Colley v. Canal Bank & Trust Co.

• Decision Date: 07 March 1946
• Docket Number: 563.,No. 562,562
• Citation: 64 F. Supp. 1016
• Parties: COLLEY v. CANAL BANK & TRUST CO. et al. (two cases).
• Court: U.S. District Court — Eastern District of Louisiana

64 F. Supp. 1016

COLLEY v. CANAL BANK & TRUST CO. et al. (two cases).

Nos. 562, 563.

District Court, E. D. Louisiana, New Orleans Division.

March 7, 1946.

Chaffe, McCall, Bruns, Toler & Phillips and Harry McCall, Sr., all of New Orleans, La., for plaintiff.

Dufour, St. Paul & Levy, William C. Dufour, Walter M. Barnett and Henry & Kelleher, Harry B. Kelleher, Rosen, Kammer, Wolff, Hopkins & Burke and Alfred C. Kammer, all of New Orleans, La., for defendants.

BORAH, District Judge.

These consolidated actions involve common questions of law and fact, and accordingly may be disposed of in one opinion.

In each original complaint, the plaintiff alleges that on February 13, 1930, when she was a minor, the Canal Bank & Trust Company and H. & B. Beer, a partnership, converted to their own use four certificates for 100 shares each of the capital stock of the Louisville & Nashville Railroad Company, and wrongfully sold the stock for $54,800. Each plaintiff seeks to recover that amount.

In a supplemental complaint filed in each suit, the original complaint was adopted in toto and there were added in considerable detail the history of each plaintiff's acquisition of the four stock certificates and a recital of the manner in which the alleged conversion was accomplished.

The uncontroverted facts, most of which have been stipulated, are these:

Findings of Fact

1. The plaintiff, Annette Folmar Colley, a citizen of the State of Alabama and wife of Dr. James O. Colley, Jr., was born on October 7, 1918. She was married on March 2, 1937, when more than eighteen years of age, and, under the applicable Alabama statute, after marriage, she had "the same legal rights and abilities as married women over twenty-one years of age".

2. On September 20, 1941, the said plaintiff was, by the Probate Court of Pike County, Ala., duly appointed guardian of her sister, Mary Folmar, a minor, who is also a citizen of Alabama. By order of court entered in the same proceeding on July 27, 1942, it was provided that Mary Folmar should be vested with all the rights and abilities possessed by a person having attained the age of twenty-one years.

3. Each of the defendants is a citizen of the State of Louisiana, and is domiciled in the Parish of Orleans, within the jurisdiction of this Court.

4. The Canal Bank & Trust Company, hereinafter called the Bank, was, in 1930, a banking corporation doing business in the city of New Orleans. In May, 1933, J. S. Brock, State Bank Commissioner of Louisiana, took lawful possession of the Bank and appointed Harry G. Thompson as his special agent in its liquidation, which appointment was confirmed on May, 20, 1933, in an order of the Civil District Court for the Parish of Orleans, which order also confirmed John F. Finke as liquidator of the Bank. Thompson and Finke are still acting in their respective capacities, but Brock has been succeeded as bank commissioner by Wilfred J. Begnaud.

5. H. & B. Beer, hereinafter referred to as Beer, was, in February, 1930, a commercial partnership doing a stock brokerage business in New Orleans, La. Among the partners at that time were J. William Barkdull, Roy E. Barkdull and C. Morgan Abrams. Henry Beer was on October 12, 1929, at the time of his death a partner "in commendam" in said firm, and his estate and/or his liquidators continued as a partner in the firm until it was liquidated on or before April 30, 1930.

6. Proceedings in the Succession of Henry Beer were filed on October 30, 1929. At the time of his death, Mr. Beer's capital interest in the firm was inventoried and appraised at $85,000. Suzanne Schaefer, one of the defendants herein, a feme sole of full age of majority, was a residuary legatee to the extent of two-thirty-seconds (2/32) of Mr. Beer's estate, and was recognized as such and sent into possession by a judgment dated June 13, 1930.

7. C. Morgan Abrams died April 15, 1940, leaving as his widow the defendant Justine Haas, and as his sole heir his daughter, the defendant Lillie Abrams, wife of Albert Lieutaud, who were recognized as such and sent into possession by a judgment dated October 12, 1940. The entire community estate amounted to $8,313.43.

8. J. C. Henderson, a resident of Troy, Pike County, Ala., died shortly prior to May 20, 1929, leaving a solvent estate. By his last will and testament he bequeathed 400 shares of the capital stock of the Louisville & Nashville Railroad Company to each of his two granddaughters, the plaintiffs herein. Under his will, probated on May 20, 1929, in Pike County, Ala., E. M. Wright and Emory Folmar were appointed executors, and they qualified as such.

