Kreitmeyer v. Baldwin Drainage Dist., 309.

• Decision Date: 30 December 1932
• Docket Number: No. 309.,309.
• Citation: 2 F. Supp. 208
• Parties: KREITMEYER v. BALDWIN DRAINAGE DIST. (FLORIDA NAT. BANK OF JACKSONVILLE, Intervener).
• Court: U.S. District Court — Southern District of Florida

2 F. Supp. 208

KREITMEYER v. BALDWIN DRAINAGE DIST. (FLORIDA NAT. BANK OF JACKSONVILLE, Intervener).

No. 309.

District Court, S. D. Florida, Jacksonville Division.

December 30, 1932.

George M. Powell, of Jacksonville, Fla., for petitioner.

J. Turner Butler, of Jacksonville, Fla., for receiver.

STRUM, District Judge.

By its petition of intervention filed herein March 24, 1930, a little more than a year after the decision of the Circuit Court of Appeals in Hemphill v. Florida National Bank, 30 F.(2d) 892, Florida National Bank now seeks to recover from the receiver, as a claim prior to the claims of bondholders and other creditors, a balance in the sum of $5,450, with interest, upon the obligation of the district to the bank originally in the sum of $13,750, evidenced by a warrant drawn by the district upon its treasurer payable to United States Trust Company and indorsed to the Florida bank, being the same instrument involved in the cause above cited, and which was there held to evidence a loan from the Florida bank to the district.

This balance remains after applying upon the district's original obligation to the bank the sum of $8,300, which was on deposit with the bank to the credit of the district when the receiver for the district was appointed, which action was approved by the Court of Appeals in the decision aforesaid.

When Hemphill, the receiver, originally sued the bank on June 27, 1924 (Hemphill v. Florida Nat. Bank, supra), attacking the validity of the bank's action in applying said sum of $8,300 in reduction of the district's obligation to the bank, the bank in due course filed an answer asserting a superior lien upon this sum of $8,300, and the right to apply the same pro tanto in reduction of the district's obligation to the bank. The answer was silent as to the balance now in question which remained after this credit was applied. No counterclaim was therein asserted for this balance of $5,450, although the balance existed when the bank's answer in the former suit was filed, and arose from the same obligation relied on in that suit by the bank, and although the same evidence which established the bank's right to the funds on deposit would have established also the existence of the balance now sought to be recovered, had such balance been asserted in the former suit as a counterclaim.

The former suit (Hemphill v. Florida National Bank) begun June 27, 1924, was terminated by decision of the Court of Appeals, February 26, 1929 (30 F.(2d) 892). Until the present suit was filed on March 24, 1930, the bank asserted no rights against either the receiver or the district with respect to this balance, other than might be found in a casual conversation between the bank's attorney and the receiver's attorney, following the decision of the Court of Appeals above referred to, in which conversation these attorneys informally discussed the question of whether the receiver would pay this balance on authority of the decision mentioned, which the receiver's attorney some time later informed the bank's attorney would not be done. This conversation cannot be construed as a demand, and if it was such it did not occur until some time subsequent to February 26, 1929.

Meanwhile, between his appointment in April, 1924, and the institution of this suit in March, 1930, the receiver has collected some $93,270 in taxes of the district, less than enough to meet bond maturities. This sum represents collections of taxes levied from approximately 1916 to 1930, inclusive. Of this, $38,681.67 was derived from the levy of 1923 and previous years. By authority of orders duly entered in the principal receivership cause, to which this suit is ancillary, the receiver disbursed to bondholders the sum of $79,269.45 on December 15, 1927, and $10,089.18 on February 4, 1930. The receiver has on hand a residue of $3,884.89, which is the balance remaining of the taxes collected throughout the years aforesaid after making said disbursements.

The disbursements above mentioned were made during and subsequent to the pendency of the receiver's suit against the bank Hemphill v. Florida National Bank (C. C. A.) 30 F.(2d) 892, in which suit the bank's superior lien upon the moneys on deposit was asserted, and while the bank stood quiescent as to the balance now contended for by it. The bank replies to this, that it had no notice of the receiver's application for the orders authorizing such disbursements, and therefore is not chargeable with the consequences thereof. Without checking the record, this statement is accepted as true as regards any conventional notice of hearing served upon the bank.

Even so, when the testimony was being taken in the suit of Hemphill, Receiver, v. Florida Nat. Bank (C. C. A.) 30 F.(2d) 892, there was then pending the ancillary cause of Krietmeyer v. Hemphill (C. C. A.) 19 F. (2d) 513, a suit to determine the priorities between the holders of several series of bonds issued by the district. In the testimony in Hemphill, Receiver, v. Florida Nat. Bank, in which the bank's superior lien upon the moneys on deposit was asserted, the receiver (Hemphill) testified that he then had on hand $85,000; that there was then due bondholders $157,000; and that no disbursement thereof would be made until the question of priorities between the bondholders, then in litigation sub nom. Krietmeyer v. Hemphill, had been settled. Thus the bank acquired knowledge on January 6, 1927, the date the testimony was given, that more money was due bondholders than the receiver had on hand, and that disbursement awaited the settlement by the Court of Appeals of priorities amongst bondholders. This was tantamount to notice to the bank of intended disbursement of these funds as soon as the stated question was settled. This question was settled May 10, 1927....