MAYHEW'll. WEST VIRGINIA OIL & OIL LAND CO.
205
MAYHEW
and others v.
WEST VIRGINIA OIL
&
OIL LAND
Co. and others.
(CirCUit Oourt, D. West Virginia.
1885.)
RECEIVER - JUDICIAL SALE OF CORPOHATE PROPERTY - CONTRAC'f-l'URCHASE FOI{ CUEDl'fORS-LIABILITY OF BIDDER FOR FAILURE 'fO MAKE PAYMENl'RESALE-CONFIllMA'fION OF SALE.
On motion (1) to confirm sale made to Charles H. Shattuck, March 17, 1885; (2) for a decree against J. N. Camden, personally, for the difference between his bid of $173,050, October 1, 1884, and that of Shattuck, March 17,1885, of $119,100; (3) to set aside order entered November 3, 1884, canceling the bond of Thompson and Payne and Chancellor, and directing a return of the deposit of $10,000. WAITE, Chief Justice. The facts on which these motions depend are as follows: Prior to the entry of the decree of November 17,1883, an instrument in writing was prepared for the Signatures of J. N. Camden, J. H. Carl'ington, W. H. Beach, A. C. Worth, Toledo National Bank, R.1::1. mail', B. B. Valentine, and Heman Loomis, purporting to be a contract between these parties to protect their several interests in the suit, and to insure a sale of the property for an amount sufficient to pay the debts due to them respectively, in full. This paper was signed by Camden, Carrington, ·Worth, Valentine, and Blair before the decree was rendered. It has never been signed by the Toledo National Bank, nor by Beach. It prOVided in substance that at the sale under the decree Camden should purchase the property if it sold for a price less than the aggregate of all the claims adjudicated against it, with interest, costs, and expenses; that if such purchase should be made by him, the other parties would assign their respective claims under the decree, so that they might be used in payment of the purchase money; that Camden should execute and put on record a declaration of trust to the effect that he would hold and manage the property to the best advantage, without charge for his own time, and apply the rents, issues, and profits to the payment in full of the amount due on the decree in favor of 'fhompson, of which he (Camden) was the assignee, and divide the remainder monthly between Loomis and the other beneficiaries in the proportion of 40 per cent. to Loomis and 60 per cent. to the others, until their respective claims were fully satisfied; and that when the debts were all paid, Camden was to become the owner of the property free of all claims by the other parties, who were to execute the necessary releases for that purpose. Although this contract refers to the decree as already entered, in point of fact the entry was not made until after all the parties who have ever signed the contract had affixed their Signatures. The decree, as entered November 17, 1883, directed a sale of the property, and an application of the proceeds to the payment, with interest from that day, of tile follOWing debts: 1. William D. Thompson, $61,267 79 Richard A. Storrs, 47,663 29 Heman Loomis, 39,476 61 (All these debts have equal priority of lien.) 2. James H. Carrington, · 46,93458 3. A. C. Worth, 2,65008 4. W. H. Beach, 2,888 58 5. Toledo National Bank, 9,843 70 R. S. Blair, 593 16 (The debts due the bank and Blair having equal priority.)
206
FEDERA.L REPORTEB.
6. R. S. Blair, 7. Benjamin B. Valentine, 8. Heman Loom:'s,
592 66 9,056 93 49,111 16
The debt to Thompson had been assigned to and was owned by Camden at the time of the rendition of the decree. At tue time of the entry of the decree there was a large sum of money in the hands of the receiver applicable to the payment of the debts, and with tue consent of 'fhompson (Camden) and Loomis, it was ordered that this be applied--Pil'st, to pay Storrs in full; and, with the assent of Loomis, second, to pay Thompson (Camden) in preference to him, (Loomis.) Under this order the following payments were made before May I, 1884: November 20, 1883. To Storrs, in full, - $47,687 12 .. Camden, · $27,190 93 .. .. 2,000 00 January 2, 1884. .. .. 1,500 00 March 5, " April 21, .. .. .. 2,00000
---------- $32,690 93
On the first day of May, 1884, the property was offered for sale under the decree by the commissioners appointed for that purpose. Camden was present at the sale, as were also the most of the creditors, either in person or by attorney. The president of the Toledo National Bank was there with the others, Bnd if Camden had purchased the property under the contract, would have assigned the debt due the bank to be used in payment of the purchase money, upon the terms and conditions provided for in the contract. Beach had also executed an assignment of the deut due to him, and placed it in the hands of his attorney, who was present, to be delivered to Camden if he purchased under the contract. Camden did not, however, bid at all at this sale, and his reason for not bidding is given in his answer filed in this proceeding in these words: "Respondent was advised and informed that the debt of Loomis was attacked in this honorable court, and that such proceedings were had that, by direction of the court as to the debt of said Loomis, the amount thereof should be paid into the registry of the said court, to await the determination of the proceedings in relation thereto, thus requiring a large sum of ready money to be paid for that purpose; and the said creditors not indicating any Willingness to aid your respondent in raising said money, and this respondent, at the time said contract was entered into, not contracting or expecting to be called upon to advance any money upon his bid to purchase under said contract, th£> said contract not requiring him to do so, respondent was advised that it was llOt safe for him to bid unless he was prepared to pay at least the amount of the Loomis debt into court. Under this advice respondent declined or refrained from uidding at the first sale of the property, on the ground that he might incur a personal liability in bidding under the contract, if the amount of the Loomis deut was required to ue paid into court to await indefinite litigation." All the creditors were desirous of having Camden make the purchase under the contract. and would have assigned their respective claims to him on t·he terms provided for, if he had so done. Of all this Camden was informed, and when he declined to buy, some of the other creditors joined together and ran the property up on the bidding to $162,000. This was enough to protect the interests of all the creditors who were bidding; and when Charles H. Shattuck afterwards bid $163,000, the property was struck off to him, no one offering more. Loomis was not among the creditors who joined in the bidding. Camden wall present all the time, and made no objection to what was done. Shattuck, the purchaser. was the receiver appointed by the court to
MAYHEW V. WEST VIRGINIA OIL & OIL LAND CO.
