Lewis v. American Naval Stores Co.

Citation119 F. 391
Decision Date08 December 1902
Docket Number13,088.
PartiesLEWIS et al. v. AMERICAN NAVAL STORES CO. HIBERNIA BANK & TRUST CO. v. LEWIS.
CourtUnited States District Courts. 5th Circuit. United States District Court (Eastern District of Louisiana)

T. M Stevens and J. H. Lyons, for plaintiffs.

Wm. C Fitts, D. B. H. Chaffe, and E. J. Bowers, for petitioner Hibernia Bank & Trust Co.

J. P Blair, for respondent J. J. Lewis.

Before SHELBY, Circuit Judge, and PARLANGE, District Judge.

SHELBY Circuit.

Judge. This is a contest between two receivers, appointed by different courts, each claiming the right to the possession and control of the assets of the defendant corporation. To show the points in controversy, it is necessary to state the facts as shown by the pleadings and the evidence offered at the hearing.

The parties to the immediate controversy are J. J. Lewis, who was appointed receiver by the United States circuit court for the Southern district of Alabama and by the United States circuit court for the Eastern district of Louisiana, and the Hibernia Bank & Trust Company, which has been appointed receiver of the defendant corporation by the civil district court for the parish of Orleans, state of Louisiana, and also by the United States circuit court for the district of New Jersey. J. J. Lewis, as such receiver, is now in the possession of the assets in question, and the Hibernia Bank & Trust Company, as receiver, seeks to obtain an order placing it in possession of such assets. Lewis' title as receiver will first be stated.

On September 25, 1902, D. R. Lewis, a citizen of the state of North Carolina, and W. P. Lewis, a citizen of the state of Alabama, residing in the Southern district of that state, filed their bill in the United States circuit court for the Southern district of Alabama, against the American Naval Stores Company, a corporation organized under the laws of New Jersey. Plaintiffs are stockholders in the defendant corporation, having $20,000 of stock, and are creditors of the corporation to the amount of $2,650. The capital stock of the corporation is $250,000, but only $106,000 of the stock has been issued and paid for. The debts of the corporation amount to about $100,000. Its assets consist of real estate, part of which is situated in the Southern district of Alabama and part in the Eastern district of Louisiana,-- that in Alabama worth about $3,834.48, and that in Louisiana worth about $12,659.74; of bills receivable and accounts, secured and unsecured, amounting to about $125,000; of rosin in Florida worth about $8,000, in Illinois, worth $18,000, and in Kentucky, worth $5,000; and other personal property in Mobile and in New Orleans. These facts appear by the bill, which elaborately states the grounds and reasons why it became and is necessary to appoint a receiver, and why it would be to the interest and advantage of the stockholders and creditors of the corporation to appoint one. The prayer is that a receiver may be appointed to take possession and control of all the assets, credits, and property belonging to the defendant company, and that the company may be liquidated, adjusted, and wound up under the supervision of the court, and for an injunction restraining any and all parties from prosecuting or instituting any suits against the defendant company, and for general relief. A subpoena in equity was issued on the day the bill was filed, and served on that date. On the same day (September 25, 1902) the defendant, the American Naval Stores Company, answered the bill, admitting its allegations, and consenting and agreeing that a receiver be appointed. It is shown in the answer that the board of directors of the defendant company, having had notice of such bill, had authorized and directed the president to file an answer consenting to the appointment of a receiver. The answer is under seal of the defendant corporation, and is verified by the president. The defendant corporation had complied with the constitution and laws of the state of Alabama by filing in the office of the secretary of state a certified copy of its articles of incorporation, designating its known place of business in Mobile, Ala., and an agent on whom process might be served. A foreign corporation may be sued in any county in Alabama where it does business. Const. Ala. 1901, art. 12, Sec. 232; Ex parte Schollenberger, 96 U.S. 369, 24 L.Ed. 853. On September 26, 1902, the bill and answer being submitted to one of the circuit judges of the Fifth circuit, a decree was rendered appointing J. J. Lewis receiver, as prayed for, with power and authority to take charge and possession of all the assets, real and personal, of the defendant, and with power to collect the debts due to the company from any and every source, and with the usual powers conferred on receivers. He was required to give and did give bond in the sum of $100,000. It was further ordered, adjudged, and decreed that all stockholders, stock subscribers, and creditors were enjoined from instituting or prosecuting any suits against the company, and from interfering with or seeking to reach any of the assets or property of the defendant company, 'except in this court and in this cause. ' On the same day-- September 26, 1902-- an ancillary bill addressed to the judges of the circuit court of the United States for the Eastern district of Louisiana by the same plaintiffs and against the same defendants-- a similar answer by the defendants having been presented-- was submitted to the same circuit judge, and a decree was signed assuming in that court ancillary jurisdiction of the cause, and confirming the appointment of J. J. Lewis as receiver. This ancillary bill and the decree thereon were received and filed in the office of the clerk of the United States circuit court for the Eastern district of Louisiana on September 29, 1902. On the same day similar ancillary bills and answers were presented to the same circuit judge as judge of the United States circuit court for the Northern district of Florida and as judge of the United States circuit court for the Southern district of Mississippi, and similar ancillary decrees were signed by him. On September 29, 1902, on similar ancillary proceedings, J. J. Lewis was appointed receiver of the defendant corporation by the United States circuit court for the Eastern district of Kentucky, by decree signed by one of the judges of that court. On October 3, 1902 on similar ancillary proceedings in the United States circuit court for the Northern district of Illinois (a judge of that court presiding), J. J. Lewis was appointed receiver of the defendant company.

