Central Trust Co. of New York v. Worcester Cycle Mfg. Co.

• Decision Date: 12 July 1901
• Docket Number: 917.
• Citation: 110 F. 491
• Parties: CENTRAL TRUST CO. OF NEW YORK v. WORCESTER CYCLE MFG. CO.
• Court: U.S. District Court — District of Massachusetts

110 F. 491

CENTRAL TRUST CO. OF NEW YORK v. WORCESTER CYCLE MFG. CO.

No. 917.

United States Circuit Court, D. Massachusetts.

July 12, 1901

Arthur H. Van Brunt, for Central Trust Co. of New York.

C Walter Artz, for receiver.

T. H Gage, Jr., assignee, pro se.

Arthur J. Rugg, for city of Worcester.

George Alfred Lamb, for Queen City Const. Co.

BROWNDistrict Judge.

This is a bill brought by the Central Trust Company, a corporation of the state of New York, against the Worcester Cycle Manufacturing Company, a corporation of the state of New Jersey, engaged in business and owning real and other property situated in the states of Massachusetts and Connecticut, praying for the foreclosure of a mortgage dated September 1, 1896, given to the trust company to secure an issue of bonds by the Worcester Cycle Manufacturing Company.Various aspects of this litigation have been before the courts in the Second circuit.Central Trust Co. v Worcester Cycle Mfg. Co. (C.C.)86 F. 35;Id., 90 F 584;Id., 93 F. 712, 35 C.C.A. 547.In the present caseT. H. Gage, Hr., assignee in insolvency, appointed on November 5, 1897, under the laws of Massachusetts, and who was upon his petition permitted to intervene in this suit, denies the complainant's right to relief.The answer of the assignee denies that the bonds were duly issued, or are a valid obligation of the Worcester Cycle Manufacturing Company; alleges that the said company was not, at the time of the commencement of the suit, in default, and that, therefore, the suit was prematurely brought; and also alleges that at the commencement of the suit there was a large amount of personal property in the state of Massachusetts, which, as after-acquired property, is not included within the mortgage.Upon a state of facts in some respects similar, it was held by the circuit court of appeals of the Second circuit that the bonds were issued for value, and that the holders are entitled to the rights and remedies which the mortgage secured to them.93 F. 712, 714, 715, 35 C.C.A. 547.The decision in the circuit court was to the effect that a prima facie case had not been made out on evidence similar to that upon which the complainant relies.This decision was reversed in 93 F. 712, 35 C.C.A. 547;the court saying:

'They have certainly made out a prima facie case, and, in the absence of any evidence impugning the good faith of the transaction, it must be held that the bonds were issued for value, and that the holders are entitled to the rights and remedies which the mortgage secured to them.'

The intervener contends that evidence impugning the good faith of the transaction has now been supplied, and that for this reason the decision of the circuit court of appeals is not in point.While it is apparent from the statements of the old and new companies that the assets were taken at valuations greatly in excess of the actual values, there is no definite evidence upon which the court would be justified in finding that the issue of bonds was in pursuance of a scheme to defraud creditors, or that it...