American Pig-Iron Storage-Warrant Co. v. German

• Decision Date: 18 April 1900
• Citation: 126 Ala. 194,28 So. 603
• Parties: AMERICAN PIG-IRON STORAGE-WARRANT CO. v. GERMAN.
• Court: Alabama Supreme Court

28 So. 603

126 Ala. 194

AMERICAN PIG-IRON STORAGE-WARRANT CO. v. GERMAN.

Supreme Court of Alabama

April 18, 1900

Appeal from chancery court, Shelby county; J. R. Dowdell Chancellor.

Suit by Marie L. E. German, executrix, against the American Pig-Iron Storage-Warrant Company to establish plaintiff's right as bailee to property in the possession of the defendant. From a decree in favor of plaintiff, defendant appeals. Affirmed.

The present appeal is the sequel of the litigation growing out of the insolvency of the Alabama Iron & Steel Company, commenced by a bill filed by one of its directors, under a resolution of its board, praying the chancery court to administer the assets of the insolvent corporation, etc. Subsequently other bills and petitions were filed by interested parties claiming priorities and liens upon the property of the corporation, and seeking to assert rights to some iron manufactured by the receiver in the cause. First and last there were five bills and two petitions filed. All of these were heard together, and one decree was rendered on the several claims and rights of the parties, as regards the matters involved in this appeal. The five bills and the two petitions were filed as follows: First. What is known as the "E. T. Peter Bill," No. 471, filed May 21, 1894, by the complainant in the capacity of a director of the iron and steel company under a resolution of its board of directors. This bill alleged the insolvency of the company, and asked the court to take charge of and administer the assets of the corporation. The only parties defendant were the iron and steel company and French Nabors, a simple-contract creditor. On the day the bill was filed the defendant answered admitting the allegations, and by consent T. J. Peter was appointed receiver. The order of the register appointing him is set out in the record. Second. On June 1, 1894, Thomas M Fancher and Henry Burke, who were unsecured creditors, filed their bill, No. 472, asserting the invalidity of certain mortgages on the property of the corporation, not material to the issues of this cause, and alleging the invalidity of the pledges of iron made to the appellant. It made parties defendant the warrant company, the iron and steel company, the Central Trust Company, the trustees of the mortgage, and receiver. On the same day the register made an order which recites that "it appearing that all the property and assets of said corporation are now in the hands of T. J. Peter as receiver," and concludes "that the said receiver keep and hold possession of the property heretofore taken possession of by him under the previous orders of the honorable court, and hold the same subject to the claims of complainants in this cause, as they may be ultimately determined." Third. On July 4, 1894, F. C. McKeever, who was also a simple-contract creditor, filed his bill, No. 474, in which he alleged that the bills filed by E. T. Peter and Fancher and Burke were collusive, and alleged the invalidity of both the mortgages to the Central Trust Company and the pledges of the iron deposited in the yards of the storage company. It made parties defendant of all parties to the two former bills. On July 9, 1894, the register made an order which recites the possession by T. J. Peter as receiver under the former order of the court, and orders that the said receiver "keep and hold the possession of the property taken possession of by him under the previous orders of the court, and hold the same subject to the claims of the complainants in this cause as they may be ultimately determined." Fourth. On the 7th day of July, 1894, Peter, as receiver, filed a petition in causes Nos. 471 and 472, which were the E. T. Peter and Fancher and Burke bills, in which he recited his appointment in case 471 and the extension of the receivership to 472, and averred that among the other assets of the corporation was a "large amount of material, consisting of charcoal, lime rock, iron ore, and other material, procured, before the appointment of a receiver, for the purpose of manufacturing pig iron." The petition further shows that in the opinion of the receiver it would be to the interest of all parties interested in the assets of the corporation for him to be allowed, for the purpose of raising the necessary funds, to use up the material, and to pay certain debts which were liens on some of the assets, and to repair the furnace, to issue receiver's certificates for an amount not exceeding $17,000, and to make up the material into iron, and then sell the iron and pay off the certificates. Fifth. On July 7th the chancellor made an order in causes 471 and 472 (the Peter and Fancher bills), which recites that "notice of said petition, and of the nature and character thereof, and of the time