ALABAMA IRON & RY. CO. 11. ANNISTON LOAN & TRUST CO.
-Citing, in support of the same, Bank v. Cunningham, 24 Pick,270; Kennedy v. Green, 3 Mylne & K. 699; In re European Bank, L. R. 5 Ch. App. 358; In re Marseilles Extension Railway Co., L. R. 7 Ch. App. 161; Ang. & A. Corp. 8; Winchester v. Railroad Co., 4: Md. 231. To the same effect, see 1 Mor. Priv. Corp. (2d Ed.) § 540; 1 Morse, Banks & Banking, § 104. As, when the bank bought the property, the record showed a perfect title in Woodson, with the purchase price fully paid, and as the bank had no actual notice of outstanding secret equities, and was not charged with constructive notice of any such equities because of any knowledge of Woodson, its president, of whom it acquired the property, it follows that the bank was an innocent purchaser without notice, and, as such, acquired the property divested of any vendor's lien which may have existed in favor of Tompkins as against Woodson. For this reason the decree of the circuit court should be reversed, and the case remanded, with instructions to dismiss the bill, with costs, and it is so ordered.
ALABAMA mON & RY. CO. et a.l. v. ANNISTON LOAN & TRUST CO. (Circuit Court of Appeals, Fifth Circuit. June 20, 1893.)
RECEIVERS-SALE OB' CERTIFICATES-RATIFICATION-EsTOPPEL.
The president of a bank in which a receiver kept his deposits, having been authorized by the receiver to sell certain receiver's certificates, made the sale after his authority had been revoked, and caused the amount realized to be credited to the receiver on the books of the bank, and on the receiver's pass book. The receiver did not repudiate the sale, but, on the contrary, drew checks against the deposits, and. reported the transactions to the court, which, in the foreclosure decree, recognized the validity of the certificat<!S, and directed that the sale should be made subject thereto. Held, that the receiver was estopped to question the validity of the certificates, as against an innocent purchaser. The fact that the receiver, on afterwards learning that the bank was insolvent, demanded and received from the bank and from the president, personally, certain collateral secUrities, to protect his deposits, was not a repudiation of the sale, but rather a fresh ratification, and acceptance of the deposits as the proceeds of the sale. The.deposits representing the proceeds having been placed in the bank, by the president, in the form of checks, drafts, etc., on other banks, which were in fact duly honored by them, the deposits must be held to have come into the receiver's hands, within the rule which makes the receipt of the proceeds by the receiver a condition precedent to the validity of the certificates, although the bank was never in a condition to pay over any considerable proportion of the deposits to the receiver. Under the circumstances, the court, having recognized the validity of the certificates, and caused the foreclosure sale to be made subject to the lien thereof, was bound to recognize the estoppel of the receiver, as its agent, and to protect the innocent purchaser of the certificates by en· forcing the same against the purchaser of the property.
SAME-RECEIPT OF PROCEEDS-DEPOSITS IN BANK.
SAME-ESTOPPEL OF COURT.
ern District of Alabama.
. Appeal from the Circuit Court of the United States for the North-
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·. i Petition of intervention filed by AmUsi:9n Loan & Trutt'tl'omps;nyin the forecl06ure suit brought by .theCentI'al Trust Company of New York against the Sheffield & Birming.ham. 0001, ';I:ron & Railway' Company. . The intervener sought to enforce! thellen otcertain re'ceiver'scertificates, as against the purchasers· at' the .foreclOsure sale; 'In' the court below there was a decree in fa"voi' of the intelwener, and an appeal was taken by the Alabama lron&' Railway Company,the Townley Coal & Coke Company, Nap<)leon. Hill, trustee, and James C. Neely, trustee. Decree affirmed" ' Statement b.:t'LOCKE;· District Judge:
On the 15thdaf;ot ArtguSt, 18l;l0, ilie Anniston Loan & Trust Company filed lts Intel"Ven1J1jf petition, cJ:itimingpayment fortive separate receiver's certificates,- numl.lered '8, 9" 10, lldUld, 12, lssuM on 10th day of October, 1S89"by,J"acpp G. Champerlain, receiver, of the She:ffield ,& Birmingham" CQi,U, , .l:r,on & n:mway The intervention set' forth that the receiver 'placed:; sai'd certiffellJtes In theMnds of Charles n. Woodson for sale; that the said Woc,dson, on the 10th October, 1889, sold the s:une to one Duncan T. Parker, now deceased, for $5,000 for each certificate; that ,the said :P-a,rlter paid Woodson said price for the certUicates, the same"havihgbeeri piaced in 'Wdodson's hands by the receiver to be negQtlated,aI\!ltl,Old1;ly power an<} authority to act for and represent said receiver in the ,matter of the sale of said certificates; that on the 2d November, 1889, T. Parker sold and delivered the certificates, for the sum of $5,Qoo each, to the,petitioner, the Anniston Loau & Trust comoanY. " . . .' .· Said' petition further. se1;& 'forth that. it. was the, duty of Ohamberlain to pay the, semiannulll'lntereat· on said certificates. being $750, due on 10th April, 1890, at the Natlollal Park BlUlk. of New York, and that said interest was not pm-d. It further stilted in said petition that said receiver duly reported the 5a1e·of said certificates as made by said Charles made to theclrcuit court of the United D. ,Woodson; such, report States, and that saId procaeds had heen placed by Woodson, to the crMit of sltid receiver, in the First Bank of Sheffield, less 6 per cent. commission 1:or selllng the. sanie; that on the 3d day of December, 1889, s. decree was rendered by said circuit court of the United States, foreclosing the and o!.'dering a sale of the property in said original suit, and that the purchasers be requirM to pay the receiVer's certificates, numbered as a;foresaid, ownM and held by