In re Pennsylvania Consol Coal Co.

• Decision Date: 27 July 1908
• Docket Number: 3,041.
• Parties: In re PENNSYLVANIA CONSOL. COAL CO.
• Court: U.S. District Court — Eastern District of Pennsylvania

163 F. 579

In re PENNSYLVANIA CONSOL. COAL CO.

No. 3,041.

United States District Court, E.D. Pennsylvania.

July 27, 1908

The following is the opinion of Referee Theodore M. Etting:

By order of court made April 3, 1908, there was referred to me as special referee, with instructions to ascertain and report the facts, together with the testimony and findings of fact and law, a petition filed by Samuel W. Shrader, Abraham W Burdett, and William F. Harvey on the 6th day of March, 1908 asking, inter alia, that an adjudication of bankruptcy made by this honorable court against the above-named Pennsylvania Consolidated Coal Company be vacated and set aside, and that John W. Miller, who had been appointed receiver of said company upon a petition filed in the Northern district of West Virginia, be appointed ancillary receiver of the assets of the said company in this district.

By order of the court, subsequently made, there was also referred to me, as special referee, answers to the above petition, filed by Joseph W. Gross, trustee, by Messrs Watson, Diehl & Watson, creditors, and by the Pennsylvania Consolidated Coal Company. The last-named pleading, though termed an answer, is, in effect, in the nature of an exception to the petition filed by Shrader.

Before submitting any conclusions of fact or law, some reference should be made to the antecedent history of the case. The Pennsylvania Consolidated Coal Company is a corporation which was incorporated under the laws of West Virginia, by charter issued by the Secretary of State of said commonwealth on the 4th day of February, 1904. The objects and purposes of the corporation, as stated in its charter, are purchasing acquiring, holding, and owning timber land, coal, iron ore, fire clay, and other mineral lands, in fee simple, when otherwise not prohibited by law, managing, working, and operating the same, mining and shipping coal, manufacturing coke, conducting general merchandise stores, and doing and performing all such other things, not prohibited by law, which may be essential and necessary, or incident, to any of the above named and described objects. The principal place of business of the corporation, as stated in its charter, is located in the city of Grafton, county of Taylor, in the state of West Virginia.

Under the laws of West Virginia, domestic corporations are divided into two classes, resident and nonresident. A resident corporation is one having both its principal place of business and its chief works in West Virginia. A nonresident corporation is one which has either its principal place of business or its chief works, or both, outside of the state of West Virginia.

The Pennsylvania Consolidated Coal Company had no real property in any state other than West Virginia. Its real property in West Virginia consisted of two coal mines, and it maintained thereat certain offices in connection with the operation of said mines. From the time of the formation of the company, and continuously thereafter, for certain purposes hereinafter referred to, the company also maintained an office in the city of Philadelphia.

In consequence of the ill success of the venture, the mines of the company had not been operated for more than a year preceding the bankruptcy, and the offices located in the vicinity of said mines had been discontinued; the Philadelphia office alone being maintained.

