Illinois Cent. R. Co. v. United States Fidelity & Guar. Co.

• Decision Date: 15 December 1936
• Docket Number: No. 8217.,8217.
• Citation: 87 F.2d 121
• Parties: ILLINOIS CENT. R. CO. v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: U.S. Court of Appeals — Fifth Circuit

87 F.2d 121 (1936)

ILLINOIS CENT. R. CO. v. UNITED STATES FIDELITY & GUARANTY CO.

No. 8217.

Circuit Court of Appeals, Fifth Circuit.

December 15, 1936.

Augustus Benners, of Birmingham, Ala., for appellant.

Frank E. Spain and H. H. Grooms, both of Birmingham, Ala., and Carl Fox, of St. Louis, Mo., for appellee.

Before FOSTER, HUTCHESON, and HOLMES, Circuit Judges.

HOLMES, Circuit Judge.

Having been permitted to intervene in this cause, the appellant filed its petition in the court below, alleging facts which showed it to be both a common and a preferred creditor of the defendant, Mobile & Ohio Railroad Company. It prayed for preferential payment of the items of its account accruing within six months prior to the receivership ratably with other creditors of the same class, and also prayed that no further preferential payments be made to the United States Fidelity & Guaranty Company upon its indebtedness which accrued from judgments paid by the Guaranty Company as surety upon appeal bonds. The court wholly denied the relief prayed for, and this appeal challenges the correctness of that ruling.

The appellee, United States Fidelity & Guaranty Company, has moved to dismiss the appeal on the ground that the order complained of is not a final decision but a discretionary and interlocutory one. No contention is made by appellant that it is an appealable interlocutory order. Therefore, the sole question for our determination is whether it is final and appealable.

There is a contention by the parties as to the proper construction to be given to the order, but whether it be construed as denying the preferential character of appellant's claim and its right to ratable distribution, or as merely denying the prayer of appellant that payments to the Guaranty Company be stopped, it is in either aspect a final order. In the first, it denies the appellant any relief whatever; in the second, it finally disposes of funds which should ratably be paid to appellant. It is a creditor of the same class as the surety or of a superior class; it was excluded from participation in the monthly payments made, and to be made, to the latter; it was entitled at least to a ratable distribution of all such funds; it has a right to resort to the general assets of the insolvent defendant for payment of its claim; the depletion of the fund from which payments are to be made under the order will impair appellant's rights. It is therefore injuriously and irreparably affected by the order and should be allowed to appeal. To quote from Pennsylvania Co. for Ins. on Lives v. Philadelphia Co. (C.C.A.) 266 F. 1, 4: "As nothing remains to be done, except to pay over the money, it is a final determination of the particular matter, and is, therefore, a final decree and appealable, although the receivership, having to do with innumerable unrelated matters, shall still continue. Ruggles v. Patton, 143 F. 312, 74 C.C.A. 450; Trustees of Internal Imp. Co. v. Greenough, 105 U.S. 527, 26 L.Ed. 1157."

In Rector v. United States (C.C.A.) 20 F.(2d) 845, at pages 860, 861, it is said:

"`While the general rule requires that a judgment of a federal court shall be final and complete before it may be reviewed on a writ of error or appeal, it is well settled that an adjudication final in its nature as to a matter distinct from the general subject of the litigation and affecting only the parties to the particular controversy, may be reviewed without awaiting the determination of the general litigation.' * * *

"`The seeming exception to this rule by which an adjudication final in its nature of matters distinct from the general subject of the litigation, like a claim to property presented by intervening petition in a receivership proceeding, has been treated as final so as to authorize an appeal without awaiting the termination of the general litigation below (Central Trust Co. v. Grant Locomotive Works, 135 U.S. 207, 224, 10 S.Ct. 736, 34 L.Ed. 97; Williams v. Morgan, 111 U.S. 684, 699, 4 S.Ct. 638, 28 L. Ed. 559; Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157) has no application here.'"

In Re N. Y. Investors, Inc. (C.C.A.) 79 F.(2d) 179, at page 182, the court said: "The appellee Endleman makes the further objection that the appellant had no status which permitted it to appeal. He argues that the Reconstruction Finance Corporation is a secured creditor which has taken no steps to realize upon its security, and for that reason is without any standing. But a creditor, who has been permitted to intervene and whose rights to resort to the general assets for payment of any balance that may be due him after the application of his security, is affected by the decision and should be allowed to appeal."

See,...