First Union Trust & Savings Bank v. CONSUMERS CO.

• Decision Date: 20 March 1933
• Docket Number: No. 4841.,4841.
• Citation: 1933 AMC 976,63 F.2d 273
• Parties: FIRST UNION TRUST & SAVINGS BANK v. CONSUMERS' CO. et al.
• Court: U.S. Court of Appeals — Seventh Circuit

1933 AMC 976, 63 F.2d 273 (1933)

FIRST UNION TRUST & SAVINGS BANK v. CONSUMERS' CO. et al.

No. 4841.

Circuit Court of Appeals, Seventh Circuit.

January 31, 1933.

Rehearing Denied March 20, 1933.

Beverly B. Vedder and Thomas C. Strachan, Jr., both of Chicago, Ill., for appellant.

Edwin W. Sims, Walter Brewer, and James P. Carey, Jr., all of Chicago, Ill., for appellee receivers.

Silas H. Strawn, John D. Black, Fred J. McManus, and L. M. Bowden, all of Chicago, Ill., for appellee Consumers' Co.

Before EVANS, and SPARKS, Circuit Judges, and LINDLEY, District Judge.

EVANS, Circuit Judge.

Appellant has appealed from two orders separately entered, on separate applications of appellant who is the trustee named in an admiralty mortgage covering some of the property of the Goodrich Transit Company. One order denied appellant's application for a bond from the creditor who instituted the equity proceedings. The second order denied appellant's application for leave to file its libel in admiralty and to proceed thereunder with the foreclosure of its mortgage and the sale of the steamships covered thereby and to direct the receivers immediately to surrender possession of the ship to the custodian or the receiver to be appointed by the admiralty court.

On a previous appeal to this court 53 F.(2d) 972, appellant presented and pressed some of the same questions it now urges in its attack upon the second order.

The first order assailed by this appeal is not a final, and therefore not an appealable, order. Moreover, it was no abuse of discretion on the part of the court to refuse to require a bond of the petitioning creditor, as the court had for over a year, through its receivers, operated the boats of the Goodrich Transit Company and had become familiar with the risks and hazards of further operation. This was not the case of one seeking an injunction and thereupon being required to furnish a bond protecting the enjoined parties against loss, which case is covered by section 382, tit. 28, USCA. The injunction granted in this proceeding was one which merely prevented the defeat or the impairment of the court's jurisdiction. Bonds are not exacted as a matter of course when such orders are entered, although a court of equity, in the absence of any statute, may exact a bond from a plaintiff whenever the equities of the case call for it.

In determining whether the plaintiff should be required to secure other creditors against loss through the further operation of the insolvent company's business, the court was confronted by a question quite different from one involving the propriety of the continued operation of the company's business. Plaintiff, in the original suit, was an unsecured creditor of Goodrich Transit Company. It invoked the jurisdiction of a court of equity to protect and to safeguard the rights of all — the secured and unsecured creditors, as well as the stockholders of the debtor company. Having lawfully acquired jurisdiction of the subject-matter, the court, to better protect all the parties, appointed receivers. It directed the receivers to operate the company's business, which they did at a loss. At the end of a year the receivers were far better informed concerning the advisability of further operation than was the plaintiff who, in the first instance, merely invoked the jurisdiction of the court. The court might well have discontinued the operation of the business. Whether it should do so was one question. Entirely different was the...