29 F. 561 (N.D.Ill. 1887), Reyburn v. Consumers' Gas, Fuel & Light Co.

Citation:29 F. 561
Party Name:REYBURN v. CONSUMERS' GAS, FUEL & LIGHT CO. and others.
Case Date:January 04, 1887
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 561

29 F. 561 (N.D.Ill. 1887)

REYBURN

v.

CONSUMERS' GAS, FUEL & LIGHT CO. and others.

United States Circuit Court, N.D. Illinois.

January 4, 1887

Grant & Brady and Mr. Petit, for Goodwin Gas Stove & Meter Co.

Page 562

Leaming & Thompson, for Dearborn Foundry Co.

F. J. Loesch, for Pennsylvania Tube-works.

Mr. Post and R. B. Bacon, for Sheckel, Harrison & Howard.

Peckham & Brown, for First Nat. Bank of Chicago.

Osborn & Lynde, for the bondholders.

BLODGETT, J.

The original bill in this case was filed June 30, 1885, and on July 30, 1885, a supplemental bill was filed charging that the defendant corporation, the Consumers' Gas, Fuel & Light Company, was insolvent, and unable to pay its debts, and asked that the company be wound up, its property sold and distributed among its creditors pursuant to the provisions of the statutes of Illinois in such case made and provided, and asking for the appointment of a receiver to take possession of the property of the corporation, and, under the orders of the court, sell and dispose of the same, and distribute the proceeds to the creditors of the company as required by law. An interlocutory decree was entered, on the filing of this supplemental bill, appointing a receiver, and directing him to take possession of all and singular the assets of the company, and the supplies and material on hand, to keep the works in operation, to make necessary repairs, and to pay and discharge the debts of employes, and for supplies and operating material, contracted within 60 days prior to his appointment. Under this decree the receiver took possession and operated the works of the company, and, pursuant to the orders of the court, made improvements and extensions of the gas-works of the company, part of which has been paid by money raised on receiver's certificates, and part out of the earnings of the company.

Prior to the appointment of a receiver the company had given a mortgage to secure an issue of $4,000,000 of bonds, of which $2,000,000 had been issued and put in circulation, and were in the hands of bona fide holders at the time the receiver was appointed. The mortgage covered all the works, franchises, personal property, and rents, issues, and profits of the property, to secure the payment of the bonds so issued; the bonds bearing interest at the rate of 6 per cent. per annum, payable semi-annually on the first day of April and October of each year. Default was made in the payment of the interest due October 1, 1885, and on March 6, 1886, the trustee in the mortgage intervened in the case, and, by leave of court, filed a cross-bill, praying a foreclosure of the mortgage; and under this cross-bill a decree of foreclosure was entered, the property sold, and the proceeds paid into court for distribution. Parties having claims against this fund in court were duly notified to present them, and make proof thereof before the master, to whom the case had been referred. Among the claims so presented were the following:

Goodwin Gas Stove & Meter Company of Philadelphia, . . $5,715 39

Sheckel, Harrison & Howard, . . . . . . . . . . . . . . . 1,032 74

Dearborn Foundry Company, . . . . . . . . . . . . . . . . 3,393 69

First National Bank of Chicago,. . . . . . . . . . . . . 1,416 50

Pennsylvania Tube-works, . . . . . . . . . . . . . . . . .

Making a total of . . . . . . . . . . . . . . . . . . . . .$12,353 19

Page 563

The proofs presented before the master by these creditors have been returned by him into court; and the question made upon these proofs is whether these claims, or any part of them, are properly chargeable against the proceeds of the property now in court, either as equitable liens upon the property itself, or by reason of any diversion of the earnings of the property while in the hands of the receiver. The proof shows, without contradiction, that the course of business of the company was to pay its employes every month, and supplies bought on credit during the month were paid for on the first of the succeeding month, so that all debts for labor and operating supplies fell due within 30 days from the time they were contracted.

Of the claim of the Goodwin Gas Stove & Meter Company, $3,000 was contracted between March and December, 1884, and the remainder was contracted between...

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