Brusselback v. Arnovitz
| Decision Date | 09 March 1937 |
| Docket Number | No. 7344.,7344. |
| Citation | 87 F.2d 761 |
| Parties | BRUSSELBACK et al. v. ARNOVITZ et al. |
| Court | U.S. Court of Appeals — Sixth Circuit |
J. A. Miller, of Chicago, Ill. (Morris Townley, of Chicago, Ill., George R. Murray, of Dayton, Ohio, Townley, Campbell, Clark & Miller, of Chicago, Ill., and Legler & Murray, of Dayton, Ohio, on the brief), for appellants.
Roy G. Fitzgerald and F. D. Schnacke, both of Dayton, Ohio (W. B. Turner, of Dayton, Ohio, on the brief), for appellees.
Before HICKS, SIMONS, and ALLEN, Circuit Judges.
The bill of complaint alleged: That plaintiffs were citizens and residents of Missouri and Illinois; that plaintiff Brusselback owned bonds of the Chicago Joint Stock Land Bank (created under the Federal Farm Loan Act, 39 Stat. 360, U.S.C., tit. 12, § 641 et seq. 12 U.S.C.A. § 641 et seq.) in the amount of $4,000, and that the remaining plaintiffs, as trustees, owned its bonds in the amount of $128,000; that certain defendants, citizens of Ohio, were stockholders of the bank; that certain others were incorporators and officers of the Western Securities Company, holding 759 shares of the stock of the bank; that the Western Securities Company was organized as a subterfuge through which the real owners of the shares of the bank, whose names were unknown, sought to escape their statutory liability; that plaintiffs as bondholders of the bank brought their suit as a class action on behalf of all other bondholders and creditors thereof; that the bank had a capital stock of the par value of $4,000,000, divided into 40,000 shares of the par value of $100 each; that the shares were originally sold for approximately $4,000,000 in cash, which was paid into its treasury; that it was incorporated in 1917 and continued business until October 1, 1932; that it issued and sold its own bonds, having a face value of more than $42,000,000 at par, or approximately par, and invested the proceeds principally in farm mortgages; that on October 1, 1932, it was declared insolvent by the Federal Farm Loan Board and its assets were turned over to a receiver who has since been engaged in their liquidation; that about October 1, 1932, certain bondholders of the bank filed their bill in the United States District Court for the Northern District of Illinois against its stockholders for the purpose of enforcing their individual liabilities under the statute (tit. 12, § 812, U.S.C. 12 U.S.C.A. § 812); that service was had upon all stockholders found residing in Illinois who for the most part answered; that the cause was referred to a master, who found the bank insolvent in that its liabilities exceeded its assets by approximately $12,000,000 and that an assessment of 100 per cent. against the stockholders would be necessary; that a decree was entered confirming the master's report and making a 100 per cent. assessment against the stockholders, and that the defendants who were before the court were directed to pay such assessments to the receiver who was originally appointed by the Federal Farm Loan Board and reappointed by the court; that the decree was binding not only upon Illinois stockholders who were before the court but upon all stockholders of the bank wherever residing.
The bill prayed that it might be treated as a class suit on behalf of all creditors of the bank for the purpose of enforcing the assessment decreed by the Illinois District Court against defendants resident in Ohio, to the end that there be provided a fund to be administered by the court for the equal benefit of all creditors of the bank; that a decree be entered against defendant stockholders directing and ordering them to pay their assessments; that a receiver be appointed for the fund to be realized; and that it be administered and distributed by the court ratably and equitably among the creditors of the bank. The bill also prayed for any needed discovery. It was later amended so as to aver the death of certain defendants and to allege the existence of their personal representatives.
Various defendants moved to dismiss the bill. The court sustained the motion, hence this appeal.
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Richardson v. Kelly
...suit" is readily apparent from the following quotation from the opinion of the Circuit Court of Appeals in Brusselback v. Arnovitz, 6 Cir., 87 F.2d 761, 762, in which the court is stating the allegations in the Ohio suit regarding the Illinois suit: "That about October 1, 1932, certain bond......
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Christopher v. Brusselback
...of action. The District Court gave judgment for petitioners which the Circuit Court of Appeals for the Sixth Circuit reversed. Brusselback v. Arnovitz, 87 F.2d 761. We granted certiorari, Christopher v. Brusselback, 302 U.S. 672, 58 S.Ct. 16, 82 L.Ed. -, to resolve a conflict between the de......
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Holmberg v. Anchell
...N.Y., 1931, 14 F.Supp. 997; Brusselback et al. v. Cago Corporation et al., D.C.S.D. N.Y., 1936, 14 F.Supp. 993, 995; Brusselback v. Arnovitz, 6 Cir., 1936, 87 F.2d 761, 763. As a matter of fact the proper procedure to be followed with regard to claims by creditors of joint stock land banks ......
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TOWN OF FAIRFAX, OKL. v. Hubler
...case involving a class suit, in which jurisdiction was founded upon the amount sought to be recovered in a class suit, is Brusselback v. Arnovitz, 6 Cir., 87 F. 2d 761. Since this action is a class suit, and the amount involved exceeds $3,000, exclusive of interest and costs, this court has......