Krauthoff v. Kansas City Joint-Stock Land Bank

• Citation: 31 F.2d 75
• Decision Date: 20 February 1929
• Docket Number: No. 8151.,8151.
• Parties: KRAUTHOFF v. KANSAS CITY JOINT-STOCK LAND BANK OF KANSAS CITY, MO., et al.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

31 F.2d 75 (1929)

KRAUTHOFF v. KANSAS CITY JOINT-STOCK LAND BANK OF KANSAS CITY, MO., et al.^*

No. 8151.

Circuit Court of Appeals, Eighth Circuit.

February 20, 1929.

Edwin A. Krauthoff, of Kansas City, Mo. (Bruce W. Sanborn, of St. Paul, Minn., Price Wickersham and Ernest D. Wilson, both of Kansas City, Mo., and Sanborn, Graves & Andre, of St. Paul, Minn., on the brief), for appellant.

Cyrus Crane, of Kansas City, Mo. (E. F. Halstead, of Kansas City, Mo., on the brief), for appellees.

Massey Holmes and Reed, Holmes & Taylor, all of Kansas City, Mo., filed brief as amicus curiæ.

Before KENYON, Circuit Judge, and JOHNSON and McDERMOTT, District Judges.

KENYON, Circuit Judge.

The Kansas City Joint-Stock Land Bank, organized under the Federal Farm Loan Act, became insolvent in 1927, and was by the Federal Farm Loan Board, under the provisions of the Federal Farm Loan Act (12 USCA c. 7, §§ 961 and 963), placed in the hands of a receiver, who took possession of all the assets of the bank of every description. Appellant after that time purchased certain of the bonds of said bank for the express purpose, as admitted in his argument in this court, of bringing suits thereon for himself and for clients whom he hoped to secure. Two of these he brought as plaintiff in the District Court of the United States for the Western District of Missouri, the numbers of which in this court are 7874 and 7939, and will be designated herein by those numbers, one in the District Court of the United States for the District of Kansas (No. 7938, this court), and one was brought by a stockholder named Raab in the District Court of the United States for the Western District of Missouri, in which appellant was attorney for the plaintiff (No. 7875, this court). The defendants were substantially the same in all of these cases. The real object and purpose of these four suits was to oust the receiver appointed by the Federal Farm Loan Board, and to substitute a receiver appointed by the court to take charge of the assets. The previous suits were dismissed by the trial courts, and their action was affirmed by this court (23 F.(2d) 71 and 73), with a modification in one of them, upon petition for rehearing, that the dismissal by the District Court be without prejudice.

This court decided in these cases that the act under which the Kansas City Joint-Stock Land Bank was created prescribed the manner in which it should be wound up in case of insolvency; that the situation was similar to the insolvency of a national bank; that the receiver appointed by the board was a public officer, and that he was in possession of the assets in discharging his duty at the time the suits were brought; and that the court had no right to interfere with such receiver in the proper discharge of his duties. In cases numbered 7874, 7875 and 7939 23 F.(2d) 71, argued and decided together, this court said that questions might arise during receivership that would require judicial determination.

Appellees urge that every question involved in the present case has been determined in some of the previous ones between substantially the same parties. We have examined appellant's brief of 198 pages, which evidences much research and philosophical meditation, to discover what, if any, issues are now presented that have not been passed on by this court in some of these cases.

As a type of the various cases, we refer to case No. 7874. There the prayer of the petition is almost identical with the prayer for relief in this case. In that case appellant asked judgment against the Land Bank in the sum of $5,000, with interest, and for a lien upon the assets in the hands of the registrar, Ryker; that he have judgment for his interest in the trust fund, and that the same be ascertained; that the court appoint a receiver to take possession of the bank's property of every kind and character, including that pledged as security for the bonds; that the total amount of bonds be ascertained, together with ownership; that an accounting and discovery be had of all transactions of the Kansas City Joint-Stock Land Bank, or of any individuals or corporations in connection therewith. These matters are all covered by the prayer in this suit, which, however, asks in addition that the receiver to be appointed be invested with authority in equity to enforce the outstanding stockholders' liability due and owing by the stockholders of the Kansas City Joint-Stock Land Bank of Kansas City.

This question was, however, referred to in the former opinions of this court, and was in fact the basis of suit No. 7939. On that subject this court said (Krauthoff v. Kansas City Joint-Stock Land Bank, 23 F.(2d) 71-73): "It cannot be thought that there was any other purpose in making the assets of the insolvent bank subject to the order of the board than the use of them — and the stockholder's liability, if necessary — in settlement of the insolvent estate, to pay the bank's debts; nor could those debts be paid until its creditors and the amount due each should be ascertained. A receiver appointed by the Comptroller must report to him, and a receiver appointed by the board must report to it."

Appellant devotes some 74 pages of his brief to the question of pledged assets. This question was in case No. 7938, appeal from the District Court of Kansas. Judge Pollock, in the District Court, said that the "receiver is entitled to the possession of the securities pledged back of the bonds now outstanding, either in this jurisdiction or any other jurisdiction or location, and in my opinion they are no more subject to be wrested from his possession and control by a receiver appointed by this court than by any other person. As the law under which the bonds owned by plaintiff were issued so provides, it must be held, in my judgment, this court is powerless at the suit of plaintiff, who, by the very act of purchasing the bonds, consented a receiver, appointed as was defendant Compton, should, in case of insolvency of the bank, take possession and hold the same to be applied as the law directs." This court upheld that decision and in a per curiam opinion 23 F.(2d) 73 said: "It the suit was brought by a creditor who owned bonds issued by Kansas City Joint-Stock Land Bank of Kansas City, Mo., in his own behalf and in behalf of all other creditors who might wish to join in the suit. The bill asks the court to appoint a receiver of the farm mortgages and United States government bonds pledged with C. A. Ryker, registrar, as security for the payment of the bonds. Ryker resides at Wichita, Kan., and the suit was brought in that district, because that was the situs of the property that appellant sought to have impounded in receivership. The ultimate relief sought was the same as that in the other cases." A petition for rehearing therein was denied. So it appears the question of pledged collateral and its protection was before this court in the prior cases.

It is entirely within bounds to say that every question presented on this appeal has been passed on by this court in one or the other of the former appeals in cases between the same plaintiff (appellant here) and substantially the same defendants (changes in defendants being merely nominal). The only difference in this case is that, while in the other suits brought by the appellant he sued on five bonds, here he adds an additional bond of $1,000, on which it is alleged that the interest due is unpaid.

In case No. 7874 this court said: "The board found the Joint-Stock Bank to be in default of its obligations, that it was insolvent, and in May, 1927, placed it in the hands of William R. Compton as its receiver." Therefore it appears that, when that case was considered, there had been defaults upon the part of the bank in the payment of its obligations, and in the bill in case No. 7874 is this allegation: "Plaintiff further states that on or about the 1st day of May, 1927, the Kansas City Joint-Stock Land Bank of Kansas City, Mo., made default of its outstanding federal loan bonds, the interest of which had matured on that date." So that, while the specific question of default in interest on this bond was not before the court in the former appeals, the cases were considered on the theory that...