In re Mt. Forest Fur Farms of America, 24331.

• Decision Date: 24 August 1945
• Docket Number: No. 24331.,24331.
• Citation: 62 F. Supp. 59
• Parties: In re MT. FOREST FUR FARMS OF AMERICA, Inc.
• Court: U.S. District Court — Western District of Michigan

62 F. Supp. 59

In re MT. FOREST FUR FARMS OF AMERICA, Inc.

No. 24331.

District Court, D. Michigan, S. D.

August 24, 1945.

COPYRIGHT MATERIAL OMITTED

The attorneys involved are listed in the findings No. 1. In addition to this —

Lester S. Moll, of Detroit, Mich., for Vermilion Bay Land Co., reorganized debtor.

C. J. Odenweller, Jr., of Cleveland, Ohio, for Securities and Exchange Commission.

LEDERLE, District Judge.

Findings of Fact

1. This corporate reorganization proceeding of Mt. Forest Fur Farms of America, Inc., a Delaware corporation, is presently before the court on petitions for final allowances of fees and disbursements requested by the following applicants, in the following amounts:

                                                                             Amount Claimed
                                                                          Fees          Expenses
                   Referees in Bankruptcy George A. Marston
                    and Walter I. McKenzie, Special Masters
                    both of Detroit, Mich.,                              $ 25,000.00
                   Frank Fitzgerald, Trustee, of Detroit
                    Mich.,                                                 24,500.00
                   Robert S. Marx, Carl Runge, and Lawrence
                    I. Levi, General Counsel, all of Detroit
                    Mich., for Trustee,                                    65,000.00       $2,303.78
                   Julian G. McIntosh, Special Counsel, of Detroit
                    Mich., for Trustee,                                    18,120.00
                   Monaghan, Crowley, Clark & Kellogg, Special
                    Counsel, of Detroit, Mich., for Trustee,                2,500.00           56.57
                   Fraser, Shumaker, Kendrick & Winn, of
                    Toledo, Ohio, Counsel for Debtor, (including
                    $500 fees of Charles S. Abbott
                    local counsel)                                         52,500.00           85.44
                   S. J. Dyer, Shareholder of Debtor and representative
                    of a group of Indiana shareholders,
                    Indianapolis, Indiana,                                                    560.00
                   Irwin H. Boesel, Shareholder of Debtor and
                    of Michigan Mt. Forest Corporation, of
                    which he was President, Springfield,
                    Ohio,                                                   5,853.04 (including
                                                                                      expenses)
                   Harold R. Smith, Attorney, of Detroit,
                    Mich.,                                                 40,000.00          305.91
                   Hugh R. Francis, of Detroit, Mich., Second
                    Successor State Court Receiver for Michigan
                    Mt. Forest Corporation,                                 3,000.00
                   Harold M. Shapero, of Detroit, Mich., and
                    J. Adrian Rosenburg, of Jackson, Mich.,
                    Attorneys for Contractholders,                          7,250.00          299.82
                   Anderson, Wilcox, Lacy & Lawson, of Detroit,
                    Mich., former Attorneys for stockholders
                    committee and debtor corporation,                      35,000.00
                   John P. Neudorfer, of Detroit, Mich., First
                    Successor State Court Receiver for Michigan
                    Mt. Forest Corporation,                                 2,000.00
                   Harley Waitman, J. Fred Wuerth, Clyde
                    M. McGuffie, et al., shareholders in both
                    the Debtor and the Michigan Mt. Forest
                    Corporations,                                           5,000.00
                    (For their attorneys, Hull, Brown &
                    Fischer and Richard Ford) all of Detroit,              11,012.50
                    Mich.,                                                                    869.45
                   Ernest D. Skinner, George A. Lehman and
                    John R. Westenbarger, beneficially interested
                    in the stock and/or income from
                    stock described as Claim No. 792, Royal
                    Oak, Mich.,                                                             1,635.60
                
                

                   Edward T. Kelley and Darden & Brashear,
                    all of Detroit, Mich., Attorneys for Stockholders
                    Committee of Debtor since April
                    21, 1944,                                              10,000.00          125.00
                   Darden & Brashear, of Detroit, Mich., Attorneys
                    for Stockholders Committee of
                    Debtor from 1938 to April 21, 1944,                      7,500.00          108.00
                   Stockholders Committee of Debtor, Albion,
                    Mich.,                                                   5,000.00        2,057.53
                   Fowler & Fowler, of Knoxville, Tenn., Associate
                    Counsel of Harold R. Smith in
                    proceedings in Tennessee to reorganize
                    Michigan Mt. Forest Corporation,                         (No amount requested)
                          Totals                                          $319,235.54       $8,407.10
                

Objections were filed to practically all such petitions, and extensive hearings were held thereon, towards the conclusion of which counsel for the Securities and Exchange Commission presented the Commission's advisory recommendations.

