Memphis Sav. Bank v. Houchens

• Decision Date: 10 March 1902
• Docket Number: 1,430.
• Citation: 115 F. 96
• Parties: MEMPHIS SAV. BANK et al v. HOUCHENS.
• Court: U.S. Court of Appeals — Eighth Circuit

115 F. 96

MEMPHIS SAV. BANK et al v. HOUCHENS.

No. 1,430.

United States Court of Appeals, Eighth Circuit.

March 10, 1902

On or about March 1, 1892, Nellie Houchens, the appellee, exhibited a bill of complaint against Thomas H. Allen, Thomas H. Allen Jr., Harry Allen, and Richard H. Allen, Jr., partners under the firm name of Thomas H. Allen & Co., and against Ellen H Allen, wife of Thomas H. Allen, and against M. B. Trezevant as assignee of the firm of Thomas H. Allen & Co., in the circuit court of Jefferson county, in the state of Arkansas. The bill contained the following allegations, in substance That Thomas H. Allen, Thomas H. Allen Jr., Harry Allen, and Richard H. Allen, Jr., all of whom were citizens of the state of Tennessee, had been copartners in business, and had been doing business at Memphis, Tenn., under the name of Thomas H. Allen & Co., and in the city of New York, under the name of Richard H. Allen & Co.; that on November 24, 1890, said firms, which were composed of the same persons, executed a deed of assignment to the defendant M. B. Trezevant, who was also a citizen of the state of Tennessee, whereby said firms conveyed to him, for the benefit of all their creditors, a large amount of real and personal property; that a part of the real property so conveyed consisted of several large plantations in the counties of Crittenden, Lee, Desha, Jefferson, Perry, Lincoln, Columbia, Nevada, Logan, Mississippi, and Ouachita, in the state of Arkansas; that, besides conveying said lands in the state of Arkansas by deed of assignment, as aforesaid, Thomas H. Allen and wife, in whom the legal title to said lands was vested, also conveyed them, in trust, on the same day to said Trezevant, such conveyance by separate deeds having been made for the purpose of rendering the transfer of the title to said lands to said Trezevant more effectual; that by other deeds, made by said Thomas H. Allen and wife on February 23, 1891, said lands located in the state of Arkansas were again conveyed to said Trezevant, all of which deeds were duly recorded in the respective counties where the lands were situated, and contained a recital that they were executed for the purpose of securing the creditors of the firms of Thomas H. Allen & Co. and Richard H. Allen & Co., and that when the claims of said creditors were paid the trust should be discharged. The bill further averred, in substance, that Trezevant accepted the trust by signing the several conveyances aforesaid; that on December 20, 1890, said firms made a proposition to their creditors to pay their respective claims in full in four equal installments, which were to be evidenced by promissory notes made by the firms, maturing every six months for the period of two years, and bearing interest at the rate of 6 per cent. per annum, and that as security for the payment of said notes the deed of assignment executed in favor of Trezevant should remain in force, said firms reserving to themselves the power to sell said lands in the meantime through the trustee when it could be lawfully done; the proceeds of any such sales, however, to be applied on said notes. The complainant also averred that Thomas H. Allen & Co. was indebted to her in the sum of $6,556.35; that she accepted the aforesaid proposition, and received three notes of said firm, bearing date December 20, 1890, for the sum of $2,145.46 each, due, respectively, December 20, 1891, June 20, 1892, and December 20, 1892; that of said notes the one which fell due December 20, 1891, was unpaid; that the payment thereof was secured by the aforesaid conveyances; that the trustee had no funds on hand with which to pay the complainant; that a large portion of the land so held in trust consisted of plantation property, a large part of which was idle and unproductive; that the taxes on said property were a heavy burden, and that the trustee was without means to pay the same; that the firm of Thomas H. Allen & Co. and Trezevant, the trustee, had been greatly embarrassed by the low price obtained for cotton and by the financial depression that had come upon the country; that the improvements on the property held in trust were in danger of going to waste; that the value of the trust property would be thereby greatly impaired; that the indebtedness of the firm of Thomas H. Allen & Co., which was secured by the aforesaid conveyances, and which was held by creditors who had assented to the composition proposition aforesaid, amounted to $427,000; and that the holders of said indebtedness were very numerous, and that they were scattered throughout the country and resided in many different states. In view of the premises the complainant prayed, in behalf of herself and all the creditors of Thomas H. Allen & Co. who might elect to join in the proceeding, that the court would appoint a receiver to take charge of all of the aforesaid property and administer it for the benefit of the creditors of Thomas H. Allen & Co., and that during the pendency of the litigation, and until such time as the property was disposed of, it would make such orders for the preservation of the trust property as might be deemed necessary, and for all such further relief as was deemed proper.

