Temple v. Glasgow

• Decision Date: 04 May 1897
• Docket Number: 176.
• Citation: 80 F. 441
• Parties: TEMPLE et al. v. GLASGOW et al.
• Court: U.S. Court of Appeals — Fourth Circuit

80 F. 441

TEMPLE et al. v. GLASGOW et al.

No. 176.

United States Court of Appeals, Fourth Circuit.

May 4, 1897

On September 17, 1892, the Connecticut River Banking Company, a corporation of Connecticut, filed its bill of complaint in the circuit court of the United States for the Western district of Virginia against the Rockbridge Company a corporation of Virginia, and against the Manhattan Trust Company, a corporation of New York, and F. T. Glasgow, a citizen of Virginia, trustees, alleging that it held, as collateral security for a debt due to it by the Rockbridge company, certain past due and unpaid first mortgage (series A) bonds of the said Rockbridge Company, secured by a deed of trust from said Rockbridge Company to the said Manhattan Trust Company and F. T. Glasgow, trustees; that, of said first mortgage (series A) bonds, there were outstanding, in all, about $120,000 or $130,000, of which no part of the principal or interest had been paid, and that the said Rockbridge Company was largely indebted to persons other than said mortgage bondholders, and was insolvent and unable to pay its debts, and that suits to a considerable amount had already been instituted against it, and other suits were threatened; that said company owned large and valuable properties, real and personal, in the county of Rockbridge but was unable to realize funds to meet its defaulted engagements, and its officers and managers were unable to do anything to relieve it from its embarrassments; and that the interests of all parties concerned required that the company should go into the liquidation, and its property and assets be placed in the hands of a receiver, to avoid being wasted by suits, and so that full justice might be done to all parties. The prayer was that the Rockbridge Company and the said mortgage trustees be required to answer, and that an injunction be granted restraining the Rockbridge Company from all further acts as a corporation, and for the appointment of a receiver of the property and assets of the company, in order that the same might be administered under the direction and control of the court, and that the debts might be collected, and the property sold, and the proceeds appropriated, under the direction of the court, to the payment of the company's debts according to their priorities; that all necessary accounts might be taken; and that the claims of all parties who should come in might be ascertained and adjudicated; and for general relief. Subpoenas were issued, and the Rockbridge Company and Glasgow were returned summoned to the October rule day, 1892, and the Manhattan Trust Company to the November rule day, 1892. The matter of the appointment of a receiver was, upon notice, set for hearing on October 17, and postponed to November 10 1892, and on that day it was continued to the next regular term.

On December 6, 1893, one H. C. Parsons filed his petition in said suit, alleging, in substance, that in his own right, and as president of the Natural Bridge Forest Company, he was the owner of $17,500 of the first mortgage bonds of said Rockbridge Company, similar to those described in the bill and that all of said mortgage bonds were past due and unpaid. And thereupon he concurred in the averments and the prayers in complainant's bill alleging as additional grounds for the appointment of a receiver that the personalty of the defendant company under its management at that time was being rapidly wasted. On December 21, 1893, J. O. Burdett, receiver, filed a petition stating that he was the holder of $5,800 of said mortgage bonds, which were a lien upon the property described in the mortgage filed with the bill, and alleging that unless a receiver was appointed the assets of the defendant company would go to waste, and judgments would be obtained against it by different creditors. He joined in the prayer of the original bill, and asked, in addition, that 'the property of said company embraced in the mortgage aforementioned be subjected to the lien of said mortgage, and be divided amongst the creditors secured therein, and, if your petitioner's debt should not be fully satisfied thereby, that he be allowed to share in the proceeds, pro rata, of any property not embraced in said mortgage, along with the unsecured creditors. ' On February 26, 1894, a similar petition was filed by the Glasgow Manufacturing Company, setting forth at great length an open account due it by the defendant Rockbridge Company, explaining how a large part of said account had been paid from the proceeds of certain mechanics' liens, and stating that the remainder thereof was secured by the hypothecation of $14,200 of said mortgage bonds. It was again stated that the defendant company owned valuable real and personal property not conveyed by said mortgage; that it was insolvent; that actions were pending against it which would soon go to judgment, and, unless some action was taken, the plaintiffs in said action would acquire liens on the property 'not embraced in said mortgage, giving them priority over creditors who have not instituted at law. ' The appointment of a receiver was again prayed, affidavits were filed with the petition in support of the allegations therein made.