9. Emory Folmar is the father of the plaintiffs, but was never at any time appointed nor did he qualify as their guardian.

10. On or about October 11, 1929, the Louisville & Nashville Railroad Company issued four certificates, each for 100 shares of its capital stock, to each of the plaintiffs.

11. On or about February 10, 1930, Arthur Folmar and F. H. Perry delivered the eight certificates referred to in the preceding paragraph to the bank for sale for the account of W. B. Folmar & Sons, bankers of Troy, Ala.

12. On the reverse side of each certificate there appeared what purported to be the signature of Mary Folmar or Annette Folmar, as assignor of the stock. These signatures, however, were not written by the plaintiffs, or by either of them, but by their father, Emory Folmar.

13. On or about February 10, 1930, the Bank entered orders with Beer, as broker, for the sale of the 800 shares, and the said broker immediately executed the orders on the floor of the New York Stock Exchange.

14. Pursuant to its orders for the sale of the stock, the Bank delivered the eight certificates to Beer, after having placed its signature guarantee on the reverse of each certificate.

15. The sales of the 800 shares of stock by Beer for the account of the Bank were made at the price of $137 per share, which was its fair and reasonable market value.

16. The account of the Bank was credited on the books of Beer with the net proceeds of said sales, on February 11, 1930, in the sum of $27,342, and on February 13, 1930, in the sum of $82,026 and said amounts were paid by Beer to the Bank. The small difference between the actual amount of the sales and the amount credited represented commissions and taxes.

17. Immediately thereafter, the certificates were transmitted by Beer to its New York branch in order to discharge the obligation to deliver the shares of stock previously sold. On instructions of W. B. Folmar & Sons, the Bank on February 11, 1930, credited $27,342 to the Folmar firm, and on the following day credited $72,658 to the same firm and $9,368 to Emory Folmar.

18. The certificates, bearing the signature guarantees of the Bank and Beer, were presented to the transfer agent of the Louisville & Nashville Railroad in New York City, for cancellation and transfer. The certificates were canceled, and new certificates were issued and delivered to persons other than the plaintiffs.

19. In June, 1941, there were served on the Louisville & Nashville Railroad in Birmingham, Ala., a summons and a complaint in the suit which Mary Folmar by her next friend, James O. Colley; Jr., had filed against the company in a Circuit Court of Alabama, seeking $200,000 damages on the ground that the railroad company had converted 400 shares of its stock belonging to said Mary Folmar; and there were also served on the railroad a summons and a complaint in the suit which Annette Folmar Colley had filed in the United States District Court for the Western District of Kentucky seeking a recovery of $54,400, with interest, on the ground that the company had converted 400 shares of its stock belonging to said Annette Folmar Colley.

20. On September 23, 1941, the Louisville & Nashville Railroad entered into separate written contracts with each of the plaintiffs, providing in substance as follows: (1) That the plaintiffs authorized the company to institute suits in their names "against such persons or parties as counsel for the Company may advise are legally liable to" the respective plaintiffs in connection with the alleged conversion of the plaintiffs' stock; (2) that the company agreed to lend to each of the plaintiffs sums not exceeding $20,000, and, in addition, to deposit with the First National Bank of Birmingham a sum equal to the difference between $48,000 and whatever amount the company might lend to the respective plaintiffs; (3) that the plaintiffs assigned to the company all sums that might be recovered from their respective claims against "all such other parties as may have arisen out of the transfer of said certificates," etc., such sums were to be applied by the company first against the maximum of $20,000 to be lent to each of the respective plaintiffs, then used to pay plaintiffs the amount on deposit, and the balance over and above $48,000, less "reasonable costs and expenses", to be turned over to the respective plaintiffs. Under each agreement, the company advanced $20,000 to each respective plaintiff and likewise under each agreement deposited $28,000 in the Birmingham bank.

21. Several times during the year 1933 there were published advertisements in New Orleans newspapers, notifying all persons other than depositors having claims against the Bank, that the Bank had been closed; that the state bank commissioner had taken possession under the provisions of the laws of Louisiana; and that claimants should file and prove their claims on or before September 15, 1933, before said commissioner.

22. Notwithstanding the publication of the notices referred to above, no claim of any nature was ever filed prior to May 14, 1941, against the Bank on behalf of either of the plaintiffs.

23. Neither plaintiff was aware of her ownership of the said stock until the early part of the year 1941. The present suits were filed on November 29, 1941.

24. Neither Beer nor any defendant...