Wheeler v. Walton & Whann Co.

• Decision Date: 12 February 1895
• Docket Number: 165.
• Citation: 65 F. 720
• Court: U.S. District Court — District of Delaware
• Parties: WHEELER v. WALTON & WHANN CO. (PENN MUT. LIFE INS. CO., Intervener).

65 F. 720

WHEELER v. WALTON & WHANN CO. (PENN MUT. LIFE INS. CO., Intervener).

No. 165.

United States Circuit Court, D. Delaware.

February 12, 1895

W. C Spruance and A. W. Spruance, for petitioner.

Bradford & Vandegrift, for receivers.

WALES District Judge.

This is a petition for authority to issue execution on a judgment which was obtained by the intervener against the defendant by confession, in the superior court of Delaware, for New Castle county, prior to the appointment of the receivers. The facts in support of the application are these:

(1) On the 17th of June, 1893, the Walton & Whann Company executed their bond and mortgage to the petitioner to secure the payment of $40,000. By the terms of each of these instruments, the interest on the debt was payable semiannually, and the principal was made payable in annual installments, of $5,000 each, until the whole debt and interest should be paid. It was further provided that if, at any time, default should be made in the payment of any installment of principal or interest, or any part thereof for the period of 30 days after the same should fall due, the whole of the principal debt and interest remaining unpaid should become due and payable, at the option of the petitioner.

(2) On the 5th of June, 1894, the bill of complainant, a stockholder of the Walton & Whann Company, on behalf of himself and all other stockholders and creditors of the defendant company was filed, stating the insolvency of the company before and at the time of the filing of the bill, and praying for the appointment of one or more receivers to take charge of and administer the estate of the insolvent corporation. The bill was founded on a statute of the state of Delaware, which provides that:

'When a corporation shall be insolvent, the chancellor, on the application and for the benefit of any creditor or stockholder thereof, may, at any time, in his discretion, appoint one or more persons to be receivers of and for such corporation, to take charge of the estate, effects, business and affairs thereof, and to collect the outstanding debts, claims, and property due and belonging to the company, with power to prosecute and defend. ' Rev. St. Del. 1893, p. 584.

(3) On the 6th of June, 1894, the court made an order, in limine, for the appointment of the receivers, who were duly qualified on the 8th of June, 1894, by each giving a bond, with surety, in the sum of $100,000.

(4) After the appointment of the receivers, the defendant company having defaulted in the payment of the semiannual interest and of the first annual installment of the principal, due on the 17th of June, 1894, the petitioner, with leave of this court, brought suit on the mortgage in the superior court of the state of Delaware for New Castle county, and recovered a judgment, on which the mortgaged premises were sold by the sheriff of New Castle county, on December 4, 1894, for $40,000, and the proceeds of the sale were applied as follows: To costs, $929.98; to county taxes on the property sold, for the year 1894, $393.60; and the balance, $38,676.42, to the debt and interest on the mortgage judgment,-- leaving a balance of $3,636.90 still due and unpaid, with interest thereon from December 4, 1894.

(5) On the 5th day of June, 1894, the attorney of the petitioner, with actual knowledge of the filing of complainant's bill, and after the service on the defendant of a certified copy of the same, together with notice that a motion would be made on the next following day for the appointment of receivers, obtained a judgment, by confession, in the superior court of Delaware, for the debt secured by the bond.

(6) The subpoena was served on the defendant at 2 p.m. on the 6th of June, and subsequent to the appointment of the receivers.

The petitioner also asks that an order be made on the receivers to pay the county taxes which were due and payable by them prior to the proceedings instituted on the mortgage.

The granting of authority to issue execution is opposed by the receivers, on the ground that this court had acquired jurisdiction of the parties and of the subject-matter of the controversy by the filing of the complainant's bill and service of notice on the defendant of the motion for the appointment of receivers, before the entry of the judgment of June 5th, and that to permit the sale of the property, now in the custody of this court, would be an interference with its jurisdiction. It is undoubtedly the law that, where two courts have concurrent jurisdiction, the one which first obtains jurisdiction will retain it to the end, and will allow no interference by the other. This rule is reciprocal between the federal and state courts, and its observance has hitherto operated to prevent any serious conflict of jurisdiction between them.

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