Southern Surety Co. v. Maxwell
Southern Surety Co. v. Maxwell
Opinion of the Court
The appellant, the Southern Surety Company, is a corporation off the state of Iowa. For brevity, it will be styled the Iowa company. It appeals under section 129 of the Judicial Code (Comp. St. § 1121) from an order of the court below a/ppointing a receiver-for two steam shovels theretofore in its possession. In the first place, it denies that there was such diversity of citizenship as sufficed to give the court below jurisdiction in the proceedings.
The appellee, Claude W. Maxwell, a citizen of West Virginia, is trustee in bankruptcy of W. J. and J. T. Gephart, copartners and bankrupts. He says that both the bankrupts are citizens of Pennsylvania. The Iowa company in its answer alleges that one of them is a citizen of West Virginia and the other of Maryland. If the appellant and the appellee were the only parties to the litigation, there would be no question that the Iowa company, the defendant below, would be treated, for the purpose of this ease, as a citizen of a different state than either of the bankrupts whether they were citizens of West Virginia, of Maryland, or of Pennsylvania. As the bill asserts a title to specific chattels, admittedly within the Northern district of West Virginia, section 57 of the Judicial Code (Comp. St. § 1039) gave venue to the court below, irrespective of the place of residence of the parties, provided, of course, no one of them on one side was a citizen of the state of anybody on the other.
The Iowa company says that if so much be admitted, the jurisdiction is defeated because the appellee’s bill was brought against not only the Iowa company, but the Erie Steam Shovel Company, a corporation of Pennsylvania, the Maryland Casualty Company, a corporation of Maryland, and the Davis Trust Company, a corporation' of West Virginia, hereinafter respectively called the Pennsylvania company, the Maryland company and the West Virginia company. It points out that if the bankrupts were eit-
The property for which the receiver was appointed consisted of two steam shovels. They had been obtained by the bankrupts from the Pennsylvania company, under a conditional contract of sale in which the vendor reserved title to itself until full payment had been made, and it is suggested that a balance may still be due the seller. The bankrupts were contractors engaged in various counties of West Virginia in the construction of state roads under several separate contracts with the state road commission of that state. The Maryland company was surety on the bonds given by the bankrupts for the performance of some of these contracts, and the Iowa company on others subsequently entered into. Before either the Maryland or the Iowa company .executed the bonds in question, the bankrupts incorporated, in the application for them, provisions' giving a chattel mortgage to the surety on all equipment to be brought upon the job to secure it against any loss it might sustain upon that particular project and also upon all other indebtedness which might be owing to it. The application further conferred upon the surety the right to use the property of the bankrupts on the work in completing the contract. All the contracts themselves were upon the state standard form, which in substance provided that, upon the contractor’s default, the commission might take the prosecution of the work out of his hands and appropriate or use any or all materials and equipment on the ground and might enter into an agreement with others for the completion of the contract.
The bankrupts began work first, under the contracts upon which the Maryland company was surety. Some of them.were completed. Some of them never were and were annulled by the state roads commission under the provision above referred to. The steam shovels in question had been used, so at least is its claim, upon the uncompleted contracts for which the Maryland company was the surety and were then moved over into another county. and put upon the work for which the Iowa company had gone on the bankrupt’s bonds, and they were there at the time of the filing of the bill in this ease.
The West Virginia company had advanced money to the bankrupts and took a bill of sale therefor upon the property of the bankrupts including the shovels in question. The state roads, commission annulled all the contracts. The Iowa company elected to complete the work on those for which it was surety and was and is using the shovels in so doing. The Maryland, the West Virginia, and the Iowa companies, as among themselves, severally claim preferred rights in these. shovels.
Shortly after the adjudication in bankruptcy and the appointment of the appellee as trustee, he caused all the property of the bankrupts including the shovels to be appraised. He then filed a petition with the. referee against all the corporations claiming liens thereon to bring them in and to settle their conflicting claims. The Maryland and the West Virginia companies appeared’ and submitted themselves to the jurisdiction of the court of bankruptcy. No process appears to have been served upon the Pennsylvania company, nor did it enter an appearance. The Iowa company did appear, but only to object to the jurisdiction of the court. Its objection was necessarily sustained.
Then, the trustee filed the hill in equity in the instant case. In it he set up the facts already stated. He claimed that he was entitled to the possession of the shovels and other property, and he also alleged that their value was being largely destroyed by the careless and improper use to which the Iowa company was putting them. After the submission of affidavits and evidence, the court overruled the motion to dismiss the bill, and held that the property might remain- in the possession of the Iowa company, if within 10 days from the date of the order it gave bond in the sum of $15,000 to make good any loss which the trustee in bankruptcy might suffer in consequence of the Iowa company retaining possession of the property and using it, if it should ultimately be determined that the rights of the trustee and
Without intimating any opinion whatever as to the ultimate rights of the parties, we are satisfied that, contrary to the contention of the appellant, there was no abuse of discretion on the part of the learned court below in appointing a receiver in view of the evidence submitted to it. A clear ease for equity jurisdiction was set up. There is no real claim that the Iowa company owned the shovels. It had, according to its contention, the right to their possession and use; but if, while rightfully holding that possession as bailee, pledgee, mortgagee, or by whatever other name its rights to the shovels are properly designated, it misused them, the right of a court of equity, for the protection of others having interests in them, to prevent such abuse, is too clear to be gainsaid.
Affirmed.
Reference
- Full Case Name
- SOUTHERN SURETY CO. v. MAXWELL
- Status
- Published