Bird v. People's Gas & Elec. Light Co.

• Citation: 158 F. 903
• Parties: BIRD et al. v. PEOPLE'S GAS & ELECTRIC LIGHT CO. et al. AMERICAN TRUST & SAVINGS BANK et al. v. SAME.
• Decision Date: 21 February 1908
• Court: U.S. District Court — Southern District of Ohio

158 F. 903

BIRD et al. v. PEOPLE'S GAS & ELECTRIC LIGHT CO. et al.

AMERICAN TRUST & SAVINGS BANK et al. v. SAME.

United States Circuit Court, S.D. Ohio, Western Division.

February 21, 1908

(Syllabus by the Court.)

Upon a bill for the appointment of a receiver, for the benefit of all concerned, filed by a bondholder, alleging that the light company had defaulted in the payment of interest for two periods; that default had been made in the payment of all taxes lawfully levied upon the company's property and franchises; that it had permitted part of its property to be sold for such taxes; that the company was hopelessly insolvent, and unable to pay its present and accruing indebtedness; that, by reason thereof, its franchises and contracts were in danger of being forfeited; that its funds had been unlawfully diverted by its officers to their own uses; that said officers had suffered collusive judgments to be taken against the company; that the proceeds of its bonds had been appropriated by its promoters under cover of the Western Gas & Investment Company which owned practically all of its stock, and which operated the mortgagor company; that a large part of its income had been similarly appropriated thereby preventing the company from meeting its obligations that said Western Gas & Investment Company and the defendant company with other operating companies were organized in furtherance and for the purpose of defrauding investors in their bonds; and that the trustees, who were residents and citizens of the state of Illinois, and not within the jurisdiction of this Court, had failed to exercise the powers granted to them for the protection of the bondholders-- held that a case was made for the appointment of a receiver.

Upon a bill for foreclosure and the appointment or extension of a receiver, as provided in the mortgage deed for the same company filed by the trustees of the mortgage six months later, held, that the receiver who had been appointed acted for neither party, but for the court, and for that reason the motion of the trustees for the appointment of a receiver or for extending the receivership will be overruled.

Upon motions filed respectively by the original complainant and by the trustees of the mortgage for consolidation of the two actions, both suits seeking substantially the same relief the motion in the first suit is sustained.

Upon motion of Evelyn Bird et al. to consolidate the suit of the American Trust & Savings Bank against the People's Gas & Electric Light Company et al. with the suit of Evelyn Bird et al. against the People's Gas & Electric Light Company et al., and upon the motion of the American Trust & Savings Bank et al. to consolidate the latter suit with the former; also the motion of the American Trust & Savings Bank et al. for the appointment of a receiver or the extension of the receivership.

The People's Gas & Electric Light Company of Xenia, Ohio during the first month of its existence, with none of its stock paid for and owning no assets, issued bonds of the face value of $175,000. The proceeds of $105,000 worth of these bonds were used in purchasing the properties and franchises of existing...