In re Cox Cotton Co.
| Decision Date | 17 November 1982 |
| Docket Number | J-80-155-B,Adv. No. 800414.,Bankruptcy No. J-80-154-B |
| Citation | 24 BR 930 |
| Court | U.S. District Court — Eastern District of Arkansas |
| Parties | In re COX COTTON COMPANY d/b/a James Grain & Cotton Co., Debtor. In re Don JAMES, Robert James and G.E. James, a general partnership, d/b/a Frisbee Cotton Company; James Grain & Elevator, Debtor. Robert P. LINDSEY, Trustee, Plaintiff, v. Mrs. Wayne CRYTS a/k/a Sandy Cryts; William Cryts, Jr.; Evans Ipock; Bill Jewell; and Wayne Cryts, Defendants. Mrs. Wayne CRYTS a/k/a Sandy Cryts; William Cryts, Jr.; Evans Ipock; Bill Jewell; and Wayne Cryts, Appellants, v. Robert P. LINDSEY, Trustee, Appellee. |
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Basil V. Hicks, Jr., North Little Rock, Ark., Thomas D. Kershaw, Jr., American Constitutional Rights Ass'n, Klamath Falls, Or., Jack T. Lassiter, Little Rock, Ark., for appellants.
Ben F. Arnold, Little Rock, Ark., A. Jan Thomas, Jr., West Memphis, Ark., Warren E. Dupwe, Jonesboro, Ark., for appellee.
Pending before the Court is an appeal from a judgment for civil contempt and a certification for criminal contempt entered on June 2, 1982, by Judge Baker of the United States Bankruptcy Court for the Eastern District of Arkansas. The judgment and certification arise out of a complex series of proceedings involving the Cox Cotton Company bankruptcies. The detailed facts surrounding those proceedings and the events leading up to the contempt order can be found elsewhere. See State of Missouri v. United States Bankruptcy Court, 647 F.2d 768, 771-74 (8th Cir.1981); Re: Contempt of Phillip Wayne Cryts, et al., AP 80-414 (Bankr.E.D.Ark. July 7, 1982) (memorandum opinion of Judge Baker). For purposes of this appeal the Court will present only a brief background of the facts pertinent to this proceeding.
Background.
The bankruptcy petition relevant to this case was filed on August 11, 1980, by the debtors who operated a number of grain elevators, one of which was located in Ristine, Missouri. A trustee, Robert Lindsey, was immediately appointed and given authority to operate the business. On September 23, 1980, he requested authority to sell all the debtors' grain free and clear of all liens and interests. That touched off a storm of protest among the Missouri farmers whose grain was stored in the debtors' elevators. Their actions included barricading entrances to the Ristine elevator, which resulted in United States marshals being assigned there. The principal questions were: who actually owned the grain or quantities thereof in those elevators; how much grain was stored in them; and whether the State of Missouri should be appointed as the proper receiver under the circumstances. The latter issue prompted Missouri and a number of its state agencies to file various actions in federal court in an attempt to obtain jurisdiction over the "Missouri grain." This culminated in a finding by the Eighth Circuit Court of Appeals, in April of 1981, that the federal bankruptcy court had exclusive jurisdiction over debtors' Missouri property, including the grain. See State of Missouri, 647 F.2d at 774.
Before that ruling, however, Wayne Cryts and others, on or about February 16, 17 and 18, removed from the debtors' Ristine, Missouri, elevator approximately 31,000 bushels of soybeans. This was done in the presence of the U.S. marshals and the FBI, and involved a convoy of some 77 trucks to transport the soybeans. The beans were taken to a Missouri Farmers Association (MFA) elevator in Bernie, Missouri. Through an order on February 18, 1981, the court of appeals declared that the jurisdictional rights in that grain were expressly reserved to the trustee until that court could resolve jurisdictional issues regarding the debtors' Missouri property.
Following the court of appeals' decision in April on the jurisdictional issue, the bankruptcy court on May 27, 1981, authorized the trustee to sell the "Missouri grain," including the 31,000 bushels in the Bernie, Missouri, elevator. Again, the local farmers became upset and on a number of occasions barricaded the entrances to the Ristine elevator. The significant event, and the one which ultimately led to this appeal, occurred on or about July 22, 1981, when Wayne Cryts and the other appellants, in the early hours of the morning, removed the soybeans from the Bernie elevator and took them to parts unknown. Consequently, the trustee filed his motions for civil contempt proceedings.