and place set for the hearing of the same, has been given to the several attorneys representing the various parties complainant and defendant in the above causes and that the parties consent to the granting of said order as prayed therein," authorizing the receiver to create an indebtedness not exceeding $17,000, for the purpose of paying off the liabilities mentioned, and for operating the furnace of the iron and steel company, and to issue therefor certificates payable by the 1st of January, 1895, which "certificates shall be a first lien upon all of the iron that may be manufactured by the receiver, and the proceeds thereof." A form of certificate was prescribed by the order, which provides that the certificates shall "be a first lien upon all the iron manufactured by me as receiver, on the furnace of the Alabama Iron & Steel Company, and upon the proceeds thereof; the produce of said furnace and the proceeds thereof being pledged for the payment of this and all other certificates issued under the said order." The certificates involved in the Lamar petition were issued under this order. Sixth. The American Pig-Iron Storage-Warrant Company was not a party to the E. T. Peter bill, and was not represented in the Fancher bill until August 2, 1894, when it filed its answer in the latter cause, which was nearly a month after the order allowing the issue of receiver's certificates, and long after the certificates were in fact issued. Seventh. The receiver never took possession of the yards of the storage company until they were surrendered under an order of the chancellor dated July 16, 1894, and filed in the office of the register on July 18, 1894. Eighth. On October 2, 1894, Joseph Verchot filed his bill, which recites the filing of the bills above mentioned, claims a first lien on 700 tons of iron, which it alleges are in the hands of the receiver, and prays that the iron be subjected to the alleged liens; and on January 24, 1895, the chancellor made an order extending the receivership of Peter to the bill, and ordered "that the receiver hold all of the property, funds, and proceeds of the Alabama Iron & Steel Company in his hands, or which may come into his hands, as such receiver, subject to discharge the liens of the parties in all of said suits described in this bill in their regular order or priority." Ninth. On March 14, 1895, P. E. Williams et al. filed their bill, alleging that they were unsecured creditors of the iron and steel company, reciting the former bills, and denying the validity of the bonds issued by that company, or the validity of the pledges of the iron stored in the yards of the warrant company, and made parties defendant all parties to the former bill, and other parties not necessary to a decision of any question raised on this appeal. This bill prayed that the assets of the iron and steel company be marshaled, the bonds declared void, and the iron subjected to the claims of the unsecured creditors, and that the receivership granted in the other bills be extended on this. On March 17, 1895, the chancellor made an order that the receivership granted in the other causes "is hereby extended over this cause." Tenth. On September 18, 1897, R. H. Pfaff filed his petition in the consolidated cause made by the bills set out above, and asserted that certain iron which had been pledged to C. S. Plumb had been transferred to him, and that the iron thus pledged was in the possession of the receiver, and asking that he be decreed to have the first lien on the iron, and have it sold for his benefit. This petition is in relation to what is known as the "Plumb Iron," and the order made on the petition is one of the matters involved in this appeal. Eleventh. On September 16, 1897, L. & E. Lamer et al. filed their petition, in which they alleged that they were the holders of certain receiver's certificates issued under the order of July 7, 1894, and further that the receiver had certain property in his possession which was subject to the lien of these certificates, and prayed that certain iron claimed by the warrant company be subjected to their lien. The order made is one of the matters involved in this appeal. The E. T. Peter, the McKeever, and the Williams bills were dismissed without prejudice to the petition of Lamar, and the Burke and Fancher bill was dismissed for want of prosecution. No further attention need, therefore, be given them, except as to what occurred in them, affecting appellant, prior to the dismissal of these bills.

Verchot Case.

The original bill in this cause was filed by Joseph Verchot on October 2, 1894, against the Alabama Iron & Steel Company the American Pig-Iron Storage-Warrant Company, and others, and sought to subject 700 tons of iron then in the yards of the warrant company to the payment of debts due him by the Alabama Iron & Steel Company. The bill alleged that at various times between the 11th day of September, 1893, and the 9th day of October, 1893, the Alabama Iron & Steel...