Central Trust Co. of New York v. Benedict

THAYER, Circuit Judge, after stating the facts as above, delivered the opinion of the court. The principal question discussed by counsel in their briefs is whether the circuit court had jurisdiction to make the order from which the a.ppeal was taken. In this behalf it is contended for the appellant that inasmuch as the circuit court cou Id not have entertained a suit between the appellant and the appellees, both of them being citizens of the state of New York, and inasmuch as it had not acquired possession of the fund in controversy, either actual or constructive, it had no power to make the order appealed from, and the same is void. It may be conceded that the jurisdictional point would have great weight if the order made by the circuit court was not properly incident to the granting of full and complete relief in the suit of Ames et al. against the Union Pacific Railway Company et al., which is ref err (id to in the foregoing statement, and if it was true that the Central Trust Company had an interest in the fund in controversy, other than that of a mere depositary. But if the suit brought by Ames et al. against the Union Pacific Railway Company et al. was of such a nature as rendered it necessary or proper in that proceeding to administer upon the fund in controversy, and if, at the time the order was made, the trial court had before it all the parties who had a proprietary interest in the fund, and authority to control the disbursement of the same, then we do not see that the validity of the order can be successfully challenged. It admits of "no doubt that the Central Trust Company (hereafter termed the “Trust Company”) was a mere depositary of the fund. It held it at all times as a banker, subject to the order of the president of the Union Pacific Railway Company and the appellees, or a majority of them, who were trustees in the second mortgage executed by the St. Joseph & Grand Island Railroad Company (hereafter termed the “Grand Island Company”). The trust company had no proprietary interest in or lien upon the fund in question. The traffic agreement named the trust company as the depositary of the fund, but it gave it no power of control over the same, other than the power to disburse it pursuant to orders and directions from time to time given by the president of the Union Pacific Railway Company and the trustees in the second mortgage. The master properly held and reported that the fund belonged to the Grand Island Company, and that the appellees and the president of the Union Pacific Railway Company, the latter acting in an official capacity, were trustees of the fund, having the sole power to disburse it for the purposes named in the trafile agreement. In no aspect of the case, so far as we can see, was the trust company 202 ¡given any authority to control tlie expenditure of the fund, or to refuse to' pay drafts that might be drawn upon the fund by the trustees, who had been appointed to expend it. In a certain sense, the trust company was a1 mere Subagent of the trustees, whose orders, when drawn upon the fund, it was bound at all times to honor. Such, appear to have been the conditions under which the deposit with the trust company was made. Passing to the second inquiry above suggested, we think it is manifest that the suit of Ames et al. against the Union Pacific Railway Company et al. was of such a nature and contemplated such relief 'that the circuit court, by an order made in that case, could property dispose of the fund in controversy,' especially after the ap-pellees, as trustees in the second mortgage, had made themselves parties to the proceeding. It was a suit brought by the stockholders of an insolvent corporation to wind up the company on the ground of its insolvency, to adjust and settle all controversies between the Union Pacific Railway Company and its creditors, and 'between that company and its leased lines, including the Grand 'island Company, and, generally, to marshal all the corporate rs-Sets, and to liquidate the company’s affairs. When the appellees, Messrs. Benedict, Bromley, and Pendleton, made themselves parties to the Ames suit, and asked for an allowance against the fund ih controversy, we do not perceive that there was any lack of pow;er:in the court to grant the relief prayed for, and to dispose of the fund. All parties who had a beneficial interest in the fund, or power to control its disbursement, to wit, the Union Pacific Railway Company, the Grand Island Company, and the trustees in its Second mortgage, were then before the court, and, by virtue of this 'fact, the fund itself became subject to the orders of the court. Vermont & C. R. Co. v. Vermont Cent. R. Co., 46 Vt. 792; Chaffee v. Quidnick Co., 13 R. I. 442; Sercomb v. Catlin, 128 Ill. 556, 21 N. E. 606; Langford v. Langford, 5 Law J. Ch. (N. S.) 60; Schindelholz v. Cullum, 12 U. S. App. 242, 249, 5 C. C. A. 293, and 55 Fed. 885; Gluck & B. Rec. p. 978. The result might be different if the trust company showed any substantial right to the fund which it could 'interpose, as against the Union Pacific Railway Company and the trastees in the second mortgage of the Grand Island Company, for 'whose benefit the fund was created. But such is not the fact. :This record, fails to disclose any such right. Inasmuch as the trust 'company held the fund merely as a banker, it does not appear that there was any' reasonable foundation for the allegation that the ti-Ust company had a lien upon the balance of the fund in its hands. ⅛⅛ record shows that the trust company is simply a depositary ‘O'f the fund, and that it holds it subject to the disposal of the parties lást' named. As against them and the Grand Island Company, the trust: company can assert no adverse right. Moreover, oecupy-ihg such a position, the trust company is not concerned in the question whether the appellees were entitled to compensation for their service's as trustees in supervising the expenditure of the fund, nor ¾ the further question whether the compensation allowed to them t(y the trial court was excessive. Having no valid claim of its 203 own agáiñst tbe fund, and being a mere debtor of the ¡Grand Island Company,. it is only concerned in the question whether the order made by- the trial court will protect it from all further claims on the part of those to whom the fund belongs. We have no doubt that the order made will afford it such protection. The order appealed from is therefore affirmed.