Bray v. Staples

• Decision Date: 13 July 1910
• Docket Number: 952.
• Parties: BRAY et al. v. STAPLES. GUARDIAN TRUST & DEPOSIT CO. v. GREENSBORO WATER SUPPLY CO.
• Court: U.S. Court of Appeals — Fourth Circuit

180 F. 321

BRAY et al. v. STAPLES.

GUARDIAN TRUST & DEPOSIT CO. v. GREENSBORO WATER SUPPLY CO.

No. 952.

United States Court of Appeals, Fourth Circuit.

July 13, 1910

Originally this was a suit in equity, begun September 29, 1900, in the United States Circuit Court for the Western District of North Carolina, at Greensboro, by the Guardian Trust & Deposit Company of Maryland, versus the Greensboro Water Supply Company.

The purpose of the original suit was to foreclose a deed of trust executed by the Greensboro Water Supply Company on July 1 1896, to secure 110 mortgage bonds for $1,000 each; default in the payment of interest and in other respects being alleged.

An amended bill of complaint was filed in said suit on August 8 1901, setting forth that the city of Greensboro had offered $75,000 for the property of the Greensboro Water Supply Company, and that there were persons claiming prior liens and the prayer of the bill was that such persons so claiming liens be brought into court by subpoena and their rights adjudicated.

Prior to the filing of the said original bill of complaint and the amended bill, there had been brought in the superior court of Guilford county, N.C., by B. J. fisher, a civil action against the Greensboro Water Supply Company, to recover damages alleged to have been suffered by the plaintiff in that action by reason of the alleged wrongful failure of the Greensboro Water Supply Company to supply sufficient water to protect the property of B. J. Fisher from injury by fire. This said action of B. J. Fisher against the Greensboro Water Supply Company to recover damages was tried in the state court, and a judgment for $25,000 in favor of B. J. Fisher was obtained in January, 1901. That judgment was for breach of contract, and the superior court refused to render judgment for tort. The case was taken by appeal of the plaintiff to the Supreme Court of North Carolina because of the refusal of the superior court to render judgment ex delicto. The Supreme Court of North Carolina reversed this ruling of the superior court, and directed that judgment be rendered ex delicto for the amount found by the verdict to be due the plaintiff.

At the June term, 1901, of the superior court of Guilford county, a judgment ex delicto was rendered in conformity with the opinion of the Supreme Court of North Carolina in favor of B. J. Fisher against the Greensboro Water Supply Company.

On the 29th day of September, 1900, a receiver for the Greensboro Water Supply Company was appointed by the United States Circuit Court in the case of Guardian Trust & Deposit Company against the Greensboro Water Supply Company, and the receiver was directed to operate the property of the Greensboro Water Supply Company, and collect all the rents, profits, and revenues of the said company, and all moneys due or to become due it.

On the 29th day of July, 1901, it was ordered by the United States Circuit Judge, in said suit, that notice issue to B. J. Fisher and others to show cause why the property of the Greensboro Water Supply Company should not be sold to the city of Greensboro for the sum of $75,000.

On the 29th day of July, 1901, a decree was passed by the United States Circuit Court confirming a sale of said property to the city of Greensboro for $75,000, and it was further provided in said decree that B. J. Fisher and others have 30 days in which to file pleadings setting up their claims to the funds coming into the hands of the receivers as the proceeds of said sale.

On the 27th day of September, 1901, B. J. Fisher filed an answer to the rule to show cause, in which he reserved to himself all his rights and interests which had theretofore or did then exist or attach by reason of his said judgment obtained in the said court, and by virtue of the laws of North Carolina. In that answer he set out that in June, 1899, his property was destroyed by reason of the failure of the Greensboro Water Supply Company to furnish sufficient water to extinguish the fire, and that this conduct on the part of said water supply company was tortious, negligent, and careless. He alleged further that on the 20th day of July, 1899, he, the said B. J. Fisher, began a civil action in the superior court of North Carolina for damages resulting to him on account of said tort, and that the corporation entered an appearance and filed answer to the complaint of the plaintiff, and that the case was regularly tried at the January term, 1901, of the superior court of Guilford county, and a verdict was obtained for $25,000. It was further alleged that from this judgment the plaintiff in that case, B. J. Fisher, appealed to the Supreme Court of North Carolina, upon the ground that the court had refused to give him a judgment ex delicto against the Greensboro Water Supply Company, and that the contention of B. J. Fisher that he was entitled to such judgment was sustained by the Supreme Court of North Carolina at the February term, 1901.

