Continental Coal Corp. v. Roszelle Bros.

• Decision Date: 06 June 1917
• Docket Number: 3047.
• Citation: 242 F. 243
• Parties: CONTINENTAL COAL CORP. et al. v. ROSZELLE BROS. et al.
• Court: U.S. Court of Appeals — Sixth Circuit

242 F. 243

CONTINENTAL COAL CORP. et al. v. ROSZELLE BROS. et al.

No. 3047.

United States Court of Appeals, Sixth Circuit.

June 6, 1917

C. C Moore and D. L. Grayson, both of Chattanooga, Tenn., for appellants.

C. L Williamson, of Lexington, Ky., for appellees.

Before KNAPPEN, MACK, and DENISON, Circuit Judges.

KNAPPEN Circuit Judge.

This is an appeal from an order adjudicating bankruptcy. It presents a conflict of jurisdiction over the administration of the bankrupt's estate, due to the pendency of proceedings in both the Eastern District of Kentucky and the Eastern District of Tennessee; the pivotal question (and the only one presented here) being in which of the two districts did the bankrupt have its principal place of business for the six months preceding May 5, 1916? Upon review of an order of the District Court for the Eastern District of Kentucky we held that that court, having first asserted jurisdiction, took constructive possession of the bankrupt's estate and should retain the case for the purpose of determining its own jurisdiction. In re Continental Coal Corporation, 238 F. 113, . . . C.C.A. . . . . Upon a reconsideration of the case the court below, adhering to its former business was in the Eastern District of Kentucky. Adjudication of bankruptcy followed.

The bankrupt corporation was organized under the laws of the state of Wyoming, and it seems to be conceded that the purpose of its organization, as stated in its charter, was the owning and holding of coal lands and the mining, selling and shipping of coal. Its legal residence was thus in Wyoming, but its principal place of business was not in that state, if indeed it has ever done any business there. It owns 2,000 acres of coal lands in Tennessee, none of which has ever been developed. All of its developed properties are in the Eastern District of Kentucky, including 15,000 acres or more in Bell county (on which it has operated during the six months period and before), and 10 coal mines from which it has mined and sold an average of more than 100,000 tons annually. In the vicinity of the mines it has maintained four commissaries, the annual sales from which to employes and the general public have averaged at least $250,000. Its average annual sales of timber from its lands have amounted to between $25,000 and $40,000. It has employed in these activities at least an average of 1,000 men (mostly miners), nearly all of whom lived in and paid rent for the company's houses (more than 500 in number) on its lands. The mining and shipment of coal, as well as the sales of merchandise timber, and lands, and the purchase of equipment and supplies for the mines and merchandise for the commissaries have all been had exclusively in Bell county. Except where the amounts of purchases were large, they were not required to be submitted to the Chattanooga office, although it was customary to consult it and sometimes take matters up with the board of directors. Detailed accounts of transactions have been kept in the office in Bell county. The maps and original deeds of the debtor's property are kept in a vault in Bell county, prepared for that purpose. For the three years ending June 5, 1915, all its activities were under the immediate supervision and direction of the company's vice-president and general manager, who resided and had his office in Bell county. Under him was a staff of officials, including an assistant general manager, who had charge of the bookkeepers and shipping clerks, a superintendent in charge of mining operations, and a manager in charge of the commissaries. The company also maintained there a timber department, a secret service department, and a legal department. In July, 1915, an executive committee was appointed, under authority of the board of directors; and its chairman, who has since resided in Bell county, has, until the bankruptcy, taken the place of and performed the duties previously discharged by the vice president and general manager. The corporation's principal office has all the time been in Chattanooga, which is in the Eastern District of Tennessee, and its principal stockholders and all its directors and officers-- except the vice-president and general manager, the chairman and another member of the executive committee-- have lived there. In this Chattanooga office the president, secretary and treasurer, and sales manager gave their entire time to the company's business, exercising a general direction and supervision over the business, and communicating daily, by mail and telephone, with those in charge at the mines and of the various operations connected therewith; and from whom, as well as from those in charge of the timber, secret service, and legal departments, reports were regularly received. The financial management was exercised at the Chattanooga office, including the borrowing of money, the remittance of funds to meet the pay rolls (made out at the mines), the payments for purchases (by checks drawn at the mines and countersigned at the Chattanooga office), and the sales of coal (some of which was bought by the company from other producers) on orders (partially at least through traveling salesmen) received and passed on at the Chattanooga office, copies of the orders being sent to the office at the mines for filling. Remittances for coal sold were also received at the Chattanooga office, and deposited in the company's account at the bank in that city where its principal banking business was done. The only bookkeeping done at the Chattanooga office seems to have related to the 'general accounts.' The company had no property in Chattanooga aside from its office furniture and equipments, books, files, and records. It did no business anywhere except in the Eastern District of Kentucky (and in Chattanooga, as stated) aside from maintaining a retail coalyard at Louisville, Ky., which is in the Western District of...