Greenwood Gum Co. v. Zimmerman
| Decision Date | 04 April 1917 |
| Docket Number | 2923. |
| Citation | 240 F. 637 |
| Parties | GREENWOOD GUM CO. v. ZIMMERMAN et al. |
| Court | U.S. Court of Appeals — Sixth Circuit |
W. R Stewart, of Youngstown, Ohio, for appellant.
W. C McKain, of Youngstown, Ohio, for appellees.
Before KNAPPEN and DENISON, Circuit Judges, and EVANS, District Judge.
In July, 1915, De Wayne Greenwood, Jr., a creditor, filed in the court of common pleas of Trumbull county, Ohio, a petition against the Greenwood Gum Company (which we shall call the company), in which he stated in some detail the names of the creditors of the company, the amount due to them, and also the nature and amount of the company's property and business. The petition, also showed that the income of the company was not sufficient to pay its running expenses; that its assets of every kind were then insufficient to pay off and discharge its liabilities; that it was insolvent, and had not sufficient property to pay its debts, and thereupon prayed the appointment of a receiver for the company. Besides, the defendant in its answer to that petition, which was sworn to by the company's attorney, stated that the company was a corporation duly organized under the laws of the state of Ohio, admitted that it was largely indebted to various persons, was without funds to pay salaries, and was 'without sufficient funds or working capital to carry on the business to make and earn sufficient money to meet and pay off its obligations which will fall due in the future and that defendant is insolvent by reason of the conditions above mentioned. ' There was no denial in terms of the allegations of the petition that defendant's assets and property were insufficient to pay its debts.
Upon this showing the court of common pleas of Trumbull county, Ohio, on July 26, 1915, put on record an entry and judgment in part as follows:
'This cause coming on to be heard upon the petition and the motion of the plaintiff herein for the appointment of a receiver, and it appearing to the court that the allegations of the petition are true, and that the defendant * * * is unable to meet its obligations which have matured, and which are about to mature, and that said company is insolvent, * * * the court grants said motion, and by the consent of parties hereto appoints De Wayne Greenwood, Sr., of Girard, Ohio, receiver herein.'
The entry then empowered and directed the receiver to take possession of all the company's property. On October 15, 1915, W. W. Zimmerman and other creditors of the company began this proceeding in the court below by filing a petition, in which, after alleging that on the 26th of July, 1915, a 'receiver was appointed by the common pleas court of Trumbull county, Ohio, and put in charge of the property of said Greenwood Gum Company on the ground that said company was insolvent,' it prayed, upon that act of bankruptcy, that the company might be adjudged a bankrupt. To this petition the company, on November 4, 1915, filed its answer, in which, among other things, it stated:
That 'it admits a receiver was appointed by the common pleas court of Trumbull County, Ohio, at about the time mentioned in said petition, and that said receiver was put in charge of the property of said the Greenwood Gum Company on the grounds alleged in the petition.'
An issue was made by the answer as to whether the requisite number of creditors with the requisite amount of indebtedness had been joined in the petition for the adjudication, and upon this issue an order was made by the court below referring the case to a special master to take testimony, find the facts and the law, and report the same and the testimony to the court. Afterwards the Sethness Company and other creditors of the company, with debts aggregating over $200, filed an intervening petition and joined in the prayer for the adjudication of the company as a bankrupt. In an answer to the intervening petition, the company, for the first time, denied that it was insolvent, or that it had committed the act of bankruptcy alleged against it. The special master took the testimony, reported that the act of bankruptcy had been committed, and recommended an adjudication accordingly.
During the proceedings before the special master the company again appeared by its attorney and offered testimony to show, first, that it was not insolvent at the time of the finding of insolvency made by the court of common pleas of Trumbull county, Ohio; second, that the proceedings by which a receiver was appointed and the finding of insolvency made by that court were without the knowledge or authority of the board of directors of the company; third, that in fact all proceedings had with reference to the insolvency and the appointment of a receiver for the company were had against the wishes and instructions of the board of directors and those having charge and authority of such matters; fourth, that at all times since the company has been in existence it had been solvent, and at no time, by a fair valuation, had its liabilities exceeded its assets, and at the time of the appointment of said receiver and the finding of insolvency by the court of common pleas of Trumbull county, Ohio, the company was not insolvent under the laws of the state of Ohio, nor under the Bankruptcy Act of the United States; and, fifth, that at the time the proceedings were commenced in the court of common pleas of Trumbull county, Ohio, the then president of the company had received specific instructions from the board of directors of the company as to the course he should pursue in managing the affairs of the company, but that the president, instead of following and adopting the instructions of the board of directors, proceeded without advising said board of directors of his intentions to have himself appointed receiver of said company.
The special master excluded all the testimony thus proffered. Exceptions to the special master's report were filed but, after consideration, the court overruled them, confirmed the report, and...
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