207
collect the rents and profits of the property pending the suit. His purchase was made for the benefit of himself, Hobert Garrett & Sons, and some others. The others were certain stockholders of the West Virginia Oil & Oil Land Company, who had joined together for that purpose. Camden was a stockholder and president of the Camden Consolidated Oil Company, a West Virginia corporation, having its principal office in Parkersburg. He was also a stockholder in the Standard Oil Company. These two companies were, more or less, connected in business. At some time after this sale, but at what precise time does not appear from the evidence, Camden left this country on a visit to Europe. Before leaving, however, he employed Charles Marshall, of Baltimore,-said to have been at the time the general attorney of the Camden Consolidated Oil Company,-to resist a confirmation of the sale. The ground of his objection to the sale was, as he states in his answer, that as Shattuck was the receiver of the property sold, he stood in such a confidential and trust relation to the parties as to prevent him from buying. On the tenth of June, Loomis filed exceptions to the report of sale of the commissioners, on the folloWing grounds: (1) Inadequacy of price; (2) misleading and doubtful expressions of the court in the course of certain proceedings, the object of which were to set aside or modify the decree in favor of Loomis; (3) surprise; (4) incompetency of the receiver to buy; and (5) un· certainty of the amount to be paid Loomis from the proceeds of the sale. The exceptions were signed by B. M. Ambler, as counsel for Loomis. No other exceptions were taken to the confirmation of the sale. Before the m<'tion for confirmation came on for hearing, the secretary of the Camden Consolidated Oil Company opened negotiations with William P. Thompson and Oliver H. Payne,-the one a vice-president and the other trpasurer of the Standard Oil Company,-upon the subject of raising the bid of Shattuck, with a view of procuring an order for a resale of the property. Thompson was a stockholder in the Camden Consolidated Oil Company, and a brother-in-law of Cam· den. The motion for confirmation came on for hearing June 18th. When the exceptions as to the insufficiency of the price were under argument. Mr. Marshall or Mr. Ambler was asked by the COUl't whether it was proposed to submit an offer of a larger sum fOL' the property in case a resale should be ordered. To this question an affirmative answer was given, and within a short time thereafter a telegram, of which the following is a cOPJ', was received by the clerk: "CLEVELAND, 6-19, 1884. "To L. B. Dellicker, Clerk U. S. Court: If there should be a resale of West Virginia Oil and Oil Land Co. property, under decree of November 17, 1883, we bind ourselves to bid not less than $173,000, and if knocked down to us, to pay therefor. . "W. P. THOMPSON. [Signed] "0. H. PAYNE." About the same time, the secretary of the Camden Consolidated Oil Company got information from Thompson and Payne that such a telegram had been sent, and he thereupon instructed Mr. Marshall to present the offer to the court, which was done. The court thereupon announced its determination to set aside the sale and offer the property again, if Thompson and Payne would secure their offer by depositing $10.000 in the registry of the court, and giving bond, with approved security. in the penal sum of $250,000, conditioned to that effect. Thompson and Payne having, through their counsel. signified their Willingness to comply with the terms proposed, the secretary of the Camden Consolidated Oil Company obtained from Mr. William N. Chancellor, of Parkersburg, a promise that he would sign the bond as surety. This being satisfactory to the parties, the counsel in the cause set about preparing
208
FEDEBAL REPORTER.
the form of an entry of the order to be made on the minutes. Iu doing this, some difference of opinion was found to exist as to what would be required of Thompson and Payne under their offer; those acting for Thompson and Payne claiming that it would be enough if they bid the amount offered the next time the property was put up for sale under the decree, while it was insisted on behalf of the creditors that they should be required to repeat tlwir bid every time the property was offered, until a sale should be made and confirmed by the court. On application to the court for further instructions in this behalf, it was decided that the order should be of the character asked by the creditors. Thereupon the order was drawn up and assented to by the parties, and approved by the court, in the following form: "This cause came on to be heard on the eighteenth and nineteenth days of the present month, upon the motion to confirm the sale made by J. B.Jackson and 1V. S. Cole, special commissioners under the decree passed and entered in this cause on the seventeenth day of November, 1883, and upon a petition filed herein by Heman Loomis, to set aside the sale of the property of the defendant company, made on the first day of May, 1884, and upon exceptions taken by the said Loomis to the report of said sale returned to the court by said special commissioners, and upon an application made by 1Vm. P. Thompson and Oliver H. Payne to have the sale set aside, and offering to bid at a resale of the property the sum of $173,000, and was argued by counsel. Upon consideration whereof, it was, on the nineteenth day of June, (instant,) adjudged that all the objections and grounds of exceptions assigned by Heman Loomis against the confirmation of the said sale made by said special commissioners to Charles H. Shattuck, on May 1st, be overruled, except the first, and that the said first ground of exception would be sustained, provided that the said Wm. P. Thompson and Oliver H. Payne should, within ten days, enter into a bond, with approved security, in the penalty of $250,000, payable to Lyman B. Dellicker. the clerk of this court. conditioned that at any future sale of said property that may be made by decree in this cause, the said Thompson and Payne, or some one for them, will bid the sum of $173,000, and that they will comply with the terms of said decree of sale in case they shall become the purchasers of said property at the said sum of $173,000; and provided further, that the said Thompson and Payne shall deposit in the registry of this court, within said ten days, the sum of $10,000 in cash, as additional security for their compliance with the offer made by them, and that the said Loomis shall, within said ten days, refund the sum of $143.65 paid by Lavinia H. Austin for advertising, and pay to the purchaser at said sale the sum of $407.50, the same being the interest accruing upon the amount of the purchase money actually paid, from the day of sale to the date of this decree." The form of the entry having been agreed upon, no further proceedings were had until June 30th, when there was presented to the court a bond in the penal sum of $250,000, executed by Thompson and Payne as principals, and Chancellor as their surety, conditioned according to the order of the court, and a certified check of the Camden Consolidated Oil Company on the First National Bank of Parkersburg for $10,000. At the same time the costs and interest specified in the order as agreed on were paid by the same company for Loomis. Thereupon, the order, which had been approved June 19th, was entered on the journal of the court, and the first sale was set aside and a resale ordered. Before the bond was signed by Chancellor, the secretary of the Camden Consolidated Oil Company procured for him, from Thompson and Payne, their individual bond of indemnity to him against any liability he might incur thereby. The check for $10,000 was at first deposited, by order of the court, in the Citizens' National Bank in Parkersburg, but afterwards it was withdrawn from that bank and deposited in the First National Bank, on interest, at the rate of four per centum per annum. At what precise time this change was made, or on whose application, does not appear. When all this was
IIAYHEW V. WEST VIRGINIA OIL &: OIL LAND CO.
