Cole v. Philadelphia & E. Ry. Co.
| Decision Date | 06 November 1905 |
| Docket Number | 9-1905. |
| Citation | 140 F. 944 |
| Parties | COLE v. PHILADELPHIA & E. RY. CO. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Ira J Williams and Simpson & Brown, for complainant.
John. C. Grady, Thos. Raeburn White, J. Howard Gendell, and S Davis Page, for interveners.
Sterling W. Cole, a citizen and inhabitant of the state of New Jersey filed a bill in equity in this court on October 23, 1905 against the Philadelphia & Easton Railway Company, a citizen of the state of Pennsylvania, alleging that he is the owner and holder of 100 shares of the capital stock of the defendant railway company, of the par value of $5,000, a first mortgage bond of $1,000, and a second mortgage bond of $1,000; that the corporation is insolvent, and unable to pay its maturing obligations; that a large number of creditors are threatening to bring suit and obtain judgments against it; and further, 'that if judgments are obtained and executions issued thereon, it will lead to the disintegration of the road and property, and will result in the impossibility of conducting the operations of the corporation defendant, or of its paying its debts, to a very great loss of said corporation and its creditors'; and that if the railway of the defendant company can be held together, and the plant saved from disintegration, and if the management of the property can be continued as a going concern, very valuable results will accrue to all interested in the property, both as stockholders and creditors. Upon this bill a receiver was appointed, as prayed for, the defendant company agreeing thereto by its attorney, and subsequently, at a meeting of the board of directors, the appointment of the receiver was approved.
The receivers of H. M. Herbert & Co., who were the contractors that built this road and bondholders of the defendant company, presented a petition asking leave to intervene. As creditors of this company, they are undoubtedly entitled to be heard. They allege that Sterling W. Cole has not such a substantial interest in the subject-matter of the controversy as to justify the court in taking jurisdiction of a bill filed by him, and that the Excelsior Trust Company is not a proper receiver to be appointed.
Since the filing of this bill, a committee of bondholders, representing $372,000, some of which reside in the state of New Jersey, have also presented a petition asking leave to intervene, alleging the insolvency of the corporation, and its inability to meet its obligations, and further averring that, if the management of the property of the said defendant company can be continued as a going concern until the same can be sold, very valuable results will accrue to the stockholders and creditors. These bondholders join with the plaintiff in the bill praying for a temporary receiver, and ask that the Excelsior Trust Company, already appointed, be continued and made permanent. Other bondholders of the state of New Jersey also join in presenting petitions to intervene, and ask the court to continue the present receiver.
There is no question about the insolvency of the defendant corporation, as the board of directors have assented to the appointment of a receiver, and the receivers of Herbert & Co. have presented a similar bill in the courts of Bucks county in this district, alleging, among other things, the defendant company's insolvency, and asking for the appointment of a receiver. The modes of proceeding in suits of equity in the Circuit Court of the United States are the same in all the states of the Union, and are not in any manner regulated or controlled by the equity procedure of the states (Bates on Federal Equity Procedure, Sec. 20); and a United States court, in the exercise of its chancery jurisdiction, and in the absence of statutory power, on a proper showing by a proper party on due notice, and in the exercise of a sound judicial discretion, may appoint a receiver over a railway where the company had made default in the payment of its mortgage indebtedness, or where default is imminent by reason of insolvency, or where the interest upon the mortgage has been long...
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