In re Charles Town Light & Power Co.

• Decision Date: 23 November 1910
• Citation: 183 F. 160
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: In re CHARLES TOWN LIGHT & POWER CO.

183 F. 160

In re CHARLES TOWN LIGHT & POWER CO.

United States District Court, N.D. West Virginia.

November 23, 1910

A petition in involuntary bankruptcy was filed herein by C. J Devore, a single creditor, alleging defendant to be a corporation, principally engaged in trading and mercantile pursuits, owing petitioner a debt of over $2,600, having less than 12 creditors, and with having committed acts of bankruptcy: (a) By causing to be recorded within four months of its property to secure a conveyance by mortgage or deed of trust all of its property to secure $18,000 of bonds; and (b) by suffering a receiver to be appointed for it by a state court. To this petition answer has been filed by the alleged bankrupt, averring itself to be a corporation chartered for the purpose of 'supplying light and power by electricity to the public at Charles Town, Jefferson county, W. Va., and to such persons, partnerships, and corporations residing therein or adjacent thereto as may desire the same,' denying that it is 'engaged principally in trading and mercantile pursuits,' denying that its creditors are less than 12, but alleging their numbers to be between 17 and 20 and setting forth the names and addresses of some 17 of such creditors. It admits that it executed the deed of trust to secure $18,000 of bonds on November 18, 1904, for the purpose of betterment of its plant, to which it alleges the money was applied, and admits that such deed of trust was not admitted to record until within four months of the filing of this petition, but why not, was, it alleges, for reasons known to the trustee and not to it. It denies the execution and recordation of this deed of trust to be an act of bankruptcy. It admits its assent to the appointment of a receiver for it 'because, for prudential business reasons, it was deemed better that any conflicting claims of creditors could be more easily and with more rapidity adjudicated and arranged. ' It avers that it owes debts not exceeding $30,000 and owns a plant and property that cost between $35,000 and $45,000 and has contracts with the town of Charles Town and with other corporations and individuals, and the 'question of its insolvency would depend upon the market value of this plant and property * * * and the value of its contracts.'

Pending consideration of this petition, the Shenandoah Valley Bank and the Winchester & Washington City Railway Company, as creditors, have entered appearances and joined in the petition, as provided in section 59f of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 562 (U.S. Comp. St. 1901 p. 3445)), and some 12 other creditors have also appeared and expressed opposition to the adjudication of the defendant as bankrupt. By order, the issue raised by petition and answer was referred to a referee 'to ascertain and report the facts'; but since the entry of this order counsel have agreed certain facts and submitted the cause to this court for decision.

The agreed facts substantially are: That prior to March 26, 1906 the alleged bankrupt company generated electricity by its own power at its plant in Charles Town, and still has in possession this plant and electric equipment; that on said 26th day of March, 1906, it entered into a contract with the Winchester & Washington City Railway Company whereby it contracted to buy from the latter, under certain terms and conditions set forth in the contract, its entire supply of electricity to be supplied over the alleged bankrupt's lines by the railway company from its power plant on the Shenandoah river three miles from Charles Town; that since the execution of said contract it has not been generating electricity at its own plant, but has been selling and delivering over its own lines the electricity so purchased by it from the railway company to its patrons in Charles Town, including the town itself, under a contract exhibited, its profit being the difference between the price at which it so purchased this electricity and the higher price at which it sells it, delivered to its customers in Charles Town.

George M. Beltzhoover, Jr., for petitioners.

Forrest W. Brown, for defendant.

DAYTON District Judge (after stating the facts as above).

Counsel for the alleged bankrupt in argument now insists that this petition must be dismissed for two reasons: First, the petition is filed by a single creditor when more than 12 creditors are shown to exist. Second, because the alleged bankrupt corporation is not a trading company within the meaning and intent of the bankrupt act.

The first proposition can be readily disposed of. Section 59f of the act provides:

'Creditors other than original petitioners may at any time enter their appearance and join in the petition, or file an answer and be heard in opposition to the prayer of the petition.'

Under this provision it is now well settled that creditors may join at any time before adjudication, even though it be more than four months after the act of bankruptcy was committed, and will be counted to make up the number of creditors and the amount of claims required by the act. In re Stein (Second Circuit) 105 F. 749, 45 C.C.A. 29; In re Plymouth Cordage Co. (Eighth Circuit) 135 F. 1000, 68 C.C.A. 434; In re Romanow (D.C.) 92 F. 510, 512; In re Mercur (D.C.) 95 F. 634. In these cases, and especially in the Plymouth Cordage one, the exact questions involved in this proposition here are determined. Therefore the two intervening creditors, recognized and set forth as such in the answer of the alleged bankrupt, having joined in the prayer of Devore's original petition before adjudication, and the debts due these three together being sufficient to give jurisdiction, I must overrule the motion to dismiss on this first ground assigned.

The second ground for dismissal presents a far more difficult and perplexing question. The petition alleges the defendant to be 'engaged principally in trading and mercantile pursuits. ' The defendant by its answer denies its business to be of this character.

In ordinary language the word 'trade' is employed in three different senses: First, in that of the business of buying and selling; second, in that of an occupation generally; and, third, in that of a mechanical employment, in contradistinction to agriculture and the liberal arts. Ordinarily, when we speak of 'trade,' we mean commerce or something of that nature; when we speak of 'a trade,' we mean an occupation, in the more general or the limited sense. As used in a statute seeking to make unlawful combinations to create or carry out 'restrictions in trade,' the word is used as the mere equivalent of commerce or traffic. Citing Queen Ins. Co. v. State, 86 Tex. 250, 24 S.W. 397, 400, 22 L.R.A. 483; United States v. Patterson (C.C.) 55 F. 605, 639; 8 Words and Phrases, 7038.

It is very clear that the bankrupt act uses the word in the first sense; that of buying and selling merchandise or any class of goods, deriving a profit therefrom.

The fact is undisputed that this company is buying, selling, and delivering electricity to its patrons for profit. Therefore the question resolves itself into whether electricity is a commercial commodity that can be 'manufactured,' 'produced,' 'generated' in form to be bought and sold in commerce, or is it a natural force, like water and air, that can only be confined and directed? Loveland, in his work on Bankruptcy (3d Ed. 178), cites in a note the only case I have been able to find where the question has been directly passed upon by a court of bankruptcy. This is the case of In re Suburban Electric Co., decided by one of the District Courts of Kentucky, where an electric light company,...