Southern Trust Co. v. Austin
| Decision Date | 26 February 1929 |
| Docket Number | No. 5464.,5464. |
| Citation | 30 F.2d 893 |
| Parties | SOUTHERN TRUST CO. v. AUSTIN et al. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Kent V. Gay, of McAlester, Okl., and W. E. Allen and W. M. Odell, both of Fort Worth, Tex. (Goree, Odell & Allen, of Fort Worth, Tex., on the brief), for appellant.
Stanley Boykin and H. C. Ray, both of Fort Worth, Tex., for appellees.
Before WALKER, BRYAN, and FOSTER, Circuit Judges.
This is an appeal by the Southern Trust Company from a decree which gave a lien upon its assets in favor of the W. C. Belcher Land Mortgage Company to secure an indebtedness of approximately $83,500 found to exist in a receivership proceeding for an accounting between the two companies.
The W. C. Belcher Land Mortgage Company is a Texas corporation. Suit was brought against it in a federal district in Texas by creditors, who were citizens of states other than Texas, to foreclose a mortgage lien, and in that suit W. C. Austin was appointed receiver for the Belcher Company. Shortly after his appointment, Austin made application to the court to extend the receivership to the Southern Trust Company, an Oklahoma corporation, on the grounds that the Belcher Company had been managing the affairs of the trust company for a number of years by virtue of an assignment; that funds of the two companies had been commingled; and that the Belcher Company had become a large creditor of the trust company as a result of the payment of its debts and liabilities, and had a lien upon its assets. Officials of the trust company had notice of this application, and filed a motion to dismiss it for want of jurisdiction; but this motion was denied and exception noted. The next steps in the litigation were taken in Oklahoma. A state court in that state appointed a general receiver for the trust company. The suit in which that was done was removed to the federal District Court, and there consolidated with a receivership suit ancillary to the suit pending in Texas. Austin and Swinney were appointed ancillary receivers, and they brought suit in which they recovered possession of some property in Oklahoma, title to which was claimed by the trust company, and then applied to the District Court of Texas for an order authorizing the sale of the property so recovered, and also prayed for an accounting between the Belcher Company and the trust company. Thereupon a motion was submitted in the name of the trust company to discharge Austin as receiver, and, if the court was of the opinion that the necessity of a receiver existed, to appoint another receiver. This motion was not made subject to the previous motion of the trust company to dismiss, but by its terms was unqualified and without reservation.
The trust company was organized in 1904, and the Belcher Company was its largest stockholder. In 1919 the trust company found itself in financial difficulties, and in pursuance of a resolution adopted by its stockholders its affairs were turned over to be managed by the Belcher Company, and they were so managed until a receiver was appointed for the Belcher Company. In the meantime the trust company was inactive, though its bare corporate existence was maintained by the election of officers. In the proceeding for an accounting, it developed that an employee of the Belcher Company was elected president of the trust company, and his salary was charged to the latter company. Another employee of the Belcher Company was elected secretary of the trust company, and half of his salary was charged to the trust company. In addition, part of the salary of the secretary of the Belcher Company was charged to the trust company. The rents for offices amounted to $200 per month, of which $40 was charged to the trust company. The Belcher Company bought bonds of the par value of $140,500 at a 10 per cent. discount, and afterwards sold the bonds at par, or at a profit of $14,000. The trust company, though it was unable to buy the bonds, received credit for the sales price, but it was charged $13,000 as...
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