The claim and title to the assets asserted by the Hibernia Bank &amp Trust Company as receiver must now be stated. Its claim is asserted in two separate petitions, which will be considered together. On September 26, 1902, Charles E. Pearce, a citizen of Mobile, Ala., filed a petition against the American Naval Stores Company in the civil district court for the parish of Orleans, La. He is a stockholder in the defendant company to the amount of $1,000, being the owner of one share. The petition alleges that the company has assets in New Orleans, and that the president and secretary of the company have resided there during the last 18 months, and that none of the officers of the corporation are domiciled in New Jersey, except one director, who has never been present at any of the meetings of the directors, and who was elected and holds office solely to comply with the statute of New Jersey, which requires that one director of a corporation created under its laws should be a resident of the state. Irregularities in the management of the company are then alleged, and it is prayed that an injunction should be issued enjoining and restraining the defendant corporation and its agent from selling, pledging, or alienating any of the property of the company. It is also prayed that the defendant be ordered to show cause why a receiver should not be appointed to take possession of the property and business of the defendant corporation, and that, after due proceedings, a fit and proper receiver be appointed, fully empowered to manage, control, conduct, or liquidate the affairs of the defendant. On the same day-- September 26, 1902-- the judge of the state court granted the writ of injunction, and also made an order that the defendant show cause on the 7th day of October, 1902, why a receiver should not be appointed as prayed for; and on the same day-- September 26, 1902-- citation was duly issued on the petition. A copy of the injunction was served by personal service on 'M. A. Moses, director,' and a copy on 'J. J. Lewis, secretary and treasurer,' on September 26, 1902. The citation and order were served September 27, 1902, by the sheriff of the parish, 'by leaving a copy of the same at the office of the defendant corporation at No. 606 Commercial alley, in the hands of L. C. Bodit, clerk, the president and other superior officers being absent. ' On October 27, 1902, Pearce's application for the appointment of a receiver coming on to be heard in the district court for the parish of Orleans, that court rendered judgment appointing the Hibernia Bank & Trust Company receiver of the defendant corporation upon its furnishing bond in the sum of $25,000, which was given, with full power and authority to 'hold, administer, manage, and dispose of the property and income of the corporation in such manner as the court shall direct. ' On October 30, 1902, Charles E. Pearce filed a bill in the United States circuit court for the district of New Jersey against the American Naval Stores Company, seeking to have a receiver appointed for the defendant corporation by that court. He alleged that he was a stockholder in the company, holding one share, and was a creditor having a claim against the...

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