Guilford Const. Co. v. Biggs
| Decision Date | 28 February 1939 |
| Docket Number | No. 4421.,4421. |
| Citation | 102 F.2d 46 |
| Parties | GUILFORD CONST. CO. et al. v. BIGGS. |
| Court | U.S. Court of Appeals — Fourth Circuit |
R. R. King, Jr., of Greensboro, N. C., and Horace S. Haworth, of High Point, N. C. (Harry Rockwell, of Greensboro, N. C., on the brief), for appellants.
R. M. Robinson, of Greensboro, N. C., for appellee.
Before PARKER and SOPER, Circuit Judges, and CHESNUT, District Judge.
This is an appeal from a decree of foreclosure in which the rights of the receiver of the Commercial National Bank of High Point, N. C., were determined with respect to a judgment assigned to that bank as collateral security by Robert G. Lassiter & Company. From a decree holding that the receiver was entitled to the judgment as collateral security for the balance of the indebtedness due the bank by Lassiter & Company, and directing that the judgment be sold and the proceeds applied upon that indebtedness, the Guilford Construction Company, successor to the rights of Lassiter & Company in its assets, and J. C. Harmon, Jr., one of its creditors, has appealed.
The facts are as follows: Lassiter & Company had obtained a judgment against the City of Lake Worth, Florida, in the sum of $246,890. The company was indebted to the bank in the sum of $119,509.08. On February 6, 1931 it assigned the judgment to the bank as collateral security for the debt, following this on June 19, 1933 by the execution of a formal indenture of assignment to the bank's receiver, who in the meantime had taken over the bank's affairs.
In September 1933, Lassiter & Company was placed in receivership; and thereafter, on October 1, 1934, the Guilford Construction Company purchased its assets, issuing in exchange therefor 10,000 shares of its non par value common stock, which was distributed by the receivers among the creditors of the company pro rata in accordance with the amount of their respective claims. Under this distribution the receiver of the bank received 1,193 shares of the stock, found by the court below to have had a value of $2.50 per share at the time of its distribution, or a total value of $2,983.50.
The assets of Lassiter & Company were transferred to the Guilford Construction Company "subject to such mortgages and other liens as may be against same", but without assumption thereof. The judgment against the City of Lake Worth was listed by the receivers of Lassiter & Company among the assets of that corporation, but was listed as having been pledged to secure the debt due the bank. Neither the orders of the court nor the transfer of the stock by the receivers of Lassiter & Company to creditors provided for the discharge of their claims upon the receipt of the stock.
A financial statement of the Guilford Construction Company showed the book value of the stock of that company to be approximately $71 per share, but no evidence was introduced by appellants as to its actual value. The receiver of the bank testified, on the other hand, as to the result of an investigation as to the value of the stock during the years 1933 and 1934. He placed the value of the assets of the corporation at the time of the distribution of the stock at $25,000. The liquidating agent of the corporation placed the value of its assets in 1937 as not exceeding $25,000. On a capitalization of 10,000 shares, this would justify the valuation of $2.50...
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