209
done Camden was in Europe. He returned before September 30th, and on that day Loomis, through Mr. Ambler, his attornef, served on him (Camden) a notice to buy the property under the contract at the sale to take place the next day, and that unless he did buy, or run the property up to the required amount, he would hold him responsible therefor. It now appears, froUl a statement made by Camden to the court at the present hearing, that before this time an arrangement had been made between him and Loomis for a joint ownership of the property after the other cre4itors were paid. At what time this new arrangement was made was not stated, and the other creditors were not in any manner affected by it. The effect of it was to change the contract, as between Camden and Loomis, so that when the other creditors were paid out of the rents and profits, the property would be owned, two-thirds by Loomis and one-third by Camden. The property was again offered for sale on the first of October, and Camden came to the place where the sale was to be made before the bidding began. After his arrival, he went to the auctioneer, who had been employed to cry the sale, and told him he would bid $173,000 for the property as the agent of Thompson and Payne. The sale was then opened by the auctioneer, and this bid was cried for Some little time. Camden then bid $173,050. This bid was also cried, and, no one offering more, the property was struck off to Camden at that price. When he made the bid he did not state that he was acting for anyone but himself, or that he was bidding under the contract, or that he expected to pay for the property otherwise than in money. After the sale was closed, the commissioners went with him to his office to get the money. On their arrival there, Camden produced the contract, and asked that it be accepted in lieu of money. This the commissioners declined to do, as their instructions were to sell for cash only. At this interview Camden did not intimate that, if the court declined to give effect to the contract, he would not pay the money; but, on the contrary, told the commissioners that, if reqUired to do so, he would complete the payment in that way. He was, however, anxious to have the return of the commissioners show his offer of the contract in lieu of money, and not his offer of money, so that he might, if possible, secure a purchase under the contract. To this the commissioners did not object; and accordingly, in their return, after setting forth the sale, they state that" Camden did not and has not paid to your commissioners the sum of money so bid and offered by him for said property as aforesaid, or any part thereof; but when your commissioners reqUired the cash from said Camden, pursuant to the terms of !laid sale, he tendered to us a paper pnrporting to be a copy of a contract," (here follows a general description of the contract before referred to.) "Said copy of the contract. with a paper thereto attached, signed by Heman Loomis, by B. M. Ambler, his attorney, bearing date September 30, 1884, is herewith filed. * * * Your commissioners declined to receive the said contract in payment, in whole or in part, of the purchase money so bid by said Camden for said property, or to accept anything in payment thereof except lawful money of the United States, and this the said Camden has not as yet paid." Mr. J. B. Jackson, one of the commissioners, went to Wheeling after the sale was closed, and the next day, October 2d, Camden. telegraphed him at that place, as follows: "PARKERSBURG, October 2, 1l:l84. "To 001J. J. B. Jack90n: Please see that my bidis reported as based solely on the contract presented in payment, without any qualification or conditions that would affect me personally on my bid. J. N. CAMDEN." Mr. Cole. the other commissioner, and who was one of the counsel for the other creditors, resided at Parkersburg, where Camden was, but no such communication was made to him.
v.24F,no.5-14
210
FEDERAL REPORTER.
The report of the sale was filed with the clerk on the fourth of October, and on the sixth of the same fnonthCarnden filed in court a petition setting up the contract, and the demand which had 1>een made on him before the sale, and praying "that, the premises bEling considered, he may be allowed to apply the claims and debts adj udged by said decree in discharge of his liability for the purchase money; that his compliance with the terms of said contract may be considered and decreed a compliance with the terms of said sale; that the said contract may be received in discharge of his bid j that the sale be COllfirmed, and that a decree be made to your petitioner for the said property; and that the court will make such further order and decree, and grant such other general and further relief in the prAmises, as your honors may deem right, as in equity may be proper, and as ill duty bound, etc., he will ever pray," etc. 'rhis petition is signed by Mr. Caleb Boggiss, one of the attorneys of this court, as counsel for Camden. In the petition it is stated that Camden is "largely interested to have the contract performed and executed. and that he desires that it may be done." 'rhe manner in which he is interested does not appear, except in the contract, and no mention is made of any new ar· rangement with Loomis. To this petition answers have been filed by all the creditors, except Loomis, objecting to the relief asked by Camden. On the fourteenth of October, Carrington, Worth, Beach, Blair, the Toledo National Bank, and Valentine filed exceptions to the report of the commisthat the purchase money had not been paid, and" prayed sioners Oil the that said report be recommitted to said commissioners, with directions that unless the said Camden do at once comply with the terms of sale by paying to said commissioners the sum of $173,050, that said real estate and property may be resold at the risk and costs of the said Camden." Upon the tiling of this petition the follOWing order was made by the court: "And it appearing to the court that at the sale of said property on the first of October, 18d4, held pursnant to said decree, J. Camden became the purchaser of said real estate and property for the sum of $173,050, and that he has failed to comply with the terms of sale by paying said sum of money, or any part· thereof, to said commissioners, or into the registry of this court, thereupon, on motion of the said defendants, Carrington, Beach, Worth, Blair, Toledo National Bank, and Valentine, a rule is awarded against the said J. N. Camden, returnable on the third day of November, 1884, to show cause, if any he can, why he should not pay to said commissioners, or into the registry of the court, the said sum of $173,050, so bid by him for said property as aforesaid, or why said sale should not be set aside, and said real estate and property resold by said commissioners at the risk and costs of said Camden." On the third of November the parties all appeared, either in person or by counsel, and, the court not being able to take up the matter at that time, the further hearing was postponed until December 2d. At that time Camden was represented by his counsel, Mr. lloggiss. The order postponing the hearing was made in the forenoon of that day. During the afternoon of the same day .1\11'. BOrigiss, who had been employed by the secretary of the Camden Consolidated Oil Uompany to act as attorney for 'rhompson and Payne, appeared in court and moved for a cancellation of their bond, and a return of their deposit of $10,000, with the interest which had accrued thereon. Neither at that time nor at any time before had it been intimated to the court that if the prayer of the petition of Camden was not granted, he would not promptly pay the full amollnt of his bid ill money. On the contrary, the recollection of the judge holdi ng the court at the time is distinct that it was expressly stated. either in the forenoon or the afternoon, or both, that the bid of Camden was bonafide, and would be paid in money if required. Under these circumstances, as Camden was known to be abln financially to pay the money, if an order to that effect was made, the following entry was directed by the court:
fl. W]j'.8T vmGINIA OIL & OIL LAND CO.
