Excelsior Pebble Phosphate Co. v. Brown

• Decision Date: 05 May 1896
• Docket Number: 155.
• Parties: EXCELSIOR PEBBLE PHOSPHATE CO. et al. v. BROWN et al.
• Court: U.S. Court of Appeals — Fourth Circuit

74 F. 321

EXCELSIOR PEBBLE PHOSPHATE CO. et al. v. BROWN et al.

No. 155.

United States Court of Appeals, Fourth Circuit.

May 5, 1896

The original bill was brought by three stockholders of the Excelsior Pebble Phosphate Company, a corporation of the state of West Virginia, making the corporation the party defendant. The bill states that this corporation was formed for the purpose of purchasing phosphate lands in the state of Florida, and the digging, mining, and quarrying pebble phosphate and phosphate rock, and the treatment and preparation of the same for market, in accordance with the customs and usages of the trade, and the vending and shipment of the same in the raw and treated state, and for the erection of the necessary buildings and houses for the conducting of said business and the shelter of its employes and servants, and the construction of canals and waterways within and upon the lands of the corporation, and also such other works and improvements as may be necessary and proper in carrying on the business contemplated under its organization; that they are stockholders, and that two of them are also creditors of the company; that the corporation had executed to the Central Trust Company of New York a mortgage of certain real estate in the state of Florida, and all of its personal property, consisting of plant and machines, as well as all other personalty upon said lands together with such as may thereafter be purchased by the company in addition thereto, or to replace any of the same which mortgage was duly recorded in Florida; that this mortgage was intended to secure 100 bonds, of $1,000 each with coupons, bonds to be due March 1, 1919; that proceedings to foreclose this mortgage are pending in the circuit court of the United States for the Southern district of Florida and that a receiver had been appointed therein; but that, though the subpoena had been properly served, no appearance had been entered for the Excelsior Pebble Phosphate Company, although the plaintiff, trustee under the mortgage, intends to proceed to a sale therein; that judgments had been obtained against the defendant company in Florida, and executions issued, under which the lands and personal property have been advertised for sale, the lands being those covered by the mortgage, and with the personalty, include nearly all the property of the defendant company, the executions amounting to about $8,000; that the corporation is insolvent, and that numerous suits are pending against it in the state courts of Florida; that these suits are brought by connections and friends of Kaufman Simon, president of the company, and in his interest, to secure him and them preferences over the property of the company, and that said Simon and a majority of the directors are in collusion in this matter, seeking, by unlawful methods, to control the property in their interest; that Simon has misused the mortgage bonds of the company, placed in his hands for special purposes; and that his aim that of his confederates is to wreck the company, and deprive complainants of their debts. The bill prays the appointment of a receiver; that he be instructed to take such action as will protect the company in the premises; that an injunction issue against the corporation, its servants and agents, preventing them from interfering in any manner with the receiver, and for general relief.

Upon presenting the bill to the court, on 23d November, 1895 leave was given to file it. The motion for the appointment of a receiver was set for a hearing on 26th November next thereafter, and an injunction was issued restraining the defendant corporation, by its president or any other officer or attorney, from confessing judgment in any suit in any federal or state tribunal of any state of the Union. Leave also was granted to the complainants to file any amendments to the bill on or before the hearing fixed. The Excelsior Pebble Phosphate Company excepted to this decree, and it is referred to in the first three assignments of error. On 26th November, the day fixed by the court, the complainants filed amendments of their bill, fortified by affidavits, and again moved for the appointment of a receiver and the issuance of an injunction, as prayed for in the bill and amended bill. These amendments change the character of the bill, by making it in behalf of all creditors and stockholders of the company who may come in, etc. They aver that the suit is not collusive, seeking to confer jurisdiction on the court of a case in which otherwise it would have no cognizance; state that the bill is brought against the Central Trust Company of New York, a corporation duly organized under the law of that state, trustee of the mortgage of the Phosphate Company; charge bad faith in the execution of the mortgage in the attorney of the defendant company, and more bad faith on the part of Simon and the majority of the directors; aver that none of the stockholders of the defendant company are citizens of West Virginia. They contain no prayer for process, nor any prayer of any kind. The proceedings following the presentation of these amendments, and the motion thereon, are in these words: 'And thereupon the defendant the Excelsior Pebble Phosphate Company, by W. E. Chilton, its solicitor, tendered its plea to the jurisdiction of the court, to the filing of which the plaintiff objects, which objection, being considered by the court, is sustained, and said plea is rejected, to which ruling of the court in refusing to allow said plea to be filed, and in rejecting the same, the defendant aforesaid excepts. And thereupon the defendant the Central Trust Company of New York, by Joseph E. Chilton, its attorney, appeared for the sole purpose of objecting to the jurisdiction of this court in this case, and for the purpose of filing its plea to the jurisdiction of the court, and did tender its plea to the jurisdiction of the court, to the filing of which the plaintiff objects. And, the court having considered said objection, the same is sustained, and said plea is rejected, to which ruling of the court in sustaining said objection, and in rejecting said plea, the said defendants object and except. And thereupon the defendants, by their solicitors aforesaid, moved the court to dismiss this suit; but the court overruled said motion, to which ruling of the court in refusing to dismiss this suit the said defendants object and except. And thereupon the defendant the Excelsior Pebble Phosphate Company filed its demurrer to the said bill and amended bill; and said demurrer is set down for argument, and, being argued and considered, the same is overruled. And thereupon the plaintiffs, by their said solicitors, moved the court to appoint a receiver as prayed for in said bill and amended bill, and to grant the injunction prayed for in said bill, which motions were resisted by the defendants, upon the grounds hereinbefore stated in their pleas and...