Citizens' Bank & Trust Co. v. Union Mining & Gold Co.

• Decision Date: 29 December 1900
• Citation: 106 F. 97
• Parties: CITIZENS' BANK & TRUST CO. et al. v. UNION MINING & GOLD CO.
• Court: U.S. District Court — Northern District of Georgia

106 F. 97

CITIZENS' BANK & TRUST CO. et al. v. UNION MINING & GOLD CO.

United States Circuit Court, N.D. Georgia.

December 29, 1900

C. J Simmons, C. L. Pettigrew, and Robert P. Woodard, for complainants.

John S Martin, for defendant.

NEWMAN District Judge.

This is a bill filed by two corporations created by, and existing under, the laws of the state of Tennessee, and citizens of that state, against the defendant, a corporation created by and existing under, the laws of West Virginia, and a citizen of that state. The bill is a general creditors' bill seeking to have the property of the defendant corporation, which consists solely and entirely of a gold mine, and plant for operating the same, in Union county, in this district, placed in the hands of a receiver, and, after proper decree, sold, and the proceeds of the sale distributed pro rata among the creditors. The bill was filed on September 14, 1900, and on the 19th of the same month the defendant answered. In its answer it admitted the allegation of insolvency contained in the bill, and the correctness of the complainants' debts as set out in the bill; that they were due and unpaid; and the necessity for the receivership, in order that the property might be protected and sold for the benefit of all the creditors of the corporation, and its affairs wound up. On September 27th a receiver was appointed. On October 24th, M. Patton, a stockholder in the defendant corporation, came into the litigation by intervening petition, which was amended November 14, 1900. By his intervention, and by argument of counsel, he raises three questions: (1) That the circuit court of this district is without jurisdiction to entertain the bill; (2) that the complainants are simple-contract creditors, and consequently the suit is not one of equitable cognizance; and (3) that the defendant is not insolvent. Other questions incident to these have come up in the argument, but the three named are the main questions involved.

As stated, the complainants are Tennessee corporations, and citizens of that state, and the defendant is a West Virginia corporation, and a citizen of that state. The district in which suit may be brought is a right that may be waived by the defendant, provided the requisite diversity of citizenship exists. Without quoting other authorities, this question is fully disposed of in Central Trust Co. v. McGeorge, 151 U.S. 129, 14 Sup.Ct. 286, 38 L.Ed. 98. In that case the complainant was a corporation of the state of New York, the defendant a corporation of the state of New Jersey, and the suit was brought in the Western district of Virginia. After deciding that the exemption from being sued out of its domicile is one that a corporation may waive, the following language, which is exceedingly pertinent to this case, is used: 'It is scarcely necessary to say that, as the defendant company had submitted itself to the jurisdiction of the court, such voluntary action could not be overruled at the instance of stockholders and creditors not parties to the suit as brought, and who were permitted to become such by intervening petition. ' In this case the charter of the defendant company provided that its officer for the transaction of its business should be in Chattanooga, Tenn. This would not change the citizenship of the corporation, and is not considered material in this connection.

The contention that this is not a suit of equitable cognizance because the complainants are simple-contract creditors, is raised too late, even if it can be raised by an intervening stockholder at all. The defendant corporation, in its answer filed in the case, says: 'Respondent admits that it is indebted to the complainants in this cause in the amount and on the claims as charged in the bill. ' There is no necessity for a trial by jury, where the defendant admits the correctness of the debt on which complainants are proceeding. That complainants should have a lien or a judgment with a return of nulla bona is not necessary, where there is an acknowledged debt, and the subject-matter of the suit is one of general equitable cognizance. This is a bill brought to distribute the assets of an insolvent corporation, having its whole property and assets in Georgia and in this district. It is a general creditors' bill, seeking a pro rata distribution among all the creditors of the proceeds of the sale of its property. The present hearing was on a motion by the intervener to dissolve the receivership, and on the hearing affidavits were presented showing certain facts which do not appear either in the bill or answer, and, among other things, that the debts of complainants are partly for money which went to purchase machinery now at the defendant's mine, and partly for the actual purchase money, it seems, of such property. One creditor intervening since the filing of the bill has a claim for services rendered as agent, acting manager, and general manager of the defendant corporation. The receiver having been appointed, given bond, and taken charge of the property, and having cared for the same, and the defendant having acknowledged by its answer the debts and the necessity for the receivership, the intervening stockholder cannot raise this question: that the complainants are simple-contract creditors. Reynes v. Dumont, 130 U.S. 354, 9 Sup.Ct. 486, 32 L.Ed. 934; Brown v. Iron Co., 134 U.S. 530, 10 Sup.Ct. 604, 33 L.Ed. 1021; Pollock v....