211
"This day came Wm. P. Thompson and Oliver H. Payne, and moved the court to release their surety, ·W. N. Chancellor, from the obligation of their bond in the penalty of $250,000, dated the twenty-first of June, 1884, conditioned to bid at a future sale of the property, directed by a decree in this cause to be sold, the sum oE $173,000, and filed in this court in this cause on the twenty-third day of June, 1884, pursuant to a decree rendered therein on the nineteenth day of June, 1884, and also moved the court to make an order directing that the sum of $10,000 deposited by them in court in this cause on the twenty-third day of June, 1884, pursuant to the last above-named decree, together with the accrued interest, be refunded to them. And it appearing to the court from the report of J. B.·Jackson and W. L. Cole, llIed in this cause on the fourth day of October, 1884, that said Thompson and Payne did in all respects comply with the conditions of said bond, and that at said sale a higher bid than they undertook to make was made by J. N. Camden, which has been reported and accepted by said commissioners, it is therefore ordered that the said bond be 'lanceled, and the parties thereto released therefrom. And it is further ordered that the said sum of $10,000 so deposited by them, together with the interest that has since accrued thereon, be refunded to the said Thompson and Payne out of the registry of the court. It is further ordered that L. B. Dellicker is entitled to receive a commission of one per cent. on the amount so received and refunded, to be taxed in the bill of costs; and the receiver is ordered to pay the same out of any funds in his hands." ·When this order was made, none of the creditors interested in the proceeds of the sale were present in person or by attorney, and they had no notice that any such application was to be made. The next day a check was made by the clerk, and properly countersigned by the judge, on the First National Bank, to . the order of the Camden Consolidated Oil Company, for $10,098 the amount of the deposit, and the accrued interest thereon, and delivered to the secretary of the Camden Consolidated Oil Company, who gave a receipt therefor as follows: "Received, Parkersburg, November 4, 1884, from L. B. Dellicker, clerk U. S. district court. the sum of ten thousand and ninety-eight 8\)-100 dollars, money deposited by Payne and Thompson in case of Mf1?Jhew et al. vs. W. Va. O. & O. L. Co. CAMDEN CONSOLIDATED OIL CO., "L. A. COLE, Sec'y." The clerk, however, required a receipt from Thompson and Payne, and this the secretary agreed to get. Afterwards he obtained and delivered to the clerk such an instrument, a copy of which is as follows: "Received of L. B. Dellicker, clerk of the circuit court of the United States for the district of West ten thousand and ninety-eight 89-100 dollars, in full for $10,000, with accumulated interest, heretofore deposited by William P. Thompson and O. H. Payne, under an order of said court, in the case of F. L. B. Mayhew & Co. v. The We".t Virginia Oil & Oil Land Company and others, passed on the nineteenth day of June, 1884, and which is now, with its accumulated interest, directed to be returned to the said W. P. Thompson and O. H. Payne by an order of the said court in the same cause, passed on the third day of November, 1884:. "$10,098.89. [Signed] W. P. TrroMPsoN. "0. H. PAYNE." As soon as the order for the cancellation of the bond was entered, the secretary of the Camden Consolidated Oil Company took a copy and presented it to Chancellor, who thereupon surrendered to him the indemnity bond of Thompson and Payne. 'fhis bond the secretary afterwards returned to Thompson and Payne. In all these transactions Thompson and Payne were represented by the secretary of the Camden Consolidated Oil Company, and they never at any time appeared in person.
