State Trust Co. of New York v. National Land Imp. & Mfg. Co.

• Decision Date: 30 June 1893
• Citation: 72 F. 575
• Parties: STATE TRUST CO. OF NEW YORK v. NATIONAL LAND IMP. & MANUF'G CO. et al. Ex parte FITZSIMONS.
• Court: U.S. Court of Appeals — Fourth Circuit

72 F. 575

STATE TRUST CO. OF NEW YORK v. NATIONAL LAND IMP. & MANUF'G CO. et al.

Ex parte FITZSIMONS.

United States Circuit Court, D. South Carolina.

June 30, 1893

Trenholm & Rhett, for complainants.

Mordecai & Gadsden, for petitioner.

SIMONTON Circuit Judge.

This case comes up upon a petition of W. Huger Fitzsimons, Esq. receiver, appointed for the National Land Improvement &amp Manufacturing Company by the state court. The prayer of the petition is that certain property heretofore of this corporation in the hands of Henry S. Holmes, Esq., receiver be delivered to him. Mr. Holmes was appointed temporary receiver in certain proceedings filed in this court, entitled 'State Trust Company of New York v. National Land Improvement & Manufacturing Company et al.' On 13th June, 1893, the Honorable J. F. Izlar, judge of the First circuit of the state of South Carolina, upon hearing a complaint of J. D. Ackerman & Bros., suing as well in their own behalf as on behalf of all other creditors in like plight of this National Land Improvement & Manufacturing Company against said corporation, issued a rule against the corporation to show cause why a receiver be not appointed, and why the temporary injunction included in said order, directed to all the creditors of the corporation, be not made perpetual. The summons on this complaint and this rule to show cause were served on the defendant on 14th June, 1893. On the 13th June, 1893, the National Land Improvement & Manufacturing Company executed as assignment for the benefit of its creditors of all of its property and assets to Aaron J. Barton as assignee, who accepted the same. The record does not disclose the actual priority as to the hour of signing between this order of the judge and the execution of the assignment. It was stated, however, at bar, and is assumed as a fact, that the order was signed about five hours before the assignment was executed. Nothing in the record induces the belief that the defendant corporation had any notice, actual or otherwise, of the order of Judge Izlar. On 17th June, 1893, a bill was filed in this court by the State Trust Company of New York against this National Land Improvement & Manufacturing Company, Aaron J. Barton, assignee, John H. Steinmeyer, executor, and Andrew J. Riley. Hearing this bill, an order was passed, filed on the same day, appointing Henry S. Holmes receiver, as prayed in the bill. The present motion is predicated upon the position that the state court had taken jurisdiction of the subject-matter of this suit, and that this court will hold its hand. A court of the United States will always avoid, if possible, a conflict of jurisdiction with a state court. These courts should never interfere with each other. It is a fixed rule of this court never to take jurisdiction of a case which presents the same issues and seeks the same relief as are presented and sought in a case pending in the state court. Gates v. Bucki, 4 C.C.A. 116, 53 F. 969; Howlett v. Improvement Co. (1893) 56 F. 161. An examination of the pleadings in each court will disclose whether a conflict exists. The plaintiffs in the state court, bringing a creditors' bill, aver that they are simply contract creditors of the defendant corporation,-- by the way, the only defendant,-- as holders of two promissory notes, and that repeated demands have been made for payment without success, and repeated promises to make a statement of the affairs of the corporation have been broken; that a number of suits either have been or are about to be instituted against the corporation; that the corporation, and its officers as well, are wholly insolvent; that the president of the corporation and the general manager are president and vice president of the Nickel Savings Bank in Charleston, and have improperly allowed all the choses in action of the defendant corporation to get into the possession and control of said bank; that J. C. Mallonee, general manager of defendant corporation, is using its funds in speculating in futures for his own benefit, and that there is great danger of waste of the property of the corporation if it and its officers are not restrained. Then comes the prayer for the injunction and the appointment of a receiver. The bill in this court is by the trustee of a deed in the nature of a mortgage executed by the defendant corporation to secure an issue of 250 bonds of $1,000 each, which deed was duly recorded. This deed is an exhibit to the bill, and it also sets out parts of it. Among other things, is this:

'If the company, its successors or assigns, shall at any time hereafter make default, or refuse, neglect, or omit for six months to pay the semiannual interest on the bonds intended to be secured hereby, or any of them, or to make any other payment of the principal of said bonds or otherwise, as

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