It is further alleged in that answer that on the 19th day of September, 1900, a receiver was appointed for the Greensboro Water Supply Company, and that prior to the appointment of the receiver he had been the attorney for the defendant, the Greensboro Water Supply Company, in the said suit brought by B. J. Fisher. It was further alleged in said complaint that under section 1255 of the Code of North Carolina mortgages made by incorporated companies upon their property and earnings have no power to exempt the property or earnings thus mortgaged from execution for satisfaction of any judgment obtained in the courts of this state against such corporation in the courts of the state of North Carolina, for torts committed by such corporation, and that the judgment of B. J. Fisher obtained in the state court was for tort. It was further alleged that the mortgages under which the bondholders claimed, and for foreclosure of which the bill of complaint was filed in the suit brought by the Guardian Trust & Deposit Company against the Greensboro Water Supply Company in the United States Circuit Court, were made and executed by the Greensboro Water Supply Company, subsequent to the legislative enactment referred to, and that the same were by operation of law void as to the said judgment of B. J. Fisher. It was further alleged in said complaint that the judgment of B. J. fisher was duly docketed, and that the rights of B. J. Fisher were prior to those of the said bondholders.

On the 24th day of March, 1902, a decree was passed by the Circuit Court of the United States for the Western District of North Carolina, at Greensboro, in the suit of the Guardian Trust & Deposit Company giving priority to the judgment of B. J. Fisher against the Greensboro Water Supply Company for $25,000, as claimed by said Fisher. It was ordered by that decree that the receiver appointed in the suit in the United States court pay out of the $75,000 which he held 'the sum of $25,000, with interest thereon from the 14th day of January, 1901, the date of the docketing thereof in the superior court of the county of Guilford, N.C.;' and it was further ordered that the costs in the state court and in the United States court incident to and on the said judgment be likewise paid by the receiver out of said funds. It was provided in the said decree that the cause of the Guardian Trust & Deposit Company against the Greensboro Water Supply Company be retained in the Circuit Court of the United States for orders and directions.

On January 9, 1907, another decree was passed in the case of the Guardian Trust & Deposit Company against the Greensboro Water Supply Company in which the following recitals are found:

'It appearing to the court that by the last decree made in this cause directing R. R. King, the receiver of the Greensboro Water Supply Company, to pay out of the funds in his hands as such receiver the judgments of the defendants, B. J. Fisher and others above named in this cause, and to distribute the remainder of the funds in his hands to the bondholders in a manner and form prescribed in the said decree, reserving and holding in his hands the sum of $5,500 for the purpose of meeting the claim of the Southern Stock Mutual Insurance Company, which had intervened in this cause, claiming to be subrogated to the right of the defendant Helen G. Brown and Charlotte J. Gorrell, to the extent of $5,000, money paid by it to those parties under its contract of insurance with them on the property claimed to have been lost by fire on account of the negligence of the Greensboro Water Supply Company; the said insurance company having theretofore instituted an action in the superior court of Guilford county in the name of itself against the Greensboro Water Supply Company for the purpose of establishing its right to the said sum of $5,000 by virtue of its subrogation to the rights of the said Helen G. Brown and Charlotte J. Gorrell, and it now appearing to the court that the said action of the Southern Stock Mutual Insurance Company against the Greensboro Water Supply Company, pending in the superior court of Guilford county, has been compromised and adjusted by the agreement of the said insurance company to accept and receive from the said receiver the sum of $3,000 in full of settlement of all of its right and claim against the Greensboro Water Supply Company, its receiver or bondholders, or the owner or holders of the said Gorrell judgment.

'It is now, by consent of the parties hereto and of the said bondholders, ordered and decreed that the said receiver, R. R. King, pay to the Southern Stock Mutual Insurance Company out of the money or funds in his hands as such receiver the sum of $3,000, in full settlement and payment of all right, recourse, or claim which the said

...