Black v. Boyd (248 F.2d 156, 1957)

SHACKELFORD MILLER, Jr., Circuit Judge.

Charles G. Black, Trustee in Bankruptcy for the Butler-Foster Milling Company, hereinafter referred to as the Trustee, and The First National Bank of Memphis, hereinafter referred to as the Bank, filed in this Court their separate applications for leave to file a petition for Writ of Mandamus to the Hon. Marion S. Boyd, Judge of the United States District Court for the Western District of Tennessee, directing him to set aside and vacate in certain respects an order entered by him on October 22, 1956, in a cause filed in that court by Continental Grain Company, hereinafter called Continental, plaintiff, against the Trustee and the Bank as defendants. On January 17, 1957, an order was entered by this court in each application directing that the District Judge show cause why a Writ of Mandamus should not issue directing him to vacate and set aside the said order. The District Judge has filed his response in each case and the matter is now before us on the legal issues presented by the petition and response in each case. Since the two proceedings involve the same factual situation and present the same questions of law, they will be considered together in this single opinion.

The facts out of which the controversy arises are as follows. On March 1, 1955, and prior thereto, the Butler-Foster Milling Company, hereinafter referred to as the Milling Company, was indebted to the Bank in the sum of $2,699,491.00 which indebtedness was purportedly secured by warehouse receipts for large quantities of soybeans issued by Alabama Grain Elevator Company of Mobile, Alabama. On February 28,1955, the Milling 'Company sold to Continental, 1,299,839 bushels of soybeans represented by said warehouse receipts. On March 1, 1955, Continental deposited in its account at the Bank $3,300,000.00 and its agent in Memphis delivered to the Milling Company its check drawn on the Bank in the :sum of $3,164,458.05. The Milling Company deposited the check in its account ■at the Bank and immediately thereafter gave the Bank its check for the full ■amount of its indebtedness to the Bank, namely, $2,699,491.00. The warehouse receipts were surrendered by the Bank ■and delivered to Continental’s agent. It later developed that the warehouse receipts . were invalid and that the Alabama Grain Elevator Company did not bave in its possession the soybeans called for by the receipts. The Milling Company was adjudicated bankrupt on April 27, 1955.

Continental thereafter filed in the District Court for the Western District of Tennessee its action against the Trustee ■and the Bank, alleging that the Milling 'Company obtained the purchase price