Morris v. Lindauer

• Decision Date: 16 February 1893
• Docket Number: 71.
• Citation: 54 F. 23
• Parties: MORRIS et al. v. LINDAUER et al.
• Court: U.S. Court of Appeals — Sixth Circuit

54 F. 23

MORRIS et al. v. LINDAUER et al.

No. 71.

United States Court of Appeals, Sixth Circuit.

February 16, 1893

Victor Schoenfeld, a retail dry goods merchant, resident and doing business in Manistee, Mich., purchased goods of Lindauer &amp Co., a Milwaukee firm, composed of Max Lindauer and Adolph Lindauer, citizens of Wisconsin, and Solomon Michelbacher, a citizen of New York. Schoenfeld was indebted for such purchases to the amount of $3,527, most of which indebtedness was incurred after March 6th. He was also indebted to the First National Bank of Manistee in the sum of $1,000 for money borrowed upon his promise to forthwith secure the loan by mortgage. This loan was made on the day next mentioned. On April 19th Schoenfeld executed and delivered to Louis E Morris, as trustee, in favor of the First National Bank of Manistee, J. R. Torbe, Julius Schoenfeld, and Mayer Bernhard of Milwaukee, a trust mortgage on all the mortgagor's property, purporting to be in consideration of $5,768.75, and this mortgage was filed in the office of the clerk of the city of Manistee, April 19, 1889, at 5 o'clock P.M. On April 22d, Schoenfeld executed a general assignment of all his property for the benefit of his creditors in favor of Jacob Aarons as assignee, and filed it in the office of the county clerk. The assignee took possession and began selling the stock.

The following opinion was delivered in the circuit court by SEVERENS, J.:

'The defendants in this case renewed at the hearing their objection to the jurisdiction of the court, that by reason of the making and filing of the assignment in the office of the clerk of Manistee county by the defendant Victor Schoenfeld the circuit court in chancery for that county became possessed of the subject-matter of the present controversy, and that this possession of the subject-matter, under the jurisdiction conferred upon that court by the statute of Michigan, was exclusive of the right of any other court to intervene, and disturb the exercise of the powers of the state court. The general principle appealed to in support of this proposition is familiar and well established. This court cannot disturb the actual possession of a thing taken into possession by the state court, but it has jurisdiction to ascertain and declare, in a case where the requisite citizenship of the parties exists, the rights of the parties in the subject matter. This question was fully considered here in the recent case of Ball v. Tompkins, 41 F. 486, and I do not think it necessary to restate the grounds upon which the court is of the opinion that the objection here urged is untenable. It is proper, however, to say that it cannot be admitted that the legislature of the state intended such consequences to follow from their vesting the supervision of the trusts created by assignments in the courts of the state, for any attempt to do this would be futile in the face of the constitutional provision giving the citizen of another state the right to invoke the action of the federal courts in his behalf against a wrong of which he may complain. The objection that some of the beneficiaries in the mortgage are citizens of the same state as the complainants is not tenable. The mortgagee, who is their trustee, represents them, and it is his, and not their, citizenship which is considered. Knapp v. Railroad Co., 20 Wall. 124.

'Upon the merits of the case the first question presented is whether the chattel mortgage of April 19, 1889, should be deemed and taken as made in contemplation of the assignment which was executed three days later, according to its date, and therefore to be treated as part of one scheme with it. There are several indications that the mortgagor intended, when he gave the mortgage, to follow it up with an assignment,-- not absolutely decisive, it is true, but tending in the direction of showing that all was intended to be, and was done substantially as, one transaction. The same persons witnessed both instruments. No circumstance occurred after giving the mortgage for making the assignment. There does not seem to have been any pressure brought to bear upon the mortgagor, and no fresh motive appears; and there are some other facts indicating the way to the same conclusion. But it is necessary, in order to invalidate the mortgage on this ground, that the mortgagees should have had notice of the mortgagor's intention; and for the purpose of testing the question whether such notice was had I think that, under the circumstances of the case, the inquiry must be directed...