In re Morgantown Tin Plate Co.

• Decision Date: 04 January 1911
• Court: U.S. District Court — Northern District of West Virginia
• Parties: In re MORGANTOWN TIN PLATE CO.

184 F. 109

In re MORGANTOWN TIN PLATE CO.

United States District Court, N.D. West Virginia.

January 4, 1911

B. M Ambler, for claimants.

Reese Blizzard, for contestants.

DAYTON District Judge.

The litigation, involving the affairs of this bankrupt, commenced before I assumed the bench, in this bankruptcy proceeding and in the equity cause of the Canton Roll & Machine Company v Rolling Mill Company of America, has already been the subject of one opinion by myself and of two by the Circuit Court of Appeals for this circuit, from which the material facts can be obtained. Sturgiss v. Corbin, 141 F. 1, 72 C.C.A 179; Canton Roll & Mach. Co. v. Rolling Mill Co. (C.C.) 155 F. 321; Canton Roll & Mach. Co. v. Rolling Mill Co., 168 F. 465, 93 C.C.A. 621. The matters now in controversy are three claims of George C. Sturgiss for $17,450, of the Morgantown & Kingwood Railroad Company for $1,741.40, and of George C. Sturgiss, assignee of George J. Humbird, for $3,746.47, upon all three of which interest is claimed from October 2, 1903. It is to be remembered that the proceedings in this bankruptcy case have been out of the usual order. My predecessor, by decree entered in it in 1904, directed a sale of the plant and property of the tin plate company to be made at once, free and acquit from liens, by commissioners appointed and not by the trustee. Such sale was made by the commissioners first to one Fisher at $154,000; but, Sturgiss offering to bid $160,000 for the property, bidding was reopened, and it was sold a second time to Sturgiss for $200,200; but, when this sale in turn came up for confirmation, Fisher securing a bid of $208,000, again bidding was reopened, and it was then sold to Fisher for $220,000, to whom the sale was confirmed. Sturgiss appealed, and the Circuit Court of Appeals sustained this appeal and directed this last sale to Fisher to be set aside and the sale of the property to be confirmed to Sturgiss at $200,200.

In this decision (141 F. 1, 72 C.C.A. 179) the action of the court in taking charge directly of the sale and decreeing the property to be sold by commissioners appointed by it, instead of allowing the referee to decree the sale by the trustee, was expressly affirmed; the court there saying:

'The order of the court below directing a sale of the property clear of all liens, claims, and incumbrances was, under all the circumstances, a wise exercise of judicial discretion, being such action as the bankrupt act contemplates and provides for in those instances when the nature and location of the property makes it desirable, in the interest of the creditors, that the same be sold as soon as practicable. The act does not require that such sales be made by the trustee in bankruptcy, and, while ordinarily it will likely be best and more convenient that such official conduct such sales, still there are doubtless many cases in bankruptcy where it is entirely proper for the court to exercise right to designate the officer it wishes to conduct the sale it is authorizing; such designation being other than the trustee.'

The proceeds of sale having been paid in cash to the commissioners, and they having paid them into court, the same were deposited with the court's registrar, and, after paying under decrees from time to time, certain debts as their validity was determined, he has retained the fund subject to the direct order of the court, and not under the orders and administration of the referee.

The litigation referred to has delayed necessarily a final distribution of this fund, but on June 17, 1909, the referee was, by decree entered by the court, directed to ascertain and report 'the general and lien creditors of said bankrupt, and who are the stockholders thereof, respectively, with the amounts of debts and stock respectively and who are entitled to be paid on account thereof, in order to a final distribution. ' Under this order the referee has reported that every debt against the bankrupt, except the three in controversy, and one due the sheriff of Monongalia county for taxes, have been paid, leaving a balance of $51,174.07 in the registrar's hands, from which, if said three claims and their interest be paid, a balance of $17,935.93 would remain to be distributed to stockholders. To the allowance of these claims exceptions are made, and the matters are brought to my attention by such exceptions to this report.

This explanation has been made, in order that it may be made apparent that this fund was taken charge of and has been administered by the court and not under the orders and directions of the referee as in ordinary cases, that the referee in effect has acted in the capacity of a special master rather than as a referee, and that therefore it becomes unnecessary to consider the technical objections taken to the pleadings had before and the rulings made by the referee in his conduct of the proceedings before him. It seems to me, disregarding all these technicalities, it is my duty under the peculiar conditions to determine from the actual facts existing as shown by the records and the reports of the referee whether these three claims are valid or not. Two of them, the one claimed by Sturgiss for $17,450 and the other by the Morgantown & Kingwood Railroad Company, which as shown by the evidence of Sturgiss, is now owned by him, have substantially the same basis. It appears that in May, 1902, the Rolling Mill Company of America, a New Jersey corporation, now defunct, with a cash capital of $100,000, owned by New York parties, commenced building its plant at Connellsville, Pa., and had expended something like $17,000 thereon when applied to by Sturgiss to change its location to a point at the then terminus of the Morgantown & Kingwood Railroad, running something like four miles up Deckers Creek from Morgantown. Sturgiss was at the time the substantial owner of this railroad and owned real estate at the point where he sought to have the plant located. The negotiations resulted in a contract between the Morgantown & Kingwood Railroad Company and Sturgiss, jointly, of the first part, and this Rolling Mill Company of America of the second part, under date of May 9, 1902, whereby the railroad company and Sturgiss agreed: (a) To convey or cause to be conveyed by deed within 10 days to the Rolling Mill Company 15 acres upon which to erect its plant; (b) to operate a railroad switch along the front and rear of the buildings to...