In re Black Ranches, Inc.

• Decision Date: 21 June 1966
• Docket Number: No. 17991,17993.,17991
• Citation: 362 F.2d 19
• Parties: In the Matter of BLACK RANCHES, INC., a Nebraska Corporation, Debtor. Roe R. BLACK, Avis C. Black, Roe C. Black, Black Ranches, Inc., a Corporation, Debtor, and Thomas Hart Fisher, Appellants, v. Anna C. BRANDO as Administratrix of the Estate of Marlon Brando, Sr., and Marlon Brando, Jr., Appellees. Marlon BRANDO, Jr., Appellant, v. Roe R. BLACK, Avis C. Black, Roe C. Black, Fred M. Nicholson, doing business as LaVernia Feed and Grain, R. D. Brown, R. A. Culpepper and G. W. Parker, a co-partnership, doing business as Veterinary Service Institute, Black Ranches, Inc., a corporation, and Thomas Hart Fisher, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

362 F.2d 19 (1966)

In the Matter of BLACK RANCHES, INC., a Nebraska Corporation, Debtor.

Roe R. BLACK, Avis C. Black, Roe C. Black, Black Ranches, Inc., a Corporation, Debtor, and Thomas Hart Fisher, Appellants, v. Anna C. BRANDO as Administratrix of the Estate of Marlon Brando, Sr., and Marlon Brando, Jr., Appellees.

Marlon BRANDO, Jr., Appellant, v. Roe R. BLACK, Avis C. Black, Roe C. Black, Fred M. Nicholson, doing business as LaVernia Feed and Grain, R. D. Brown, R. A. Culpepper and G. W. Parker, a co-partnership, doing business as Veterinary Service Institute, Black Ranches, Inc., a corporation, and Thomas Hart Fisher, Appellees.

Nos. 17991, 17993.

United States Court of Appeals Eighth Circuit.

May 12, 1966.

Motions to Amend and Petition for Rehearing Denied June 21, 1966.

COPYRIGHT MATERIAL OMITTED

Thomas Hart Fisher, Chicago, Ill., made argument for Roe R. Black, and others, and filed brief with E. H. Powell, Aurora, Neb.

Norma Vermaas, Lincoln, Neb., for Anna C. Brando, and others.

Before MATTHES and GIBSON, Circuit Judges, and HUNTER, District Judge.

MATTHES, Circuit Judge.

These are two of the series of four appeals in the Black Ranches, Inc. Chapter X reorganization proceeding.

Before proceeding further, we are constrained to state the reason for the undue length of this opinion. The style of the opinion indicating two appeals is misleading. Eight distinct claims, which have given rise to numerous controversies, are involved and each of these claims constitutes, in effect, a separate appeal.

In case No. 17,991, appellants have appealed from the orders allowing: (a) claim No. 16, in favor of Marlon Brando, in the amount of $3,500; (b) claim No. 17, in favor of Marlon Brando, Jr., in the amount of $3,289.02; (c) claim No. 21, in favor of Marlon Brando, Jr., in the amount of $14,372.58; (d) claim No. 22, in favor of Marlon Brando, Jr., in the amount of $86,257.62; and (e) claim No. 23, in favor of Marlon Brando, in the amount of $2,698.18. All were allowed as general and unsecured claims.¹

In case No. 17,993, Marlon Brando, Jr. has appealed from: (a) the order denying his claim No. 22 the status of a secured claim; (b) the order disallowing his claim No. 19, in the amount of $50,000; (c) the order disallowing his claim No. 20, in the amount of $17,500; (d) the order allowing claim No. 12 of Roe R. Black and claim No. 13 of Thomas Hart Fisher, Black's assignee, in the total amount of $78,641.75; and (e) the order refusing to subordinate claims Nos. 12 and 13 to any and all claims of Marlon Brando, Jr.

All of the presently contested claims emanate from complex facts having their setting in Black Ranches' distressed financial plight, which developed shortly after debtor's organization in 1949 and continued until this proceeding was instituted in 1954. The background facts discussed in appeal No. 17,990 (Black et al. v. Strand et al., 8 Cir., 362 F.2d 8) and additional operative facts particularly apropos to these appeals and to appeal No. 17,992 (Black et al. v. Denver United States National Bank, 8 Cir., 362 F.2d 38) aid a more comprehensive understanding of the numerous questions presented for our determination.

Roe R. and Avis C. Black, husband and wife, are the parents of Roe C. Black, who is also a party to all of the appeals.²

Roe R. Black and John M. Palmer have been acquaintances since 1930. They ventured into the cattle ranching business in 1947. From this beginning Black's ranching enterprise, consisting principally of providing pasture and care for cattle belonging to other parties, expanded until, in 1949, Black Ranches came into existence.

Marlon Brando was the father of Marlon Brando, Jr.³ The latter was, during all relevant times, an actor in the motion picture industry. Penny Poke Ranch, Inc., was a corporation whose capital stock was owned by Brando, Jr. Apparently, Brando, Jr.'s ranching enterprise was pursued, in part, through this corporation. In 1948, Marlon Brando, Jr. decided to invest some of his available funds in the establishment of a breeding herd of cattle. That same year, cattle, constituting the beginning of what later became known as the "Penny Poke" herd, were acquired for him by his father. Pursuant to contractual arrangement, this "Penny Poke" herd, indisputably owned by Brando, Jr., eventually was kept and grazed on Black Ranches land.

