Illinois Trust & Sav. Bank v. Kilbourne

• Citation: 76 F. 883
• Decision Date: 05 October 1896
• Docket Number: 296
• Parties: ILLINOIS TRUST & SAVINGS BANK v. KILBOURNE et al.
• Court: U.S. Court of Appeals — Ninth Circuit

76 F. 883

ILLINOIS TRUST & SAVINGS BANK v. KILBOURNE et al.

No. 296

United States Court of Appeals, Ninth Circuit.

October 5, 1896

The principal cause in the court below was a suit by the Illinois Trust & Savings Bank, as trustee of a first mortgage of the railway lines and other property of the Seattle Electric Railway & Power Company for the foreclosure of that mortgage. That suit was begun December 31, 1894. Prior thereto, to wit, June 14, 1893, one A. P. Fuller, an unsecured creditor, had commenced a suit against the Seattle Consolidated Street-Railway Company, the corporate successor of the Seattle Electric Railway & Power Company, in which suit a receiver of all of the property of the company was on the same day appointed, who thereupon took the property into his possession. On October 17, 1893, Fuller commenced a second suit against the Consolidated Company. After the execution of the mortgage to the complainant Illinois Trust & Savings Bank, and before the institution of either suit by Fuller, one Annie Sears, together with her husband, Frank Sears, commenced a suit in the superior court of King county, Wash., against the Consolidated Company, to recover damages for personal injuries alleged to have been sustained by her on September 16, 1891, while a passenger on one of the company's railway lines, in which suit Mrs Sears and her husband recovered, on March 24, 1892, judgment against the company for such damages in the sum of $15,000 and costs of suit. The Consolidated Company appealed from the judgment so given against it to the supreme court of the state of Washington, and, upon taking the appeal, in order to stay proceedings upon the judgment, it filed a supersedeas bond in the sum of $16,000, with eight sureties, namely, E C. Kilbourne, Leilla S. Kilbourne, L. H. Griffith, Tina W. Griffith, V. Hugo Smith, Margaret Smith, J. S. Porter, and Hellen Porter, which bond was duly approved. Subsequently, and on November 18, 1893, the supreme court of Washington affirmed the judgment so appealed from, and gave judgment upon the appeal bond against the Consolidated Company and against the sureties on the bond, and each of them, in the sum of $16,000 (34 P. 918), upon which judgment a remittitur was issued directing the superior court to execute the judgment, which remittitur was duly entered in the court from which the appeal was taken. At the time of the recovery of the judgment by Mrs. Sears and her husband against the Consolidated Company, that company was in the receipt of a large revenue, and during the time the judgment was held in abeyance by the appeal therefrom and the supersedeas bond such receipts, over and above the operating expenses of the lines of railway of the company, were more than enough to satisfy the judgment. The defendants to the suit brought by the complainant for the foreclosure of the first mortgage, which was given to secure the payment of bonds in the sum of $381,000, besides the mortgagor company and its corporate successor, the Consolidated Company, included, among others, Annie Sears and her husband, Frank Sears, the Central Trust Company of the City of New York as trustee of a second mortgage upon the property to secure the payment of certain other bonds, and the three members of the law firm styled Thompson, Edson & Humphreys, who had recovered the judgment for Mrs. Sears, and who had filed notices that they claimed attorneys' liens thereon for certain contingent fees secured to them by contracts.

On June 6, 1895, the circuit court, in which was pending the foreclosure suit brought by the complainant, as also the two suits brought by Fuller, of its own motion entered an order consolidating them, and directing 'that they shall henceforth proceed in all respects, both as to the causes themselves and as to any interventions pending or hereafter to be brought in any thereof, as one cause, under the title of 'Illinois Trust & Savings Bank, Trustee, vs. Seattle Electric Railway & Power Company; Seattle Consolidated Street-Railway Company; Central Trust Company of the City of New York, Trustee; Frank L. Waterman; Joseph E. Nichols Annie Sears (alias Anna Sears), and Frank Sears, her husband; J. B. Maxon; William H. Thompson, Edward P. Edson, and John E. Humphreys, as co-partners under the style Thompson, Edson & Humphreys; George E. M. Pratt and William H. White, as co-partners under the style of Pratt & White; A. P. Fuller; Walker Todd; and F. T. Blunck (alias F. F. Blunck), '-- and numbered 472 on the docket of the court. ' The order further directed that 'M. F. Backus, the receiver of said property, heretofore appointed by said court is said cause No. 284 (Fuller v. The Consolidated Company), do henceforth administer said property subject to the directions of the court from time to time to be given in said consolidated cause under the title aforesaid, for the benefit of such parties thereto, or other persons as the court shall from time to time find and decree to be entitled to any of the benefits of said receivership; and that the direction heretofore given to said receiver by the court from time to time in said causes numbers 284 and 335, or either of them, shall remain in force until the further order of the court; and that the bond heretofore given by said receiver and filed in said cause number 284 shall stand in force as his bond as receiver in said consolidated cause. ' On March 2, 1895, Annie Sears and her husband, Frank Sears, and Thompson, Edson & Humphreys, filed their joint answer to the bill in the foreclosure suit brought by the Illinois Trust & Savings Bank, in which answer they set up the injury to Mrs. Sears; the recovery of her judgment therefor; the contracts with the attorneys for their fees; the Consolidated Company's appeal to the supreme court of the state of Washington; the filing of the supersedeas bond; the affirmance of the judgment, and its extension against the sureties; the nonpayment of the judgment; the insolvency of all of the sureties; the appointment of the receiver of the railway company's property prior to the rendition of the judgment on the supersedeas bond; the receipt by the railway company at the time Mrs. Sears recovered her judgment in the superior court of King county, Washington, and thenceforward while the judgment was superseded upon the appeal therefrom, of an income from its railway lines of about $15,000 per month; that those receipts were used in payment of operating expenses and interest on the indebtedness of the company, including the mortgage indebtedness to the complainant; that the amount so received by the company over and above the amount of the operating expenses was more than enough to have satisfied Mrs. Sears' judgment, with interest; and that the company, while the supersedeas was in force, wrongfully appropriated the income to the payment of interest on the mortgage...