Continental Trust Co. v. Tallassee Falls Mfg. Co.

• Decision Date: 25 March 1915
• Docket Number: 298.
• Parties: CONTINENTAL TRUST CO. v. TALLASSEE FALLS MFG. CO. et al.
• Court: U.S. District Court — Middle District of Alabama

222 F. 694

CONTINENTAL TRUST CO. v. TALLASSEE FALLS MFG. CO. et al.

No. 298.

United States District Court, M.D. Alabama, Northern Division.

March 25, 1915

The bill in this cause was brought by the Continental Trust Company, a Maryland corporation, as trustee, on March 18 1911, under a deed of trust in mortgage form, executed to it by the Mt. Vernon-Woodberry Cotton Duck Company, a Delaware corporation, to secure an issue of $8,000,000 of bonds. John R. Sayres, James D. Parks, J. F. McCluskey, J. H. McBrayer the Tallassee Falls Manufacturing Company, an Alabama corporation, and the Mt. Vernon-Woodberry Cotton Duck Company are made parties defendant to the bill. The deed of trust includes several manufacturing plants and lands situated in different states, and shares of stock in several corporations, and the includes the lands and cotton factory of the Tallassee Falls Manufacturing Company, the Alabama corporation, situated near Tallassee, Ala., together with the capital stock of said corporation, which the mortgagor company then owned or might afterwards acquire. This mortgage and deed was executed August 30, 1899. On February 8, 1900 the Tallassee Falls Manufacturing Company executed a deed to the plaintiff herein confirmatory of the action of the mortgagor company in conveying said property (to which it did not then hold the legal title), and by which it conveyed said property to the plaintiff as trustee on the trust mentioned in said mortgage and then over to the Mt. Vernon-Woodberry Cotton Duck Company.

The deed of trust provided that the mortgagor company should preserve the corporate existence of the different corporations, whose stock or property was conveyed, together with all their corporate rights, and the mortgagor company covenanted that it would not suffer to be created any charge upon the property superior to the lien of the trust deed or mortgage.

By the terms of this mortgage or trust deed the trustee was not to have the right to the possession of this property conveyed unless default should be made in the payment of interest on or the principal of the bonds. At the time the bill was filed no such default had occurred.

The primary purpose of the bill is to conserve certain property belonging to the Tallassee Falls Manufacturing Company, at the time of the two conveyances mentioned, and of which it has since remained in possession in subordination to said conveyances, except as disturbed by the defendants Sayres and Parks, to the end that such property may continue to be security for the mortgage debt and may be eventually applied to it in case of a default in its payment.

It is further alleged that the right and title of the plaintiff as trustee to this property is endangered by certain claims made in respect to the property by the defendants Sayres and Parks; that the Tallassee Falls Manufacturing Company heretofore instituted unsuccessful proceedings in the state chancery court in the effort to protect and conserve said property against the claims of Parks and Sayres; that since then neither the mortgagor company nor the Tallassee Falls Manufacturing Company had made any effort to protect the property against such claim; that the property so endangered forms a valuable portion of the mortgage security held by the plaintiff and will be lost to the plaintiff as trustee and finally to the bondholders, the cestui que trustent, unless the right of the trustee to it be protected.

The further allegations of the bill are substantially as follows The Tallassee Falls Manufacturing Company owned and was in the possession of certain lands, between six and ten acres on the east side of the Tallapoosa river, and between the river and the town of East Tallassee, where the operatives of that company's mills resided and which this company owned. Although this piece, six acres, or more, was in the heart of the company's holdings and immediately adjoining its plant, it had been, in part, allowed to remain unutilized for the reason that the company had reserved it as the place for contemplated improvements for the benefit of its operatives and the inhabitants of the towns of Tallassee and East Tallassee, such as a water basin of the waterworks, schoolhouses, and the like.

There was an old dwelling situated on this six acres, more or less, known as the Barent Du Bois house. On this same tract of land the company had constructed in the year 1900, at a cost of $3,500, a dwelling house for its assistant superintendent, Frank Milstead, and in which he resided for some years.

