Chicago Bank of Commerce v. Carter

• Citation: 61 F.2d 986
• Decision Date: 15 December 1932
• Docket Number: 9494,9493,9531.,No. 9434,9497,9435,9434
• Parties: CHICAGO BANK OF COMMERCE et al. v. CARTER, and three other cases.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

61 F.2d 986 (1932)

CHICAGO BANK OF COMMERCE et al. v. CARTER, and three other cases.

Nos. 9434, 9493, 9435, 9494, 9497, 9531.

Circuit Court of Appeals, Eighth Circuit.

November 17, 1932.

Rehearing Denied December 15, 1932.

Elmer J. Lundy, of Tulsa, Okl. (Grover T. Owens and S. L. Ehrman, both of Little Rock, Ark., and J. R. Harmon, of Chicago, Ill., on the brief), for appellants.

J. A. Tellier, of Little Rock, Ark. (G. E. Garner, George A. McConnell, and Elmer Schoggen, all of Little Rock, Ark., on the brief), for appellees.

Before KENYON, GARDNER, and SANBORN, Circuit Judges.

GARDNER, Circuit Judge.

On the 8th of January, 1932, in the District Court of the United States for the Eastern District of Arkansas, on voluntary petitions filed on that date, the Central Texas Ice Company, a corporation, incorporated under the laws of the state of Texas, the Natural Gas & Fuel Company, a corporation, incorporated under the laws of the state of Texas, the Municipal Gas Company of Muskogee, a corporation, incorporated under the laws of the state of Oklahoma, and the Cherokee Public Service Company, a corporation, incorporated under the laws of the state of Delaware, were, by separate orders, adjudged bankrupt. The petitions on which these adjudications were entered are identical, except for the name of the corporation, and there accompanied each petition a copy of the minutes of a meeting of the board of directors of each company, held January 7, 1932, at Little Rock, Ark., the minutes reciting the insolvency of the corporation, its inability to meet its current demands, that it was being sued, and would soon find itself in the hands of a state receiver, that it was the unanimous opinion of the directors that it was necessary that the company be placed in federal bankruptcy, and the adoption of a resolution authorizing, empowering, and directing the president and secretary to take such steps as might be necessary to place the company and its affairs in the hands of the federal bankruptcy court.

After the adjudication, and on January 12 and 15, 1932, petitions were filed by appellants, challenging the jurisdiction of the court to enter the adjudications in bankruptcy, and seeking to vacate the orders of adjudication on the ground that neither corporation had had its principal place of business within the district of the adjudication for the greater portion of the six months next preceding, and that the officers filing the petitions had not been authorized by the board of directors, at a proper and lawful meeting, to file such petitions.

Each petition was denied, and, from the orders denying the petitions, separate appeals have been taken. These appeals have been consolidated in this court. In each case there are in fact two appeals, one allowed by the District Court and the other allowed by this court.

On these appeals, it is urged by appellants that the lower court was without jurisdiction to enter the adjudications in bankruptcy (1) because neither of said corporations had had their principal place of business within the district for the greater part of the six months next preceding the adjudication, and (2) because the officers of the corporation were without authority to file a voluntary petition in bankruptcy.

By section 11, title 11, USCA, courts of bankruptcy are vested with jurisdiction to "adjudge persons bankrupt who have had their principal place of business, resided, or had their domicile within their respective territorial jurisdictions for the preceding six months, or the greater portion thereof." Courts of bankruptcy, being of statutory origin, possess only such jurisdiction and powers as are expressly, or by necessary implication, conferred upon them by the Bankruptcy Act. Jones v. Kansas City Custom Garment Making Co. (C. C. A.) 1 F.(2d) 649; Nixon v. Michaels (C. C. A.) 38 F.(2d) 420, 423; Finn v. Carolina Portland Cement Co. (C. C. A.) 232 F. 815; In re Hollins et al. (C. C. A.) 229 F. 349.

As said by this court in Nixon v. Michaels, supra: "A District Court of the United States sitting as a court of bankruptcy is a court of limited jurisdiction. Limitations exist as to subject-matter; as to territory; as to the residence and occupation of the debtor to be adjudicated; as to the status of the corporation or person to be adjudicated; and as to other matters. Remington on Bankruptcy (3d Ed.) c. III. And consent cannot confer jurisdiction over subject-matter. The express provisions of the statute and the necessary implications are controlling."

