Garner v. Boyd
| Citation | 330 F. Supp. 22 |
| Decision Date | 20 October 1970 |
| Docket Number | Civ. A. No. 5-679. |
| Parties | Robert E. GARNER, Trustee of Standard Milling Company, Plaintiff, v. Joe T. BOYD et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
John E. Vickers, Walker Metcalf, Edwin M. O'Connor, Lubbock, Tex., for plaintiff.
Milton L. Bankston, of Stubbeman, McRae, Sealy & Laughlin, Midland, Tex., Benjamin S. Hoarn, Tucson, Ariz., Robert E. Ford, Abilene, Tex., for defendants.
The above case was tried before the Court without a jury and after announcements the parties proceeded to introduce their evidence. At the close of the evidence the Court ordered that the deposition of Joe T. Boyd be taken, and that same would be considered by the Court as a part of the record in this case. All matters have now been submitted to the Court and this memorandum opinion is filed as the Court's Findings of Fact and Conclusions of Law.
Plaintiff is the trustee of the Standard Milling Company, a Texas corporation which was adjudged a bankrupt in this District on April 15, 1969.
The Defendants named in the complaint are Joe T. Boyd; M. S. Knisely; Howard Brookshire; R. B. (Parker) Goodloe; the First National Bank of Atoka, Oklahoma, a National Banking Association; Fred Bannowsky; Dalton Boyd; United's American Milling & Manufacturing Company, a Texas Corporation; United American Industries, Incorporated, a Delaware Corporation a Delaware Corporation (also referred to herein as the Arizona corporation); the Midland National Bank, a National Banking Association; Earl Lewis; and Selwyn Webber.
By Interlocutory Order dated August 24, 1970, it appearing from the evidence that there was no cause of action maintainable against the Defendant, the Midland National Bank, Midland, Texas, it was accordingly ordered that this party be dismissed, with prejudice, and said order also dismissed without prejudice United American Industries, Inc., which dismissal was also stipulated and agreed to by Plaintiff.
It appears from the record in this cause that the following Interlocutory Orders have been entered by the Court pertaining to some of the above-named Defendants, to-wit:
1. Order dated August 19, 1970 dismissing the Defendant, Selwyn Webber, as a defendant, with prejudice.
2. Order dated August 19, 1970 declaring that the Defendant, First National Bank of Atoka had no further right, title or interest in and to the lands and properties of Standard Milling Company by virtue of the deed of trust dated June 19, 1968 and further finding and declaring that the notes secured by said deed of trust were for the benefit of the individuals who were then officers of the corporation rather than being for the benefit of the corporation, and declaring that such indebtedness was not the debt and obligation of the bankrupt.
3. Order dated August 19, 1970 that any titles and assets received by United's American Milling & Manufacturing Company by virtue of the conveyances to it by the First National Bank of Atoka were adjudged to have been received for the use and benefit of the bankrupt, as said Defendant, United's American Milling & Manufacturing Company, did not enter any appearance or defense to the Plaintiff's Complaint in this cause.
4. Order dated August 19, 1970 pertaining to the Defendant, Earl Lewis, which is here modified and changed to show that the said Earl Lewis, received only one stock certificate which evidenced the issuance of 50,000 shares of United American Industries, Inc., from the Defendant, M. S. Knisely, and which order of August 19, 1970 ordered the Defendant Lewis to return such shares of stock to the Plaintiff in this cause by September 5, 1970, which has not been done.
The Defendants thus remaining in the case are Joe T. Boyd, M. S. Knisely, Howard Brookshire, R. B. (Parker) Goodloe, the First National Bank of Atoka, Fred Bannowsky, and Dalton Boyd from whom the Plaintiff, Trustee in Bankruptcy for Standard Milling Company, seeks the recovery of 1,733,333 shares of capital stock of United American Industries, Inc., or alternatively, money damages for the conversion of such stock by these Defendants.
On June 4, 1968, all the capital stock of the Standard Milling Company was sold to Lonnie St. Clair, R. W. Bratcher and Selwyn Webber. At the time of this sale, the company was heavily indebted, with liabilities in excess of its assets, and the company was not paying its debts as they became due.
On June 19, 1968, a deed of trust was executed by Standard Milling Company on the realty of the bankrupt to secure payment of two notes each in the amount of $15,000 payable to the First National Bank of Atoka, with Joe T. Boyd as trustee. This lien was given to secure individual obligations of the then officers of the corporation. No consideration was paid to the bankrupt therefor. The financial condition of the bankrupt continued to deteriorate.
On November 1, 1968, all of the stock of Standard Milling Company was sold to Joe T. Boyd, who purchased the corporate stock individually and as agent for Defendants Knisely, Brookshire, and Bannowsky. Also included was a purchaser known as Blue Cross Finance Company.
On April 1, 1969, there was a foreclosure of the deed of trust and a trustee's deed was then executed to the Defendant, First National Bank of Atoka. No consideration appears to have been credited therefor; immediately afterward, the bank executed a deed conveying all of the bankrupt's properties over to United's American Milling & Manufacturing Company. At the same time, letters were forwarded to various creditors, advising them that United's American Milling & Manufacturing Company had bought the property of Standard Milling at a foreclosure.
Although there was a name change, there does not appear to have been any actual change in the business, personnel, or ownership, and it continued to function with the same assets, properties and personnel as Standard Milling had. An audit which the Defendants caused to be made reflects the passage of the assets of Standard Milling into United's American Milling & Manufacturing Company, but omits any reference to the liabilities of the bankrupt, thereby making it appear that the book value of the equity of the new concern was in excess of $400,000.00.
United's American Milling & Manufacturing Company secured a charter of incorporation from the Secretary of the State of Texas on or about April 20, 1969. The application for the charter was signed by Defendants R. B. (Parker) Goodloe, and Dalton Boyd, together with his wife, J. J. Boyd. No stock was ever issued in connection with the new corporation, and apparently no new capital or consideration was paid into the new corporation.
In the early part of April, 1969, negotiations were entered into between Defendant Joe T. Boyd, and Stewart Birnam, executive vice-president of the United American Industries, Inc., of Tucson, Arizona. These negotiations were formalized by a Letter of Intent, dated April 11, 1969, executed by the president of United American Industries, Inc., and by Defendants R. B. (Parker) Goodloe, Dalton Boyd, Joe T. Boyd, and J. J. Boyd, whereby it was agreed to exchange "the absolute complete ownership of United's American Milling & Manufacturing Co.," for 1,733,333 shares of the capital stock of United American Industries, Inc., of Tucson, Arizona. Though a letter of recission signed by the same parties cancelling this letter of intent was entered on July 15, 1969, the stock of the Arizona corporation was actually delivered to Joe T. Boyd in April of 1969, and the Defendants have since retained possession. Defendants' Exhibits Numbers 2 through 8 show that Joe T. Boyd signed receipts for the stock received by him in behalf of the other Defendants, apparently as their agent.
Defendants' Exhibit 2 acknowledges receipt by Joe T. Boyd on behalf of M. S. Knisely of United American stock certificates #9488/89NR for a total of 100,000 shares.
Defendants' Exhibit 3 acknowledges receipt by Joe T. Boyd on behalf of Dalton Boyd of United American stock certificate #9466NR for a total of 20,000 shares.
Defendants' Exhibit 4 acknowledges receipt by Joe T. Boyd, again on behalf of M. S. Knisely, of United American stock certificates #9467NR-9469NR for a total of 131,667 shares....
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