Levi v. Evans

• Decision Date: 02 October 1893
• Docket Number: 45-47.
• Citation: 57 F. 677
• Parties: LEVI v. EVANS. SAME v. SIEBERLING. SAME v. WILD.
• Court: U.S. Court of Appeals — Seventh Circuit

57 F. 677

LEVI v. EVANS.

SAME v. SIEBERLING.

SAME v. WILD.

Nos. 45-47.

United States Court of Appeals, Seventh Circuit.

October 2, 1893

Statement by BAKER, District Judge:

The appellee James L. Evans commenced an action in attachment in the circuit court of Hamilton county, Ind., against the appellant, Emil S. Levi making the American Strawboard Company and Crawford Fairbanks garnishee defendants therein. The complaint was in a single paragraph for money had and received, as the proceeds of the sale of certain shares of stock. In the state court the appellee Leonard Wild filed under said attachment a similar complaint. Upon the appellant's petition, the causes were removed into the circuit court of the United States for the district of Indiana. After such removal, and before the filing of the transcript in the federal court, the appellee Monroe Sieberling filed in the latter court his complaint and proceedings in attachment similar to the complaints filed in the state court by Evans and Wild. The transcript on removal was filed on the 9th day of December, 1889. On the 7th day of January, 1890, Crawford Fairbanks, garnishee, acknowledged his indebtedness in the sum of $12,590.80, which he then paid into the registry of the court in obedience to its order. At the same time the American Strawboard Company, garnishee acknowledged an indebtedness of $24,214.60, which was paid in under the order of the court 'for the use of the parties lawfully entitled thereto.'

On the 10th day of January, 1890, the following entry was made in the original cause:

'Evans v. Levi. Come James L. Evans, Leonard Wild, and Monroe Sieberling, by Shirts & Vestal and A. C. Harris, their attorneys, and file amended complaints herein as follows [h. i.] And it is ordered for the convenience of trial that each case be docketed as a separate case, and, on motion, the defendants are ruled to answer such complaint.'

The amended complaints so filed were in fact bills in equity, wherein the appellant, Levi, and the American Strawboard Company and Crawford Fairbanks were defendants, charging that conflicting claims to said funds existed, and setting out the facts in detail substantially as stated in the second paragraphs filed May 5, 1890, except that in the latter paragraphs it was shown that all of the money had been paid into court for the use of whoever was entitled thereto.

After the money had been paid into court by Fairbanks and the strawboard company, the appellant, Levi, sought to give the ordinary delivery bond and take the money, but the appellees objected, on the ground that the money was a trust fund, the proceeds of the sale of their stock, and therefore could not be taken out. Thereupon, on the 21st day of January, 1890, the parties entered into the following stipulation:

'Whereas, there is a controversy over the question whether Emil S. Levi has a right to tender a bond and take part or all of the money now in the registry of the circuit court of the United States for the district of Indiana, paid in by the garnishees in cause No. 8,551; and the jurisdiction of the court over the person of the defendant in said cause is also in question: Now, then, in consideration of the mutual settlement of these two questions, it is agreed by and between Emil S. Levi, on the one part, and James L. Evans, Leonard Wild, and Monroe Sieberling, on the other part, that an order shall be forthwith made by said court that the said sums of money shall be forthwith paid over to said Levi or his attorneys, when the said Levi shall file with said clerk an appropriate delivery bond, with R. T. McDonald as surety, and upon the entering by counsel of a full general appearance to said action, and to the amended pleadings filed therein, which have been for the convenience of this court docketed as separate actions, numbered 8,558, 8,559, and 8,560, on the law side of said court. It is understood that by this agreement the said Emil S. Levi expressly waives all questions of the jurisdiction of the Hamilton circuit court or of this court in said causes, including said amended pleadings; but he reserves the right to answer, plead, or demur to the same extent as though he was brought in by process duly served. This agreement may be filed in said cause as evidence of the facts herein set out.'

The foregoing stipulation was duly signed, and on the 22d day of January, 1890, the parties filed the same in said causes in said court, and Levi tendered the bond and received the money thereunder. Afterwards, on May 5, 1890, Evans, Wild, and Sieberling each filed second paragraphs of complaint, which differed from the amended bills filed January 10, 1890, only in that the second paragraphs each showed the money had been paid into court, leaving the litigation to be waged only between the parties to these appeals.

