Mercantile Trust Co. v. Binford

• Decision Date: 25 June 1925
• Docket Number: No. 2501.,2501.
• Citation: 6 F.2d 285
• Parties: MERCANTILE TRUST CO. et al. v. BINFORD, Sheriff, et al.
• Court: U.S. District Court — Panama Canal Zone

6 F.2d 285 (1925)

MERCANTILE TRUST CO. et al. v. BINFORD, Sheriff, et al.

No. 2501.

District Court, N. D. Texas, Dallas Division.

June 25, 1925.

S. B. Dabney and Samuel Streetman, both of Houston, Tex., and R. A. Ritchie, of Dallas, Tex., for plaintiffs.

E. B. Robertson, of Fort Worth, Tex., Geo. L. Edwards, of Kansas City, Mo., Wm. T. Jones, of St. Louis, Mo., and John W. Brady, of Austin, Tex., for defendants.

ATWELL, District Judge.

The complainants are the Mercantile Trust Company of New York, and the International-Great Northern Railway Company of Texas. The respondents are T. A. Binford, sheriff of Harris county, Tex., Concrete Investment Company, and National Bank of Commerce of St. Louis, Mo.

The pleadings disclose that the International & Great Northern Railroad Company was received by the United States Circuit Court, at Dallas, in February, 1908; that in November, 1908, a master in chancery was appointed, and by an order of reference he was directed to pass upon all claims, fix priorities and liens, and report his findings to the court. In 1908 the National Bank of Commerce of St. Louis, filed two interventions — one for two $25,000 notes; the other covering approximately $53,000 overdrafts. It was alleged in each of these interventions that the funds represented by the respective obligations were advanced for the "current expenses" of operating the road. These interventions were referred to the master. He reported in 1912 that the debts were correct, but that they were unsecured; that is, that they had no "preference" under the six-months equity rule. This report of the master was approved by the District Court, which had, by the operation of the law, succeeded to the jurisdiction of the Circuit Court. From this approval no appeal was taken.

In 1913, the St. Louis bank assigned its claims to the Concrete Investment Company, one of the defendants herein, and that company brought a suit in a state district court under a statute of Texas which was passed in 1910, a part of which reads as follows:

"In case of any sale heretofore or hereafter made of the property and franchises of a railroad company within this state, the purchaser or purchasers thereof and associates, if any, shall be entitled to form a corporation under chapter one of this title, for the purpose of acquiring, owning, maintaining and operating the road so purchased, as if such road were the road intended to be constructed by the corporation; and, when such charter has been filed, the new corporation shall have the powers and privileges then conferred by the laws of this state upon chartered railroads, including the power to construct and extend: Provided, that, notwithstanding such incorporation, the property and franchises so purchased shall be charged with and subject to the payment of all subsisting liabilities and claims for death and personal injuries sustained in the operation of the railroad by the sold-out company and by any receiver thereof, and for loss of and damage to property sustained in the operation of the railroad by the sold-out company and by any receiver thereof, and for the current expenses of such operation, including labor, supplies and repairs: Provided, that all such subsisting claims and liabilities shall have accrued within two years prior to the beginning of the receivership resulting in the sale of such property."

This act in its entirety constitutes articles 6624 and 6625, Vernon's Sayles' Ann. Civ. St. Tex. 1914, and is popularly known as the "I. & G. N. bill." It was the result of a called session of the Legislature after the receivership and decree of foreclosure in the United States court. After the passage of this act the sale was postponed until June, 1911.

This suit the Concrete Investment Company litigated through all of the state courts successfully, and the judgment, which was affirmed by the highest courts of Texas, for the amount of the two interventions mentioned above, plus interest, aggregates at this time about $250,000. Upon this judgment execution was duly issued and the sheriff levied upon the railroad property "formerly owned by the I. & G. N. Railroad Company," worth, approximately, $25,000,000. A temporary restraining order was granted, and made returnable to show cause why a preliminary injunction should not issue. A motion to dismiss was overruled.

When the United States District Court sold the received road in 1911, it reserved jurisdiction over claims, liens, and other proceedings that might affect the title to the property sold, in the following words: "It is further ordered, adjudged, and decreed that all questions not hereby disposed of, including the discharge of the receiver and the settlement of his accounts, and including the disposition of all claims heretofore filed herein, or hereafter to be so filed in accordance with the provisions of this decree, are hereby reserved for future adjudication; and the court reserves jurisdiction of this cause and of the property effected by this decree for the purpose of final disposition of all such questions and matters; and any party to this proceeding and any claimant whose claims have been or shall be so filed herein may apply to the court for further orders and directions at the foot of this decree."

The decree of foreclosure was entered in the United States court before the passage of the act of 1910. The International-Great Northern road, upon which the present levy is made, is probably largely the same property, but a new corporation, which bought under a...