Evans v. Mansur & Tebbetts Implement Co.

• Decision Date: 26 April 1898
• Docket Number: 634.
• Parties: EVANS v. MANSUR & TEBBETTS IMPLEMENT CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

87 F. 275

EVANS v. MANSUR & TEBBETTS IMPLEMENT CO. et al.

No. 634.

United States Court of Appeals, Fifth Circuit.

April 26, 1898

On December 3, 1896, one W. E. Dupree executed a deed of trust by which he conveyed, for the benefit of his creditors, his goods, wares, merchandise, and other personal property described in the deed of trust. The deed of trust divided the creditors into three classes, A, B, and C; the total amount of claims intended to be secured being $211,611.98. William W. Evans, the intervener herein, was included in class A; and provision was thus made for payment to him of a debt of $3,518, represented by notes. The deed of trust provided that the trustee should sell the property conveyed, and that if the proceeds of the sale should be insufficient to pay all the creditors, a certain claim of the Provident National Bank of Waco, Tex., should first be paid by preference, and the remainder of the proceeds of sale should then be divided pro rata among the creditors composing class A, which, as already stated, included the claim of the intervener, Evans. On December 5, 1896, the Mansur & Tebbetts Implement Company and the Washburn & Moen Manufacturing Company filed their bill in the circuit court of the United States for the Northern district of Texas, at Waco, against Dupree and one J. C Birkhead, the trustee, and the Provident National Bank setting up, among other things, the execution of said deed of trust, and the provisions thereof; estimating the value of the property not to exceed the sum of $65,500, and alleging that the time within which such property must be sold by Birkhead was insufficient to permit a prudent and fruitful administration of the trust conferred on him, and, on account of the character of goods conveyed to him therein, that the same could not be marketed for a fair price, for cash, within the next ensuing five months; charging a combination between Birkhead and Dupree in the making of said deed of trust; that Birkhead was a man of small means, and that by the terms of said instrument he was not required to give bond to secure the beneficiaries under the deed of trust for a faithful administration of his trust; that suits by creditors had been instituted against Dupree, and writs of attachment issued thereon, and that the same had been levied and attempted to be levied upon the goods conveyed by the instrument, not by seizure and appropriation, but by giving notice to Birkhead and his employes in charge and custody of the property; that writs of garnishment against Dupree were sued out in different courts of McLennan county, Tex., and served upon Birkhead and his employes in charge of said assets and property; and alleging that controversies have arisen and will arise between the attaching creditors and garnishing creditors of Dupree; that the assets and property conveyed in said deed of trust were not sufficient in value to pay off the expense of administering the trust and the debts in Exhibit A of said instrument, and also pay off and discharge in full the debts mentioned, including the debts of the complainants, who are in class B, and will not pay the complainants and creditors in class B more than 50 per cent. of their claims. The bill charges combination and confederacy between Dupree and Birkhead; that, unless restrained by injunction, Dupree and Birkhead will, acting together and in concert, take from the assets and property conveyed to Birkhead by the provisions of said trust deed a sufficient sum of money to pay off and discharge the debt due by Dupree to the Provident National Bank, and will cancel and discharge said debt, and that Birkhead will turn over and deliver to Dupree the collateral securities which the Provident National Bank holds to secure the payment of this debt, unless enjoined from so doing. The bill further prays for the appointment of a receiver to take charge of, and administer under the orders of the court, the assets and property of every kind conveyed by the deed of trust, as well as the collateral securities held by the Provident National Bank, and that the property be administered and the proceeds thereof be distributed under the orders of the court, and the receiver be required to collect the collaterals, and that the same be applied, by proper orders of the court, towards the payment of the debt first due to the Provident National Bank, and that complainants' claims be established and declared a lien upon the funds in the hands of the receiver, according to the priorities that may be established therein, and that all parties entitled to participate in said fund be required to intervene therein and establish their rights thereto, and that the injunction therein prayed for might be perpetual.

