maurice S. Cohen.

VIII. Inasmuch as under the decision of the United States Supreme Court on April 25, 1938, in Interstate Circuit, Inc., v. United States, 304 U.S. 55, 57, 58 S.Ct. 768, 769, 82 L.Ed. 1146, it is indicated that formal findings of fact and conclusions of law separately stated under Equity Rule 70½, 28 U.S.C.A. following section 723, must supersede any opinion in an equity case, I shall content myself with indicating generally my findings of fact and reasons therefor and my conclusions of law thereon, without attempting to write a considered opinion such as the interesting questions of law herein raised by the defendants tempt me to do.

IX. The Question of Insolvency and the Quantum of Assessment.

I hold that the receivership, which was set up by the Federal Farm Loan Board on May 2, 1932, is a matter with which I cannot properly deal because it is an act of an executive administrative board not shown to have been wrong. Therefore, insolvency on May 2, 1932 must be assumed.

I was abundantly satisfied on the subject of the quantum of the present deficit by the books and by the evidence of the experts on farm values called by the plaintiffs—Smith, Ludlow, Bennetson, Johnson, Riesinger, Hynes, Orth, Wasnuk and Simmons. I thought they knew their job most extraordinarily well. They all had seen all the farms as to which they were testifying and they were most satisfactory to me as experts. So it is quite appropriate for me to adopt what they testified to as correct, and to find, as I do, that the present deficit of the Southern Minnesota Joint Stock Land Bank of Minneapolis—the present name of the bank herein involved —is in excess of $11,000,000.

We know that the deficit by the receiver's books, based on carrying value, was $8,328,102.43 and we also know that the only substantial asset items, as to which there could be room for argument, are the real estate owned and the sheriff's certificates which, in this cause, are so few as to be almost negligible. As to these categories of items, the experts above mentioned testified, as I have stated, most clearly, and I adopt the values they fixed without going into the detail of all the multitudinous exhibits which are part of this branch of the case.

I think that we can look at the matter thus:

1. The real estate owned by the receiver was carried at the unpaid balance of the original mortgage loan except that, in cases where title had been acquired by the bank one year prior to the receivership, the property was carried at the amount of the unpaid balance of the loan or the reappraised value of the property, whichever was less.

2. The real estate represented by sheriff's certificates was carried at the unpaid balance of the original loan. These certificates amounted to only...