American Surety Co. v. Edwards & Bradford Lumber Co.

• Decision Date: 01 August 1944
• Docket Number: Civil Action No. 145.
• Citation: 57 F. Supp. 18
• Parties: AMERICAN SURETY CO. OF NEW YORK v. EDWARDS & BRADFORD LUMBER CO. et al. SPARKS v. SAME.
• Court: U.S. District Court — Northern District of Iowa

57 F. Supp. 18

AMERICAN SURETY CO. OF NEW YORK v. EDWARDS & BRADFORD LUMBER CO. et al.

SPARKS v. SAME.

Civil Action No. 145.

District Court. N. D. Iowa, W. D.

August 1, 1944.

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Shull & Marshall, of Sioux City, Iowa, and Dent, Weichelt & Hampton, of Chicago, Ill., for plaintiff and cross-defendant, American Surety Co. of New York.

George F. Sparks, administrator, pro se.

W. V. Steuteville, of Sioux City, Iowa, and Daily, Dines, White & Fiedler, of Chicago, Ill., for defendants and cross-defendants, Edwards & Bradford Lumber Co. and Tom Mould.

W. V. Steuteville, of Sioux City, Iowa, and Alden, Latham & Young, of Chicago, Ill., for defendants and cross-defendants, W. T. Alden, trustee, Frances B. Edwards, William R. Edwards, Jr., John C. Edwards, and Bonita Edwards Mannville Barbee.

Kidwell & Darrah, of Wichita, Kan., for defendant and cross-defendant Lindas Lumber Co.

GRAVEN, District Judge.

On motions to quash service for lack of jurisdiction.

This is an action brought by the plaintiff, American Surety Company of New York, in the Western Division of the Northern District of Iowa, against the defendants, George F. Sparks, administrator of the estate of W. R. Edwards, deceased, Edwards & Bradford Lumber Company, Tom Mould, Lindas Lumber Company, W. T. Alden, Trustee, Frances B. Edwards, William R. Edwards, Jr., John C. Edwards and Bonita Edwards Mannville Barbee. In this action the plaintiff seeks judgment against the defendant George F. Sparks, Administrator, in the approximate sum of $15,000 upon a judgment rendered against W. R. Edwards in his lifetime in the State of Illinois, and seeks to set aside as having been made in fraud of creditors certain transfers of corporate stock made by W. R. Edwards during his lifetime. The defendant George F. Sparks, administrator, has filed a cross-complaint against his co-defendants and the plaintiff, asking that the same transfers be held fraudulent as to creditors.

It is the claim of the plaintiff and cross-complainant that W. R. Edwards during his lifetime made transfers of stock owned by him in the defendant Edwards & Bradford Lumber Company, which were fraudulent as to creditors, and which transfers are the transfers hereafter referred to. It is claimed that the plaintiff's claim antedates those transfers. It appears that W. R. Edwards died January 28th 1943.

It appears that during his lifetime W. R. Edwards was the owner of two blocks of stock in the defendant Edwards & Bradford Lumber Company, an Iowa corporation; one block consisted of 11,220 shares, and one block consisted of 1530 shares. It further appears that W. R. Edwards in 1927 caused the block of 11,220 shares to be placed in trust for the benefit of himself during his lifetime, and for the benefit of his widow and children after his death. It appears that the defendant W. T. Alden is the present trustee of that trust. It further appears that in 1935, W. R. Edwards entered into an agreement with the Lindas Lumber Company relating to the 11,220 shares of trusteed stock, and to the 1530 shares of stock held by W. R. Edwards individually, under which the Lindas Lumber Company was to pay W. R. Edwards during his lifetime $200 a month, and continue such payments to his widow and children after his death. These payments of $200 a month were in the nature of an advance against dividends to be paid on the 11,220 shares and the 1530 shares. This agreement with the Lindas Lumber Company was apparently part of a larger transaction in which the Lindas Lumber Company was taking over control of the Edwards & Bradford Lumber Company. However, the Lindas Lumber Company was not purchasing the 11,200 shares and the 1530 shares. Under the agreement between W. R. Edwards and the Lindas Lumber Company the dividends on the 11,220 shares and the 1530 shares when paid were to go back to the Lindas Lumber Company. To protect the Lindas Lumber Company against transfers of the stock, a deposit of it with a neutral depositary was obviously necessary. The defendant Tom Mould was designated the depositary, and W. R. Edwards caused to be deposited with the defendant Tom Mould the 11,220 shares of trusteed stock and the 1530 shares of nontrusteed stock. Subsequently W. R. Edwards assigned his interest in the 1530 shares of stock to the defendant Bonita Edwards Mannville Barbee. The defendant Tom Mould is a resident of Sioux City, Woodbury County, Iowa, and at all times since 1935 the 11,220 shares and the 1530 shares have been in his possession at that place. Woodbury County is in the Western Division of the Northern District.

