Equitable Trust Co. v. Connecticut Brass & Mfg. Corp.

• Decision Date: 20 May 1925
• Docket Number: No. 1488.,1488.
• Citation: 6 F.2d 582
• Court: U.S. District Court — District of Connecticut
• Parties: EQUITABLE TRUST CO. OF NEW YORK v. CONNECTICUT BRASS & MFG. CORPORATION et al.

6 F.2d 582 (1925)

EQUITABLE TRUST CO. OF NEW YORK v. CONNECTICUT BRASS & MFG. CORPORATION et al.

No. 1488.

District Court, D. Connecticut.

May 20, 1925.

John Buckley, U. S. Atty., of Hartford, Conn., and Alexander Holtzoff, Sp. Asst. Atty. Gen., for the United States, intervening petitioner.

Cummings & Lockwood, of Stamford, Conn. (Charles D. Lockwood, of Stamford, Conn., of counsel), for ancillary receiver.

Murray, Prentice & Aldrich, of New York City (William Roberts, of New York City, of counsel), for creditors' committee.

THOMAS, District Judge.

The United States, as an intervening petitioner, prays for an order to impress a trust in favor of the government on certain raw copper that came into the receiver's possession, and to direct the receiver to deliver it to the petitioner, or, if sold, that the receiver be directed to turn over the proceeds of the sale. The matter is now before the court on a motion to separately hear and determine the issues raised by the first and second defenses to the petition, pursuant to the provisions of equity rule 29.

In an action to conserve the assets of the defendant corporation located within this jurisdiction, William H. Coverdale was duly appointed receiver on September 15, 1918. Thereafter, and on April 14, 1919, an order was entered by this court directing creditors to file their claims with the receiver and on or about January 17, 1920, the United States filed its claim in the sum of $343,588.18. The claim is based on the value of certain copper and spelter which the United States had delivered to the defendant corporation for the purpose of having the same manufactured into sheet brass and articles made of brass under agreements whereby the United States retained title to the copper and spelter delivered by it to the defendant.

On July 5, 1921, the United States presented a petition to this court praying for an adjudication of priority under the provisions of § 3466 of the Revised Statutes. Among other things, the petitioner alleged that the value of the copper delivered by it was 26 cents per pound; that out of the total amount of copper delivered by the United States there was a "balance due the United States of 1,321,493 pounds of copper." The petition then alleged that the defendant had wrongfully "and improperly converted to its own use" the aforesaid copper, and that "although the Connecticut Brass & Manufacturing Corporation is indebted to the United States of America in the sum of $343,588.18, with lawful interest thereon, by reason of the wrongful conversion" of the said copper, and, although due demand had been made, neither that sum nor any part thereof had been paid. Whereupon the petitioner prayed for an order instructing the receiver to forthwith pay the claim of the United States in the sum of $343,588.18, with lawful interest, before paying any other debt of the corporation. Upon the presentation of this petition, the receiver and the creditors' committee duly moved this court to dismiss the same upon the ground that the United States was not entitled to any priority under the facts stated in the petition. The motion was granted, the petition dismissed, and on April 30, 1923, the ruling of this court was affirmed by the Circuit Court of Appeals. See 290 F. 712.

On December 2, 1924, the United States filed this its second petition, realleging its delivery of the copper and spelter for the purposes hereinbefore set forth, as well as the retention by the defendant of 1,321,493 pounds of said material. This retention is characterized as a conversion, in that the raw material had been unlawfully commingled by the defendant with other raw copper in defendant's possession. It is alleged in this petition that a large amount of this copper was wrongfully utilized for purposes other than the carrying out of the contract of the defendant with the United States, and that at the time of the appointment of the receiver 726,520 pounds of the same copper came into his possession. As already noted, the petition prays that it be decreed that this raw copper, or the proceeds thereof in the hands of the receiver, be impressed with a trust in favor of the United States, and that the receiver be directed to turn over the copper or the proceeds of the sale. To this petition the receiver, as well as the creditors' committee, interposed four separate defenses, but the present motion addresses itself to the sufficiency of only the first and second.

In the...