Central Republic Bank & Trust Co. v. Caldwell

• Decision Date: 22 April 1932
• Docket Number: 9295.,No. 9309,9309
• Citation: 58 F.2d 721
• Parties: CENTRAL REPUBLIC BANK & TRUST CO. et al. v. CALDWELL et al.
• Court: U.S. Court of Appeals — Eighth Circuit

58 F.2d 721 (1932)

CENTRAL REPUBLIC BANK & TRUST CO. et al. v. CALDWELL et al.^*

Nos. 9309, 9295.

Circuit Court of Appeals, Eighth Circuit.

April 22, 1932.

COPYRIGHT MATERIAL OMITTED

Dean E. Terrill, of Chicago, Ill. (Perry M. Chadwick, of Chicago, Ill., and James H. Harkless and Clifford Histed, both of Kansas City, Mo., on the brief), for appellants.

William G. Boatright, of Kansas City, Mo. (James A. Reed, I. J. Ringolsky, Harry L. Jacobs, Charles P. Woodbury, Paul Kelly, and Phineas Rosenberg, all of Kansas City, Mo., on the brief), for appellees.

Before STONE, and BOOTH, Circuit Judges, and WYMAN, District Judge.

BOOTH, Circuit Judge.

There are here two appeals; one allowed by the District Court, and one allowed by this Court, both covering the same matter, the duplication being precautionary. The appeals are from an order of the trial court denying the petition of the appellants, interveners in a bankruptcy proceeding, to set aside or modify an order theretofore made in said bankruptcy proceeding appointing a receiver and directing him to take possession and manage properties of the bankrupt, including property upon which appellants, as trustees, held a mortgage.

We think that the facts (which will be set out presently) clearly show that the matter in dispute in the lower court constituted a controversy arising in bankruptcy proceedings, as distinguished from a proceeding in bankruptcy. Houghton v. Burden, 228 U. S. 161, 165, 33 S. Ct. 491, 57 L. Ed. 780; Taylor v. Voss, 271 U. S. 176, 180, 46 S. Ct. 461, 70 L. Ed. 889; Hopkins v. National Shawmut Bank (C. C. A.) 293 F. 884; Foster v. McMasters, 15 F.(2d) 751 (C. C. A. 8); Clark v. Huckaby, 28 F.(2d) 154, 67 A. L. R. 1456 (C. C. A. 8); Quinn v. Gardner, 28 F.(2d) 270 (C. C. A. 8).

Appeal was rightly taken, therefore, under subdivision a of section 24 of the Bankruptcy Act (11 USCA § 47(a), and was properly allowable by the District Court. Houghton v. Burden, supra; Quinn v. Gardner, supra; Nixon v. Michaels, 38 F.(2d) 420, 422 (C. C. A. 8); In re Bell Motor Co., 45 F.(2d) 19, 25 (C. C. A. 8); General Orders in Bankruptcy XXXVI (11 USCA § 53).

The matter will accordingly be heard in this court on that appeal. The appeal allowed by this court is dismissed.

The main facts and proceedings leading up to the order appealed from are substantially as follows:

"Municipal Telephone and Utilities Company is a corporation organized and existing under the laws of the State of Delaware, having had its principal place of business within the Western District of Missouri for the greater portion of six months preceding June 17, 1931, the date of the filing of the involuntary petition in bankruptcy against said company.

"Municipal Utility Investment Company is a corporation organized and existing under the laws of the State of Missouri and having had its principal place of business and its domicile within the Western District of Missouri for the greater portion of six months preceding June 18, 1931, the date of the filing of the involuntary petition in bankruptcy against said company.

"Municipal Utility Investment Company is the owner of all of the voting stock of the following named corporations:

"1. Municipal Telephone and Utilities Company, a Delaware corporation.

"2. The Municipal Utility Investment Company of Kansas, a Kansas corporation.

"3. Municipal Utility Investment Company, an Illinois corporation.

"4. Western Bond & Share Company, an Oklahoma corporation.

"5. Commonwealth Public Service Company, a Delaware corporation.

"Municipal Telephone and Utilities Company is the owner of all of the voting stock of the following named corporations:

"1. Associate Utilities, Inc., an Arkansas corporation.

"2. Kentucky State Telephone Company, a Delaware corporation.

"3. North Central Telephone Company, a Missouri corporation.

"4. Continental Telephone Company, an Oklahoma corporation.

"5. The Southern Kansas Utilities Company, a Kansas corporation.

"6. The Gas Utilities Company, a Kansas corporation.

"7. Commonwealth Engineering and Management Company, a Delaware corporation.

"Associated Utilities, Inc. is the owner of all of the voting stock of the following corporations:

"1. Commonwealth Public Service Company of Oklahoma, a Delaware corporation.

"2. Arkansas Electric & Water Company, a Delaware corporation.

