72 F. 115 | 5th Cir. | 1895
This is a suit in equity, in which the following facts are alleged: A. L, Soulard was a promoter of the Bridgeport Electric & Ice Company. On May 7, 1891, he entered into a contract with the plaintiff for the purchase of a machine for the manufacture of ice. It was stipulated in writing that the Bridgeport Electric & Ice Company should pay the plaintiff the sum of f23,000 for the machine, as follows: $5,750 on its delivery at Bridgeport, Ala.; $5,750-when it had withstood a 15 days’ test, producing 30,000 pounds of good merchantable ice per day. For the balance the purchaser agreed to give negotiable notes, with interest at 6 per cent, per annum from date of delivery, — one for $5,850, payable in 4 months, and one for $5,850, payable in 8 months. It was expressly stipulated that these notes should be secured by mortgage on the machine, buildings, and real estate on which they were to be erected, or by personal indorsements satisfactory to the plaintiff. The machine was delivered in May or June, 1891, and was accepted by the defendant on April 26, 1892. Thereafter, in September, 1891, the Bridgeport Electric & Ice Company was organized. The capital stock of the defendant consisted of 301 shares at $100 per share. On October 10, 1891, the directors of the company, who held a majority of the stock, ratified the contract of May 7, 1891, made by Soulard, the promoter, and attempted to provide for ■its payment as follows: They executed and delivered five promissory notes of $2,190 each, bearing interest at the rate of 6 per cent, per annum, payable to the Blymer Ice Machine Company, A. B. Meader, trustee, in 3, 5, 7, 9, and 11 months. These were to be secured by delivery to the trustee of bonds, of the par value of $13,-500, of an issue of 6 per cent, bonds of the defendant of the face value of $25,000. These bonds were to be secured by a mortgage upon the entire property of the defendant at Bridgeport, Ala. It was intended to. place the bonds with Meader, trustee, for payment of the notes. In the event, however, that the bonds should not be issued on or before November 15, 1892, it was proposed to issue to the Blymer Ice Machine Company, A. B. Meader, trustee, a mortgage upon the building containing the ice machinery, the land upon which it stood, and the plant, machinery, and fixtures, as originally agreed by Soulard, — this to secure the payment of said last-men-tiofied notes. It resulted that the bonds were not issued, nor was personal security satisfactory to the plaintiff given, as contemplated by the contract of May 7, 1891. On the contrary, the Bridgeport Electric & Ice Company became insolvent- This insolvency was conceded on March 18, 1892. The plaintiff claims that he was entitled,. by the agreements hereinbefore set forth, to a mortgage or lien on the real estate and personal property of the defendant situated in the town of Bridgeport, Ala., known as the “Bridgeport Electric" & Ice Company Plant”; and the prayers of his bill are that the defendant be required to execute to him a first mortgage upon the plant as of the date when the balance of purchase price of the ice-making machine became due, and that plaintiff be decreed to have a lien of first dignity, and prior to all others,, for said balance with interest thereon, and that the plant and real estate be sold- under
•‘Application for writ of injunction, as prayed for in the foregoing hill, upon the averments contained in the bill, which are sworn to, being made this day to me at chambers, in vacation, at Montgomery, Ala. Upon consideration, it is ordered that the 10th day of April, 1893, he set for hearing-of said motion at Huntsville, Ala., of which the defendants shall have 30 days’ notice, to ho issued by the clerk of said court, and served by the marshal thereof upon the defendant. It is further ordered that, pending the hearing of said application, and until the same is disposed of, the defendant he, and it is hereby, restrained from making or executing any mortgage or incumbrance upon this property, or doing anything prejudicial' to the rights of the complainant, as set. up and averred in said hill. Let copy of this order be served on the defendant.”
