69 F.2d 133 | 5th Cir. | 1934
This is supposedly one in equity. Equity Rule 75 (28 USCA § 723) requires that the appellant make a statement of evidence in simple and condensed narra^ve £ornh omitting unnecessary parts, and ^at judSTe approve it. Instead of such a statement, we have 195 pages of printed reeord entitled: “Transcript of the testimony of certain witnesses as given in this cause, copied in htec verba,” and signed and authentieated only by the court reporter. It contains not only questions and answers in full,
Considering the appeal on the pleadings, with .exhibits, and on the fact findings of the court, we must reverse. There has been a fundamental misconception of the relationship of bondholders to the distributor of the bonds, and a confusion of it with their relationship to the trustee in the bond mortgage who happened to be the same corporate person. It appears that one Marshall, reputed to be wealthy, desired to build a hotel upon lots which he owned in Port Lauderdale, Fla., and, to assist in financing it on January 15, 1926, he executed his bonds to an amount of $350,000, and secured them by a mortgage on the lots to Trust Company of Plorida as trustee for bondholders, with the conditions and covenants usual in such instruments. The bonds were all delivered by Marshall to the Trust Company to be sold for him, but the details of the sales agreement do not appear. The Trust Company issued advertising circulars which are criticized as untrue mainly in that they asserted that a surety bond existed guaranteeing the completion of the proposed hotel free of liens. Of the bonds $181,800 were sold; $168,200 remaining unsold. About April 15, 1926, the building contractor failed; no completion bond having been furnished. The Florida boom was subsiding, and the hotel was never completed. On June 15, 1926, the Trust Company had on hand $110,000 of money from the bond sales. In June, 1927, Marshall made an agreement with Marion Mortgage Company, a subsidiary of the Trust Company of Plorida, whereby the Mortgage Company should arrange to take over the unfinished hotel and pay off building liens against it, should redeliver to Marshall the unsold bonds, and use the $110,000 in the hands of the Trust Company to redeem bonds which had been sold; the apparent purpose being to relieve Marshall and the Trust Company of responsibility by retiring all bonds and to reorganize and complete the hotel. The sum of $54,000 was used by the Trust Company to pay off liens contrary to the agreement, which was not carried out by Marion Mortgage Company. The Trust Company claims to have paid out the remainder of the money except $2,934 for bond interest and other things. The interest on outstanding bonds finally went into default, and the Trust Company ■ foreclosed on the unfinished hotel and acquired title for the bondholders. Pour bondholders, ostensibly suing for all, brought this bill against Trust Company of Plorida as sole defendant on November 12, 1931, but two weeks later the Trust Company, because of insolvency, was taken over for liquidation by the Comptroller of Plorida, and his liquidator was made a party defendant. The bill sought an account of the money obtained from the bond sales as of a trust fund, and of the proceeds of unused building materials sold by the Trust Company, denying that any of the money should have been used to pay the liens on the uncompleted building. It did not seek to administer the building, and did not set up the transaction with Marion Mortgage Company, nor the fact of foreclosure. At first a general receivership was prayed for all the assets of the Trust Company, but, after the liquidator became a party by amendment, the contention was made that the bond sale money, being a trust fund, was used by the Trust Company to protect other unidentified properties, and a tracing of it into them was prayed, together with a general preference lien on all the assets of the Trust Company of Plorida. The findings of fact fail to trace any money into any assets of the Trust Company in the liquidator’s hands. The decree held the Trust Company and its liquidator liable to the complainants for the use of all bondholders in a sum of $108,870.-84 principal, with interest to date $47,438.-97, $2,934.00 thereof being adjudged a preferred claim; and two conservators were appointed to collect and distribute this recovery. The hotel property, into which it was found about $70,000 of the bond sale money had gone, was also adjudged to belong to the bondholders, and steps ordered taken by the conservators looking to its sale. The Trust Company and its liquidator appealing assign error on the decree and on the overruling of their motions to dismiss the bill for want of equity and because of adequate remedy at law.
Had the bill sought to administer the mortgaged property, including perhaps the building materials bought to be used in it and apparently surrendered to the trustee in the mortgage, there would have been a ease in which these bondholders could sue in behalf of all, and the decree so far as it affects this property could be sustained. We do not think that the liquidation of the Trust Com-
The judgment is reversed, and the cause remanded for further proceedings not inconsistent with this opinion.
On Appellants’ Motion to Modify Opinion.
Before BRYAN, SIBLEY, and HUTCH-ESON, Circuit, Judges.
A motion is made to modify the opinion in this case by withdrawing the ruling concerning the so-called statement of evidence on the ground that what was done was authorized by the District Judge. Our attention is called to the order allowing the appeal, which contains these words: “And that a certified copy of the record, testimony in haoc verba, exhibits, stipulations and all proceedings be forthwith transmitted to the said Circuit Court of Appeals.” While on this order the clerk might certify exhibits and testimony taken by interrogatories or depositions or by an examiner appointed by the court when duly filed, testimony taken in open court under Equity Rule 46 (28 USCA § 723) cannot become a certifiable part of the record otherwise than by an authentication and filing under the order of the judge who heard it. Buessel v. United States (C. C. A.) 258 F. 812. There is no such official known to a federal court of equity as a court reporter with authority to sign and file a report of the trial. A stenographer employed by the parties reports only to his employers, and his work can obtain authenticity only by the approval of the judge. But, if the report of the trial here in question had been approved and ordered filed, it would still not be a condensed and narrative statement of the evidence conforming to Equity Rule 75 (b), 28 USCA § 723. The provision of that rule that, if either party desires it and the judge
We see no need to modify the opinion, and the motion is denied.