Godchaux v. Morris

• Decision Date: 24 February 1903
• Docket Number: 1,189.
• Citation: 121 F. 482
• Parties: GODCHAUX et al. v. MORRIS et al.
• Court: U.S. Court of Appeals — Fifth Circuit

121 F. 482

GODCHAUX et al. v. MORRIS et al.

No. 1,189.

United States Court of Appeals, Fifth Circuit.

February 24, 1903

Emile Godchaux, Alexis Brian, and R. E. Milling, for appellants.

James Legendre and Guy M. Hornor, for appellees.

Before McCORMICK and SHELBY, Circuit Judges, and NEWMAN, District judge.

PER CURIAM.

The decree from which this appeal is taken is as follows:

'Alfred H. Morris v. Caffery Central Sugar Refinery & R.R. Co Ltd. In Equity. (No. 12,992.)

'This cause came on to be further heard at this term on the oppositions of Charles Godchaux, agent, Moses Alexander and Mrs. F. E. Marks, to the confirmation of the sale of the real estate of defendant reported to the court by A. G. Brice, Esquire, special commissioner, and upon the report of William Grant, Esquire, special master, upon said oppositions, and the objections to his report, and was argued by counsel. Whereupon, in consideration thereof, it is now ordered, adjudged, and decreed as follows:

'First. That all the objections to the report of said special master be overruled, and that his report be in all respects confirmed; the court being fully satisfied with the correctness of the special master's conclusion, both of law and of fact.

'Second. It is further ordered that the opposition of Charles Godchaux, agent, of Moses Alexander, and of Mrs. F. E. Marks, filed to the rule for the confirmation of the sale made by the said A. G. Brice, special commissioner, be overruled, and that the sale of the property of the defendant corporation to Charles Godchaux, agent, made on the 29th day of March, 1902, for the price and sum of one hundred and fifty thousand dollars, as reported to the court by said special commissioner, be now in all respects approved.

'Third. It is further ordered that upon the tender by the special commissioner to him of a deed executed before notary public of the city of New Orleans, in which the notes and bonds secured by mortgage on the said property shall be surrendered and canceled, the purchaser shall forthwith pay into the hands of the special commissioner the sum of $150,000, the purchase price at which the property was adjudicated to him, less the sum of $15,000, already deposited on account thereof with said special commissioner.

'Fourth. It is further ordered that all the costs incurred on the oppositions to said sale, including a fee of $500 to Wm. Grant, the special master, as an allowance for his services herein, to be taxed as part of the costs, be paid by the said opponents, Charles Godchaux, Moses Alexander, and Mrs. F. E. Marks, for which they are condemned jointly and severally.'

The report of the special master, referred to in the foregoing decree, is substantially as follows:

'First. It appears from the record that a decree was entered upon the bill and answer in this case on the 18th day of February, 1902, ordering the sale of the plantations of the defendant to be made by the commissioner at the front door of the customhouse in the city of New Orleans, for cash, upon thirty days' notice. By the terms of the decree the commissioner was directed to offer the properties for sale in lots as follows: First, the Caffery Central Refinery, with the three lots of ground connected therewith; second, the Stirling plantation; third, the Peebles plantation; fourth, the tract of land fourthly described in the decree. It is further ordered that, after the properties were so offered, they should be offered as one parcel, and, if the bid for them as a totality should exceed the aggregate of the bids for the several lots, then the bid for the properties as a whole should be accepted. It appears from the commissioner's report that he first offered the first three properties separately, but that, through an oversight, he omitted to offer the several parcel of land fourthly described. He then offered all the properties as one parcel, and struck them off to Charles Godchaux, agent, upon his bid of $150,000, which was in excess of the aggregate amount bid for the properties separately. All these facts were reported to the court by the commissioner on the 11th day of April, 1901.

'On a rule taken by the complainant against the purchaser, Charles Godchaux, agent, to show cause why the sale should not be approved, objections were filed by the purchaser, by Moses Alexander, a creditor who has a privilege on the proceeds of cane sold to the defendant, and by Mrs. F. E. Marks, a stockholder in the defendant corporation. These objections may be stated and summarized as follows: (1) That all the stockholders and creditors of the defendant corporation who have an interest in the sale were not made parties to the rule. (b) That sufficient time has not been allowed the parties in interest to file objections to the sale. (c) That the commissioner did not offer each of the four properties separately, nor afterwards offer them as one parcel, as required by the decree of sale. (d) That said sale was not made in the parish of St. Mary, where the greater portion of the lands are situated as required by the act of Congress approved March 3, 1893 (27 Stat. 751 (U.S. Comp. St. 1901, p. 710)). (3) That said property, owing to the present temporary financial depression, brought a grossly inadequate price, and that if reoffered it will bring its real value.

'I shall consider these objections separately, in the order here stated:

'(a) The objection that all parties in interest, including stockholders, mortgage and ordinary creditors of the defendant corporation, have not been served with a copy of the rule to confirm the sale, it seems to me, is without merit. It appears from the indorsements on the original rule filed April 21, 1902, that all the parties to the record, except Moses Alexander, a creditor for the price of cane sold to the refinery, have come into the case. They are represented by and through the corporation in all matters in litigation, and are not, as a general rule, permitted to appear in a suit and make a defense for the corporation in which they are shareholders, except where it is alleged that the corporation is fraudulently neglecting to defend its interest, etc. Hawes v. Oakland, 104 U.S. 450, 26 L.Ed. 827. Nor do I think that general creditors who have not come into the cause, and whose rights are not directly affected, are entitled to notice of the rule, or to be made parties to the cause. The general charge is made in the oppositions that all the parties in interest have not been served with the rule; but the supposed parties are not named, as they ought to be, under the rules of practice, to give the plaintiff a better writ. It appears from the evidence, however, that there are several suits pending against the defendant corporation in the district court of St. Mary Parish, a list of which is given in the transcript of evidence, and substantiated by copies of the records of the cases filed herewith. Judgments have been recovered against the Caffery Company in these cases, but they have not been signed, owing to the pendency of rules for a new trial, nor have they been registered in the mortgage office as liens on the lands sold by the commissioner, nor can they become operative liens if signed and registered in the future, pending the rule to confirm the sale, for it is an elementary rule that liens cannot be acquired on property in custody of the law to the prejudice of the lis pendens. My conclusion on this point is that neither stockholders nor general creditors without liens are necessary parties to a suit of this character in the first instance, under the rule that no one need be a complainant in whom there exists no interest, and none a defendant against whom nothing is demanded. Kerr v. Watts, 6 Wheat. 550, 5 L.Ed. 328. While the general rule is that all parties in interest must be made parties, it should be restricted to parties whose interests are directly in issue. Mechanics' Bank v. Seaton, 1 Pet. 299, 7 L.Ed. 152; Story v. Livingston, 13 Pet. 359, 10 L.Ed. 200. If all the unsecured creditors of a corporation in cases of this character,

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