On January 28, 1893, the plaintiff brought an action at law in the circuit court of the United States for the Northern district of Alabama for the amount due on the original contract, and on April 29, 1893. judgment was confessed by the defendant. When the judgment was rendered the plaintiff tendered the notes, executed on October 10. 1891, to the defendant, as he had formally offered to do in the bill hereinbefore described. These notes were accepted by the defendant. On March 18, 1893, nearly two months after the bill in the circuit court of: the United States was filed, and after the decree for injunction above set forth had been granted, the Bridgeport Land & Improvement Company, alleging itself to be a creditor, filed a proceeding in the state chancery court of Jackson county, Ala., against the defendant, the Bridgeport Electric & Ice Company. This proceeding sought the appointment of a receiver to take charge of the properlies of the ice company, and a receiver was appointed. It appeared that the officials and directors of the Bridgeport Land & Improvement Company were, to a large extent, identical with those who were 1 lie officials of the Bridgeport Electric & Tee Company, and that, in the dual capacities, and personally, they had notice of the pendency of the suit in the circuit court of the United States, and of the injunction granted therein. Header, trustee, the plaintiff, some months after the bill now before us was filed in the circuit court, made application to the state chancery court for leave to enforce Ms judgment, obtained at law on April 29, 1893, hereinbefore mentioned. The state chancery court granted him leave. Subsequently he caused the property in dispute to be sold under execution. in pursuance of said permission, and himself became the purchaser. Thereafter the supreme court of Alabama issued an order of mandamus vacating and annulling the order of the state chancery court which had authorized this sale. The proceedings at law in the circuit court, as well as in the state chancery court, were brought to the attention of the circuit court in equity by a supplemental bill.
The answer of the defendant, admitting the purchase of the ice-
On the hearing, the circuit court of the Northern district of Alabama (the Honorable Alex. Boarman, judge presiding) decreéd that the plaintiff was entitled to a lien for the balance due him; that the-lien should relate back to and commence from the date of the original contract, to wit, May 37, 1891; that the amount due of the purchase-price on the ice machine was $11,385.87, with interest from the 26th day of April, 3.893. And upon the failure of the defendant to pay this debt, with interest and costs, within 30 days from the enrollment of the decree, it was ordered that a special master, appointed in the decree; should sell the property on which the lien was established at public outcry, for cash, and for the satisfaction of the debt. From this decree the appeal is taken.
It is well settled that an agreement to give a mortgage, for a valuable consideration, upon property which is sufficiently specified, is in a court of equity regarded as the creation of the mortgage itself.. This is held, for the reason that equity will treat that as done which ought to be done. 1 Jones, Mortg. § 163; Ketchum v. St. Louis, 101 U. S. 306; Gest v. Packwood, 39 Fed. 525; Will. Eq. Jur. pp. 48, 298;
As to the contention that the plaintiff prevented, by his injunction, the issue of the bonds contemplated by the resolution of October 10,1892, it is enough to say that the bonds were not issued at the time agreed upon. This was November 15, 1892. And when the plaintiff thereafter, on December 6,1892, after declining to accept the bonds, and demanding the execution of the mortgage, agreed to extend the time to January 10th, he did so very reluctantly. But on the 10th of January the bonds were not issued. These propositions were considered in a spirit of indulgence and compromise, and they failed. The bill was filed, as heretofore stated, on January 27, 1893. In the effort to secure this large indebtedness from an insolvent company, the plaintiff did all in the way of compromise and adjustment that his creditor could hope for. Besides, from subsequent developments, the bonds themselves would have been utterly valueless, and the plaintiff, as a man of business, exercised a judicious discretion in availing himself of the opportunity to refuse them which the defendant’s dilatory and disappointing conduct afforded him. The plaintiff’s contract for a mortgage was made long anterior to the contract of the Thomson-Houston Electric Company. The costly machine was in process of erection on the lands of the defendant company at the time the Thomson-Houston Electric Company gave credit to the defendant. The statute of the state of Alabama, supra, creating the lien for the machinery, it seems, should at least have provoked inquiry, and inquiry would have ascertained the character of the contract between the Blymer Ice Machine Company and the Bridgeport Electric & Ice Company. It is, however, enough to hold now that the Bridgeport Electric & Ice Company are not in any sense charged with the duty of enforcing the lien, actual or supposititious, of the Thomson-Houston Electric Company.
Finally, it is insisted that this property is now in the custody of a receiver appointed by the state court, and for that reason the decree of sale in the circuit court of the United States is improper. That a court of the United States may, upon a bill filed, with proper parties