Florence Min Co v. Brown

• Decision Date: 23 January 1888
• Citation: 8 S.Ct. 531,31 L.Ed. 424,124 U.S. 385
• Parties: FLORENCE MIN. CO. v. BROWN
• Court: U.S. Supreme Court

124 U.S. 385

8 S.Ct. 531

31 L.Ed. 424

FLORENCE MIN. CO. v. BROWN.

January 23, 1888.

Harvey D. Goulder and Geo. D. Van Dyke, for appellant.

F. J. Wing, for appellee.

FIELD, J.

In February, 1883, three corporations, namely, the Lake Superior Iron Company, and the Jackson Iron Company, created under the laws of Michigan, and the Negaunee Concentrating Company, created under the laws of New York, filed a bill, in chancery in the circuit court of the United States for the Northern district of Ohio, against the defendant, Brown, Bonnell & Co., a corporation created under the laws of Ohio, alleging that they were creditors of the latter corporation, and designating the amounts of such indebtedness—that owing to the first two named corporations, consist- ing of certain promissory notes of the defendant, and that owing to the last-named corporation, being a judgment against the defendant in the circuit court rendered on that day. The bill purported to be filed, not only on behalf of the complainants, but also on behalf of all other creditors, whom it represented to be so numerous that it was impossible to make them parties. It alleged that the defendant was insolvent; that it had long been engaged in the business of manufacturing iron, and had erected blast-furnaces, rolling-mills, and coke-works, and had opened and operated coal mines; that its plant was of great value, as was also the good will of its business; and that it employed at least 4,000 persons in its mills and works. It also alleged that vexatious litigation had been commenced against the defendant, and more was threatened; that such litigation was accompanied by attachments and seizures of property, and the threatened litigation would also be accompanied by like attachments and seizures, and they would give to the creditors who were pursuing them undue advantage over those complainants whose claims were not yet due, and work them irreparable injury; and that if such litigation should be further instituted, and the property of the defendant be attached, there was danger that it would be to a great extent destroyed, and its long-established business broken up. It therefore prayed the appointment of a receiver to take charge of the assets and property of the defendant, and for further relief. The defendant appeared at once to the bill; and thereupon, pursuant to the complainant's motion, Fayette Brown was appointed receiver of its assets and property.

In March, 1883, a supplemental bill was filed, setting forth that the property of the defendant was of such a peculiar nature that great and irreparable loss would be caused to the complainants and other of its creditors, unless its property should be preserved by the receiver in its entirety as a business during the time required to liquidate and adjust its affairs; that the Negaunee Concentrating Company, one of the complainants, had recovered judgment against the defendant prior to the filing of the bill; that its recovery gave to the company a lien upon all the real estate of the defendant within the jurisdiction of the court; that execution had been issued upon said judgment, and had been returned unsatisfied; that other claims for liens and priorities of payment had been made by creditors of the defendant, both secured and unsecured; and that many claims were made, the justice of which was doubtful, and many which were unliquidated. It therefore prayed the appointment of a special master to ascertain the priorities of liens and the rights and claims of creditors generally, and report to the court his findings.

The court thereupon made an order requiring all the creditors of the defendant to file their claims in the office of the clerk, by petition stating their amount and nature; and in July following it appointed the special master prayed to determine the rights of the several creditors of the defendant who had, in accordance with its previous order, filed their claims with the clerk, and to marshal the liens and priorities of such claims. Among the claims filed with the clerk pursuant to this order was one presented by the Florence Mining Company, a corporation of Michigan, for an amount alleged to be due to it upon a contract with Brown, Bonnell & Co. for the sale of certain iron ores. Among the transactions had under the contract, a check was given to the Florence Mining Company by Brown, Bonnell & Co. shortly before its failure, upon he Importers' & Traders' National Bank of New York, on account of a cash payment then due, which check, it was contended, operated as an equitable assignment of certain moneys then in the bank to its credit.

These matters were considered by the special master, who took testimony respecting them, and heard counsel thereon. He reported the amount due the Florence Mining Company, deducting from the price for the whole ore which was to be delivered the value of the...