Real Estate Loan Co. v. Brown
| Decision Date | 31 December 1927 |
| Docket Number | No. 478.,478. |
| Citation | 23 F.2d 329 |
| Parties | REAL ESTATE LOAN CO. v. BROWN (LANE COTTON MILLS CO., Intervener.) |
| Court | U.S. District Court — Panama Canal Zone |
Roy S. Drennan, of Atlanta, Ga., for plaintiff.
Jones, Evins, Moore & Powers, of Atlanta, Ga., for defendant.
Spence & Spence, of Atlanta, Ga., for intervener.
The proceedings which led up to this motion to remand the case to the state court are unusual and must be carefully stated. Lane Cotton Mills Company, a corporation of Louisiana, on March 24, 1926, sold to Paul F. Brown, a citizen of Georgia, certain personalty, securing the purchase-money note for $40,000 by a retention of title and a mortgage on real estate, duly recorded. Default occurring, suit was brought in the state court and judgment recovered for $27,500 principal, $1,833.13 interest, and $2,933.51 attorney's fees, declared to be a special lien on the property securing the debt. Thereafter, on October 10th, 1927, Real Estate Loan Company, a corporation and citizen of Georgia, brought a bill in the superior court of Fulton county, Georgia, against Paul F. Brown as sole defendant, alleging itself to be his creditor in the sum of $5,000, without lien; that Brown had a valuable interest in the property sold him by the Lane Cotton Mills Company, and in the real estate mortgaged to it, all fully described, and that Lane Cotton Mills Company was threatening to enforce collection of its claim; that there were ample assets to pay all creditors, if properly handled, but likelihood of loss, unless the assets were administered in equity. A receiver was prayed, a marshaling of the assets for the benefit of all creditors similarly situated, an injunction against all persons from interfering with the receiver, and a judgment on the debt of $5,000.
A receiver was appointed the same day, on the consent of Brown, and a general injunction granted as prayed. The receiver qualified and took possession of the property, and still holds it. On October 31, 1927, Lane Cotton Mills Company sought to intervene, setting forth its rights as above stated, and additionally that at the time of the receivership the personal property sold was held in possession for its benefit by a custodian, with right to sell privately for the payment of its debt. Intervener disclaimed any interest in Brown's other debts, but objected to costs and expenses of a receivership coming against its securities. The prayers were to intervene as a defendant, to have the receiver turn over to it the personalty mentioned, and to vacate the receivership as to property on which intervener had a special lien under its judgment. The intervention was allowed as prayed, and a hearing ordered on the prayers.
On November 9, 1927, Brown answered the original bill, admitting all its allegations, and further sought to attack the correctness of the judgment which Lane Cotton Mills Company had obtained against him, and to set up a counterclaim for $123,000 against Lane Cotton Mills Company, on which he prayed a judgment in his favor. He and Real Estate Loan Company on the same day each filed, also, an answer and cross-bill to the intervention, making similar attacks on the judgment of Lane Cotton Mills Company, and seeking to set up the $123,000 counterclaim of Brown against it. On November 18, 1927, still within the time fixed by the Georgia law for answering the original bill, Lane Cotton Mills Company, claiming that there existed a separable controversy between Real Estate Loan Company and Brown, citizens of Georgia, on the one hand, and itself, a citizen of Louisiana, on the other hand, procured a removal of the suit to this court.
The petition to remove was here amended to allege that there was a fraudulent conspiracy between Brown and Real Estate Loan Company to deprive Lane Cotton Mills Company of its right to try the controversy in the federal court, and that the form of proceedings in the state court was adopted for that purpose, there being no bona fide intention to file a creditor's bill against an insolvent debtor. Brown moves to remand the case, Real Estate Loan Company joining him in urging the motion, on the grounds: (1) That Lane Cotton Mills...
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...Construction Co. v. O'Brien, C.C., 104 F. 930; Freeman v. Butler, C.C., 39 F. 1. This question was squarely decided in Real Estate Loan Co. v. Brown, D.C., 23 F.2d 329, in an excellent opinion by District (afterwards Circuit) Judge Sibley. His words are as true and applicable in the instant......
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