Dooley v. Hadden

In July, 1895, Harold F. Hadden and James E. S. Hadden brought an action in the New York supreme court for the city and county of New York, against the Natchaug Silk Company, Michael F. Dooley, personally and as receiver of the First National Bank of Willimantic, John A. Pangburn, and others, including William I. Buttling, sheriff of Kings county. The complaint alleged certain fraudulent and collusive proceedings between the Natchaug Silk Company, Dooley, receiver of the First National Bank of Willimantic, and John A. Pangburn, and, under a prayer of the bill, an injunction pendente lite was granted restraining the sheriff of Kings county from selling property of the silk company in his possession as sheriff upon executions against said company in favor of John A. Pangburn or Dooley, as receiver, and restraining Pangburn and Dooley from further proceedings at law against the property of the silk company in the state of New York.

The action was removed to the circuit court of the United States for the soughern district of New York; and repeated motions made to dissolve the temporary injunction made to dissolve the temporary injunction were made and denied; and the order of the circuit court denying the motions was, on appeal, affirmed by the circuit court of appeals. 20 C. C. A. 494, 38 U.S. App. 651, 74 Fed. Rep. 429.

Subsequently, the taking of testimony in the case having been closed, the defendants Dooley and Pangburn made another motion, upon the plenary proofs, to dissolve the injunction; and this motion was granted, after hearing, by Circuit Judge Lacombe, on November 27, 1896.

The case came to final hearing in the circuit court, and resulted in a decree dismissing the bill on January 27, 1898.

Upon appeal by the complainants the circuit court of appeals reversed the decree in part, and affirmed it in part. From this decree of the circuit court of appeals the complainants have appealed to this court, on the ground that the decree should have been adjudged to the complainants' priority of lien on all the goods in dispute; and the defendants have appealed on the ground that the circuit court of appeals erred in reversing the decree of the circuit court.

The facts, as stated in the opinion of Circuit Judge Shipman, were substantially these:

On April 23, 1895, the Natchaug Silk Company, a Connecticut corporation, owed the First National Bank of Willimantic, a national banking association located in Connecticut, over $300,000, and was entirely insolvent. In consequence of this indebtedness, the bank suspended, and Michael F. Dooley was appointed its receiver on April 26, 1895, by the comptroller of the currency. On April 23, 1895, J. D. Chaffee, as president and general manager of the silk company, in consideration of and to reduce this indebtedness, sold to the bank 107 cases of manufactured silk, the value of which cannot be accurately ascertained, but which is said to be about $20,000. They were then, or had been, shipped to New York city, where they were subsequently taken by Dooley into his possession, and removed to Brooklyn. On May 8, 1895, he, as receiver, attached the goods by an attachment, which was subsequently dissolved. On May 30, 1895, he sold and assigned to Pangburn, who is a resident of the state of New York, notes of the silk company, not paid by this transfer, amounting to about $67,000, for the nominal consideration of $200, which sale Dooley made by virtue of an order of the circuit court of the southern district of New York, with the approval of the comptroller of the currency, for the purpose of enabling a suit to be brought in the state of New York by a resident of that state, in his own name, against the silk company, a foreign corporation. Pangburn did bring suit on said notes against the silk company on June 1, 1895, in the proper state court, obtained an order of attachment, a judgment for the full amount thereof, and an execution, which was levied by the sheriff of Kings county upon these cases of silk. The sale was stopped by this injunction order.

On June 6, 1895, the complainants, who are creditors of the silk company to the amount of about $22,000, brought suit against it, in a court of the state of New York, and obtained an order of attachment, under which the sheriff of Kings county levied an attachment upon the same silk.

On July 2, 1895, the complainants brought a bill in equity upon which the injunction order now in question was issued against Dooley, Pangburn, the silk company, and others, alleging that all their acts in connection with the silk were fraudulent, and praying for relief by injunction and otherwise.

It thus appears that the bank and the complainants are creditors of the silk company, and that Dooley, as receiver of the bank, and the complainants, are each striving to obtain a hold upon the silk as a means of payment for their respective debts.

Mr. Edward Winslow Paige for Dooley et al.

Messrs. ''Wm. B. Putney and Henry B. Twombly for Hadden et al.''  Mr. Justice Shiras delivered the opinion of the court: