Becker v. Hoke
Decision Date | 19 June 1897 |
Docket Number | 412. |
Citation | 80 F. 973 |
Parties | BECKER v. HOKE et al. |
Court | U.S. Court of Appeals — Seventh Circuit |
This is an appeal from a decree of the court below denying the intervening petition of Charles Becker, receiver of the North & South Rolling-Stock Company, appointed by the circuit court of St. Clair county in the state of Illinois, on November 30 1896. The North & South Rolling-Stock Company is a corporation organized under the laws of the state of Illinois, its principal business being to make, purchase, or lease various kinds of freight cars, and to hire them out to railroads for a compensation. At the times in question it was the owner of 76 stock cars, 242 box freight cars, 100 refrigerator cars, and held under lease 100 refrigerator cars, 156 box cars, and 61 coal cars. John S. Berthold was president of the company, and Curtis M. Jennings was its secretary and treasurer. They were also co-partners in a business carried on at the city of St. Louis, under the firm name and style of Berthold & Jennings. George S. Hoke was a clerk of the firm of Berthold & Jennings, and claimed to be the owner of one share of the North & South Rolling-Stock Company. The capital stock of that company was $300,000 divided into shares of $100 each; its board of directors consisting of three members, Berthold, Jennings, and Hoke. Berthold and Jennings were each the holders of 1,000 shares of the capital stock, but it was alleged that nothing had been paid thereon. Henry O'Hara was also a subscriber for 1,000 shares of the capital stock of the company and it is charged that nothing whatever had been paid by him on such subscription. The management of the company was under the control of Berthold and Jennings. On June 24, 1896, Henry O'Hara obtained a judgment in the state court of East St Louis, St. Clair county, Ill., against the North & South Rolling-Stock Company, for the sum of $60,639.70 and costs of suit. On the 14th day of August, 1896, an execution was sued out upon the judgment, and a demand made of the company for its payment, which was not complied with, nor was any property turned out upon which to levy or satisfy the execution, and the same was returned, 'No property found.' On the same day, and in the same court, Henry O'Hara obtained a certain other judgment against the North & South Rolling-Stock Company for the sum of $2,620.28 and costs of suit, upon which execution was issued to the sheriff, and under which the sheriff threatened to levy upon and sell the cars of the defendant corporation. On August 11 1896, the rolling-stock company, by J. S. Berthold, its president, and C. M. Jennings, its secretary, executed to the firm of Berthold & Jennings a chattel mortgage upon 100 refrigerator cars, 16 Box cars, 226 box cars, and 76 stock cars, described, to secure three promissory notes, dated August 11, 1896, executed by the North & South Rolling-Stock Company, by its president, Berthold, and its secretary, Jennings, each payable to the order of Berthold & Jennings, one of said notes being for the sum of $20,096.75, payable at six months from that date, with interest at 6 per cent., and each of the other notes being for the sum of $7,682.40, one maturing February 1, 1897, and the other February 1, 1898, each bearing 6 per cent. interest after due. This mortgage was filed for record August 12, 1896. On the same day, the North & South Rolling-Stock Company, by its said president and its said secretary, executed to C. M. Jennings, its secretary and treasurer, the promissory note of the corporation, payable upon demand for the sum of $8,260.60, in the form of a judgment note, and this note was indorsed by C. M. Jennings to the firm of Berthold & Jennings. On the same day, that corporation, by the same officers, executed a like note to the order of J. S. Berthold, its president, and for the sum of $8,300, which note was indorsed by Berthold to the firm of Berthold & Jennings. On August 12, 1896, judgment by confession in favor of Berthold & Jennings was entered in the circuit court of St. Clair county, Ill., upon the two notes of $8,300 and $8,260.60, respectively, and execution upon the judgment was issued to the sheriff of the county of St. Clair, who levied the same upon all the property of the North & South Rolling-Stock Company which could be found within the county, including the property embraced in the chattel mortgage. On the 1st day of September, 1896, O'Hara and the Bannantine Galvanized Iron Manufacturing Company (the latter claiming as assignee of O'Hara) filed in the circuit court of St. Clair county, Ill., a bill in the nature of a creditors' bill, setting forth the judgments obtained by O'Hara; the organization of the company, with Berthold as its president and Jennings as its secretary, and their subscription to the stock of the company, and that nothing had been paid thereon; their possession of the funds of the company; the execution by them as officers to themselves as creditors of the chattel mortgage hereinbefore set forth, and the execution of the several notes, and the entry of judgment thereon, as hereinbefore described; that, to obtain an undue advantage over other creditors of the North & South Rolling-Stock Company, Berthold and Jennings, at the time of the execution of the chattel mortgage and notes, paid to themselves, on an alleged indebtedness of their own, out of the funds of the company, a sum in excess of $40,000, and kept the property and effects of the company out of the state, and concealed and covered up, so that the same cannot be reached by execution. The bill prayed that the chattel mortgage be vacated and set aside; that the judgment obtained by Berthold & Jennings be vacated, and the execution thereon be quashed, and that they be required to discover, make known, and surrender all property of the North & South Rolling-Stock Company that could be applied in satisfaction of the O'Hara judgments; that Berthold and Jennings be required to refund and bring into court all money obtained by them as preferences; that disposition may be made thereof as might accord with equity; that they be required to surrender any property that they may have belonging to the company; that they be required to pay whatever may be due by them, respectively, upon the stock held by them, so far as may be necessary to satisfy the O'Hara judgments; that a receiver be appointed to take charge of the property, funds, and possessions of the North & South Rolling-Stock Company, with the usual powers of receivers; and that an injunction issue to restrain them from selling, transferring, or mortgaging the property of the company, and from removing the same from out of the state; and that they and the sheriff be enjoined from the further enforcement of the execution issued upon the judgment set forth, and for such equitable relief as the nature of the case may require. On October 7, 1897, the North & South Rolling-Stock Company filed its answer to ...
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...its plain provisions, but to allow it to be used to defeat the very purpose for which it was enacted." The bill in the case of Becker v. Hoke, 80 F. 973, somewhat resembles the complaint for the appointment of receiver in this proceeding, and Judge Caldwell, in his opinion, said: "We are of......
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