Atlantic Trust Co. v. Chapman

• Decision Date: 14 May 1906
• Docket Number: 1,142.
• Parties: ATLANTIC TRUST CO. v. CHAPMAN et al.
• Court: U.S. Court of Appeals — Ninth Circuit

145 F. 820

ATLANTIC TRUST CO. v. CHAPMAN et al.

No. 1,142.

United States Court of Appeals, Ninth Circuit.

May 14, 1906

J. J Scrivner, for appellant.

E. C Chapman and Stanley W. Dexter, in pro. per.

Before GILBERT and ROSS, Circuit Judges, and HAWLEY, District Judge.

GILBERT Circuit Judge.

This case was before this court before on appeal from a decree sustaining the demurrer of the appellant, the Atlantic Trust Company to the petition of E. C. Chapman, receiver, for an order requiring the trust company to pay the costs and expenses of the receivership. Chapman v. Atlantic Trust Co. et al., 119 F. 257, 56 C.C.A. 61. This court adjudged that the demurrer should have been overruled, and held that where the costs and expenses of the management of mortgaged property by a receiver in a suit, which costs and expenses were authorized by the court, exceed the proceeds of the property when sold, together with its earnings, and the court has expressly retained jurisdiction over the subject-matter and the parties until the final settlement of the receiver's accounts, it has power on such settlement to render a judgment for the deficiency against the complainant at whose instance the receiver was appointed and continued and the expenses incurred. The cause was remanded to the Circuit Court for further proceedings. The trust company then filed its answer to the receiver's petition. Thereupon the matter was submitted to the Circuit Court as upon bill and answer. Upon consideration thereof the court entered a decree adjudging that the trust company pay to the receiver the costs and expenses in accordance with the prayer of his petition. From that decree the present appeal is taken.

Upon submission of the cause as upon bill and answer, the trust company was entitled to the benefit of all denials in the answer of the matters set forth in the petition, and all matters properly pleaded in the answer; and the question at issue was what was a proper judgment upon the facts presented by the petition and not denied in the answer together with the facts properly pleaded in the answer. Reynolds v Crawfordsville Bank, 112 U.S. 405, 5 Sup.Ct. 213, 28 L.Ed. 733; Banks v. Manchester, 128 U.S. 244, 9 Sup.Ct. 36, 32 L.Ed. 425. The appellant contends that upon the case now presented the equities are with it, and that certain allegations of the petition which stood admitted upon the record when the case was formerly before this court are now eliminated by reason of denials in the answer, such as the allegation that the expenses were incurred on the motion or request of the appellant, that the receiver acted upon its assurances as to the sufficiency of the property to pay the foreclosure expenses, that the foreclosure was irregular and collusive, and that the acts of the appellant contributed to the delay of the suit and its disastrous result. The appellant urges that the receiver himself was the person best acquainted with the situation at all times, and that he should have given warning that future expenses might result in a deficit upon a sale; that so far as the final disaster was due to human mistakes it was due to the mistakes of the receiver and his employes, and particularly to his selection of an engineer at the instance of others; and that the delays which prolonged the receivership until the break down of the dam were due to matters beyond the appellant's control such as interventions in the suit by outside parties and the litigation resulting therefrom. The answer sets up reasons, some by way of argument, others by statement of facts, why the appellant should not be held liable for the expenses of the receivership. It does not deny any of the material facts alleged in the petition. It alleges as matter of defense that the Canal & Irrigation Company was a quasi public corporation, and that all the expenses were incurred by the receiver as the officer and hand of the court, not as the agent of the appellant nor for its benefit, but for the benefit of all concerned...