Thereafter, upon notice to the defendants, the motion for the appointment of a receiver was renewed on February 26, 1894, and on that day a decree was entered, which, after reciting that it appears to the court that the appointment of a receiver was necessary, decreed as follows: 'It is adjudged, ordered, and decreed that J. Lewis Bumgardner and F. T. Glasgow be, and are hereby, appointed as receivers for said the Rockbridge Company, and that they shall, as soon as practicable, take possession, and that the officers and agents of the said company be directed to give them possession, of all the property, books, papers, and assets of the said company, of all nature and description. And the said receivers shall, as soon as practicable, make an inventory of the property and effects of the said company, and shall report the same to this court, with such suggestions and recommendations as they shall deem best, with a view to the liquidation of the indebtedness of the said company. And that said receivers are authorized to employ such agents, clerical, expert, and other assistance as they may deem proper, in order that the property of the company may be protected, the inventory above directed made, the books of the company examined in the discharge of their duty. And said receivers are directed to collect all debts due the said company, by suit or otherwise,-- not incurring the expense of suit, however, on claims known to be insolvent, but only on such claims as they in their judgment, may deem it best for the interests of the creditors of the company to institute suit upon; and they also shall have power to compromise claims on such terms as they both may agree upon. That the officers and agents of the said company are hereby enjoined and restrained from exercising any rights or control over the property, assets, books, and papers of the said company, and from interfering in any manner whatever with the control and management of the receivers over and with the same. And all persons who are, or claim to be, creditors of the said company, are hereby enjoined and restrained from instituting any suit or suits against the said company, and, in case any such suit or suits has or have been heretofore instituted against the said company, the further prosecution of the same is or are hereby enjoined and restrained. And it is further adjudged, ordered, and decreed that George E. Sipe, of Harrisonburg, Va., be, and he is hereby, appointed as a special master commissioner of this court for the purpose, whose duty it shall be, as soon as practicable, to take, state, and settle (1) an account of the property and assets of the Rockbridge Company; (2) an account of the debts and liabilities of the Rockbridge Company, and the order of their priorities; (3) any other matter which he may deem pertinent, or which any party in interest may require to be specially stated. But before executing the said account the said special master commissioner shall first advertise the times and places of his primary appointments once a week for four successive weeks in some newspaper published in the town of Harrisonburg, Virginia, and also in some newspaper published in the town of Lexington, Virginia, which said publication shall be deemed equivalent to personal service of notice on all parties in interest. And before said J. Lewis Bumgardner and F. T. Glasgow, receivers, shall be authorized to act under this decree, they shall each execute and file before the clerk of this court their bonds, with approved personal security, and to be approved by this court, in the penalty of ten thousand dollars, each separately, payable to the United States of America, and conditional for the faithful discharge of his duty under this and all future orders and decrees of the court in this cause.'

In pursuance of this decree, one of the receivers thereby appointed filed his bond, with sureties, on the 20th day of February, the day of his appointment, and the other receiver filed a similar bond on the 1st day of March following, but as appears from the record, neither bond was approved by the court until March 2d. When the decree was entered, actions at law in favor of the appellants against said Rockbridge Company were pending in the circuit court of Rockbridge county, Va., and matured for a term of said court commencing on the 1st day of March, 1894. At this time the appellants were not parties to this suit, and on said 1st day of March, 1894, judgments were entered in said actions at law in favor of the appellants. The special...