The cotton mill of the company was on the east side of the river and was operated by water power supplied by a dam across the river, and this dam was anchored on this vacant property here involved. One end of a steel bridge across the river rests on this property. A canal which conveys the water from the pool or pond, made by the dam across the river to the factory or power house of the company, was constructed across the land now in dispute. Through these agencies, the cotton mill on the east side of the river was operated. The plaintiff alleges that, if the title of the defendants Parks and Sayres be held valid, the damage to the plant of the Tallassee Falls Manufacturing Company would be great and irreparable, and that neither the Tallassee Falls Manufacturing Company nor the mortgagor company has any property in the state of Alabama, except that covered by the mortgage, of sufficient value to make good such loss.

During the year 1893, one Howard was put in possession, by the Tallassee Falls Manufacturing Company, of the above-mentioned Barent Du Bois house, situated on the land here involved, as its tenant. At the time this was done, the company was engaged in the construction of a dam across the river, and there were more laborers engaged in the work than could be housed by the company. Howard was granted permission, by the company, to erect a small house within a few feet of such dwelling which he occupied in which to board and lodge these laborers. He erected the small house and furnished lodgings to the laborers as long as he remained in possession. Afterwards, Howard vacated the premises and surrendered the dwelling house to the company, and A. J. Parks, and father of the defendant J. D. Parks, went into possession alone, either as the tenant of the company or with one of his sons (other than J. D. Parks) who became such tenant. By permission of the company, Howard sold the small house which he had erected as aforesaid to one Sayres, but did not convey or pretend to convey to him the land on which it stood. This house was a cheap affair costing about $50. On taking possession, Sayres began the operation of a small beef market in it. This market was a convenience to the employes of the company, and for that reason the company made no objection to Sayres' occupancy for that purpose. So far as the company knew or could reasonably infer, Sayres made no claim while he was operating such market to the lands on which it was situated or any of the land involved in this controversy; his claim being confined to the house itself. Sayres bought this house about the year 1905, and not until two years after that date did the company receive any information that he was making any claim to any part of the land.

Sometime during 1907, Sayres began to add to the house. The company protested against his right to do so and demanded to know by what authority he was taking such action. It was then informed, for the first time, that Sayres had procured a deed from some one purporting to convey to him the land upon which the house, bought by Sayres from Howard, was situated. He declined to exhibit the deed or to give any information on the subject. In the early part of 1908, the company discovered the existence of the deed to Sayres. In September, 1908, the company discovered that a deed was recorded in the office of the judge of probate of Tallapoosa county (the proper place for the record of such conveyances) on October 30, 1907, and this deed was dated August 1, 1907, was executed by Elizabeth C. Du Bois, and purported to convey 'one-fourth interest in all that portion of the north half of section 19 not disposed of in the lifetime of Barent Du Bois to T. M. Barnett, Sr., and Wm. Marks, lying east of the Tallapoosa river in Tallapoosa county. ' This deed covered the vacant property, six acres more or less, on the east bank of the river, including the land on which the dam and bridge were anchored, and the canal was dug, and on which the power house stood, and probably also the cotton mill of the company.

The Tallassee Falls Manufacturing Company later learned that Parks and Sayres were claiming title under two other deeds, not then recorded, but it never knew what persons had executed these two deeds or what land was included therein until in May, 1909, when Parks and Sayres filed an answer to a certain bill of complaint brought against them by the Tallassee Falls Manufacturing Company, and in which answer copies of said deeds were exhibited. These two deeds were executed by Mrs. Holden and Mrs. Minugh, each a granddaughter of Barent Du Bois, the original owner of the lands, and purported to convey their entire undivided interest in that part of the lands of Barent Du Bois situated in section 19, township 18, range 22, bounded on the west by the Tallapoosa river, on the north by the Tallassee Falls Manufacturing Company's lands, on the east by the Tallassee and Dadeville Road, and on the south by the G. W. Turnipseed lot, containing six acres more or less.

The bill avers that as A. J. Parks, the company's tenant, moved out of the dwelling house on the land in controversy, his son, J. D. Parks, by collusion between Sayres and his father, immediately moved...