Nebraska City Nat. Bank v. Nebraska City Hydraulic Gaslight & Coke Co.

• Decision Date: 01 January 1883
• Citation: 14 F. 763
• Court: U.S. District Court — District of Nebraska
• Parties: NEBRASKA CITY NAT. BANK and others v. NEBRASKA CITY HYDRAULIC GAS-LIGHT & COKE CO. and others.

14 F. 763

NEBRASKA CITY NAT. BANK and others v. NEBRASKA CITY HYDRAULIC GAS-LIGHT & COKE CO. and others.

United States Circuit Court, D. Nebraska.

January, 1883

This is a demurrer to a bill in equity. The facts alleged in the bill are briefly and in substance as follows:

The plaintiff bank is organized under the national banking act. The other plaintiffs are all citizens of states other than Nebraska except James Sweet, who is a citizen of that state. The defendants are all citizens of Nebraska. On the first of October, 1872, the gas company issued 28 bonds for $1,000 each, payable on the first of October, 1882, with interest at the rate of 10 per cent. per annum, payable semi-annually, as provided by coupons attached to the bonds. There was a further provision that if any installment of interest falling due remained unpaid for six months, the whole debt should become due. To secure these bonds the gas company executed its mortgage to J. Sterling Morton and George W. Meeker, as trustees, conveying all property and works of the company. On the first of October, 1876, the company made default in payment of its interest coupons falling due on that day. The plaintiffs respectively hold some of the bonds secured by said mortgage, and in the aggregate they are the owners of 25 of them. The trustees refuse to execute the trust. Upon these allegations complainants pray for a decree for the foreclosure of the mortgage and sale of the mortgaged premises. The bill further alleges as follows: In 1874 the firm of Connor & Son were the owners of $86,000 of the gas company's stock, and by virtue of such ownership had control of its affairs. They sold said stock to Metcalf Hill, Morrison, Morton, and the Pinneys, (who will hereafter be referred to as Metcalf and associates,) for $43,000, but 'in carrying out said agreement the said co-respondents required of the said Connor & Son to deduct from the said sum of $43,000 the entire indebtedness of the said Hydraulic Gas-light & Coke Company, including the above-described bonds, and that the said Connor & Son, in order to dispose of their said stock, they being at that time financially embarrassed, and being pressed by their creditors, consented to such appropriation of the purchase money of and for the said stock then owned by them, and that in truth and in fact the above-named co-respondents only paid to the said Connor &amp Son for $28,000 worth of stock in said company, which they then received, and have ever since held the difference between the total indebtedness of said company, (or what the same could be discounted for,) and the said sum of $43,000 the agreed price thereof; that the balance of said agreed price remained in the hands of the above-named co-respondents as a trust fund, from which to discharge said indebtedness of said company, and especially the above-mentioned indebtedness of your orators, and, so far as the above-mentioned bonds are concerned, the same still remains in their hands.'

The prayer is that the alleged trust fund be brought into court and be distributed among the bondholders, and that the usual decree of foreclosure and sale be entered, and for any deficiency remaining after the sale of the mortgaged premises and the application of the proceeds thereof to the mortgage debt, judgment be rendered against said confederates. There is a demurrer filed on behalf of Metcalf and associates and also a separate demurrer by Nelson Pinney, one of the said associates, which, taken together, raise the following questions:

First whether the allegations of the bill, taken as true, show that the complainants are entitled to the relief prayed as against Metcalf and associates; second, whether the court is deprived of its jurisdiction by reason of the fact that Sweet, one of the complainants, is a citizen of Nebraska; third, whether the bill...