First Nat. Bank of Columbus v. Charles Broadway Rouss, Inc.

• Decision Date: 29 October 1932
• Docket Number: No. 6672.,6672.
• Parties: FIRST NAT. BANK OF COLUMBUS, GA., et al. v. CHARLES BROADWAY ROUSS, Inc., et al.
• Court: U.S. Court of Appeals — Fifth Circuit

61 F.2d 489 (1932)

FIRST NAT. BANK OF COLUMBUS, GA., et al. v. CHARLES BROADWAY ROUSS, Inc., et al.

No. 6672.

Circuit Court of Appeals, Fifth Circuit.

October 29, 1932.

H. C. McCutchen, T. Leslie Bowden, and Geo. C. Palmer, all of Columbus, Ga., for appellants.

H. H. Swift, J. Q. Davidson, and Theo J. McGee, all of Columbus, Ga., for appellee.

Before BRYAN, FOSTER, and WALKER, Circuit Judges.

WALKER, Circuit Judge.

On April 12, 1932, appellants, the First National Bank of Columbus, Ga., and the Home Savings Bank of Columbus, Ga., each brought a suit in the superior court of Muscogee county, Ga., seeking the foreclosure of a security deed, dated December 28, 1931, covering a described city lot, and alleged to have been given to it to secure a stated debt; the petition in the suit of the first mentioned bank alleging that the secured note to it was executed by C. E. Westbrook Realty Company, a Georgia corporation (herein referred to as the realty company), and Mrs. Emma Westbrook, as executrix of the last will and testament of C. E. Westbrook, deceased, the two makers of such note being made defendants to that suit; and the petition in the suit of the other bank alleging that the secured note to it was executed by the realty company, Mrs. Emma Westbrook, as executrix of the last will and testament of C. E. Westbrook, deceased, and Mrs. Emma Westbrook, individually, the three makers of such note being made defendants to that suit. After those suits were brought the appellee, Charles Broadway Rouss, Inc., a New York corporation, brought this suit in the court below, against the realty company, Emma T. Westbrook, Almand J. Westbrook, Dorothy T. Westbrook, and the appellants, the First National Bank of Columbus and the Home Savings Bank of Columbus. The bill in this suit alleged the institution of the above-mentioned suits by the appellant banks. That bill contained allegations to the following effect: In April, 1931, Emma T. Westbrook, Almand J. Westbrook, and Dorothy T. Westbrook became indebted to the plaintiff in this suit, appellee here, in the sum of $58,053.25, evidenced by interest-bearing notes dated April 15, 1931, to secure which the makers of such notes pledged to plaintiff 67,000 shares of the total 90,000 shares of the capital stock of the realty company, the entire assets of which consisted of the real estate described in the above-mentioned security deeds executed to the appellant banks. At the time of the execution of the above-mentioned security deeds to the appellant banks the officers of the realty company were Almand J. Westbrook, president, and Dorothy T. Westbrook, secretary, and its board of directors consisted of said Emma T. Westbrook, Almand J. Westbrook, and Dorothy T. Westbrook. At that time the realty company was not indebted to either of said banks, and received no consideration, those security deeds being executed to secure debts to said banks, respectively, of the individuals who respectively signed the notes which the security deeds purported to secure. The realty company had no power under the terms of its charter to become responsible in any way for the debts of individuals which said security deeds purported to secure. At the time those security deeds were executed and delivered appellant banks had notice and knowledge of the above-mentioned pledge to plaintiff of said 67,000 shares of the capital stock of the realty company. The appellant banks fraudulently conspired and agreed with said Emma T. Westbrook, Almand J. Westbrook, Dorothy T. Westbrook, and the realty company to cause said security deeds to be executed for the purpose of securing the alleged indebtedness of the individuals who, respectively, signed the notes purported to be secured, for which debts the realty company was in no way responsible, and thereby said defendants, through the said conspiracy, caused the realty company to convey for other than its own indebtedness all of its unincumbered property to said banks, to the irreparable injury and damage of the plaintiff, appellee here. That bill contained prayers to the effect: That said security deeds to appellant banks be decreed to be null, void, and of no effect; that said banks, their officers and directors be enjoined and commanded to surrender and deliver their respective security deeds into court, in order that the same may be canceled; that said banks, and each of them, their officers, agents, servants, and employees be enjoined and restrained from foreclosing said security deeds, and from proceeding to prosecute any pretended rights arising out of said security deeds in any court; and that, pending a final decree, the court appoint a receiver to take possession and control of the assets and property of the realty company. Upon the filing of the bill, the court appointed a temporary receiver as prayed for. After answers to the bill had been filed by the two banks and the realty company, which answers put in issue material allegations of the bill, the court, after a hearing under an order that defendants in the case show cause why the order appointing a temporary receiver therein should not be continued in force, and why the defendants should not be temporarily restrained and enjoined pursuant to the prayer of the bill of complaint, made an order or decree which, after ratifying and confirming the previously...