The defendants to said bill appeared in the circuit court of Jefferson county on April 4, 1892, and obtained an order for the removal of said cause to the circuit court of the United States for the Western division of the Eastern district of Arkansas, which order of removal was based on the ground that the complainant, Nellie Houchens, was a citizen of Louisiana and that all of the defendants were citizens of the state of Tennessee. The transcript of the record in the state court was filed in the federal circuit court on June 20, 1892, and on July 1, 1892, the latter court made an order appointing M. B. Trezevant receiver of all the Arkansas lands which had been conveyed to him, as aforesaid, in trust to secure the creditors of the firms of Thomas H. Allen & Co. and Richard H. Allen & Co. The receiver duly qualified by giving bond on July 6, 1892. The order of appointment authorized the receiver to sell the lands in controversy subject to the approval of the court, and until they were sold to rent the same and to pay the taxes thereon. On December 21, 1892, the receiver aforesaid filed a petition in the federal circuit court, wherein he represented that the Memphis Savings Bank of Memphis, Tenn., the City National Bank of Cairo, and the Phoenix Insurance Company of Memphis, three of the appellants, and one A. G. Mitchell, of Memphis, had severally commenced actions at law by attachment in the circuit court of Crittenden county, Ark., against the firm of Thomas H. Allen & Co., and had severally sued out writs of attachment which they had caused to be levied on the lands of said firm theretofore conveyed to the receiver in trust, which were situated in Crittenden, Perry, and Jefferson counties, Ark.; that at the October term, 1892, of said court, judgments had been obtained in said several actions against Thomas H. Allen & Co.; and that an order for the sale of the attached lands had been entered, under which the respective sheriffs of said counties were about to proceed. In view of the premises the receiver prayed for an injunction to restrain the threatened sale, and such an injunction was accordingly granted on December 23, 1892. A similar order of injunction, restraining the sale under said judgments of other attached lands of said firm, which were situated in Lee and Faulkner counties, Ark., appears to have been obtained on January 4, 1894. A motion to dissolve the aforesaid injunctions as respects the lands situated in Lee, Jefferson, and Faulkner counties, so that the sale thereof might proceed, appears to have been made in behalf of the appellants in the federal court, which motion was denied on December 5, 1896. Thereafter, on February 10, 1897, the complainant below filed an amended bill of complaint in pursuance of leave theretofore obtained, by virtue of which amended bill the Memphis Savings Bank, the Phoenix Fire & Marine Insurance Company, the City National Bank of Cairo, Ill., and A. G. Mitchell were made parties to the proceeding. After setting forth the commencement of the several actions at law aforesaid in the circuit court of Crittenden county, Ark., said amended complaint contained allegations showing the dates on which the several writs of attachment therein had been received and levied. According to the averments of the bill and the proof offered in support thereof, it appears that none of said writs of attachment were received prior to July 2, 1892, and that none of said writs were actually levied prior to July 8, 1892. Some of the writs were not levied until August 20, 1892. It was further averred, in substance, in said amended bill, that notice of the removal of the cause from the state to the federal court on June 20, 1892, was served upon the defendants; that notice was likewise served upon them that the complainant would, on June 28, 1892, make application to the federal court for the appointment of a receiver to assume charge, control, and custody of the lands heretofore mentioned; that such a receiver had been duly appointed, who had qualified on July 6, 1892; that the lands of which he had thus been appointed receiver had been previously conveyed to him by the firm of Thomas H. Allen & Co., and by Thomas H. Allen and wife, in the manner heretofore described; that Thomas H. Allen & Co. had made a proposition to their creditors for the composition and settlement of their indebtedness in the manner heretofore stated; that said composition had been accepted by all, or nearly all, of the creditors of Thomas H. Allen & Co.; that the Memphis Savings Bank, the Phoenix Fire &...