2. The fur farm enterprise was organized to develop fur bearing animals for the commercial markets. Many thousands of investors contributed approximately one and a half million dollars to the enterprise. Various stock interests, muskrat ranching contracts covering pairs of muskrats, and marshland contracts for deeds to swamp acreage with trapping leases back to the corporation, were sold to the general public. Among properties acquired by the Debtor, were large tracts in the Louisiana swamps and bayous. An account of the use of this locality as the principal source of supply for the world muskrat market, which appears in the March, 1945, Readers' Digest, at page 77, under the title "Louisiana's Fabulous Muskrat Marshland," aptly summarizes trapping-lease practices which the Trustee has followed throughout this proceeding. Some mineral and oil rights were also acquired by Debtor in connection with the acquisition of the Louisiana property. The enterprise originated as a Michigan copartnership, which later transferred to Mt. Forest Fur Farm, a Michigan corporation. The present Debtor was incorporated as a Delaware corporation in March, 1928, and the Michigan corporation transferred the business to the Debtor and purportedly received 48% of the Debtor's capital stock.

3. On August 15, 1938, the Debtor filed herein its voluntary petition for corporate reorganization in accordance with the provisions of Section 77B of Chapter VIII of the National Bankruptcy Act, 11 U.S.C.A. § 207. On the same day, the petition was approved, and Frank FitzGerald, a competent attorney with considerable experience in corporate reorganization matters, was appointed Temporary Trustee. This appointment was later made permanent at a hearing held upon notice to all interested parties. Three days after institution of this proceeding, Robert S. Marx, Carl Runge and Lawrence I. Levi, outstanding members of the legal profession with a nationwide practice and a large staff of associates and assistants, were appointed general counsel for the Trustee, and Julian G. McIntosh, a competent attorney who possessed considerable background knowledge of the Debtor's complicated affairs, was appointed special counsel to assist with Louisiana property and tax matters. Under such appointments, these attorneys have represented the Trustee throughout. A competent and outstanding Toledo legal firm, Fraser, Shumaker, Kendrick and Winn, with some assistance from Charles S. Abbott as local counsel, represented the Debtor from the inception of this proceeding until the Board of Directors of the reorganized Debtor retained Lester S. Moll as attorney to represent the Debtor at these fee hearings. No petition for allowance has been filed herein by this latter attorney. Since the effective date of the Chandler Act, this proceeding has been conducted in accordance with the corporate reorganization sections thereof, 11 U.S.C.A. §§ 501-676. Upon request of the court, the Securities and Exchange Commission formally appeared in this proceeding shortly after its institution. The representatives of this Commission have taken an active part herein. They have given unstintingly of their time and talent, and have rendered splendid public services in this connection.

4. At the time this proceeding was instituted, the Debtor had been involved for many years in the Michigan state court receivership case of Kimball v. Bangs et al., Wayne Circuit No. 180,924, which had been pending since March, 1930, and Debtor was on the brink of losing all its property to satisfy liens for receivership expenses. It had practically no income or cash resources. Funds were raised by subscription to pay the initial filing fee of this reorganization proceeding. An injunction in the state court receivership case purportedly enjoined parties in interest from seeking relief under the National Bankruptcy Act. Some of the interested parties went outside the jurisdiction of the state court, namely, to Toledo, Ohio, and there engaged attorneys who prepared and filed the necessary documents for instituting the instant proceeding.

5. Throughout the tumultuous and litigious history of the fur farm enterprise, its progress has been continuously hampered and impeded by internecine warfare between various groups and factions of stockholders and interested parties. This continued dissension has contributed materially to the complexity of this reorganization proceeding as well as to the necessary services of the Trustee and his counsel, and, particularly in the initial stages, counsel for the Debtor.

6. Immediately upon institution of this proceeding, attacks were made by Harry J. Merritt, State Court Receiver, and his attorneys upon the jurisdiction of this court, the bona fides of the reorganization petition, the order approving it, the appointment of a Trustee, and two restraining orders entered in aid of this court's jurisdiction. After a vigorous contest in this court, appeals were taken. The opinion affirming this court's decision, reported as In re Mt. Forest Fur Farms of America, 6 Cir., 103 F.2d 69, succinctly narrates the highlights of the Debtor's litigation to that point. Certiorari was sought and denied. Merritt v. Mt. Forest Fur Farms of...