St. Paul Title-Insurance & Trust Co. v. Diagonal Coal Co.

• Citation: 64 N.W. 606,95 Iowa 551
• Court: Iowa Supreme Court
• Decision Date: 10 October 1895
• Parties: ST. PAUL TITLE-INSURANCE & TRUST CO. ET AL. v. DIAGONAL COAL CO. ET AL. (GUNSON ET AL., INTERVENERS).

95 Iowa 551

64 N.W. 606

ST. PAUL TITLE-INSURANCE & TRUST CO. ET AL.

v.DIAGONAL COAL CO. ET AL. (GUNSON ET AL., INTERVENERS).

Supreme Court of Iowa.

Oct. 10, 1895.

Appeal from district court, Jasper county; D. Ryan, Judge.

Plaintiffs, the holders of the bonds of the Diagonal Coal Company, on March 3, 1893, began an action in the Jasper district court for a foreclosure of a mortgage securing them. In the petition it was averred that said coal company was indebted to other parties in various sums, aggregating $20,000 or over. The necessary facts were alleged as grounds for the appointment of a receiver, and on the same day W. H. Ernst was appointed as receiver of the coal company, and ordered to take possession of all of its property, and manage and conduct its business, until otherwise ordered by the court. The order appointing the receiver authorized him to borrow $3,000 to pay wages of the miners and workmen then employed by the company, and which were then earned; and it was provided that no miner or workman employed in said mine should be paid wages for more than three months then last passed. The court also ordered that the party loaning said sum to the receiver should have a first lien therefor upon all the property of the company for its repayment. The receiver qualified, and took possession of the property as early as March 4, 1893; and in a report to the court made on March 8, 1893, shows that he had borrowed the $3,000 of the Des Moines National Bank for the purpose of paying the wages of miners and laborers due on March 4, 1893, and executed his obligation to repay the same, specifying that said sum should be a first lien upon all of the property of the coal company; that on March 4, 1893, he paid to said miners in the aggregate $2,582.05 out of said sum so borrowed. This report was approved. March 30, 1893, one Jones, on his own behalf, and on behalf of 94 others, filed a petition of intervention in the cause, setting forth that petitioners had, within 90 days next preceding the transfer of said property to the receiver, performed labor for said Diagonal Coal Company, on the dates set out, and for the amounts shown, which sums in the aggregate amounted to over $2,500; that the several sums were due each of said persons after allowing all just claims and set-offs, and no part thereof had been paid. Judgment was demanded against the coal company, and a lien prayed superior to the lien of all other parties. June 26, 1893, the receiver made a report, showing that it was impossible to operate the mines of said coal company; that he could not procure money with which to prosecute the work; that his note for $3,000 borrowed under the order of the court had matured, and he had no funds with which to pay the same; that he had applied all moneys received from the operation of the mine to the payment of current expenses. He asked and obtained an order for the sale of the personal property belonging to the coal company. The court also ordered that, from the proceeds of such sale, the receiver should--First, pay the note for $3,000 and interest; second, pay sums due for wages to employés employed by him; third, pay other expenses of the receivership; and, if any sum remained, it should be held to await the further orders of the court. Thereafter the receiver resigned, and J. P. Huett was appointed as receiver. On September 1, 1893, Edwin Broude and 5 others intervened, alleging that they had been employed by the receiver, and that there was due them for services in the aggregate $213.87. They asked that their claims be allowed and paid as preferred claims. The claims of the 95 laborers above mentioned were on September, 1893, by the court, established as preferred claims, under chapter 48, Laws 23d Gen. Assem. The receiver was also ordered to pay the claims of Edwin Broude and the 5 others above mentioned as preferred claims. It appears from the reports of the two receivers that they received, on account and for the sale of coal and personal property, $3,051.66; that the real estate of the company sold at the foreclosure sale for $4,500,--making an aggregate of over $7,500 received by the receivers and sheriff, exclusive of the $3,000 borrowed of the bank. From the reports of the receivers and the return of the sheriff, it appears that all this money has been paid off except the sum of $16.12. The court ordered that the money realized from the sale of the company's real estate should be distributed as follows: Costs of sale and accruing costs, $40; to Receiver Huett, the amount due upon the receiver's $3,000 note, $1,756.67, and interest thereon, $21.12; to Receiver Huett, to pay laborers employed by him, $1,240,79; to plaintiff, for its services as trustee, $500; and to its attorneys, for services, $850; to the holders of the bond, $31,242.04; and out of any balance the 95 labor claimants were to be paid, and, if there was not sufficient to pay all the claimants last mentioned, then the sum remaining was to be divided pro rata among said parties. These 95 labor claimants except and appeal. Reversed.Alanson Clark and E. J. Salmon, for appellants.

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