210 F. 824 (4th Cir. 1913), 1,197, In re Columbia Cotton Oil & Provision Corp.

Docket Nº:1,197.
Citation:210 F. 824
Party Name:In re COLUMBIA COTTON OIL & PROVISION CORPORATION. v. HARLOW et al. VARNEY
Case Date:December 18, 1913
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 824

210 F. 824 (4th Cir. 1913)

In re COLUMBIA COTTON OIL & PROVISION CORPORATION.

VARNEY

v.

HARLOW et al.

No. 1,197.

United States Court of Appeals, Fourth Circuit.

December 18, 1913

Page 825

D. Lawrence Groner, of Norfolk, Va., for petitioner.

Before PRITCHARD and WOODS, Circuit Judges, and ROSE, District Judge.

ROSE, District Judge.

The petitioner is a referee in bankruptcy. He will be called the 'referee.' One of the respondents is the trustee in bankruptcy of the Columbia Cotton Oil & Provision Corporation. He will be styled the 'trustee,' it the 'bankrupt.' The others are the trustee under a mortgage of the bankrupt intended to secure bonds issued by it, and the attorneys in fact of the holders of such bonds. The trustee, these attorneys, and the individual holders of bonds will be indifferently referred to as the 'bondholders.'

The question in the case is whether the referee is entitled to be paid $879.55, being one per cent. upon the amount constructively disbursed by the trustee to the bondholders.

An involuntary petition in bankruptcy was filed September 13, 1911. On October 9th adjudication followed. The real and apparently most, if not all, of the personal property of the bankrupt was subject to the lien of the mortgage already mentioned. One hundred thousand dollars of bonds secured by it were outstanding. The mortgaged property came into the hands of the trustee. It was by order of the referee appraised. The appraisers reported that, if it was to be used for the purposes for which it was intended, it was worth $155,000. If it was to be dismantled and the machinery sold as junk, its value was only $101,000.

On December 26th the trustee asked for an order of the District Court to sell clear of liens. Due notice of this application was given by the referee. On January 5, 1912, the bondholders united in the request for such sale. It was ordered. The decree was obviously drafted to meet the bondholders' convenience. If they became purchasers they could turn in their bonds as cash. On February 7th the sale took place. The bondholders bought in the property for $90,000; that is, for some $10,000 less than the face of their lien claim. The sale was ratified in due course and without objection. The referee performed the same services he would have been called upon to render had some one other than the bondholders been the successful bidder, except that he did not have to countersign the check or checks which in the latter event the trustee would have given to the bondholders or their representatives. The latter paid the trustee $2,044.30 to cover the cost and expenses of the sale. No other cash passed between the trustee and the bondholders. The District...

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