Tropical Printing Co., Inc. v. Union Title Guarantee Co., Inc.
| Decision Date | 02 October 1934 |
| Docket Number | 32791 |
| Citation | 157 So. 534,180 La. 702 |
| Court | Louisiana Supreme Court |
| Parties | TROPICAL PRINTING CO., Inc., v. UNION TITLE GUARANTEE CO., Inc |
Rehearing Denied October 29, 1934
Appeal from Civil District Court, Parish of Orleans; William H Byrnes, Jr., Judge.
Action by the Tropical Printing Company, Inc., against the Union Title Guarantee Company, Inc., in which receivers were appointed for defendant. From a judgment directing method of distribution of assets by receivers, the city of New Orleans and others appeal.
Reversed and remanded with directions.
Isaac S. Heller, Max M. Schaumburger, and Leopold Stahl, all of New Orleans, for appellants Mortgage Corporation et al. and Mrs Emile Hirsch.
Dufour, St. Paul, Levy & Miceli and Philip E. James, all of New Orleans, for appellant Reconstruction Finance Corporation.
Theo. Cotonio, Jr., and Theo. Cotonio, both of New Orleans, for appellant John Foto.
Titche & Titche, of New Orleans, for appellant Mrs. Delphine F. Levy.
Benjamin Y. Wolf, of New Orleans, for appellant Adam Wirth.
L. D. Dunbar, of New Orleans, for appellant Joseph C. Meyers.
Dart & Dart, of New Orleans (L. C. Guidry, of New Orleans, of counsel), for appellants American Nat. Ins. Co., Lafayette Fire Ins. Co., and Mertie M. Bloom.
Nat W. Bond, City Atty., and Walter M. Barnett, Jr., and Howard W. Lenfant, Asst. City Attys., all of New Orleans, for appellant City of New Orleans.
Herbert W. Kaiser and John H. Hammel, Jr., both of New Orleans, for appellees Peat, Marwick, Mitchell & Co. and Emile Bienvenu.
Charles J. Rivet, of New Orleans, for appellee John J. Maxwell.
Rene A. Viosca, U.S. Atty., William H. Norman, Sp. Asst. to U.S. Atty., and Robert Weinstein, Asst. U.S. Atty., all of New Orleans, for appellee United States of America.
J. C. Henriques and Rosen, Kammer, Wolff & Farrar, all of New Orleans, for receivers, Clay W. Beckner and S. Sanford Levy.
Pierre D. Oliver, appellee, in pro. per.
O'NIELL, Chief Justice.
The receivers of the Union Title Guarantee Company, Inc., who were appointed on the 6th of January, 1933, filed what they called their first provisional account and tableau of distribution on the 24th of October, 1933. The account consists of a voluminous audit of the books of the insolvent corporation, a list and valuation of the property on hand, a statement and classification of the funds held by the receivers, including collections made after their appointment, and a list and classification of the claims against the corporation.
The company's business was that of making loans secured by mortgages on real estate and selling the mortgage notes, under a guaranty, not only that the title of the mortgaged property was valid, but also that the notes would be paid at maturity. Every mortgage note so received and disposed of by the corporation contained this stipulation:
"Principal and interest of this note are payable solely at the office of Union Title Guarantee Company, Inc., New Orleans, La."
The acts of mortgage securing the payment of the notes contained these clauses:
For a period of nearly ten years after the corporation was organized, or until the 24th of June, 1932, all sums of money deposited with the company by note makers, to be paid to the holders of their notes, were simply credited to the account of the note holders and deposited in the company's bank account, to be paid over on demand of the note holders for whom the money was collected. But, on the 24th of June, 1932, the officers of the company, perhaps having come to realize that the funds which were deposited by note makers with the company as agent for the note holders did not belong to the company and should not be mingled with the company's funds, or dealt with as such, opened a bank account, labeled, "Trustee Account," which was kept entirely separate and apart from the company's bank account; and into this so-called trustee account the company then deposited exactly the amount which the company had collected and was holding for account of note holders. Thenceforth the company maintained the trustee account, representing the money that had been collected for and belonged to note holders. As a rule, all sums deposited by note makers for account of the holders of their notes were deposited directly and immediately into the trustee account; but sometimes these deposits were first placed into the company's bank account and afterwards transferred to the trustee account. A month after the account was opened, the company borrowed $ 6,000 from the account, but returned it to the account five days afterwards. Four months later the company made a loan of $ 10,000 of the funds in the trustee account to the Union Indemnity Company, a corporation affiliated with the Union Title Guarantee Company; and, a week later, the Union Title Guarantee Company made another loan of $ 10,000 of the funds in the trustee account to the Union Indemnity Company. Eighteen days afterwards the Union Indemnity Company paid the two loans, and the $ 20,000 was redeposited by the Union Title Guarantee Company immediately into the trustee account. These loans to the Union Indemnity Company were intended to be only temporary transactions, to accommodate the borrower pending the consummation of a loan of $ 20,000 from the Reconstruction Finance Corporation, which loan was in fact consummated. A few days later, that is, on the 5th of January, 1933, the Union Title Guarantee borrowed $ 15,600 from the Union Indemnity Company and immediately deposited the amount into the trustee account. It required exactly that sum to cover certain sums which had been deposited by note makers with the Union Title Guarantee Company, as agent for the note holders, and which had not yet been placed into the trustee account. After the $ 15,600 was placed into the trustee account, it contained nothing more than had been deposited by note makers with the Union Title Guarantee Company, as agent for the holders of their notes.
At the time when the receivers were appointed, there was in the trustee account the sum of $ 53,724.84, and in the company's bank account $ 10,694.61. The receivers afterwards received from note makers deposits for account of the holders of their notes, which deposits, of course, were in the same category as the funds in the trustee account.
Thus the receivers had on hand when they filed their provisional account $ 69,705.60, including the funds in the trustee account, and including also the sums that were deposited by note makers with the receivers for account of note holders; and the receivers proposed, in their petition for approval of their provisional account, to distribute the $ 69,705.60, thus:
1. To return to the note makers the sums received from them by
the receivers for account of note holders
2. To pay to the note holders (less 10 per cent. to be reserved
for costs of administration) the sums deposited with the
corporation by note makers for account of the holders of their
notes and placed by the corporation directly into the trustee
account
3. To set aside for court costs and miscellaneous expenses
4. To pay to the receivers, in part payment of their fee of
5. To pay to the attorneys for the receivers, in part payment
of their fee of $ 10,000.00
6. To pay to the notary public, on account of his fee of
$ 5,000.00, for making the inventory
7. To pay to the two appraisers $ 1,750.00 each, on account of
their fees of $ 2,500.00 each
8. To pay to the auditors, in part payment of their charges of
$ 15,995.00
Total amount to be disbursed
The receivers proposed also to disburse the money thereafter coming into their hands, from sales of the property of the corporation, thus: First, to pay the balance of the fees of the receivers, their attorneys, the notaries, appraisers, and auditors, $ 17,355.00; second, to pay any additional fees that might be allowed the receivers or their attorneys third, to pay the income taxes due to the United States, amounting to $ 26,935.68; and, fourth, to pay the state and city taxes assessed against the property of the corporation, the amount of which was not determinable at that time.
The city of New Orleans filed an opposition to the account, and obtained a rule on the...
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