Ibbs v. Archer

• Decision Date: 08 February 1911
• Docket Number: 1,445 (47).
• Citation: 185 F. 37
• Parties: IBBS v. ARCHER.
• Court: U.S. Court of Appeals — Third Circuit

185 F. 37

IBBS v. ARCHER.

No. 1,445 (47).

United States Court of Appeals, Third Circuit.

February 8, 1911

Martin V. Bergen, Jr., and A. B. Stoughton, for appellant.

Reynolds D. Brown and Malcolm Lloyd, Jr., for appellee.

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges.

GRAY Circuit Judge.

In November, 1905, Arthur K. Brown, surviving receiver of the American Alkali Company, filed a bill in the court below against Thomas Pegram, A. R. Harvey and Ruth L. Harvey, alien subjects of the King of Great Britain, residing in Liverpool England, the Commercial Development Corporation, Limited, a corporation organized under the laws of Great Britain and resident thereof, and E. J. Walker, receiver of said corporation and an alien subject of the King of Great Britain, and Tyson Ibbs, an alien subject of the King of Great Britain, residing in Liverpool, England.

The allegations of the bill, briefly stated, are, that the American Alkali Company was a corporation duly organized under the laws of the state of New Jersey, in 1899; that the Commercial Development Corporation, Limited, is a corporation organized under the laws of Great Britain, and a resident thereof; that E. J. walker is receiver of the said Commercial Development Corporation, Limited, and is a subject of the King of Great Britain; that in September, 1902, Arthur K Brown and Henry I. Budd were duly appointed receivers of the American Alkali Company, in the Circuit Court of the United States for the District of New Jersey; that prior to the said receivership, the American Alkali Company had given two notes to the Commercial Development Corporation for $30,000 and $20,000, respectively, as part consideration for certain patent rights purchased by the Alkali Company from the Commercial Corporation. These and subsequent transactions were carried on between the two by A. R. Harvey, a holder of a large majority of the stock of the Commercial Corporation and W. W. Gibbs, president of the Alkali Company. In consequence of subsequent financial embarrassments, the Commercial Corporation borrowed from Thomas Pegram, one of the defendants, $10,000, and gave as collateral security therefor the two notes above mentioned of the Alkali Company. On these notes, a judgment amounting to $52,887.45 was obtained by Pegram against the Alkali Company, in the Circuit Court of the United States for the Eastern District of Pennsylvania, in 1903. Subsequently upon his demand, additional collateral was given to Pegram, consisting, among other securities, of three notes, each for the sum of $15,000, made by W. W. Gibbs, president of the Alkali Company, to the order of A. R. Harvey, who, as stated by the court below, claimed ownership in one of these notes, dated August 19, 1901, and which he claims he assigned to Mrs. Harvey, who assigned it to her brother, one Tyson Ibbs, one of the defendants. Afterwards, in order to secure possession of these three notes, Gibbs substituted other securities, among which was a large number of shares of the Chloride Electrical Company. This stock having been substituted by Pegram as collateral security for the three notes returned by him to Gibbs, was sold by Pegram, he realizing from the sale thereof, . . .6,000.

The prayer of the bill was that the court might fix the true amount for which the defendant, Thomas Pegram, was entitled to recover and hold for his own use, in the judgment of $52,000 recovered by him against the American Alkali Company, and how much for the benefit of the defendant, A. R. Harvey, or the defendant Ruth L. Harvey, or the defendant Commercial Development Corporation, Limited, or its receiver, or some of them, and that the court might decree that the complainant, as receiver of the American Alkali Company, is entitled, upon a distribution of the fund, to set off as against so much of the judgment of $52,000 as the defendant, Pegram, holds as trustee for any of the other defendants, certain amounts in the way of equitable or legal set-offs claimed by complainant against such defendants.

After the filing of the bill, under the terms of a settlement made by complainant with Pegram, complainant received from Pegram an assignment of the equity of the Commercial Development Corporation in the notes in suit, upon the payment to him of a sum agreed upon. The Commercial Development Corporation being, as claimed by counsel for complainant, eliminated as a factor by the acquisition by complainant of any claim that it had on the notes, the only question left open was, whether 'any one else, Mrs. Harvey for example, had any higher rights than the Commercial Development Corporation, and the controversy was therefore reduced to the point, whether Mrs. Harvey could establish a claim against the American Alkali Company, higher than that of the Commercial Development Corporation,' Harvey and his wife in their answer having claimed an ownership or equitable interest in one of the Gibbs notes.

Answers of all the original defendants having been filed some time thereafter, Mrs. Harvey disclaimed any interest in the said note, averring that she had assigned and transferred all her interest in the said note and in said controversy, to her brother, Tyson Ibbs, in payment of a previous indebtedness. Thereupon, in January, 1909, the complainant, by an amended and supplemental bill, made Tyson Ibbs a party defendant.

Much testimony was taken and many questions of law and fact were submitted to the court below, and were passed upon by it in a well considered opinion. In its decree, the court, after numerous findings of fact, 'ordered and decreed that neither defendant Thomas Pegram, defendant A. R. Harvey, defendant Ruth L. Harvey, nor defendant Tyson Ibbs, has any just claim to any portion of the judgment aforesaid, obtained by defendant Thomas Pegram against the American Alkali Company, and that no one of said defendants is entitled to be subrogated to any interest therein. And it further appearing to the court that the American Alkali Company, or its receiver, has acquired all the interest of the Commercial Development Corporation, Limited, in said judgment, it is further ordered and...