212
On the twenty-first of November, Carrington, Worth, the Toledo National Bank, Valentine, and Blair, having heard of the order canceling the bond and surrendering the deposit, filed a petition to have that order set aside, and on the second of December the court made an order in reference thereto, as follows: "This day came James H. Carrington, A. C. Worth, 'William H. Beach, the 'foledo National Bank, Benjamin B. Valentine. and Robert S. Blair, by W. C. Cole, their attorney, and moved the court to set aside the order made in this cause. on the third day of November, 1884, returning. to Oliver H. Payne and William P. Thompson the ten thousand dollars heretofore deposited by them in the registry of this court, and canceling their bond in the penalty of $250,000, with Wm. N. Chancellor as security, according to the prayer of their petition filed in this cause; and it appearing that notice of this lIlotion and of the filing of said petition has been given to the said Oliver H. Payne, William P. 'fhompson, and William N. Chancellor, it is ordered that tilis motion be placed on the docket, and the consideration thereof is continued until a future day of this court." This petition was filed and the entry thereon made during the term in which the order of cancellation was granted, but the matter was not disposed of before the adjournment. It therefore went over to the next term, which is the present term, as unfinished business. On the twenty-second day of January, 1885, and during the present term, the motions connected with the sale of October 1, 1884, all came on for hearing, and the decision in reference thereto appears in the following order which was then made: "This cause came on to be heard at the present term upon the report of J. B. Jackson and W. L. Cole, commissioners, heretofore appointed to make sale of the property mentioned in this cause, filed on the fourth day of October, 1884, whereby it appears that J. N. Camden bid the sum of $173,050 for said property, when it was offered for sale by said commissioners at public auction, on the first day of October, 1884, pursuant to a former decree of this court passed in this cause, and the said commissioners accepted the bid of said Camden, but that he has not complied with the terms of sale by paying to said commissioners the amount of said bid, or any part thereof. Upon consideration of the said report, and the exceptions filed thereto by several parties to this suit, and the rule heretofore awarded against said Camden to show cause why said property should not be resold at his cost and risk, and the petition of said Camden treated and considered as his answer to said rule, and the answers to said petition filed by the exceptors to said report, and the arguments of counsel for said Camden and said exceptors, and the said Camden still failing to comply with the terms of said sale by paying the amount of his said bid in cash, it is this twenty-second day of January, 1885, considered and ordered by the court that said petition and answer of said Camden is not a defense to said rule. It is further ordered that the exceptions to said report be and the same are hereby sustained, and the said sale is set aside, and the said commissioners will proceed at once to advertise and resell said property in accordance with the terms and provisions of said former decree passed in this cause on the seventeenth day of November, 1883, for cash, which sale will be made at the costs of said Camden. And if the said property should be sold for a less sum than $173,050, the said bid of the said Camden, the court reserves, for future determination in this cause, the question whether the said Camden will be required to pay the deficiency." Under this order the property was again offered for sale on the seventeenth of March, and sold to Charles H. Shattuck for $119,100, he being the highest and best bidder. The purchase money was paid at the time of the sale, and is now in court. After this sale was reported to the court, the Toledo Na-tional Bank, Valentine, and Blair filed their petition asking that, before the sale Should be confirmed, the court would, if necessary, modify its order of January 22d, so as to hold Camden on his bid. or for the deficiency between his bid and that of Shll.ttuck. and to require Camden to take the property at his bid,
MAYHEW '11. WEST VmGINIA. On. '" On. LAND CO.
213
and, if he failed to do so, to confirm the sale to Shattuck, unless Thompson, Payne, and Chancellor elected to take and pay for the property at their bid of $173,000. The same parties also filed exceptions to the report, the object of which was to secure the same action which was asked for in the petition. Camden filed: (1) A motion to strike this petition from the files; and (2) an answer without pl'ejudice to this motion. Loomis has also filed a petition to the same general effect, and With SUbstantially the same prayer. In this petition the follOWing averment ismade: "11. The commissioners offered said property again on the seventeenth day of March, 1885, at which time some arrangement had been made by which the interests of the Standard Oil Company and the parties represented by Receiver Shattuck had been settled upon a basis not known to your petitioner, under which the property was to be bought at the lowest figure at which it could be got. And Mr. Robert Garrett, whom Mr. Shattuck formerly, as now, represented, in part at least, and who had been the real party on the first bid of $163,000, had some tacit or express, direct or indirect, understanding with Mr. Camden and his friends, whereby the property should be bought for a low figure, and without competition between them. And the said Camden now desires this sale to be confirmed at $119,100, and pretends that he is not liable on his bid of $173,050." To this Camden answered as follows: "Respondent denies that any such etrrangements were entered into as set out in charge 11 of said petition, but refers to his answer hereinbefore referred to, and relies upon the SetIDe as his answers to this charge, in so far as said answer is responsive thereto." 'fhe answer" hereinbefore referred to" is that filed to the petition of the other creditors, and the part of it which is responsive to the allegation of Loomis is as follows: "Respondent admits that the property being large and valuable, and the probable amount for which it would sell being large, that the sale being for cash would be more than anyone individual would be Willing to raise and invest in that character of property; and that certain persons, some of whom are named in the petition, did agree to join in the purchase of said property; and, if the property was so purchased by them, that they would form a corporation to own and work said property. Respondent denies that there was any combination or intention on his part to beat down the price of said property, or to procure the same for less that its fair cash value. On the contrary thereof, said arrangement was entered into bona fide to compete for the purchase of the said property, and to bid for the same to the fair value thereof; and respondent states, as his opinion and belief, that without such an arrangement the property would not have brought as much as it did at that sale. Respondent avers that none of parties were interested in any of the liens upon said property except the Thompson debt, represented by himself; that many of the other lien creditors were present at said sale, as he is informed, and that others were present by counsel; that the sale was fair and open, and ample opportunity afforded to all interested to bid for the same; and to the best of his information, from the present condition and character of the property, the same was sold for all it would bring, and more than it would now probably bring upon another resale." Since the first day of .May, 1884, there has been paid to Camden by the receiver the follOWing sums, to apply on his claim as assignee of Thompson: January 3, 1885, - $2,000 00 January 30, 1885, 7,000 00 February 27, 1885, 1,500 00 March 16, 1885, 809 07
About these facts there is littlA if any dispute, and I have no hesitation in holding that Camden, by his purchase at the sale of October 1. 1884. became personally bound for the payment of the price
214
in money or its equivalent. The bid of Thompson and Payne must be taken to have been bona fide, for they were under bonds to make it. When Camden bid over them he gave no notice that he expected to pay otherwise than in money. He does not pretend that he had then or now any assignment of the claims payable out of the purchase money except that of Thompson, and perhaps that of Loomis, unless the alleged contract was sufficient of itself for that purpose. 'l'his contract was not signed by all the parties named in it, and there is nothing to indicate that any were to be bound until the execution by all was complete. . When the property was first put up for sale ,Camden was as much bound by the contract as he ever has been, but be then designedly re· frained from bidding, and allowed a purchaser to buy at a price far belowwhat, if the contract was in force, he should have offered. 'l'hig made it necessary for the other creditors to resort to other means protection of their interests. And some of them did so. In for this way a sale was secured for an amount in cash sufficient to pay all in full except Loomis. Camden afterwards saw fit to lesist the confirmation of this sale, and for that purpose he joined with Loomis. All of the other creditors were in favor of the confirmation. In the exceptions, which were filed in the name of Loomis, no mention was made of the contract, and it was not intimated at the hearing, in any wa.y, that the purpose of the contestants was to give Camden another opportunity to buy under the contract. All parties, so far as appearances were concerned, treated the contract as no longer an element in the case. 'l'he sale was finally set aside because of inadequacy of price, which was shown by an advance cash bid from other respon· sible parties. Camden now claims, in his answers to the petitions filed against him, that the decree of November 17, 1883, was entered up by consent of parties in a different form from what it would have been were it not for the contract; but there is no proof of that fact, and he himself does not state what these changes were. So far as appears from the face of the decree, the only consents were those of Thompson (Camden) and Loomis, that Storrs should be paid first from the money in the hands of the receiver, instead of pro rata with them; and that of Loomis, that Thompson (Camden) should be next paid in full before anything was distributed to him. But by the terms of the contract rrhompson (Camden) was to be paid in full from the earnings of the property before Loomis was entitled to anything. I am unable to see how Camden has lost anything by his consent to the decree. -In his answer Camden states as his excuse for not bidding at the first sale that some uncertainty then ex.isted as to his right to use the Loomis debt as money to pay for the purchase; but the same difficulty existed when he bid in October. No change had been made as to that part of the case between the first sale and the second to relieve Camden from embarrassment in this particular. All he says on that
MAYIH'W V. WEST VIRGINIA Ou. & OIL LAND CO.
