218 F. 55 | 5th Cir. | 1914
This is an appeal by the Georgia Southern & Florida Railway Company, a corporation organized under the laws of the state of Georgia, having its principal place of business at Macon, in said state, and Birney C. Parsons and Francis M. Edwards, citizens of the state of Massachusetts, doing business as Parsons & Edwards, from a decree rendered in the United States District Court for the Western Division of the Southern District of Georgia, entered February <7, 1914, in a suit in which they were defendants.
The bill of complaint was filed on May 31, 1900, by Benjamin F. Einstein, as assignee of Abraham Backer, and Benjamin F. Einstein and Henry Rice, trustees of Abraham Backer, all citizens of the state of New York, and Rice, Stix & Co., a firm composed of Henry Rice, a citizen of New York, William Stix, Jonathan Rice, Benjamin Eis-man, David Eisman, and Elias Mitchael, all citizens of the state of Missouri, in behalf of themselves, and all persons entitled to stock in the Georgia Southern & Florida Railway Company similarly situated to them, against the Georgia Southern & Florida Railway Company, the appellant herein, the Mercantile Trust & Deposit Company of Baltimore, Md., a corporation, a citizen of Maryland, Christian Devries, a citizen of Maryland, the firm of Parsons & Edwards, appellants, the Southern Railway Company, a corporation and citizen of Virginia, and Herman Myers, a citizen of Georgia. The bill of complaint alleges substantially as follows:'
The Macon Construction Company was the builder of and holder' of all the stock in the Georgia Southern & Florida Railroad Company and the Macon & Birmingham Railroad Company, and, becoming insolvent, was, together with the Georgia Southern & Florida Railroad 'Company and the Macon & Birmingham Railroad Company, placed in the hands of a receiver by the Bibb county superior court. The Macon Construction Company was indebted to one Abraham Backer in a large sum, and a judgment obtained against it for the amount due. Backer was also holder of some 410 bonds of the Macon & Birmingham Railroad Company, of the face value of $1,000 each. Rice, Stix & Co. were also the holders of 50 of these bonds. The bonds of the Macon & Birmingham Railroad Company had upon each a guaranty by the Georgia Southern & Florida Railroad Company properly executed by said last-named company. The trustees for the bonds of each of the railroads intervened in the Bibb county superior court to foreclose the deeds of trust securing the bond issues. Pools were formed of the bonds of each of the roads, and committees appointed to guard the interests of the bondholders; a very large majority of the bonds being represented, although not all.
The litigation dragged, and the bondholders of the Georgia Southern & Florida Railroad, being desirous to overcome the opposition of
In the spring of 1895 the Georgia Southern & Florida Railroad was sold under the foreclosure proceedings, and bought in by the bondholders’ committee, and a new corporation, the Georgia Southern & Florida Railway Company was formed, and the properties of the old Georgia Southern & Florida Railroad Company conveyed to the new corporation in consideration of the delivery to the committee of the stock and bonds of the new corporation. Upon this being done the committee of bondholders of the Georgia Southern & Florida Railroad Company notified the committee of the Macon & Birmingham Railroad bondholders that they had the stock as per agreement for delivery, but requiring that the last-named committee should first enforce the judgments against the property of the Macon Construction Company, and deed said property to them for the new corporation, the appellant in this case. This was in June of 1895. In November of 1895 the Macon & Birmingham committee by resolution repudiated the claim of the Georgia Southern committee, and insisted that the contract between them be carried out..
This condition of affairs continued until January, 1896, when the stock of the new corporation was finally delivered in accordance with the contracts between the parties. While negotiations were pending between the two committees as to delivery of the stock, the bonds of the trustees and those of Rice, Stix & Co. were withdrawn from the committee, and sold to Parsons & Edwards, 460 bonds, of the face value of $1000 each, for the sum of $46,000. On June 15, 1896, the Macon & Birmingham committee delivered the pro rata share of the stock in- the Georgia Southern & Florida Railway Company to Parsons & Edwards as the owners of the bonds.
The bill also alleges demand on the committee by the trustees for the bonds and refusal, and that Myers, the cotrustee, refused to join in the suit, and was therefore made a party defendant. The bill then prays “that they have transferred to- them as their property on the books * * * shares of stock,” also that Parsons & Edwards, in the event they have converted said stock, account for the value thereof, and then the prayer for general relief.
The answer also pleaded the Georgia statute of four years’ pre>-scription as to the title of personal property. The railway company answered that the stock had been delivered to the bonding committee, and it had no interest in the matter. ,
The cause was referred to a master, to take the testimony and report it, with his findings of fact and law, to the court. The testimony was taken, and the master made his report, and finding of facts and law. He found that the bonds were transferred to Parsons & Edwards without reserve or restriction, and the sale was a complete transfer of said bonds, and all that were appurtenant to them, to wit, both sources to which the holder of the bonds could look for payment, the agreement with the committee of bondholders of the Georgia Southern bonds and the proceeds of the sale of the Macon & Birmingham Railroad, and that Parsons & Edwards, when they bought the bonds, had full notice of all the facts in the case. The master finds against the contention that the claim was barred by the statute of limitations of Georgia, and in conclusion finds the merits against the complainants.
Upon exceptions to this report, the District Judge entered a final decree, sustaining exceptions to said report, challenging the finding of the master that complainants werq not entitled to the relief sought, and awarded to the complainants the shares of stock claimed, and further requiring the payment by Parsons & Edwards of a considerable sum received as dividends, and decreeing a lien on all the other stock held by Parsons & Edwards in the Georgia Southern & Florida Railway Company for the payment of said money decree. The decree further requires the railway company to transfer on its books the number of shares claimed, and further requires the payment by the said railway to the complainants of all sums paid as dividends on said stock after the filing of said suit. This portion of the decree makes the railway company jointly with Parsons & Edwards accountable for dividends paid them after the commencement of this suit. It is from this decree' that this appeal is taken.
We wish to observe that in our opinion the complainants have not. made a case, either by their bill or proofs, that appeals to the conscience of the chancellor. The claim is based upon an agreement not to interpose objections to a foreclosure proceeding, which objections could not have been meritorious. The bonds seeking payment under the deed of trust sought to be foreclosed were a first lien on the property of the railroad. The guaranty of the bonds of the Macon & Birmingham road was junior to said lien, and the only effect of the opposition of the Macon & Birmingham committee was to delay sale,, and this seemed to be recognized by the parties making the agreement. The result of the agreement, and the object of the parties to the agreement, was to buy off this opposition by giving the stock in question and a court of equity and conscience might well leave the parties in the condition in which it finds them.
While the master found, and we think the proofs sustain such finding, that the plea of the statute of limitations was not sustained, yet. the proofs show that the stock was delivered to Devries on June 9, 1895, and delivered to appellant on the 15th of the same month. This-bill was not filed until May 31, 1900, and no excuse for such delay offered. In the meantime, according to the allegations in the bill, the value of the stock had increased from $30,000 to $100,000. This would seem to us such gross laches as, had it been properly pleaded, would have prevented a recovery in this case by the complainants.
It is our judgment that the decree of the District Court be reversed, and the cause remanded, with directions to overrule exceptions to the-master’s report and dismiss the cause, at the costs of the complainants in the original bill. The costs of this appeal to be taxed against the appellees.