Coleman v. Alcock, No. 17662.

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtRIVES, , and TUTTLE and BROWN, Circuit
Citation272 F.2d 618
PartiesD. C. COLEMAN, Sr., As Trustee of Florida-Carolina Lumber Company, Bankrupt, Appellant, v. Charles ALCOCK, P. J. Davis, Clarence E. Hood, Jr., Individually and As Officers and Directors of Florida Carolina Lumber Company and Southern Creosoted Lumber Co., Inc., Southern Creosoted Lumber Co., et al., Appellees.
Decision Date05 January 1960
Docket NumberNo. 17662.

272 F.2d 618 (1959)

D. C. COLEMAN, Sr., As Trustee of Florida-Carolina Lumber Company, Bankrupt, Appellant,
v.
Charles ALCOCK, P. J. Davis, Clarence E. Hood, Jr., Individually and As Officers and Directors of Florida Carolina Lumber Company and Southern Creosoted Lumber Co., Inc., Southern Creosoted Lumber Co., et al., Appellees.

No. 17662.

United States Court of Appeals Fifth Circuit.

December 4, 1959.

Rehearing Denied January 5, 1960.


272 F.2d 619

H. I. Fischbach, Fischbach & Lurie, Miami, Fla., for appellant.

Harold Friedman, William B. Roman, Miami, Fla., Seymour B. Liebman, Fred R. Baisden, Thomas H. Barkdull, Jr., Miami Beach, for appellees.

Aaron M. Kanner, Miami, Fla., for P. J. Davis.

Sibley, Grusmark, Barkdull & King, Miami Beach, Fla., for Alcock and Hood.

Copeland, Therrel, Baisden & Peterson, Miami Beach, Fla., for Miami Beach First Nat. Bank.

Feibelman & Friedman, Miami, Fla., for Leo Robinson, Dania Bank and Southern Creosoted Lumber Co.

Before RIVES, Chief Judge, and TUTTLE and BROWN, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

This case presents the question whether a Trustee in Bankruptcy seeking pursuant

272 F.2d 620
to Section 70, sub. e1 to set aside transfers in fraud of creditors under Florida state laws is foreclosed by res judicata by reason of a prior state court judgment2 brought by a judgment creditor against the Bankrupt and those participating in the suspected transfers. The District Court on the basis of the Trustee's complaint and the record3 of the State Court proceeding entered summary judgment in favor of the defendants and against the Trustee

The Trustee's federal court complaint can be quickly capsulated. The Bankrupt is the Florida Carolina Lumber Company, a corporation. The individual defendants, Alcock, Davis and Hood were officers and directors of Florida Carolina. They were also officers and directors of Southern Creosoted Lumber Company, a corporation, claimed to be a wholly owned subsidiary of the Bankrupt Florida Carolina. On June 28, 1956, while Florida Carolina was insolvent,4 the three individuals, Alcock, Davis and Hood, as officers of Southern Creosoted executed a mortgage on all of the assets of Southern Creosoted to secure the obligations of Florida Carolina (the Bankrupt) to the three defendant Miami banks. At the same time these individuals executed a voting trust transferring all voting rights of Southern Creosoted to the defendant voting-liquidating Trustees. These transfers were made without consideration to Florida Carolina for the purpose and with the intent of giving preference to the individual officers and stockholders who were endorsers on the corporation's notes. The receipt, appropriation and application of moneys and properties belonging to Southern Creosoted in partial liquidation of the obligations of Florida Carolina and its officers to the defendant Banks to the exclusion of other creditors violated Section 608.55, Florida Statutes, F.S.A., prohibiting transfers of corporate assets after or in contemplation of insolvency.

The Trustees' complaint sought this relief: (a) the stock of Southern Creosoted be declared to be property of the Bankrupt and surrendered; (2) the voting trust be set aside, (3) the mortgage given the Banks on Southern Creosoted's property be set aside, and (4) the assignment of the stock to one of the Banks (Miami Beach) be set aside.

The state court proceedings held to be res judicata can likewise be swiftly summarized. Central Bank and Trust Company, the holder of an unsatisfied common law judgment against Florida Carolina (and Davis and his wife as guarantors), filed in the Florida state court a bill in equity contending that the transactions between Florida Carolina, Southern Creosoted and the three individual owners of all of the stock in each of the two corporations constituted a fraud against its right as a creditor. "The

272 F.2d 621
complaint prayed that all of the voting trust agreements be set aside, that Southern Creosoted be declared a wholly owned subsidiary of Florida Carolina and that the assets of these corporations be made available at least pro tanto to the liquidation of Central Bank and Trust Company judgment." Central Bank & Trust Co. v. Davis, supra, 102 So.2d at page 602

The defendants moved for summary judgment supporting their motions with various depositions and affidavits. "The sum of the depositions and affidavits was simply that Southern Creosoted was a perfectly solvent corporation, that it was not a wholly owned subsidiary of Florida Carolina, that the voting trust agreements were made in good faith * * *." Central Bank & Trust Co. v. Davis, supra, 102 So.2d at page 602. Central Bank and Trust Company filed no counter affidavits whatsoever and relied wholly on its verified complaint to establish a genuine factual issue.