On this bill of complaint, the judge of the United States circuit court appointed a receiver of all the property covered by the deed of trust, or held by the Provident National Bank as security for Evans' debt to it. The injunction prayed for was also granted. On December 6, 1896, the receiver qualified and took possession. Thereafter, W. B. Belknap & Co. filed their bill of complaint, asking for the removal of Birkhead as trustee, and for a receiver of all the properties which by a chattel mortgage of date December 3, 1896, Dupree conveyed to Birkhead as trustee; also, of the property held by the Provident National Bank as collateral security,-- the last two not being defendants in the original bill. The court thereupon ordered that F. F. Fink, who had previously qualified as receiver in the cause in which the Mansur & Tebbitts Implement Company et al. are plaintiffs, be also appointed receiver under the bill filed by W. B. Belknap & Co. Subsequently, as shown by three orders, the court directed that all persons interested be granted leave to intervene in the proceedings, without further leave of court, subject to exception; that all interventions, without further order, be referred to a standing master of the court named in the order; and that the master report on the law and facts of all interventions.

The intervener herein, W. W. Evans, filed his petition of intervention, setting up that on March 7, 1896, the defendant W. E. Dupree made and delivered to him his promissory note for the sum of $1,000, payable at Waco, Tex., 60 days after date, bearing interest at the rate of 10 per cent. per annum from date until paid, and providing that if default was made in the payment of said note at maturity, and it was placed in the hands of an attorney for collection, the maker thereof would pay the amount of 10 per cent. additional on the principal and interest of said note as attorney's fees. The intervener further showed that said Dupree on or about the 1st day of December, 1896, for a valuable consideration, made and delivered to the intervener his certain other promissory note for the sum of $2,500, payable at Waco, Tex., 60 days after the date thereof, and bearing interest at the rate of 10 per cent. per annum from date until paid, and providing for attorney's fees as in the first note. Intervener further showed that he was the legal owner and holder of said notes, and set up the fact that on or about the 3d day of December, 1896, said Dupree made his deed of trust to J. C. Birkhead, as trustee, conveying all of his stock of goods, wares, and merchandise owned by the said Dupree in McLennan, Falls, and Hill counties, Tex., as is fully set out and described in said deed of trust, and that the said Birkhead accepted as such trustee, under the provisions of the said deed of trust, and that, on the application heretofore mentioned, said Birkhead was removed by the court, and Frank F. Fink appointed as receiver in his stead, who qualified as such, and is now acting as such, under the direction of the court. Intervener further showed that in said deed of trust the aforesaid indebtedness due by said Dupree to intervener was secured in class A, as provided for in said deed of trust, and this intervener became invested with a valid and subsisting lien on all the property conveyed in said deed of trust, to secure the payment of said moneys as aforesaid. Intervener further showed that he accepted under the provisions of the said deed of trust before any intervening rights of any other creditors attached, and he is now the legal holder and owner of a valid and subsisting lien conveyed in said deed of trust to secure the payment of said moneys. The prayer of his plea of intervention was that the said notes be adjudged to be secured by a valid and subsisting and prior lien on the property conveyed in said deed of trust, and the funds arising from the sale thereof by the receiver in this cause, and that said notes, interest, and attorney's fees be paid. To this petition of intervention the receiver, Frank F. Fink, filed an answer on April 5, 1897, which said answer consisted of a general demurrer and general denial.

A hearing was had before the master on intervener's petition, and testimony taken, and said standing master filed his report in court as to all the claims presented before him for trial under the court's order. Among other things connected with said report is the finding as to claim of intervener, William W. Evans: 'No. 83. W. W. Evans Intervener. This claim is duly verified as required by order of court. Exceptions of complainant overruled. This claim is for two notes,-- one for the sum of $1,000, dated May 7, 1896, due sixty days after date, bearing interest at the rate of 10 per cent. per annum, and providing for 10 per cent. attorney's fees; also, a note dated 1st of December, A.D. 1896, for $2,500, due sixty days after date, bearing interest at same rate, and containing the same stipulations,-- the two notes aggregating $3,518. I consider the claim a just claim, to...