Hollander v. Heaslip

• Court: U.S. Court of Appeals — Fifth Circuit
• Citation: Hollander v. Heaslip, 222 F. 808 (5th Cir. 1915)
• Decision Date: 24 March 1915
• Docket Number: 2650.
• Parties: HOLLANDER v. HEASLIP.

222 F. 808

HOLLANDER v. HEASLIP.

No. 2650.

United States Court of Appeals, Fifth Circuit.

March 24, 1915

Rehearing Denied April 27, 1915. [Copyrighted Material Omitted]

Under a bill filed on the 14th day of May, 1908, by the Graham Paper Company against the World Publishing Company, Limited, the appellee was on the same day appointed receiver of the property of the latter company, and was authorized to continue the business of that company, which was that of publishing a newspaper. Under authority conferred by an order made in that case, the appellee, on November 9, 1909, filed in the same court what was styled a dependent and auxiliary bill against the appellant and others, averring, among other things, that each of the defendants therein subscribed for a stated number of shares of the capital stock of the World Publishing Company, Limited, and paid on account of their said subscriptions stated sums of money--appellant's subscription being for five shares, upon which $50 had been paid--leaving due from them stated sums or balances, and that, in consequence of the fact that the liabilities of the World Publishing Company, Limited, largely exceed the value of its assets, it was necessary to collect said unpaid balances. That bill prayed that the plaintiff therein have judgment against each of the defendants named therein for the sums of money found to be due by each, with interest thereon from May 14, 1908. The court overruled a demurrer of the appellant to this bill, which set out, among other grounds that the plaintiff therein has, to enforce the payment of said alleged debt, a complete and adequate remedy at law, and that the defendant has, under the Constitution of the United States, the right to have the fact of his indebtedness vel non tried before a jury; the amount in controversy exceeding the sum of $20, as appears by the bill herein. Thereafter the appellant filed a plea, which averred as follows:

'This defendant, not confessing any of the matters contained in the bill of complaint to be true, for plea to so much of said bill as seeks to hold this respondent for an alleged subscription to the capital stock of the World Publishing Company, Limited, of which complainant herein is the receiver, does plead thereto and say: Defendant admits that he signed the subscription list of the World Publishing Company, Limited, prior to said company being chartered and organized; that his said subscription was upon the following conditions, to wit: 'Whereas, the World Publishing Company, of New Orleans, La., is to be organized and incorporated under the laws of the state of Louisiana, with a capital stock of $500,000, the undersigned subscribe to the capital stock of said corporation for the number of shares set opposite their respective names, each share of the stock representing the par value of $100, and to be paid for as follows: Five (5%) per cent. of the stock subscribed by us respectively, to be paid in cash; five (5%) per cent. to be paid within ten days from the organization of said corporation. And we obligate ourselves to pay the balance of our subscription upon the call of the board of directors of said corporation on the following conditions: First. That no call of the board of directors for the payment of the balance due on said stock shall exceed forty (40%) per cent. of the face value thereof. Second. That no call shall be made until after thirty days' notice by publication or a letter addressed to the subscriber at his last known place of residence. Third. That the directors shall make their calls not less than thirty days apart. Fourth. That no call shall be made until two hundred and fifty thousand dollars, or half of the capital stock, shall have been subscribed.' Henry L. Lazarus and David Sessler, both of New Orleans, La. (Herman Michel and Eldon S. Lazarus, both of New Orleans, La., on the brief), for appellant.

George Denegre, Victor Leovy, and Henry H. Chaffe, all of New Orleans, La., for appellee.

Before PARDEE and WALKER, Circuit Judges, and MAXEY, District Judge.

WALKER Circuit Judge (after stating the facts as above).

We are not of opinion that the court was in error in overruling the above-mentioned demurrer. The bill to which it was interposed was auxiliary to the original suit in which, by means of a receivership, the court had acquired possession of the assets of the World Publishing Company, Limited, for the purpose of applying them to the payment of its debts. This enabled it to cause a debtor to that corporation who was within reach of its process to be brought into the original cause, to the end that his debt might be ascertained and payment coerced. It was for the court, in its discretion, to decide whether it would determine for itself all claims of the corporation whose estate it was administering, or would allow them to be litigated elsewhere. It was within its power to hear and determine all controversies regarding such claims, at least in so far as it could acquire jurisdiction of the persons of those who were parties to such controversies, though the questions thus collaterally involved were of a purely legal nature. White v. Ewing, 159 U.S. 36, 15 Sup.Ct 1018, 40 L.Ed. 67; Porter v. Sabin, 149 U.S. 473, 13 Sup.Ct. 1008, 37 L.Ed. 815; Bottom v. National Ry. Building & Loan Ass'n (C.C.) 123 F. 744; Peck v. Elliott, 79 F. 10, 24 C.C.A. 425, 38 L.R.A. 616; Ross-Meehan Brake Shoe F. Co. v. Southern Malleable Iron Co. (C.C.) 72 F. 957. It could not have so dealt with a purely legal demand, if the bill which asserted it had not been an ancillary or auxiliary one, but was an original suit brought by a receiver who derived his authority from a court of another jurisdiction. Hale v. Allinson, 188 U.S. 56, 23 Sup.Ct. 244, 47 L.Ed. 380; Fidelity...