During the fall of 1981, the bankruptcy court had difficulty assembling all the parties for an adversary hearing on the contempt motions, and it was not until February 9, 1982, that the first such hearing was held. On that date Wayne Cryts took the witness stand and invoked his Fifth Amendment privilege against self-incrimination when asked who helped him remove the grain from the Bernie elevator, where the grain was taken, and how the grain was disposed of. Judge Baker adjourned the hearing until it could be determined if Wayne Cryts might be granted use immunity in exchange for his testimony. That immunity was granted by this Court on April 1, 1982. Judge Baker reconvened the hearing on April 28, 1982, but Wayne Cryts again refused to answer the trustee's questions. Judge Baker immediately jailed the appellant for civil contempt. On June 1, 1982, appellant was released from jail on the order of Judge Baker because he had come to a decision on the trustee's motion for contempt. The judgment on that motion was entered on June 7, 1981, and the appellants were found to be in civil contempt and were held jointly and severally liable for the sum of $287,708.73 plus $1,500 per day for each day the judgment remained unsatisfied. The amount of the judgment was based on the value of the soybeans taken and the trustee's costs in bringing the contempt action. Judge Baker also certified to this Court a criminal contempt for each appellant. This appeal was then taken.
The Court will first resolve the issues before it with respect to Wayne Cryts. Mr. Cryts presents his claims on three levels: First, the entire Bankruptcy Code is unconstitutional; second, assuming the Code to be constitutional, the contempt provisions of the Code are unconstitutional; and, third, assuming the contempt provisions to be constitutional, the finding of civil contempt as to him was unconstitutional because, under the facts and circumstances of this particular situation, the bankruptcy court lacked jurisdiction over the 31,000 bushels of soybeans in the Bernie Elevator.
Jurisdiction Over the 31,000 Bushels of Soybeans.
Addressing appellant's last contention first, the Court finds it to be a rather straightforward theory. Appellant claims he had a right to remove the 31,000 bushels of soybeans from the trustee's possession because the trustee, like the debtors, held those beans solely as a bailee. Therefore, he argues, the beans were not "property of the estate" within the meaning of 11 U.S.C. ? 541 because the trustee was a mere possessor of his beans, while he always had, and continued to have, all legal title and ownership in them. Consequently, he contends that the trustee was without authority to use, sell or dispose of the beans, and when he took the beans from the Ristine and the Bernie elevators, he had simply retrieved from the trustee his lawful property. Appellant places great reliance on the Eighth Circuit opinion, which upheld the jurisdiction of the bankruptcy court over the "Missouri grain." See State of Missouri, 647 F.2d at 774. In that case the court expressly refused to authorize the trustee to sell the 31,000 bushels of grain located in the Bernie elevator. In order for the trustee to sell that, and all other "Missouri grain," the Court found that the bankruptcy court had to satisfy the requirements of 11 U.S.C. ? 363(f) (). Appellant contends that none of these requirements were satisfied. Therefore, he argues, the 31,000 bushels of soybeans in the Bernie elevator were, as they always had been, his rightful property and not subject to the power of the trustee.
The Court finds that appellant accurately describes the relationship between a grain depositor holding a warehouse receipt and a warehouseman. That relationship is one of bailor-bailee and actual ownership of the depositor's grain remains with him. In Potter v. Mt. Vernon Roller Mill Co., 101 Mo.App. 581, 583, 73 S.W. 1005 (1903), the court stated:
It is well settled that where a warehouseman has received grain on deposit for its owner, in a common granary or depository, where it is mingled with other grain of himself or others, or both, in such receptacle, to which, from day to day, other grain of various owners, of like kind and quality, is added, and from which, from time to time, sales and delivery of grain are made, and the warehouseman keeps constantly on hand grain of the quality received, prepared for delivery on call to all depositors, the contract is a bailment, and not a sale. The circumstances that the identical grain is commingled with other grain, and is not to be returned to the depositor, but a like quantity of the same kind and quality are not sufficient to convert the contract into a sale. (Citations omitted.)
The relationship was described likewise in United States v. Luther, 225 F.2d 499, 504 (10th Cir.1955), cert. denied, 350 U.S. 947, 76 S.Ct. 321, 100 L.Ed. 825 (1956).
The title to the milo and wheat, which were in the possession of the Grain Company at the time of the adjudication, which passed into the possession of the trustee, and which the trustee converted by sale into the Milo Fund and Wheat Fund, was not in the Grain Company and did not pass to the trustee. Such milo and wheat were held by the Grain Company as bailee, and belonged to the holders of warehouse receipts and the storers of grain who stored on open storage. (Footnote omitted.)
At this point, however, appellan...
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