On February 20, 1908, certain creditors of the company filed in the District Court of The United States for the Eastern District of Pennsylvania a petition praying that the company be adjudged a bankrupt. In that petition it was averred that the principal place of business of the company for the six months preceding was in Philadelphia. Upon this petition, the subpoena issued, service of which was accepted by the secretary of the coal company, and on the 6th day of March, 1908, an adjudication of bankruptcy was entered, and an order of reference made to me, as one of the referees in bankruptcy of this district. It further appears that on the 6th day of March, 1908, an application was made to the judge of the District Court of the United States for the Northern District of West Virginia by Samuel W. Shrader, Abraham W. Burdett, and William F. Harvey, praying for the appointment of a receiver and an adjudication in bankruptcy against said coal company. On the 9th day of March, 1908, pursuant to the prayer of the petition above referred to, the judge of the District Court of the United States for the Northern District of West Virginia appointed John W. Miller receiver. No order has as yet been entered by that court, adjudicating the said coal company bankrupt, and I assume, from correspondence which has been shown me by counsel for Shrader, that this course has been pursued in consequence of the prior adjudication of this court and the proceedings now pending. On March 13, 1908, the bankrupt filed with me, as the referee to whom the cause above mentioned had been referred, the schedules required by law, and, after due notice to all creditors whose names appeared thereon, a first meeting of creditors was called, and said meeting was held at my office, No. 701 Arcade Building, in the city of Philadelphia, on the 3d day of April, 1908. At this meeting eight creditors filed claims, which were allowed. The claims thus allowed amounted, in the aggregate, to $11,254.86. At said meeting an election was held, at which Joseph W. Gross was duly elected trustee, and was required to enter bond in the sum of $5,000. The trust has been accepted by Mr. Gross, bond in the above amount has been filed and approved, and Mr. Gross has, from the time of his election and qualification as aforesaid, been acting, and is still acting, as trustee. On the 13th day of April, 1908, after due notice to all the parties in interest, a meeting was called and held at my office, No. 701 Arcade Building, city of Philadelphia, for the purpose of considering, as special referee, the petition filed by Samuel W. Shrader et al. and the other pleadings hereinbefore referred to. At said meeting, and at sundry adjourned meeting held from time to time thereafter, I was attended by Joseph W. Gross, Esq., trustee, Abraham W. Burdett, Esq., and G.H.A. Kunst, Esq., attorneys for Samuel W. Shrader et al., J. Aubrey Anderson, Esq., attorney for the bankrupt, Albert W. Watson, Esq., of counsel for the trustee, Thomas M. Righter and Charles H. Jacobs, president and secretary, respectively, of the bankrupt company, and also by John W. Miller, the receiver appointed by the District Court of the United States for the Northern District of West Virginia. Testimony of the officers of the company and of Mr. Miller and Mr. Burdett was taken stenographically and was afterwards typewritten; their signatures thereto being waived by agreement of counsel. This testimony is returned herewith. There is annexed to the testimony all of the documentary evidence presented at the said meeting, and there is included therein a copy of the docket entries of the District Court of the United States for the Northern District of West Virginia, certified to by the clerk of said court.

In addition to the facts hereinbefore referred to in stating the antecedent history of the case, I find the facts to be as follows:

The real property of the company, which consists of two coal mines and certain land adjacent thereto, with certain houses erected thereon, is situate in Upshur county, W.Va. Work at both mines was discontinued for upward of a year prior to the filing of the petition in bankruptcy, and one mine is at present full of water.

Under the order of the District Court of the United States for the Northern District of West Virginia, Mr. Miller, the receiver of the said coal company, is now in possession. He has sold some mules; my understanding being they were sold as perishable.

One of the mines owned by the company was conveyed to it by the Irondale Valley Coal Company, and the other by the Pleasant Valley Coal & Coke Company. Vendors' liens are retained in the deeds to secure unpaid purchase money to the amount of $115,000, $90,000 of which represents the unpaid purchase money for the property purchased from the Irondale Valley Coal Company, and $25,000 of which represents the unpaid purchase money for the property purchased from the Pleasant Valley Coal & Coke Company, and for the above amounts notes were executed by the bankrupt company. These notes are held in part by the residents of Pennsylvania, and in part by the residents of West Virginia. The owners of the said notes have not as yet proved their claims before the special referee in bankruptcy, or appeared in these proceedings, and I am unable therefore to state with certainty which of these notes, or which of certain other notes which are said to be in existence, are owned by citizens of West Virginia, and which are owned by citizens of Pennsylvania; but, so far as I am able at present to determine, the Pennsylvania creditors of this class exceed, both in number and amount, the West Virginia creditors. The same condition of affairs may be said to subsist with respect to the unsecured claims of said bankrupt company which, as stated in the schedule, amount to $11,499.79.

The laws of West Virginia prescribe the method to be adopted in the event of a corporation of this class desiring to change the location of its principal office from the place named in its charter, which, as before stated, was the city of Grafton, in the state of West Virginia. I find that the requirements of law in this respect were not observed by the bankrupt company, and I also find that from the time the company commenced operating its mines, as well as during the six months preceding bankruptcy, the executive offices and principal business...