The Albany v. The Southern Agricultural Works
| Decision Date | 31 March 1886 |
| Parties | The Albany and Renssellaer Iron and Steel Company et al. vs. The Southern Agricultural Works et al. |
| Court | Georgia Supreme Court |
[This case was argued at the last term, and the decision reserved.]
Debtor and Creditor. Assignments. Laws. Construction of Statutes. Injunction. Receiver. Before Judge Hammond. Fulton Superior Court. March Term, 1885.
On March 25, 1885, the plaintiffs in error filed their bill, on behalf of themselves and such other creditors as might become parties, alleging, in brief, as follows:
Complainants are creditors of the Southern Agricultural Works in various sums, aggregating upwards of $00,000, for debts contracted for materials and supplies used by said works to carry on its business. On March 13, 1885, the company attempted to make an assignment for the benefit of creditors to L. De Give, giving preferences therein. The leading recitals and provisions contained in the assignment were, in brief, as follows:
It conveys all of the property, real and personal, and choses in action, more particularly described in schedule "A' thereto attached, and further recites, "and this conveyance is intended to convey any and all real estate, choses in action and personal property, the schedule attached being a full and complete inventory, so far as it is possible to make one, " the conveyance being in trust for the following purposes:
Said works are indebted as follows: State and county taxes, and employes for daily wages, between $1,000 and $2,000, styled class first, Certain first mortgage bonds, about $60,000, secured by mortgage or deed of trust to L. J. Hill and P. Romare, trustees, covering the realty, buildings and machinery of said works—$36,500 being regularly issued, and about $23,500 held as collateral by creditors of the third-class. Said issue of bonds is styled herein class second.
Said works are also indebted for borrowed money, accommodation paper and discounts as follows:
Notes, drafts and acceptances due to said works, discounted at said Atlanta National and Gate City National Hanks. All this class is secured by two mortgages, dated March 11th, 1885, and this is styled class third. The rest of the creditors of said works, aggregating about if 130, 000, are next set forth and styled class fourth.
"This conveyance covers all of the property of the Southern Agricultural Works; " it is made in trust to pay debts, according to the priorities existing and hereinafter declared.
The trustee is ordered to take charge, and convert the assets into money, for the benefit of first, third and fourth classes, and the deed provides for sale of property; the second class holds bonds at long time; the sale is to be made subject to their mortgage, unless they consent, in which event the bonds are to be first paid to an amount equal to the sum realized from the property mortgaged for their security.
The trustee
He is authorized to sell the stock and products of the works privately, and in such quantities as may be judicious; but sales of real estate or machinery must be public.
The money derived from said assets, subject to the provision for paying the bonds, the trustee shall apply:
1st. To the payment of expenses, including his own compensation. 2d. To the payment in full of the debts of the third class, which is hereby made and declared a preferred class of indebtedness, to be paid in full before any portion of the indebtedness included in the fourth class is paid."
This preference follows, and is in addition to and independent of, the preference heretofore given this class by mortgage.
Bonds held as collateral to be cancelled when the debt they secure is paid, and such debt to be cancelled when such bonds are paid.
Executed with the approval of the board of directors, signed by the president and secretary and treasurer and by the stockholders. Accepted March 13th, 1885, by L. De Give.
Affixed to said assignment was a schedule marked "A, " purporting to be a full and complete inventory and schedule of all of the assets of said assignor, verified as such by the affidavit of E. Haiman, president of said works.
The bill denied that the inventory was complete, as required by law. It further alleged that at the time of attempting said assignment, said corporation was insolvent, and being a corporation, under the laws of Georgia, its assets were a trust fund, charged equally with the payment of its debts, and that it could not prefer certain of its creditors, and that the preferences in said attempted assignment were void.
That on the 11 th of March, 1885, the defendant corporation also attempted to create two mortgage liens on its property in favor of class three of its creditors, which mortgages were made as a part of the scheme of assignment, and to cover the debts until the assignment could be drawn, and were founded on no new consideration of any sort, and were made after said corporation was insolvent andknown to be such by the mortgagees, and were void. One of said mortgages covers the realty and the improvements thereon, and the other covers all the personal property, consisting of notes and accounts, machinery and tools, etc.
The bill further alleged that both said deed of assignment and mortgages were void, because they did not describe the debts, to prefer and secure which they were given, in this, that they are given to secure certain notes and drafts discounted at, the Atlanta and Gate City National Banks, and the said notes and drafts are not described in any manner whatever.
That the assignment was void because there was no complete inventory and schedule attached, as required by law.
The bill charge that the inventory was incomplete in omitting entirely the following assets: Patents worth several thousand dollars.
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|Interest in Southern Contton Tie Association|$ 7, 000 00|
|--------------------------------------------|-----------|
|Mule and dray |250 00 |
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By amendment it was charged that the following assets were omitted:
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|Consignment |$ 6, 113 25|
|------------------------------------------|-----------|
|Deer, Mansur & Co. account |3, 491 02 |
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|Also, Graham, Cousens & Co. account, (bal)|1, 045 42 |
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|Culver, Moore & Culver account |242 46 |
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|A. B. Farquhar account |2 38 |
|------------------------------------------|-----------|
|Dudley Bros. & Liscombe account |524 69 |
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|M. Wolf account |136 62 |
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|Langstaff & Co. account. |800 62 |
|------------------------------------------|-----------|
|L.A. Gray account |18 65 |...To continue reading
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