In re Muncie Pulp Co.

• Decision Date: 07 January 1907
• Docket Number: 70.
• Parties: In re MUNCIE PULP CO.
• Court: U.S. Court of Appeals — Second Circuit

151 F. 732

In re MUNCIE PULP CO.

No. 70.

United States Court of Appeals, Second Circuit.

January 7, 1907

Caruthers Ewing, Russell & Winslow, H. C. Williamson, Jr., and Chas. T Coleman, for petitioners.

A. I Elkus, James N. Rosenberg, Robert P. Levis and James, Schell & Elkus, for respondent.

Before LACOMBE, TOWNSEND, and COXE, Circuit Judges.

LACOMBE Circuit Judge.

On June 21, 1901, one Cissna, the owner of timber lands in Arkansas entered into a written contract with the Muncie Pulp Company a New York corporation, for the sale to it of certain standing timber, the contract providing that all the timber within a certain specified area should be cut and removed within two years, all within a certain other specified area within five years, and the remaining timber (located in another specified area of 2,000 acres) within seven years. The consideration of the sale and transfer is stated to be the sum of $35,000, $7,000 in cash on signing the contract, and four notes of even date therewith, each for $7,000, with 5 per cent. interest, due one, two, three, and four years from date. It is apparent from this provision that one-fifth of the consideration was to be paid before any timber was cut and removed, and that the entire consideration was to be paid three years before the time limited for cutting and removing. In the affidavits it is suggested that it was expected that the rate at which the timber could be cut and removed would be such that each installment when paid would be sufficient to cover the timber cut and removed down to the time when the next installment might fall due. But it is not necessary to refer to any affidavits or other testimony outside of the contract; a special clause makes the intent of the parties entirely clear. It is expressly provided that--

'if at any time the said party of the second part (the pulp company) shall cut and remove from the said property a larger amount of timber than the proportionate value of the same has been already paid for, that it will immediately pay to the party of the first part (Cissna) that proportion of the purchase price covering the said timber; that at no time shall they cut and remove a greater amount of timber than they have already paid for under this contract, it being the intention hereby that whenever any timber is cut and removed from the said property, that it shall be at all times paid for in cash.'

The cash installment of $7,000 was paid, and the company entered upon the land and proceeded to cut and remove timber. The two notes maturing in 1902 and 1903 were paid. The notes due in 1904 and 1905, respectively, are still unpaid, and have been assigned by Cissna to the Corn Exchange Bank and Mrs. Kinney, respectively. The rate at which the timber was cut and removed seems to have been greater than was contemplated, so that by July, 1904, a greater amount had been removed than the company had already paid for; the precise figures are not given, but it is stated that about three-fourths of the entire amount of timber standing when the contract was made had been removed, while, by reason of default in payment of the note due June 21, 1904, only three-fifths of the consideration had been paid. The credit of the company being apparently good, the owner of the timber had not been careful to put a stop to the continued cutting; payment of the 1904 note would have paid for all and covered a large part of future cuttings.

On July 30, 1904, petition in involuntary bankruptcy against the pulp company was filed in the Southern District of New York;...