petitioner; that on the 4th January, 1890, the., said circuit court made an order modifying the former decree, of' 3d December, 1889; authorizing such purchasers of said properties rut the foreclosure sale to contest the validity of said certificates so sold. by Wood!jon, and the· said moditiM decree was made after Parker had pUrchased said certifi.cntee from the dUly-authorized agent of sail! receiver, in good faith, for a valuable consideration, and had sold them to pe21st April, 1890, said property was sold under said detiti()ner; that on cree, and part of th(jsame, pur(jpq.sed by Napoleon Hill, trustee, and part by James C. Neely, trustee. Petitioner then prays for relief,-that the amount of $Rid certificates be paid to it by the purchaser of said property. Totbis a deri:iurrer was interposed, and on the 12th November, 1890. petitioner amended its intervention, setting forth more specificlllly tho authority given to said JacobG. Cham1;lerlaln, receiver, to issue said re"celver's certitlci.ttes; and stating that the' action of Woodson was as the allthorized agent ot· the receiver, in. selling said five certificates and reiterating, in a jlreat measure, what. had already been set forth n the original petition. 'On the 2dDecember, i890,' respondents renewM their demurrer t() the petition and amendM petiti()ll, which was overruled. On the 31st January; 1891, respondents filed their answers to the intervention of the Anniston Loan & Trust Company ·l'iubstantially as follows:
ALABAMA IRON & RY. CQ; V; ANNISTON LOAN & TRUST CO.
They deny that said Chamberlain, receiver, ever engaged Woodson, th<.> president of the First National Bank of E;heffield,Ala., to act as his agent in the· negotiation and·· sale of said receiver's certificates, and allege that Woodson disposed of the same without warrant Ot· authority frOID Chamberlain. receiver, and contrary to the direct instrdctions and request (If said rect>iver; that said certificates were not disposed of by Woodson, as alleged in the intervention, on the 10th October, to one Duncan T. Parker, or any otie else, nor were they disposed of for the sum of $5,000 each. And aver that said five certificates were n.yt; disposed of by Woodson until after the 13th October, 1889, and that they were then sold, or otherwise disposed of, by Woodson, without authority, and against the express instructions of the receiver, to some pereon or persons unknown to respondents, and for a price not greater than 75 cents on the dollar, and also call for strict proof that said Duncan T. Parker, or anyone in his behalf, ever paid to Oharles D. Woodson $5,000 for each of said certificates. And respondents aver that, if the said Parker ever bought the certificates at all from said Woodson, they were bought for a less sum than they were directed by the conrt to be sold for, and that the purchase of the same was against the order of the court, and against the instructions of the receiver. They further allege that the price paid for said certificates by said Parker, whatever the price may have been, was never turued over or transferred by Parker, or anyone for him, to said Woodson ner to said Chamberlain, as receiver. They aver that they were not informed as to what said Parker may have done with said certificates, but deny that Parker sold and transferred Said certificates to the Inter\'cner for $5,000 each. They also deny that it was the duty of Chamberla1n to pay the interest upon said certificates, or that said ChamberllUn reported the sale of said certificates, Nos. 1, 2, and 3, and also Nos. 8, 9, 10, 11, and 12, for him, by said Woodson, or thllit the proceeds were placed to his credit in the First National Bank of Sheffield. Respondents admit, however, that sald Chamberlain did report to the court that the proceeds cf tIle five certificates in litlgn,tion had been placed by Woodson to the receiver's credit in the Il'irst Nat!onlll Bank of Sheffield, less commission for selling same: but respondents aver and show to the court that such statemellt, made by said receiYer, was made through misinformation, and brought about by misrepresentation and misconduct of said 'Voodson; and that said proceeded to correct said statement m said report so soon as be became aware of the error into which he had been led. Respondents admit that a decree had been taken on the 3d December, lAA9, as alleged in the intervention, and that it was ordered in said decree that the purchaser of the property 8hould pay for said certificates, m addition to the amount bId at the sale of property. And they further admit the court did on the 4th day of ,January, 1890, make another decree, modifying and changlng the one of December 3, 1889, so as to authorize the purchaser of the property to test the validity of the said five certificates, hut deny that Woodson was the agent for the receiver, or that his sale of said certilkates was binding npon the purchaser of the prop· erty. They also admit the Fale of the mortgaged property on the 21st April, 1890, under the decree, as modified, authorizing the purchaser of the property to contl'St the validity of the five certifieates. In answer to the amended petition, substantially the same admissions and denials were made as in the answers to the original petition of intervener. On the 6th March, 1891, an order was entered, by consent, referring the cause to a special master, who on the 3d of August, 1892, filed an extended report upon matters of fact, in substance finding as follows: That Chamberlain, the receiver, by an order of the court, duly and regularly made, issued receiver's certificates for an amount, in the aggregate, of $150.000. Of these certificates, five, for $5,000 each,-Nos. 8, 9, 10, 11, and 12, inclusive,-the receiver placed in the hands of C. D. Woodson, who was at the time president of the First National Bank of Sheffield, to sell. That thesetlvecertificates are the subject of controversy in tWs suit, and the re-