Fitzgerald v. Central Bank & Trust Company, 5821.
| Decision Date | 08 July 1958 |
| Docket Number | No. 5821.,5821. |
| Citation | 257 F.2d 118 |
| Parties | Thomas J. FITZGERALD, Trustee, Appellant, v. The CENTRAL BANK AND TRUST COMPANY, Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Frederick P. Cranston and Herbert W. Delaney, Jr., Denver, Colo. (L. James Arthur, Denver, Colo., was with them on the brief), for appellant.
Clarence L. Ireland, Denver, Colo. (Ireland, Ireland, Stapleton & Pryor, Denver, Colo., was with him on the brief), for appellee.
Before BRATTON, Chief Judge, and PHILLIPS and BREITENSTEIN, Circuit Judges.
This appeal brings here for review an order of the district court affirming an order of the referee in bankruptcy allowing a preferred claim in a proceeding in bankruptcy. Platte Valley Elevators Company, a corporation, hereinafter referred to as the bankrupt, filed a voluntary petition in bankruptcy and was seasonably adjudicated a bankrupt. Central Bank and Trust Company, hereinafter referred to as the bank, filed its secured claim, based upon a promissory note in the sum of $100,000, secured by a duly filed and recorded chattel mortgage upon the equipment and building of the bankrupt which stood on leased land, and also secured by an assignment of the lease of the land upon which the building stood. The trustee in bankruptcy filed objections to the allowance of the claim in any amount in excess of $33,000 upon the ground that the bankrupt was not the real borrower from the bank; that the real borrower was R. S. Berger, president of the bankrupt, doing business as Berger Sales Company; and that Berger, or Berger Sales Company, hereinafter referred to as the sales company, was the debtor of the bank. At the time the note and mortgage and assignment were given to the bank, the property was subject to an outstanding note and mortgage in the sum of $33,000 held by a third party. The bank acquired such note and mortgage. With the consent of the bank, the trustee sold the mortgaged assets for $71,500. Out of the proceeds of the sale, the referee authorized the trustee to make certain payments, including $33,000 in discharge of the note and mortgage in that amount which the bank had acquired from the third party. After making the payments authorized by the referee, $30,147.38 remained in the hands of the trustee. A hearing was had upon the claim of the bank. The referee entered an order directing payment to the bank of $30,147.38, and allowing the remainder of the claim of the bank in the sum of $34,117.11 as an unsecured claim. On review, the district court affirmed the order of the referee. The trustee appealed.
The order of the district court affirming the order of the referee is challenged upon the ground that the evidence failed to establish the validity of the claim of the bank for any amount in excess of $33,000. Specifically, the argument is that the claim was not predicated upon an obligation of the bankrupt, and that instead it was predicated upon an obligation of Berger, doing business as the sales company. It is the well established general rule that ordinarily a corporation is regarded as a legal entity separate and distinct from its members. But the fiction of separate existence may be disregarded and the acts of the members treated as acts of the corporation where circumstances warrant it. The conditions under which the corporate entity may be disregarded, or the corporation treated as the alter ego of its members, necessarily vary according to the circumstances in each case. But it may be said in general terms that the doctrine is an equitable one appropriate for application to prevent fraud, injustice, or wrong. Henry v. Dolley, 10 Cir., 99 F.2d 94; Fish v. East, 10 Cir., 114 F.2d 177; Warner Bros. Theatres v. Cooper Foundation, 10 Cir., 189 F.2d 825.
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