215
subject in his answer is that "the proceedings attacking the clebt ot Loomis were dismissed or so modified by the opinion or action of the court in entering decrees ordering a resale under said former decree, that respondent was advised and believed that the obstacles to his bidding under said contract were substantially removed." He fails entirely to state what the modifications were, and I can discover nothing in the order to which such an effect can be given. Under the circumstances, it is clear to my mind that Camden could not use the al· leged contract in lieu of money to pay his bid. The claims the different creditors had not been assigned to him, and he was in no con· dition to call on u. court of equity to require the creditors to make such assignments. As the contract was not available to him for the purposes of payment, it was incumbent upon him to pay in money. The liability of. Camden originally for the payment of his bid in money on the confirmation C?f the sale having thus been established, the next inquiry is whether, in the proceedings since his bid, anything has been done to release him from that liability. In his answers he states bis claim as to this part of the case in these words: "Respondent is advised by counsel that the court having refused to confirm said sale at the bid so made by the respondent, and in entering a deeree ordering a resale of said property, that all liability on the part of respondent for such deficiency was determined, and respondent discharged therefrom: that respondent was not liable as purchaser at sale until the court had accepted the bid of respondent and confirmed the sale ausolutely."
And in another place: "Respondent, however, submits that by said decree of resale he was discharged from further liability upon his uid of $173,O:i0; there being no acceptance of said bid by the court, and a confirmation of said sale, which, respondent is advised, were necessary to charge him under said bid."
It is true, as was contended in argument, that in chancery a bid· del' at a sale by a master, under a decree of court, is not considered a purchaser until the report of sale is confirmed; and that he cannot be compelled to complete his purchase until the confirmation of the report; that is, until his bid has been in some form accepted by the court, as the court stands in the place of a vendor, using the master to receive and report the bids. Sugd. Vend. & Pur. (3d Lond. Ed.) 38, 39; (1st Amer. Ed. 33.) Under the old English practice an or· del' nisi was first entered as of course, and this was afterwards made absolute, also of course, unless cause was shown to the contrary. 'fhe purpose of the whole proceeding was to show that the court accepted the bid and made the sale. Sugd. Vend. & Pur. 39,,8upra. In the present case the commissioners reported the sale in due form, and Camden asked the court to take his alleged contract in lieu of money and confirm the report. The creditors in interest adverse to his petition asked that he be required to pay in money, and for a confirmation on that basis. No one else appeared to resist. There was no dispute about the regularity of the proceedings at the sale,
218
FEDERAL REPORTER.. ..
'or the sufficiency of the price, or the title to the property. The difficulty was not as to the sale, but as to how it should be paid for. Camden did not ask to be released from his purchase because of a misunderstanding as to his rights, but only that he might be allowed to pay the price in a particular way. The creditors did not ask to have the sale set aside if the money was paid, and to get the money they obtained a rule on Camden. The defense of Camden to this rule was, not that he could not be required to pay because the sale had not been confirmed, but in effect that as, by the terms of a contract he claimed to have with the creditors, he would be entitled to the money when paid in, the contract should be taken in lieu of the money, to avoid unnecessary circuity of action. When, therefore, under the circumstances, the court decided that Camden must pay in money, it in effect confirmed the report of sale, and required him to act accordingly. The order which was entered at the time may not have been expressed with precise technical accuracy, but its meaning is clear; the sale was confirmed on the basis of a bid for cash, no other having been made, and as the money had not been paid, a resale was ordered at the costs of Camden, leaving the question open whether it should be at his risk. It is true that in the order this language occurs: "It is further ordered that the exceptions to said report and the same are hereby sustained, and the sale set aside, and the said commissioners will proceed at once to advertise and resell," etc. But this, when taken in connection with the rest of the order, was clearly intended only as a provision to relieve the subsequent sale from embarrassment by reason of the former one to Camden, and not to discharge him from liability for a deficiency between his own bid and any that might be made and accepted by the court under the resale which was ordered. Camden had full notice that the purpose of the court was to charge him for a deficiency, if upon further inquiry it should be found he was liable. No room whatever was left for a misunderstanding on that subject, and the order of January 22d was made during the present term, and is still under the control of the court, except sO far as the rights of third persons have intervened. The answers of Camden satisfy me that he is interested directly or indirectly in the present purchase by Shattuck. For this reason I am not inclined to consider Shattuck as having an interest which will interfere with the right of the court to make such modification of that order as may now seem to be just. I am also satisfied that the order of November 3, 1884, canceling the bond of Thompson, Payne, and Chancellor, was made under a misapprehension of the facts, and onght to be vacated. It is therefore ordered that Camden elect here and now whether he will take the property at his bid of $173,050 and pay for it in money. If he will, and he makes his payment within a reasonable time, to be fixed if required, the sale to Shattuck will be set aside, and that to him on the first of October, 1884, carried into effect by proper order. If Camden does
IN BE WABASH R. CO.