"3. General Utilities Service Corporation, a Delaware corporation.

"On the 16th day of June, 1931, in a proceeding brought by A. C. Maxwell against said Municipal Telephone and Utilities Company, in Equity No. 1671, in the District Court of the United States for the Western Division of the Western District of Missouri, Harry L. Donnelly was appointed receiver of said Municipal Telephone and Utilities Company; that on said date, in a proceeding brought by A. C. Maxwell against said Municipal Utility Investment Company, No. 760,298, in the Circuit Court of Jackson County, Missouri, at Independence, Henri L. Warren and Ed H. Gill were appointed receivers of said Municipal Utility Investment Company; that on said date, in a proceeding brought by Harry E. Snyder against said Commonwealth Public Service Company of Oklahoma, No. 69,208, in the District Court of Oklahoma County, Oklahoma, T. B. Mumma was appointed receiver of said Commonwealth Public Service Company of Oklahoma; that on said date, in a proceeding brought by Harry E. Snyder against said Kentucky State Telephone Company, No. 2119, in the Circuit Court of Bracken County, Kentucky, J. W. Byrne was appointed receiver of said Kentucky State Telephone Company; that on or about said date, in a proceeding brought by Harry E. Snyder against said North Central Telephone Company, No. 76,296, in the Circuit Court of Jackson County, Missouri, at Independence, John P. Gordon and Baylis Steele were appointed receivers for said North Central Telephone Company; that on said date, in a proceeding brought by Harry E. Snyder against said Continental Telephone Company, No. 69,202, in the District Court of Oklahoma County, Oklahoma, T. B. Mumma was appointed receiver for said Continental Telephone Company; that on said date, in a proceeding brought by H. E. Snyder against said The Gas Utilities Company, No. 46,252, in the District Court of Shawnee County, Kansas, Paul H. Heinz was appointed receiver of said The Gas Utilities Company; that on the 15th day of June, 1931, in a proceeding brought by Harry E. Snyder against said Associated Utilities, Inc., No. 764, in the Jackson Chancery Court of Arkansas, Z. M. McCarroll was appointed receiver for said Associated Utilities, Inc.; that each of said receivers took charge and custody of part of the assets and property of the alleged bankrupt; that each of said receivership proceedings was induced by the alleged bankrupt and said subsidiary corporations and each of said receivers was appointed by and with the consent of the alleged bankrupts and their said subsidiary corporations."

The involuntary petition in bankruptcy against the Municipal Telephone & Utilities Company, filed June 17, 1931, alleged, among other things, that the company is "principally engaged in the business of owning and operating telephone lines, telephone switchboards and telephone companies and generally engaged in the business of owning and operating telephone public utilities and dealing in stocks and bonds of such telephone companies." It further alleged:

"* * * that the alleged bankrupt carries on and operates its business through the means of wholly owned subsidiary corporations, which corporations are, in fact and in law, mere agencies, departments, bureaus, branches, adjuncts and parts of the alleged bankrupt and of its business and property; that some of such wholly owned subsidiaries are The Associated Utilities Inc. of Arkansas, The Kentucky State Telephone Company, the Southern Kansas Utilities Company, The Gas Utilities Company of Kansas, the Continental Telephone Company of Oklahoma, The North Central Telephone Company of Missouri and Municipal Utility Investment Company of Delaware; that each and all of said subsidiary corporations, although organized under the laws of various states, have had their principal place of business for the six months period next preceding the date of the filing of this petition in Kansas City, Jackson County, Missouri, and in the same offices as the alleged bankrupt; that said wholly owned subsidiaries have the same officers, directors, management, agents and representatives as the alleged bankrupt; that the property and assets of the alleged bankrupt and of each of said wholly owned subsidiaries has been intermingled and is a part of the property and assets of the alleged bankrupt. * * *" On the same day, June 17, 1931, a petition for the appointment of a receiver was filed in the bankruptcy proceeding. This petition repeated many of the allegations of the involuntary petition in bankruptcy, and also alleged:

"* * * that the business and property of the alleged bankrupt and the business and property standing in the name of or carried on in the name of said wholly owned subsidiaries constitute and is, in law and in fact, but one business and property; that the liabilities of the alleged bankrupt and of each and all of said subsidiary corporations are liabilities and claims existing against the entire property and business and are due from and owing by the alleged bankrupt.

"That some of such wholly owned subsidiaries of the alleged bankrupt are the following corporations:

"The Associated Utilities Inc. of Arkansas, The Kentucky State Telephone Company, the Southern Kansas Utilities Company, The Gas Utilities Company of Kansas, The Continental Telephone Company of Oklahoma, The North Central Telephone Company of Missouri and Municipal Utility Investment Company of Delaware. * * *

"* * * That the appointment of numerous receivers and by different courts and in different proceedings, all relating to the same property, assets and estate...