Hale v. Bugg

• Decision Date: 31 March 1897
• Citation: 82 F. 33
• Parties: HALE v. BUGG et al.
• Court: U.S. District Court — Western District of Arkansas

82 F. 33

HALE v. BUGG et al.

United States Circuit Court, W.D. Arkansas.

March 31, 1897

Tracy C. Becker, for complainant.

Frederick P. Fish, W. K. Richardson, and John E. Pound, for defendant.

ROGERS District Judge.

The facts necessary to a correct determination of this cause are as follows: J. W. Hood, Antone Maree, George H. Lyman, and several other creditors, all citizens of Arkansas, on the 21st of February, 1896, filed a creditors' bill in the Sebastian circuit court for the Ft. Smith district against the American Savings & Loan Association of Minneapolis Minn., and, having made the necessary affidavits, caused an attachment to be issued and levied upon a body of land belonging to said association, situate in the Ft. Smith district of Sebastian county, Ark., and which, for convenience, is called the 'Tilley Tract.' While said Tilley tract was in the custody of the sheriff the defendant association appeared in the state court, and removed the case into this court. Upon its being docketed here a motion was filed to remand the same, which was accordingly done; and that case is now pending in the Sebastian circuit court for the Ft. Smith district, its status being the same as when it was originally removed into this court. Subsequently, on the 19th of November, 1896, the bill in this case was filed in this court by William D. Hale, as receiver of the American Savings & Loan Association, against all the plaintiffs in the suit in the state court, the agents for the Arkansas land and the sheriff of Sebastian county, who holds the Tilley tract under attachment from the state court, as defendants, and alleges that he was appointed such receiver on the 14th of January, 1896, by the district court of the Fourth judicial district of the state of Minnesota, at the relation of the attorney general of that state, said association being a corporation created and existing under and by authority of the laws of that state, and that subsequently, on the 18th of June, 1896, the appointment of said Hale as receiver was made permanent, and said receiver invested by the decree of said court with all the lands tenements, hereditaments, choses in action, and assets of every kind, wherever situate, and the officers of said company decreed to convey, and did convey, to said Hale on the 27th of June, 1896, among other things, the said Tilley tract of land, and also other lands described in the complaint, situate in the Western district of Arkansas. It alleges that under the orders and decrees of said court it is the duty of the said receiver to reduce to possession all the assets of every description belonging to said association, and from the money so derived to pay the creditors of said corporation, and disburse the residue under the orders of that court; that on the 7th of November, 1896, the said district court for the state of Minnesota directed said receiver to file a bill in this court to the end that the real estate situate in the Western district of Arkansas might be reduced to his possession through the appointment of a receiver. It is alleged that the said William D. Hale is a citizen and resident of the state of Minnesota, and that all of the defendants to this bill are residents, citizens, and inhabitants of the Western district of Arkansas, and that all the tracts of land in controversy exceed in value the sum of $2,000. It is also alleged that the plaintiffs in the suit in the Sebastian circuit court for the Ft. Smith district are stockholders in said association in said state except such stockholders, and that no citizen of Arkansas has any prior right or rights in the Arkansas lands; that said association was a duly-created building or savings and loan association of the state of Minnesota, its business being to assist its members in saving and investing money, and in buying and improving real estate, and in procuring money for other purposes, by loaning or advancing, under the mutual building society plan, to such of them as may desire to anticipate the ultimate value of their shares, from funds accumulated from the monthly contributions of its stockholders, and also such other funds as might from time to time come into its hands; that the Arkansas stockholders paid their stock in monthly subscriptions, in accordance with the methods of business adopted by the company; that said association owns real estate in 19 states, and has mortgages in 29 others, and that all the stockholders in each of said states were jointly interested with the Arkansas stockholders in the rights, privileges, immunities, and liabilities of said association; that the association is insolvent, and has been so declared by the said district court of Minnesota, at the relation of the attorney general of said state, and that the rights and liabilities of each and every stockholder in said corporation were to be determined and adjudicated under the laws of the state of Minnesota; that the said creditors' bill filed in the Arkansas state court is based upon subscriptions of stock which the said plaintiffs therein had paid, and that said suit in the said state court is an attempt upon the part of the plaintiffs in said suit in said state to secure an unlawful preference over other stockholders in said association, and over creditors of said corporation, and is unauthorized by law and against equity and good conscience; that said receiver is not a party to said suit in said state court, although it was filed after he had been appointed and was invested with all of the assets of said corporation, and after said corporation was adjudged insolvent and restrained from further controlling or managing its assets. It does not appear from the bill that said corporation has ever been dissolved. Folger v. Insurance Co., 99 Mass. 267; Hubbard v. Bank, 7 Metc. (Mass.) 340; Taylor v. Insurance Co., 14 Allen, 353. On the contrary, it appears that said corporation appeared in the Arkansas state court, and caused said suit to be removed to this court, which suit, as before stated, has been remanded to the state court. The prayer of the bill is for the appointment of an ancillary receiver to take possession of all the property of said association in Arkansas, and to sell the same under proper orders of the court, and bring the proceeds into said court, to be turned over to the complainant, to be administered under the orders of the district court of the state of Minnesota, or, in the event the judges of this court determine otherwise, then to be administered under proper orders of this court, and the surplus, if any, to be turned over to the complainant, to be administered under the laws of the state of Minnesota; (2) that the sheriff of Sebastian county, and George H. Lyman, the agent of said association, and defendants Clark & Clock, agents of other property situated at Eureka Springs, Ark., be required to deliver to the receiver so appointed the real estate under their control; (3) that the Arkansas defendant stockholders, who are plaintiffs in the suit in the Arkansas state court, be enjoined and restrained from pursuing their action at law in this court, or in the Sebastian circuit court for the Ft. Smith district, or any other court, and be required to dismiss their attachment of said real estate in said Arkansas state court. The bill also prays for general relief. All of the defendants except Clark & Clock appear and file answer, but the answer does not contravene any matters of fact hereinbefore stated. The replication was duly filed, and the cause submitted to the court upon bill and exhibits, answer and replication, and the written stipulation that the allegations of fact contained in the pleadings are true, and that they state all the facts of the case.

The court is of opinion that the bill is sufficient to authorize the appointment of an ancillary receiver to take charge of all the property in the state upon which no prior lien by citizens of this state has been acquired. The real question in the case is 'whether or not this court can render any decree which in any wise affects the sheriff's possession of the Tilley tract, duly levied upon under attachment issued from the state court at the instance of the plaintiffs in that suit, who are defendants in this. ' In the determination of this question, it is not necessary to decide, and I do not decide, whether or not the plaintiffs in the state circuit court have stated any cause of action, or whether, under the admitted facts in this case, any cause of action can be stated which would entitle them to recover against the defendant corporation, or the receiver appointed in this case, should he conclude to make himself a party to that suit, contesting the title and right of possession to the Tilley tract, for the reason that, if the cause of action in that case is defectively stated, it can be amended, and, if the facts do not admit of its being so amended as to make a good cause of action, that question can be determined by that court, which has jurisdiction of the parties and the subject-matter. If it be said that this view of the case deprives the plaintiff, who is a citizen of Minnesota, of his right, guarantied under the laws of the United States, to have his case tried in the federal court, the answer is that, had the receiver, in apt time, and before the defendants instituted their suit in the state court, applied here for the appointment of an ancillary receiver to take charge of the assets of the said association in this state, it would have been granted, and the federal court would then have adjudicated and settled all the questions involved; or, if the receiver had appeared in apt time and made himself a party to the proceedings in the state court for the purpose only of testing his title and right to the...