Murray v. Sioux Alaska Mining Co.

• Decision Date: 13 February 1917
• Docket Number: 2655.
• Citation: 239 F. 818
• Parties: MURRAY v. SIOUX ALASKA MINING CO. et al
• Court: U.S. Court of Appeals — Ninth Circuit

239 F. 818

MURRAY v. SIOUX ALASKA MINING CO. et al

No. 2655.

United States Court of Appeals, Ninth Circuit.

February 13, 1917

William A. Gilmore, of Seattle, Wash., James E. Fenton, of San Francisco, Cal., and T. M. Reed, of Nome, Alaska, for appellant.

G. J Lomen, of Nome, Alaska, for appellees Sioux Alaska Mining Co. and Belleview.

The plaintiff, Murray, sued the defendants, Sioux Alaska Mining Company, called Mining Company, and Hastings Creek Dredging Company and H. M. Smith, and the Hastings Creek Dredging Company and Joseph Belleview, alleging: That between March 1910, and May, 1912, at the instance of the Mining Company he performed services at an agreed and reasonable value, and advanced money for the defendant, amounting in all to $3,895.93 and interest. That in 1912 the Mining Company made a bill of sale to the defendant Smith of a certain dredge then owned by the Mining Company in Alaska, the transfer being made as security to Smith for the payment of $5,500 borrowed by the Mining Company from Smith about that time. That subsequently Smith sold the dredge to Knowles and Hansen for $15,000, and received $6,000 on account, which was applied by Smith in payment of the debt of the Mining Company to Smith. That when the bill of sale was made by the Mining Company to Smith it was agreed between the parties thereto that Smith should act as trustee for the Mining Company and hold the legal title by the bill of sale for the dredge, and that all the proceeds from the sale of the dredge above the sum of $5,500 should be paid by Smith at once to the Mining Company. That when the bill of sale to Smith was made the Mining Company had no other property, except a few worthless mining claims, which plaintiff alleges have been forfeited or abandoned, and that the Mining Company is wholly insolvent, except for this equitable interest in the proceeds to arise from the mortgage held by Smith as alleged. That in December, 1914, Smith, in an action against Knowles and Hansen, obtained a decree of foreclosure in a proceeding to collect the balance due on the mortgage already described, and that under execution he has sold all of the interest of Knowles and Hansen in the dredge, and on June 15, 1915, he purchased at marshal's sale all of the interest of Knowles and Hansen in the dredge.

Plaintiff alleges: That Smith was acting as trustee for the Mining Company, and that all his acts were authorized by and conducted in behalf of the insolvent corporation. That on March 2, 1915, Smith in his own name, but acting for the Mining Company, agreed in writing with the defendant Belleview, who was acting for himself and the defendant Hastings Creek Dredging Company, to pay Smith, for the Mining Company, $7,000 for the dredge as soon as Smith could complete the foreclosure proceedings and deliver title to the dredge. That Smith, in behalf of the Mining Company, is about to deliver possession and title of the dredge to Belleview and the Hastings Creek Dredging Company, who were about to pay Smith for the Mining Company $7,000. That Smith is a nonresident of Alaska, but that all other defendants are within the jurisdiction of the court. That the Mining Company deliberately and fraudulently selected Smith as its trustee in order to prevent the plaintiff from compelling Smith to account in the district where the dredge is located and that because defendant has no property, except what it has placed in the name of Smith, plaintiff cannot reach the Mining Company by any legal process. That it is impossible to attach the proceeds of the bill of sale, unless the court will restrain Belleview and the Hastings Creek Dredging Company from paying the moneys described to Smith or the Mining Company. That it would be useless for plaintiff to begin and maintain an action at law against the Mining Company, because of its insolvency, except for the equitable claim to the fund above referred to. That because of these facts, plaintiff files this creditors' bill, instead of an action at law, and unless the court grants plaintiff an injunction, plaintiff will be unable to obtain relief against the Mining Company. The prayer is for a judgment against the Mining Company for $4,869.40, together with interest; for injunction pendente lite restraining Belleview and Hastings Creek Dredging Company from paying Smith the consideration for the transfer and sale of the dredge; that Smith be adjudged the trustee of the Mining Company; and on final hearing that Smith and Belleview and the Hastings Creek Dredging Company be ordered to pay $7,000, or so much as may be due to the plaintiff, in the registry of the court to satisfy any decree obtained by plaintiff, and for general relief.

Plaintiff filed a motion for a restraining order at the time of the filing of the complaint, and supported the same by affidavit of William A. Gilmore, one of the attorneys for plaintiff. The affidavit tends to support the averments of the complaint and refers to a letter (made an exhibit to the affidavit) wherein H. S. Sandvig, who was secretary of the Mining Company, states that a mortgage on the dredge was given to Smith when the company made a $5,500 loan, and that the dredge was turned over to Smith in payment of the loan, with the understanding that Smith was to return to the company what he got above the indebtedness. The writer of the letter also states that Smith sold the dredge for $15,000 and had received $5,000. The court granted a temporary restraining order and order to show cause. The defendants Mining Company and Belleview moved to dissolve the restraining order, and demurred to the complaint for lack of jurisdiction and failure to state facts sufficient to constitute a cause of action. Hearing was had on the motion and order.

Belleview stated: That, about March 2, 1915, he 'bargained' with Smith for the purchase of the dredge, and before the beginning of the action paid Smith $1,000 as part consideration, and gave to Smith his notes, aggregating $6,000, payable to Smith or order. That the notes are a consideration paid for the dredge, it being understood between affiant and Smith that good title to the dredge should be delivered to affiant by the foreclosure of a mortgage given by Knowles and Hansen, that the mortgage was foreclosed, and that the dredge passed...