Laughlin v. United States Rolling-Stock Co.

• Decision Date: 28 September 1894
• Citation: 64 F. 25
• Parties: LAUGHLIN et al. v. UNITED STATES ROLLING-STOCK CO.
• Court: U.S. District Court — Southern District of New York

64 F. 25

LAUGHLIN et al. v. UNITED STATES ROLLING-STOCK CO.

United States Circuit Court, S.D. New York.

September 28, 1894

Cravath & Houston, for complainants.

Seward Guthrie, Morawetz & Steele, for defendant.

LACOMBE Circuit Judge.

Upon the argument two questions only were presented for the consideration of the court: First, whether the receiver's certificates are entitled to priority over the claims of other creditors, secured or unsecured; second, whether the receiver should have allowed a claim of Bement, Miles & Co. for $52,275.50.

1. As no brief has been filed in support of the contention of the holders of the receiver's certificates, it will be unnecessary to enter upon any extended discussion of the law or the facts involved in the first question. There is no pretense that any notice of application for the orders authorizing the issuing of these certificates was given to the bondholders or general creditors, whose rights are now claimed to be affected thereby; and the receiver and all to whom the certificates were delivered, therefore, took the risk of the final action of the court touching the priority of such securities when in the fullness of time an opportunity to hear all parties and persons interested should be afforded. Union Trust Co. v. Illinois M. Ry. Co., 117 U.S. 434, 6 Sup.Ct. 809. As the certificates were none of them issued for indebtedness of the receiver as such, but were all turned over to creditors of the company for claims accruing prior to the receivership for goods sold to the company in the ordinary course of business or money loaned to it, or for salaries of its officers or fees of its counsel there is no warrant in the authorities for giving them any priority either over secured or even other unsecured creditors. To do so would be grossly inequitable. Cases referred to on the argument, dealing with the administration of railroad receiverships, are of no application in the case at bar, where the insolvent is a private manufacturing corporation. Farmers' Loan & Trust Co. v. Grape Creek Coal Co., 50 F. 481. There is nothing in the orders heretofore made by the United States circuit court in Illinois which, either as an adjudication or as a matter of comity, should prevent this court from finally administering and distributing the assets in the hands of the receiver according to these well-settled principles of equity jurisprudence. The Illinois court, on the...