The jurisdiction of the bankruptcy court must depend upon the existence as a fact of the residence, domicile, or principal place of business of the person to be adjudged bankrupt within the district of the court for the period of time required by statute. In considering the question of the court's jurisdiction, we may exclude any question of domicile or residence of these corporations because, confessedly, neither of them had a domicile or residence in the state of Arkansas, all being as to that state foreign corporations. If the court's jurisdiction is to be sustained, it must be upon the ground that these corporations had their principal places of business in the state of Arkansas for six months, or the greater portion thereof, immediately preceding the filing of the petitions.

It was alleged in the petitions to vacate the order of adjudication that they had not had such principal places of business within the territorial jurisdiction of the bankruptcy court. The appellees joined issue on this allegation, and the trial court, after hearing the testimony, found as to the Central Texas Ice Company as follows: "Testimony of witnesses was taken orally at the bar of the court and the cause was argued and the court having heard and fully considered all of said facts and pleas, and arguments, and being fully advised in the premises is of the opinion that the principal place of business of said Central Texas Ice Company was within the jurisdiction of this court for a period of six months immediately preceding the date of its said adjudication, and being of the opinion that the application and amended application should be overruled and dismissed."

A substantially identical finding was entered as to each corporation.

Every presumption is indulged in favor of the jurisdiction of the court once assumed, and there is, of course, a presumption in favor of the correctness of the finding of the lower court. As said by this court in Central Republic Bank & Trust Co. v. Caldwell et al., 58 F.(2d) 721, 734: "The rule in this court often announced is: `Where the court below has considered a question and made a finding on conflicting evidence, its conclusion is presumptively correct, and it should not be disturbed unless it is reasonably clear that a serious mistake has been made in the consideration of the facts or an obvious error has intervened in the application of the law.' Dodge v. Norlin (C. C. A.) 133 F. 363, 371; Cleage v. Laidley, 149 F. 346, 353 (C. C. A. 8); Houchin Sales Co. v. Angert, 11 F.(2d) 115, 117 (C. C. A. 8), and cases cited; Parrish v. City Nat. Bank, 32 F.(2d) 982 (C. C. A. 8); Remington on Bankruptcy (3d Ed.) § 3871; see Quinn v. Union Nat. Bank, 32 F.(2d) 762 (C. C. A. 8)."

To the same effect see Coder v. Arts (C. C. A.) 152 F. 943, 15 L. R. A. (N. S.) 372, affirmed 213 U. S. 223, 29 S. Ct. 436, 53 L. Ed. 772, 16 Ann. Cas. 1008; Moore v. Yampa Mercantile Co. (C. C. A.) 287 F. 629; In re Cannon (C. C. A.) 31 F.(2d) 388.

The question as to the place of business of a corporation is one of fact. Home Powder Co. v. Geis (C. C. A.) 204 F. 568, 572; In re Pusey & Jones Co. (C. C. A.) 286 F. 88; Continental Coal Corp. v. Roszelle Bros. (C. C. A.) 242 F. 243; Dryden v. Ranger Refining & Pipe Line Co. (C. C. A.) 280 F. 257, 262; In re Pennsylvania Consol. Coal Co. (D. C.) 163 F. 579.

This court in Home Powder Co. v. Geis, supra, referring to the place of business of a corporation, said: "It thus becomes a question of fact as to whether the mining company had its principal place of business in the Western district of Missouri for the greater portion of the six months next preceding August 27, 1910."

In Dryden v. Ranger Refining & Pipe Line Co., supra, the court said: "Where a corporation conducts its business at a number of places, no one of which is plainly the place where its business is principally conducted, one of such places, where a substantial business is transacted, and from which general supervision of all of its business is exercised, may be properly held to be the principal place of business of such corporation."

In the course of the opinion in the above case, the court quoted with approval from In re Worcester Footwear Co. (D. C.) 251 F. 760, 761, as follows: "It is not easy, nor is it required, to lay down any general rule for determining which one of several places at which a corporation does business is its principal place of business."

The principal place of business of a corporation is to be determined by the facts, and not by the intentions of the parties, nor the recitals in the charter of the corporation. The principal place of business of a corporation for the purpose of jurisdiction in bankruptcy being a question of fact, neither its place of incorporation nor its charter is controlling. In re Pennsylvania Consol. Coal Co., supra.

It is the contention of the appellees that the question of the location of the principal place of business of these corporations being one of fact, the finding of the lower court based upon disputed evidence is conclusive, while the appellants, conceding that the question of where the principal place of business of a corporation may be is one of fact, contend that the meaning of the term "place of business" is one of law; and it is also the contention of the appellants that there is no substantial controversy as to the facts.

At the threshold of this controversy, we are met with the...