217
not elect to take the property, it will be ordered that he now, as the agent who made the bid for Thompson and Payne on the first October, elect for them whether they will take the property at $173,000, and pay for it. If he does so elect, a reasonable time will be given them to make the payment, and the proper orders made to perfect a transfer of the property to them under their bid of October I, 1884. Should neither Camden nor Thompson and Payne elect to take the property under these orders, the sale to Shattuck will be confirmed, and a personal decree rendered against Camden for the deficiency. The order of November 3, 1884, canceling the bond of Thompson, Payne and Chancellor, will also be vacated. BOND,
J., concurs.
In re
WABASH
R.
CO.l
(Circuit Court, W. D. Missouri. June, 1885.) RECEIVER-INTERFERENCE OF STRIKl£RS-CONTE:.IPT-PUNISHMENT. A writer, signing himself chairman, sent the following notice to the various foremen of the shops of the Wabash Railway Company during a strike organized to resist a reduction of wages. the railroad being at that time in the hands of a receiver appointed by the United States circuit court: .. OFFICE OF LOCAL COMMI'l'TEE, June 17,1885. " - - ' , Foreman: You are requested to stay away from the shop until the present difficulty is settled. Your compliance with this will command the protection of the Wabash employes. Hut in no case are you to consider this an intimidation." Held, that this was an unlawful interference with the management of the road by the receiver, and a contempt of court, for which the writer should be punished.
Beebe t:f Randolph, for the railroad company. Hall &; Rogers, for defendants. KREKEL, J. C. M. Berry and Thomas Selby, employes of the Wabash Railroad, are before me charged with contempt of court in interfering with the management and operation of the road. The special charge is that on the seventeenth day of June,1885, they took possession of the round-house at Moberly, within this district, and by threats and intimidation caused employes of the company to quit work, and afterwards prevented them from working for the company, thus interfering with the operation of the road. In their return the defendants state that, on the morning of the seventeenth of June, they, with other employes of the road, at the usual hour of the day, went 1 Reported
by Hobertson Huward, Esq.,
01 the St. Paul bar.
to work, but found a notice posted on the shop doors which reads as follows: "MOBERLY, Mo., June 16, 1885. "To Employes: By authority of the general manager, A. A. Talmadge, I am instructed to close the shops at Moberly indefinitely. I expect further instructions in the matter to-morrow. W. J. BROKAN, Div. M. M."
That the defendants thereupon went into the round.house to notify the men there employed of a meeting to be held by the employes that morning at 8 o'clock, and that such of the men as they did not see Mr. Arthur, in charge of the round-house, promised to notify; that they came to and went from the round-house in an orderly manner, and without any threat or intimidation. The testimony before the court shows that, early in the spring of 1885, a strike was inaugurated in Moberly by the employes of the Wabash Railroad, resisting by force and intimidation a reduction of wages attempted to be made by the managers, in which the strikers accomplished their object, namely, to be reinstated at their former wages. On this occasion the managers of the road, in a circular ad· dressed to Shaw, Coughlin, and Berry, as a committee of the employes, among other things, said; "That in case it becomes necessary to make further reduction we will give the chairman of yOUl' committee three days' notice; and the committee shall decide whether there shall be a reduction of force or of hours worked, or an entire sllspension of everything, excepting running repairs and inspection."
It appears that afterwards a correspondence regarding reduction of time or wages (it does not appear which) was had between Manager Talmadge and Berry, as chairman of the Moberly committee, in the course of which Berry suggested the reduction of wages of the officers rather than of the employes. Thus matters stood on the sixteenth day of June, when a suspension of the shop-work (not of repairs) was ordered by the managers, and the former strikers, among them these defendants, inaugurated the combination or strike hereinafter spoken of. Three written notices were issued on June 1 1885, by C. M. Berry, as chairman of the employes, of which the following are copies: "OFFICE OF LOCAL COMMITTEE, June 17, 1885. "S. M. Nugent, Por. of Lathes: You are requested to stay away from the shop until the present difficulty is settled, Your compliance with this will command the protection of the Wabash employes. But in no case are you to consider this an intimidation. [Signed] "C. M. BERRY, Chan·man.·' "MOBERLY, Mo., June. "OFFICE OF LOCAL COM.
"To W. P. Sie: You are requested to stay away from the shops until this matter is settled. By your compliance with this request your action will be sustained by the ·Wabash employes to the utmost of their power. But in no case are you to consider this all intimidation. Having sent a similar notice to other foremen, the committee consider it ,vise to give you an opportunity to establish J'ourself for or againstrus. C. M. BERRY, Chairman. ", .
IN BE WABASH R. CO. "OFFICE OF LOCAL CoMMITTEE,
219 June 17, 1885.
informed that it is our wish that they should remain away from the shops until the present difficulty is settled, but in your case you are justified in remaining while passenger trains are running; bllt we reqllest you to confine J'our work to passenger engines only. But in no case are yOll to consider this an intimidation. C. M. BERRY, Chairman."