The Supreme Court of Florida affirmed summary judgment in favor of the defendants and against the judgment creditor. On the merits it held the transfers were not fraudulent under Section 726.01, F.S.A. or prohibited under Section 608.55 (formerly Section 612.45) covering transfer of assets by a corporation after or in contemplation of insolvency.

The Court also held that there was no showing whatsoever — and hence no genuine issue preventing summary judgment — that Southern Creosoted was owned or controlled by Florida Carolina. This conclusion was based on two grounds, both procedural. The first, indigenous to the Florida common law approach to pleadings, was that since the complaint showed on its face that "all of the stock in Southern Creosoted was owned individually" the complaint "itself excluded the possibility of establishing this aspect to the judgment creditor's position."5 The second was that while for summary judgment a verified pleading may serve as a counter affidavit to create an issue of fact, the facts in the pleadings have to be in the form satisfying Rule 1.36(e), Florida Rules of Civil Procedure, 30 F.S.A. This the Court states, requires "that the affidavit be made on personal knowledge and shall set forth facts admissible in evidence and shall show affirmatively that the affiant is competent to testify to the matter stated in the affidavit."6

To escape the threat of res judicata, the Trustee makes much of two things to distinguish his case from the prior litigation. First, that in the federal court suit mention is made only of Section 608.55, F.S.A., and not 726.01. Second, that his complaint categorically charges that Southern Creosoted is a wholly owned subsidiary of Florida Carolina, an assertion which the Florida Supreme Court merely declared had not been proved. We regard these as not too important. For if, as appellees contend and the District Court held, the prior judgment was binding because the Trustee was in...

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43 practice notes
  • In re Worldcom, Inc., No. 02-13533 (AJG).
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • 26 Febrero 2009
    ...the OneStar Trustee was elected the representative of the estate, he became a successor in interest to OneStar. See Coleman v. Alcock, 272 F.2d 618, 621 (5th Cir.1959) ("The Trustee is, of course, a successor of the [debtor] for many purposes."). As a successor to OneStar's interests, the O......
  • In re Professional Coatings (NA), Inc., Bankruptcy No. 95-26580
    • United States
    • United States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — Eastern District of Virginia
    • 9 Mayo 1997
    ...the Bankrupt was a party defendant in the prior litigation. Only in a limited situation will the Trustee be foreclosed. Coleman v. Alcock, 272 F.2d 618, 621-22 (5th Cir.1959)(court held that the trustee was not bound by a state court judgment declaring that certain transfers were not a frau......
  • In Re: Fordu v. Fordu, No. 97-3936
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • 7 Agosto 1998
    ...who were not parties to the . . . consent judgment and whose interests were not represented by [the debtor] . . . ."); Coleman v. Alcock, 272 F.2d 618, 621-22 (5th Cir. 1959) (Because the trustee is invested with "extraordinary rights . . . as a general representative of . . . creditors," h......
  • In re Fill, Bankruptcy No. 85 B 11531 (TLB)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • 11 Diciembre 1987
    ...case was begun. For it is plain that the rights of creditors are not considered in the pre-bankruptcy suit. In Coleman v. Alcock, 272 F.2d 618 (5th Cir.1959), where a trustee was held not bound by a state court judgment declaring that certain transfers were not a fraud on a particular judgm......
  • Request a trial to view additional results
43 cases
  • In re Worldcom, Inc., No. 02-13533 (AJG).
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • 26 Febrero 2009
    ...the OneStar Trustee was elected the representative of the estate, he became a successor in interest to OneStar. See Coleman v. Alcock, 272 F.2d 618, 621 (5th Cir.1959) ("The Trustee is, of course, a successor of the [debtor] for many purposes."). As a successor to OneStar's interests, the O......
  • In re Professional Coatings (NA), Inc., Bankruptcy No. 95-26580
    • United States
    • United States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — Eastern District of Virginia
    • 9 Mayo 1997
    ...the Bankrupt was a party defendant in the prior litigation. Only in a limited situation will the Trustee be foreclosed. Coleman v. Alcock, 272 F.2d 618, 621-22 (5th Cir.1959)(court held that the trustee was not bound by a state court judgment declaring that certain transfers were not a frau......
  • In Re: Fordu v. Fordu, No. 97-3936
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • 7 Agosto 1998
    ...who were not parties to the . . . consent judgment and whose interests were not represented by [the debtor] . . . ."); Coleman v. Alcock, 272 F.2d 618, 621-22 (5th Cir. 1959) (Because the trustee is invested with "extraordinary rights . . . as a general representative of . . . creditors," h......
  • In re Fill, Bankruptcy No. 85 B 11531 (TLB)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • 11 Diciembre 1987
    ...case was begun. For it is plain that the rights of creditors are not considered in the pre-bankruptcy suit. In Coleman v. Alcock, 272 F.2d 618 (5th Cir.1959), where a trustee was held not bound by a state court judgment declaring that certain transfers were not a fraud on a particular judgm......
  • Request a trial to view additional results

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