175 F.2d 603 (5th Cir. 1949), 12564, Lunsford v. Haynie

Docket Nº:12564.
Citation:175 F.2d 603
Party Name:LUNSFORD v. HAYNIE et al.
Case Date:July 14, 1949
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 603

175 F.2d 603 (5th Cir. 1949)



HAYNIE et al.

No. 12564.

United States Court of Appeals, Fifth Circuit.

July 14, 1949

Rehearing Denied Aug. 17, 1949.

Page 604

Ivan Irwin, Dallas, Texas, Harold B. Sanders, DallasTexas for appellant.

James P. Swift, Dallas, Texas, Wm. Madden Hill, Dallas, Texas, Claude Williams, Dallas, Texas, Orrin Miller, Dallas, Texas, William P. Fonville, Dallas, Texas, for appellees.

Before HUTCHESON, SIBLEY, and WALLER, Circuit Judges.

HUTCHESON, Circuit Judge.

Appellant was the creator, and, during its brief life, the president, the dominating influence in, and except for his wife and his secretary, the sole stockholder and owner, of Marvins, Inc., his creature, a corporation, which, within less than a year after he formed it, wound up in bankruptcy, largely as a result, as plaintiff claimed and the court found, of his charges against, and withdrawals from it.

Judgment having gone against him in both a summary proceeding and a plenary suit, he is here complaining in this one appeal of both judgments, and seeking their reversal.

The summary proceeding, begun for small sums and in a small way, has continued in that way. It presents for decision questions

Page 605

based on appellant's claims that the sums demanded of him came into his possession and are held by him, under a title which is not in subordination, but adverse, to that of the bankrupt, that summary jurisdiction to proceed against him is, therefore, lacking, and that if there is jurisdiction, the judgment is wrong.

The plenary suit began as a scatter gun effort, under Pepper v. Litton, 308 U.S. 295, 60 S.Ct. 238, 84 L.Ed. 281, to rake appellant fore and aft on the general claim that he had misbegotten the corporation in sin and iniquity and, throughout its brief existence, had misused it for his own benefit and to the injury of the corporation and its creditors. It has continued, as it has begun. It comes to us in that same case without benefit of fact findings and in a more or less jumbled way.

Claiming indiscriminately everything in plain sight and some things more or less hidden, that is making some claims which seem to us obvious and some which seem less plain, the trustee in the plenary suit sued the defendant on various accounts for sums aggregating more than $200, 000 and for a decree establishing the trustee as owner in right of the corporation of undivided interests in two tracts of land described in his petition.

As broken down these are the items making up the total sum:

1. For fraud in securing the charter on inadequate capital . . .

$96, 492.92

2. For sums paid out by the bankrupt corporation on account of debts and obligations of defendant . . .

45, 389.02

3. For salaries unlawfully paid him . . .

16, 920.00

4. For moneys advanced to pay his personal income taxes . . .

13, 500.00

5. For moneys exacted from the corporation as pretended royalties on trade names . . .

12, 630.00

6. For expenses claimed by him as incurred in connection with the operation of the corporation . . .

13, 613.84

Submitted to the court on a great mass of illy assorted evidence taken before the referee in other connections and for other purposes, the district judge, in an opinion marked by the greatest generality, determined that plaintiff had established his right to recover $100, 000, and gave judgment therefore. He also awarded plaintiff judgment for the interest sued for in the land but subjected it to tax liens for appellant's personal taxes in such amounts that the judgment is of doubtful value to the trustee.

At any rate, the appellant makes only a feeble attack on that part of the judgment, and we need not pay it much mind.

The opinion, as to the money judgment, does indicate, though it does not expressly state, that the court finds against the claim for the $96, 000 sued for in connection with the incorporation of the company, and that it thinks the claims for royalties for the use of trade names are quite extreme, but outside of these indications, the opinion gives no guide, furnishes no clue, to the items making up the amount of the judgment rendered.

In order to obtain a complete judgment of reversal, appellant is, therefore, confronted with the burden of showing that none of the six matters claimed present recoverable items, and to obtain a diminution of the judgment, he is obliged to show that less than $96, 000 is recoverable on account of them. We, therefore, will approach the case from that standpoint, taking up, and disposing of, in turn each item claimed.

As to the first and largest item, the alleged liability of appellant for $96, 000, by reason of the method and manner of incorporation of Marvins, Inc., we are quite clear, upon the authorities 1 he cites, that appellant is right in his contention that no right of recovery on this item is shown, and upon the indication in the opinion that it did not enter into the judgment rendered.

Upon the second matter of recovery, however, the liability of appellant for withdrawal of...

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