Burns v. Ender Coal & Coke Co., 6688.
| Decision Date | 07 July 1939 |
| Docket Number | No. 6688.,6688. |
| Citation | 104 F.2d 964 |
| Parties | BURNS v. ENDER COAL & COKE CO. et al. |
| Court | U.S. Court of Appeals — Seventh Circuit |
William A. Rogan, of Chicago, Ill., and Lenn J. Oare, of South Bend, Ind., for appellant.
Aaron H. Huguenard, of South Bend, Ind., and Chas. A. Crawford, of Terre Haute, Ind., for appellees.
Before EVANS, SPARKS, and TREANOR, Circuit Judges.
The question here presented arose out of a receivership of the Vermillion Coal Company, resulting from an action in the District Court instituted by the Ender Coal and Coke Company. In that proceeding certain property of the Vermillion Coal Company was sold by its receiver by order and with the approval of the court. Later the receiver distributed the funds and filed his final report, and it was approved by the court. Subsequently thereto, and during the same term at which the final report was approved, appellant filed his motion to vacate the order of sale and the order approving the receiver's report. Thereafter the receiver filed his motion to dismiss appellant's motion. The court sustained this motion to dismiss, and from this order of the court this appeal is prosecuted.
A chronological statement of the various steps taken in this proceeding is here set forth: The Ender Coal and Coke Company was a corporation organized under the laws of Illinois, and the Vermillion Coal Company was organized under the laws of Indiana. Their residences were in the respective states of their organization. The complaint, which was filed on June 17, 1929, alleged that the Vermillion Coal Company carried on business in both the Northern and Southern Districts of Indiana, and that a portion of its property, resources and assets were located in each district. The Vermillion Coal Company was indebted to the Ender Coal and Coke Company in excess of $108,000, which was evidenced by past due and unpaid promissory notes. The debtor was further indebted to other persons and corporations in the approximate sum of $240,000, which was due and unpaid.
A large part of the debtor's assets was represented by leases upon coal lands upon which it was in default, or about to come in default. In that event they were subject to cancellation, and if cancelled, the value of the debtor's property would have been reduced to not more than a salvage value. The debtor was unable to meet these obligations in the ordinary course of business and was insolvent. It was upon these allegations that the court was requested to appoint a receiver. On the same day the complaint was filed, the Vermillion Coal Company filed its answer admitting the truth of the averments and consented that a receiver should be appointed.
On the same date, Milward, Crawford, Spears, and Cochran, claiming to be creditors of the debtor, and Buena V. Marshall, claiming to be trustee under a certain mortgage executed by the debtor for five creditors holding notes for $70,000, filed a motion representing that the claims held by them constituted 97 per cent of the total amount of the indebtedness owed by the debtor, and that it would be for the best interest of all parties that a receiver be appointed. On account of the special qualifications of the creditor Spears, they recommended that he be appointed as a receiver. On the same day the court granted the request of the bill and answers and appointed Wilbur N. Warner, of the Northern District of Indiana, and Archibald D. Spears, of the Southern District of Indiana, as receivers to take possession of all the property and assets of the debtor and to maintain and operate them. They qualified as receivers and filed their inventories and appraisal of the debtor's property on July 16, 1929.
On October 10, 1929, the receivers requested authority from the court to borrow $30,000, upon receivers' certificates, for the purpose of operating the property. This petition was consented to by Marshall, trustee, the authority to issue the certificates was thereupon granted, and they were issued and sold.
On January 8, 1931, an employee, on behalf of himself and more than two hundred other employees, filed a petition to enforce liens for their wages against the receivers in the sum of $5,000. This was granted by the court on January 14, 1931. On February 25, 1931, the court entered an order for the filing of claims and directed that notice be given of the hearing to determine their priorities. On March 11, 1931, Mark E. Nebeker, as successor trustee to Buena V. Marshall, under the mortgage given by the debtor to secure the notes executed by it, including the notes now claimed to be held by appellant, filed his claim in the sum of $79,450. On August 17, 1931, the court classified the liens and claims on the notes secured by the mortgage as seventh in priority.
On October 28, 1932, the receivers filed a motion to sell the real estate and the personal property, alleging that the assets of the debtor, including the trust estate, were not sufficient in value to pay either the liabilities of the receivers or those of the debtor, and asked for an order to sell all of the assets except cash, and bills, notes and accounts receivable. They further requested an order to sell the property free and clear of liens and encumbrances, except taxes, and that all liens be transferred to the fund arising from the proceeds of the sale in order of preference as the court should direct. They further asked that Nebeker, as trustee, be made a party defendant and that process issue to him. Thereupon Nebeker, as trustee, entered his written appearance to the petition, and on October 28, 1932, the court entered this order in accordance with the prayer, and fixed the upset...
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