W. R. Edwards died intestate and insolvent a resident of the State of Illinois on January 28, 1943. No administration has been taken out in that state on his estate. On October 18, 1943, just prior to the commencement of this action, George F. Sparks, a resident of Sioux City, Woodbury County, Iowa, was appointed administrator of the estate of W. R. Edwards in Iowa by the state court having jurisdiction of probate matters in Woodbury County, Iowa. In the cross-complaint of that administrator it is stated that subsequent to the commencement of this action by the plaintiff, plaintiff's claim had been allowed as a claim against the estate of W. R. Edwards in the course of administration in the state court in the approximate sum of $15,000.

On June 25, 1941, during the lifetime of W. R. Edwards and while he was a resident of Illinois, the plaintiff had execution issued on its Illinois judgment to the Sheriff of Cook County, Illinois. On September 23, 1941, the execution was returned by that sheriff wholly unsatisfied. No further proceedings were had in reference to that judgment in the State of Illinois, and the first proceedings had in Iowa in connection therewith was the bringing of this action. At the time this action was brought, the situation was that the plaintiff was the owner and holder of a foreign judgment not reduced to judgment in this state.

The citizenship of the parties is as follows: The defendants and cross-defendants Edwards & Bradford Lumber Company and Tom Mould are both citizens of Iowa, and both in the Western Division of the Northern District; as is also the defendant and cross-complainant George F. Sparks, administrator of the estate of W. R. Edwards, deceased; the defendant and cross-defendant Lindas Lumber Company is a citizen of Kansas; the defendant and cross-defendant W. T. Alden, Trustee, is a citizen of Illinois; the defendant and cross-defendant John C. Edwards is a citizen of Florida; the defendants and cross-defendants Frances B. Edwards, William R. Edwards, Jr., and Bonita Edwards Mannville Barbee are citizens of California; and the plaintiff is a citizen of New York.

The defendant and cross-defendant Frances B. Edwards is the widow of W. R. Edwards, and the defendants and cross-defendants John C. Edwards, William R. Edwards, Jr., and Bonita Edwards Mannville Barbee are the children of W. R. Edwards, deceased.

The defendants and cross-defendants, Edwards & Bradford Lumber Company, Tom Mould, the Lindas Lumber Company, and the defendant and cross-complainant George F. Sparks, administrator of the estate of W. R. Edwards, have either appeared and answered, or appeared without challenging the jurisdiction of the Court. While the defendant, George F. Sparks, administrator, in his answer admits the allegations of plaintiff's complaint, it is his further claim thereon that he as administrator is the only proper person to maintain the action to have the transfers of the stock in question declared fraudulent as to creditors, and that the stock in question should be administered by him as assets of the estate of W. R. Edwards.

The defendants W. T. Alden, Trustee, Frances B. Edwards, William R. Edwards, Jr., John C. Edwards, and Bonita Edwards Mannville Barbee, being residents of states other than Iowa, the plaintiff proceeded to give them notice as prescribed by Court Order under 28 U.S.C.A. § 118, the same being Section 57 of the Judicial Code, which provides in part as follows:

"When in any suit commenced in any district court of the United States to enforce any legal or equitable lien upon or claim to, or to remove any incumbrance or lien or cloud upon the title to real or personal property within the district where such suit is brought, one or more of the defendants therein shall not be an inhabitant of or found within the said district, or shall not voluntarily appear thereto, it shall be lawful for the court to make an order directing such absent defendant or defendants to appear, plead, answer, or demur by a day certain to be designated, which order shall be served on such absent defendant or defendants, if practicable, wherever found, and also upon the person or persons in possession or charge of said property, if any there be; or where such personal service upon such absent defendant or defendants is not practicable, such order shall be published in such manner as the court may direct, not less than once a week for six consecutive weeks. * * *"

Pursuant to an Order of Court, the defendants Edwards & Bradford Lumber Company and Tom Mould were given notice as parties in the possession of the stock. The cross-complainant George F. Sparks, administrator, served his cross-complaint by mailing copies of it to the different parties or their attorneys. The defendants and cross-defendants W. T. Alden, Trustee, Frances B. Edwards, William R. Edwards, Jr., John C. Edwards and Bonita Edwards Mannville Barbee, challenge the jurisdiction of the Court by motions to quash service as to them of both the complaint and cross-complaint, and ask the dismissal of both. It is the claim of the moving defendants and cross-defendants that this suit is not a local action under Section 57, but is a suit in personam; and that as a suit in personam it cannot be maintained in the federal district court for the ...