On July 26, 1950, Brando, Jr. executed a power of attorney wherein he constituted his father his attorney in fact. Pursuant to that authority, Marlon Brando represented his son in the many transactions involved in this litigation.

Jean A. Cobbey is a lawyer. He has been an acquaintance of John M. Palmer for many years and of Roe R. Black since 1948. Cobbey organized Black Ranches, Inc. at the behest of Palmer and Black. Cobbey was the attorney for Black Ranches for some time after its organization. Although he and Palmer were also directors and officers of the company for less than two years, Cobbey remained closely associated with Roe R. Black and Black Ranches.

CLAIM NO. 22

In No. 17,991, appellants challenge the court's allowance of this claim in any amount, whereas, in No. 17,993, Brando, Jr. not only seeks to uphold the allowance, but contends that the court erred in not granting it the status of a secured claim.

The claim was based upon two promissory notes executed by Black Ranches, pursuant to the authority of its board of directors. One note, for $40,742.41, was dated October 1, 1952, payable to Brando, Jr. two years from date, and bore interest at six per cent per annum from date until maturity, and eight per cent per annum from maturity. This note was secured by a real estate mortgage of same date on the ranch land of debtor. The second note, dated July 2, 1953, for $36,761.01, was payable to Brando, Jr. two years after date, with interest from date at six per cent per annum until maturity, and eight per cent per annum thereafter. This note was also secured by a real estate mortgage on the ranch land of debtor. Thus, Brando, Jr. held third and fourth mortgages on the land (Union National and Sack held first and second mortgages. See, appeal 17,990). The District Court of Brown County, Nebraska, in the proceeding instituted by Union National, decreed that Brando, Jr. was the owner of the third and fourth mortgage liens upon the ranch land and further decreed foreclosure, as provided by law. Although Judge Delehant allowed claim No. 22 in the total sum of $86,257.62, which included the principal amount of the notes and accumulated interest to October 22, 1954, he declined to recognize the mortgages as valid liens, and consequently accorded the claim general and unsecured status. Neither of the parties is satisfied with the result.

A. APPEAL NO. 17,991.

In appeal No. 17,991, appellants assert that there is included, as a part of the allowance, the sum of $37,814.16 (with interest) on account of "winter feed expenses", and they contend this amount was incurred in caring for cattle owned by Penny Poke Ranch, the Brandos and other persons, was paid directly to third persons, and that debtor was in no way liable for this amount.

Manifestly, appellants' defense raised an issue of fact, which has been resolved against them. We unhesitatingly conclude that appellants have not sustained the burden of demonstrating that the court's findings (presumptively correct) are clearly erroneous.

To state the various facets of appellants' attack or to detail the pertinent evidence even superficially, would unnecessarily overburden this opinion. However, it is confidently stated that appellants' arguments have been examined and found lacking in factual support. Without further discussion, we dispose of the point by concurring in Judge Delehant's finding that:

"The whole evidence * * * convinces * * * that the full sum of $77,503.42, represented in the two notes * * * was by Marlon Brando, Jr., the claimant, advanced and loaned to Black Ranches, Inc. in aid of the latter\'s operation of its business, and in varying amounts and at different times prior to the execution of the several notes. The objectors are quite unrealistic in their assertion that Marlon Brando, Jr. loaned or advanced the entire sum * * * to Marlon Brando, who thereupon applied it on his own account to the expenses of Black Ranches, Inc. * * *" The advancements "were expressly made for and in behalf of Marlon Brando, Jr. with the complete awareness of their source on the part of Black Ranches, Inc., and of no one in its behalf more surely than Roe R. Black. In that phase of the corporation\'s operations, Roe R. Black not only welcomed, but cultivated, the younger Brando as a very real, and probably the most promising, source of financial assistance in a persisting economic crisis. Marlon Brando, Jr., as has already been observed, was then in affluent circumstances, thanks to his profitable employment in his theatrical calling. No one else connected with Blanck Ranches, Inc. was even comparably as well circumstanced in a financial way."

Appellants next assert that the two promissory notes to Brando, Jr. "were invalid because they were issued by Debtor as a part of the fraudulent scheme of Brando and Cobbey to create fraudulent claims against Debtor in breach of their fiduciary obligations to Debtor." It is, perhaps, appropriate to recall basic legal principles applicable to resolution of this contention. Under normal circumstances, the law presumes good faith and honesty. As a corollary, the general rule is that fraud will not be presumed, but must be proved by the party asserting it. 24 Am.Jur., Fraud & Deceit, §§ 255-256; United States v. Wunderlich, 342 U.S. 98, 100, 72 S.Ct. 154, 96 L.Ed. 113 (1951); Lessmann v. C. I. R., 327 F.2d 990 (8 Cir. 1964); Reeves v. United States, 168 F.Supp. 720 (D.C.Neb. 1958).

Appellants enthusiastically state that Judge Delehant found "in the clearest possible terms that Cobbey and Brando had formulated in mid-April,...