On the 29th of August, 1890, the court made the following order:

'Come the parties, and it appearing that this suit when removed from the state court was an action at law, and it further appearing that after its removal the original plaintiffs filed additional or amended pleadings seeking equitable relief, and that thereupon the defendants entered their appearance to the suit, including said additional or amended pleadings, it is therefore ordered that said common-law action, as it originally stood at the time of removal, be docketed on the law side of the court, and that the additional or amended pleadings be docketed on the equity side thereof, and that they proceed as suits in equity, and the defendants are ordered to answer therein on or before the first Monday in October.'

The causes were so docketed, and on the 1st day of October, 1890, the appellant demurred to each bill of complaint, which demurrers were overruled February 17, 1891, and on March 3, 1891, he filed his answers. The causes were put at issue, and were referred to the master, who, by consent, heard the cases together, and on the 12th of October, 1891, made his report finding for the appellees. The appellant filed exceptions to the master's report, pending which he also moved to dismiss the causes. The motion to dismiss, as well as the exceptions, were severally overruled, and final decree was entered in accordance with the master's finding.

The case made by the findings is substantially as follows: In 1888 the Noblesville Manufacturing Company was organized with an authorized capital stock of $150,000, of which $80,000 was deemed to be represented and paid up by various donations. The remaining $70,000 was held as follows: Emil S. Levi, individually, $20,000; Levi, trustee for Sieberling, $10,000; James L. Evans, $10,000; Leonard Wild, $10,000; John B. Carter, $10,000; Charles A. Jay, $10,000. By the original agreement, Levi, Evans, Wild, Carter, and Jay were to and did each subscribe for $2,000 for the benefit of Sieberling, in trust, which was to be carried for him in consideration of his knowledge and skill in the business, and in consideration that he should furnish plans for the buildings and machinery. This arrangement was modified by a subsequent written contract, whereby Levi became sole trustee for Sieberling for the $10,000 worth of stock which he was to pay for and hold for his reimbursement, with full power to vote the same. Afterwards, the capacity of the mill was increased, and $80,000 of additional stock was issued, of which $40,000 was sold to one Sheldon, trustee, for A. L. Conger. Sieberling obtained from Conger $10,000 of this stock. The remaining $40,000 was to be divided between the original stockholders in proportion to their holdings of original stock. Levi went to Europe about the time the stock was increased, but left Carter to act for him. Levi, when in Europe, subscribed for $20,000 of the new stock, and sent the subscription paper back to Carter for the other subscriptions. It is claimed that $5,000 of the $20,000 subscription made by Levi was agreed by him to be held in trust for Sieberling, for whom he was to pay assessments as made with his own money. On August 15, 1889, Carter, Evans, and Wild executed the following agreement:

'Know all men by these presents, that we, John B. Carter, of the county of Howard, James L. Evans and Leonard Wild, of the county of Hamilton, all in the state of Indiana, witnesseth, that whereas, the said parties are each the owner of stock in the Noblesville Manufacturing Company, a corporation having its place of business at the city of Noblesville, in said county of Hamilton, of the face value of fifteen thousand dollars: Now, therefore, the said John B. Carter, James L. Evans, and Leonard Wild, for value received, do by these presents bargain, sell, and convey unto Emil S. Levi, of the city and state of New York, for and during the period of six months from this date, all and singular the said shares of stock, and all of our respective interests in said corporation, in trust, however, for the use and benefit of the grantors, and with full and absolute power to the said Levi to sell, transfer and convey the same for cash: provided, however, the said Levi only has power to sell the said shares as a whole, and for not less than the amounts of money that have been paid thereon by said shareholders to the present time, and one hundred per cent, thereon in addition thereto, together with the amount of money that may be paid upon said shares by the grantors between this date and the date of any sale thereof by said Levi. The proceeds arising from any such sale shall be paid to the grantor in equal shares, by either paying the same to him at said city of Noblesville, or by depositing the same to his credit at the Citizens' State Bank at said city of Noblesville. And the said trustee has full power to do any and all acts necessary

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