Case Name: FT. PAYNE COAL & IRON CO. v. SAYLES et al.
Court: United States Court of Appeals for the Fifth Circuit
Jurisdiction: United States
Decision Date: 1893-01-16
Citations: 55 F. 360
Docket Number: No. 85
Parties: FT. PAYNE COAL & IRON CO. v. SAYLES et al.
Judges: Before PARDEE and McCORMICK, Circuit Judges, and LOCKE, District Judge.
Reporter: Federal Reporter
Volume: 55
Pages: 360–361

Head Matter:
FT. PAYNE COAL & IRON CO. v. SAYLES et al.
(Circuit Court of Appeals, Fifth Circuit.
January 16, 1893.)
No. 85.
Appeal from the Circuit Court of the United States for the Northern District of Alabama.
In Equity. Bill by A. L. Sayles and others — some of them as stockholders and bondholders and others as bondholders only, in the Et. Payne Coal & Iron Company — against the said company, the Old Colony Trust Company of Massachusetts, A. B. Green, A. J. Butler, the Citizens’ Bank & Trust Company, and G. N. Hensen, praying that a receiver he appointed for the Et. Payne Coal & Iron Company, and that the respondents be enjoined from disposing of the assets of said company. Temporary injunctions were granted, and a temporary receiver appointed. Demurrers were overruled, and a decree entered for complainants, making the receivership permanent, and continuing the injunction against the Ft. Payne Coal & Iron Company, which now prosecutes this appeal. Affirmed.
Complainants are citizens of Massachusetts and other states, and the respondent Et. Payne Company, a corporation organized under the laws of Alabama, and engaged in the business of developing the coal and iron resources of De Kalb county, in that state, and in building and developing the town of Et. Payne. The company was organized November 22, 1888, with a capital stock of $5,000,000, (50,000 shares, at $100 each,) of which 40,QOO shares were subscribed and paid for chiefly in New England at $25 a share, the other 10,000 shares being reserved in the treasury of the company. The bill charges that financial difficulties forced the company to market the greater part of the reserved 10,000 shares at $37 per share; that this did not afford sufficient relief, and in order to raise more money a mortgage on all the property of the Et. Payne Company was given to the Old Colony Trust Company, respondent, a corporation organized under the laws of Massachusetts to secure an issue of $300,000 of bonds, whereof $212,000 worth were sold at or near par, and the rest hypothecated for debts; that valuable properties of the company had been disposed of at ruinous rates to meet debts of the company; that the real estate had been sold for taxes; that default had been made upon the interest of the bonds; that the price of the stock was depressed to $1.50 a share; that at a meeting where W. P. Rice held a majority of the proxies, few stockholders being present, it was voted to issue $1,000,000 in bonds; that the complainant stockholders were liable under the laws of Alabama for $75 unpaid subscriptions on each share; that the Old Colony Trust Company had brought no suit to foreclose the mortgage made to securo the principal and interest of the bonds; that the management was wasteful and extravagant, and entirely controlled by W. P. Rice, the president.
J. A. W. Smith, for appellant.
Jas. Norfliet, for appellees.
Before PARDEE and McCORMICK, Circuit Judges, and LOCKE, District Judge.

Opinion:
McCORMlCK, Circuit Judge.
In ¡Ms case we do not deem it, necessary to discuss tke various questions irado ou rois appeal. A careful examination of the case satisfies ns 11m i. as between the bondholders, who joined in ¡mú iieoii relief by the bill, and the Hi. Ihiyne Coal & Iron Company, appellant, the bill proseáis a case of which the circuit court had jurisdiction, and such equities as warranted the court to intervene for the preservation of the trust property, and grant preliminary relief by injunction, as well as by the appointment of a receiver. Tho order appealed from should be affirmed, and the cost of appeal adjudged against the appellant, and it is so ordered.