United Elec. Securities Co. v. Louisiana Elec. Light Co.

• Decision Date: 28 June 1895
• Citation: 68 F. 673
• Parties: UNITED ELECTRIC SECURITIES CO. v. LOUISIANA ELECTRIC LIGHT CO. et. al.
• Court: U.S. District Court — Eastern District of Louisiana

68 F. 673

UNITED ELECTRIC SECURITIES CO. v. LOUISIANA ELECTRIC LIGHT CO. et. al.

United States Circuit Court, E.D. Louisiana.

June 28, 1895

Fenner, Henderson & Fenner and Denegre & Denegre, for United Electric Securities Co., American Loan & Trust Co., and New Orleans Traction Co.

R. C Bell, Thomas J. Semmes, and R. S. Taylor, for Louisiana Electric Light Co.

PARDEE Circuit Judge.

As the restraining order already issued in this case maintains the statu quo, I had intended to take the record, and, after thoroughly digesting it, file an elaborate opinion covering the law and the facts; but being advised that other matters are pressing affecting the interests of the Louisiana Electric Light Company and the preservation of the trust fund, I have concluded to announce my already formulated views of the case, and file hereafter, if necessary, a full exposition of the equities involved.

At the outset, it is to be noticed that the question now before the court is in relation to the steps which the court ought to take with a view of preserving the rights of parties and the safety of the trust fund pendente lite. Of course, the court does not now undertake to settle and determine the rights of parties, and decree relief, as might be its duty upon a hearing on the merits of the case. At this time, therefore, I will not make any decided and conclusive finding as to the rights of parties, except as they appear upon the ex parte showing that has been made in the case.

It is next proper to notice the exact status of the case as to the jurisdiction and parties. The suit is brought by the Electric Securities Company, a citizen of the state of Louisiana, and in the suit the American Loan & Trust Company, of Massachusetts, and the New Orleans Traction Company, of Louisiana, have intervened, adopting as interveners, the charges made and contained in the complainant's bill. The American Loan & Trust Company, as trustee under the first mortgage granted by the Louisiana Electric Light Company asserts no interest in the case, outside of its interest as trustee; and as the case made shows no outstanding default on the part of the Louisiana Electric Light Company under the mortgage, no further consideration of the American Loan & Trust Company's position in this suit is necessary. The New Orleans Traction Company is a citizen of the same state as the New Orleans Electric Light Company, and it is therefore plain that this court has no jurisdiction over controversies between these two, unless the jurisdiction of the court attaches by reason of the controversy between the Electric Securities Company and the Louisiana Electric Light Company. The jurisdiction of the court, must, therefore, depend upon the controversy between the securities company and the light company; and, unless there is such controversy, and one, too, that draws to the court the possession and control of the property of the light company, the case or controversy of the traction company with the electric light company must be left out of consideration.

The Electric Securities Complains in a double capacity,-- as a creditor and as a stockholder. Under the showing made in the case, it seems to be too plain for dispute, that, as a creditor, the Electric Securities Company has no such controversy with the light company as would justify the court in interfering with the property and management of the Louisiana Electric Light Company. There seems to be no doubt that all the interest due on bonds secured by the first mortgage under the trust of the American Loan & Trust Company is paid up, and that there is no other default under the mortgage which would authorize an interference on the part of the trustee, or any bondholder. The case shows that the Louisiana Electric Light Company has property covered by the mortgage worth nearly a million of dollars, without considering in any way its business and good will as a going concern; that it is able to earn a net revenue on its present business more than twice sufficient to pay accruing interest so that it must be acknowledged that unless hereafter the trustee and the bondholders shall be negligent in asserting their rights under the mortgage, which, by the way, is full of provisions to protect the bondholders, the bonds held by the Electric Securities Company are as secure as bonds of a private corporation can be made. The controversy, then, must depend upon the rights of the Electric Securities Company as a stockholder in the Louisiana Electric Light Company. Although in the bill it is charged that $425,000 of stock issued to the Fort Wayne Company on the organization of the Louisiana Electric Light Company was issued without consideration, in which case it would be fictitious stock, and void under the constitution and laws...