UMr. Arthu1', Foreman R. H.-DEAR 8m: All other foremen have been
The testimony further shows that the men engaged in the roundhouse on repairs quit work and went to the meeting called by Berry, chairman; and that of the 35 men employed in the round-house, the number who returned to their work at no time exceeded 15,-a number insufficient to carryon the necessary work of repairs. A number of the men who have gone to work swear that they have not been molested or interfered with. One of the locomotive engineers, however, testifies that a notice was given him to quit work, which he refused to obey; that, thereupon, three partially masked men approached him on his engine, and used violent and threatening language. Selby, one of the defendants, testifies that he went to the round.house, at the suggestion of Berry, to notify the men of the meeting. Witnesses differ as to the language used by Berry and Selby, while talking to Arthur in the round-house, about the men attending the meeting, but sufficient can be gathered from it to show that, while they undertook to avoid the law, yet they intended to leave the impression that the round-house employes had better attend the meeting. Upon this (a general outline of the facts) the question arises, ought the defendants to be punished for contempt? It will be recollected that the property of the Wabash Railroad is in the hands of the court, and that receivers have been appointed by it for its management. Th owners have been deprived of possession and control, and with it the ability to protect it. 'Ihe court, through its officers, has undertaken to do the ordinary business of the company, the running of regular, speedy, and safe trains for the conveyance of mails, passengers, and merchandise; and, moreover, the management of the property so as to make it valuable to those who have claims against it. All these great public and private interests demand that no unnecessary interferences with the property and its management should take place. If anyone has grievances, be they employes or othf'J'il, ;,hey can have easy and ready redress for their actual or supposed wrongs by bringing them to the attention of the court. Both receiverr p,lld managers are subject to its control. The court will not permit its officers to wrong anyone, and is always ready to redress grievances. Snch a thing as taking the law into their own hands, be they employes of the company or officers of the court, will not be tolerated. Stress has been laid, in the argument for defendants, upon the promise made in the circular issued by the managers during the early strike; that notice should be given to the chairman of the committee of the employes of any intended reduction, and that the committee should be consulted
220
about any reduction or suspension. These promises, heretofore more fully set out, though not applicable here, were well calculated to mislead, and no doubt had their influence in the proceedings afterwards had by the committee and striKers. The wholesome law of the state of Missouri, requiring companies to give 30 days' notice to employes before reducing their wages, which went into effect on the twenty-third day of June, has no application, because not in force when these occurrences took place. The provisions of this law no doubt emanated from the same sense of justice which induced the promise of the managers to give notice of any reduction, in the circular spoken of. It moreover indicates the true source where the remedy for grievances of the kind under consideration is to be sought. Differences between employers and employes, if not settled by compromise, must be settled by law and the courts. The community at large cannot afford to tolerate conflicts, from which outside and innocent parties must suffer. Courts do not interfere between employer a,nd employes, except to declare what the rights of the parties are, and to keep order. Men may work or cease working as they choose, provided they violate no contract. They may combine and peaceably seek to forward their interest in any manner, provided they do no violence to others' rights, or commit no violation of law. Did these defendants, by what they did, interfere with the rights of others? The court (in this case) had a right to operate the railroad without molestation of anybody. Indeed, as shown, was bound in law and justice to do so. The defendants, and specially Berry, the recognized leader of the strikers, did interfere in the management of the road. To make this plain, it is only necessary to refer to his notices. What would we say of one signing himself "Chairman" who; in the ordinary transactions of life, would give notice to a foreman in a shop to remain away from his work, and assure him that acompliance with the request would command the protection of a set of men who had combined to resist being discharged from work? What would we say of a man signing himself "Chairman" of an organized body who would write to an employe of a shop to stay away from his work, and that by compliance he would be sustained to the utmost by the body which he represented; that the committee considered it wise to give him an opportunity to establish himself for or against the combination? What would be thought of a man who signs himself "Chairman" of an organized body writing to an employe in a shop that he might remain in it to do a particular kind of work, but to confine himself to work designated by the writer? Such things occurring in ordinary life transactions, no one of common sense would doubt that such acts were an interference. The implied threats contained in the notices would justify the placing of the perpetrators under peace-bonds, and if consequences followed, Buch as in this case, the perpetrator becomes further amenable to the law. The statement in all of these notices that they are not to be taken as intimidations go to show beyond a
FIRST NAT. BANK 11. LOCK-5TlTCH FENCE 00.
221 I
doubt that the writer knew he was violating the law, and by this sub. terfuge sought to escape its penalties. The defendant Selby is shown by the testimony to be an anxious and active helper, who knew very well what he was doing. He kept nearer within the bounds of the law than his co.defendant Berry. In view of the fact that the prom. ises made in the circular of the managers, heretofore spoken of, may have induced the strikers to again try improper and illegal means, the sentence of the court is that Berry be confined for two, and Selby for one, month in the county jail of Jackson county, reserving the right to add to this sentence, if deemed necessary, peace-bonds in the sum of $500 each, to run for one year. .
FIRST NAT. BANK
OF
WORCESTER, MASSACHUSETTS, v. LOCK-STITCH FENCE Co. and others. OF
CEN'1'RAL NAT. BANK
MASSACHUSETTS
V.
SAME.
(Oircuit Oourt, N. D. Illinois. May, 1885.)
1.
PROMISSORY NOTES-LIABILITY OF AT TIME OF EXECUTroN AND BEFORE DELIVERy-NOTE AS EVIDENCE-HuLE IN UNITED STATES COURTSILLINOIS STATUTE.
The question of the liability of such a party is one of general commercial law, and the decisions of the courts of the state in which the note is executed and made payable are not necessarily controlling in the decision thereof by a United States court. SAME-EVIDENCE.
3.
The evidence in this case held not to overcome or change the prima fode case made by the introduction of the note, and judgment entered for plaintiff against all of the defendan ts as jointly liable upon the notes in suit.
These were two suits upon promissory notes, one for $2,121, and the other for $1,123.59, both dated January 1, 1884, due 12 months after date, and payable to the order of Washburn & Moen Manufacturing Company, at the First National Bank of Joliet, Illinois. The plaintiff in each case is a banking corporation, organized under the laws of the United States, and located in Massachusetts. The defendants are citizens of Illinois, the defendant Lock-Stitch Fence Company being a corporation, having its principal office and place of business at Joliet. The declaration in each case contained. a single count, in which the defendants were charged as joint makers of the note setout in the declaration, and as such jointly liable to the plain-