In re Rollins Gold & Silver Min. Co.

• Decision Date: 12 July 1900
• Citation: 102 F. 982
• Parties: In re ROLLINS GOLD & SILVER MIN. CO.
• Court: U.S. District Court — Southern District of New York

102 F. 982

In re ROLLINS GOLD & SILVER MIN. CO.

United States District Court, S.D. New York.

July 12, 1900

The following is the opinion of Referee F. K. PENDLETON:

An order to show cause having been made why the order adjudicating the above company a bankrupt should not be set aside and the petition and proceedings thereunder dismissed the matter was referred to me by an order entered on the 6th day of February, 1900, to take the testimony and proofs in regard thereto and to report the same, together with my opinion thereon, with all convenient speed.

The grounds of the application are:

(1) That the Rollins Gold & Silver Mining Company was not a corporation engaged principally in the business of manufacturing, trading, etc., as required by section 4 of the bankruptcy act, and not therefore subject to the provisions of that act.

(2) That no act of bankruptcy was committed by the said company in that the board of directors of a corporation has not the power to make the statutory admission required by section 3 of the act, of the inability of the company to pay its debts and its willingness to be adjudged a bankrupt, the power to do so being vested in the stockholders exclusively.

(3) That the corporation was adjudged a bankrupt as the result of a scheme on the part of the president of the company and his associates in the board of directors, whereby the company has practically obtained the benefits of the act as a voluntary bankrupt.

(4) That the corporation was not at the time of the filing of the petition for the adjudication herein, unable to pay its debts.

The first question involved is whether the above company is one of the corporations made by section 4, subd. 'b,' of the bankruptcy act, amenable to its provisions. That section provides that 'any corporation engaged principally in manufacturing, trading, printing, publishing or mercantile pursuits' may be adjudged an involuntary bankrupt.

This corporation was organized under the laws of the state of New York, entitled 'An act to authorize the formation of corporations for manufacturing, mining, mechanical and chemical purposes,' passed February 17, 1848. The objects for which the corporation was formed were stated in the certificate or articles of incorporation to be 'the mining and reducing of gold, silver and other ores and selling the same.'

In the New York & Westchester Water Co. Case (D.C.) 98 F. 711, it was held that the question as to whether a corporation is included within the meaning of section 4, subd. 'b,' or not, depends not on the extent of its powers, but on its pursuits,-- not whether it has the power, under its articles of incorporation, but whether it in fact is engaged in one of the occupations there mentioned, and that the words of the act, 'manufacturing, trading,' etc., should be interpreted according to their commonly accepted meaning. It has been decided that selling the product of one's own land is not 'trading or mercantile pursuit.'

Under the present act it has been held that mining is not a manufacturing trading or mercantile pursuit. In re Elk Park Mining & Milling Co. (D.

C.) decided by Judge Halleck. The case seems not to be reported but the copy of the opinion submitted to me is filed herewith. ^[1] It appears from the public press in the last few days that a similar decision was rendered by Judge Carland, of the United States circuit court for the state of Missouri, in the Victoria Zinc-Min. Co. Case (oral opinion). I think these decisions clearly correct. It was held in Byers v. Coal Co., 106 Mass. 131, that a mining company is not a manufacturing company within the meaning of the statute imposing upon officers and stockholders of manufacturing companies liability for debts. In another case that a company mining coal is not a manufacturing company within the meaning of the act releasing manufacturing companies from taxation. Appeal of Commonwealth (Pa. Sup.) 18 A. 133. The above is conceded by counsel for petitioning creditors, at whose instance this company was declared a bankrupt. But it is contended that reducing or milling ore is manufacturing within the meaning of the act.

The question is therefore whether the Rollins Gold & Silver Mining Company was principally engaged in milling and reducing ore, and if so whether that business is manufacturing.

It appears from the evidence that the property of the corporation was situated in Colorado, and consisted of 26 mines or mining claims, with the necessary machinery and appurtenances, a stamp mill which cost about $25,000, some 1,200 acres of agricultural lands, and 300 or 400 acres of placer mining property; that the company had leased for almost the whole of the last eight years all its property and has done nothing except receive the royalties or rent that it became entitled to under the lease. The mining of ore has been carried on by the lessee or his sublessees, the lessee operating the mill to grind ores so mined, and perhaps for other miners. So far as milling ores for others is concerned, that is not manufacturing, but rather rendering or performing labor or services for hire.

I think, however, it very clear that the business carried on by the lessee cannot in any sense be held to be the business of the lessor, and that on the above facts the company is not principally or at all engaged in milling and reducing ore. But even if it were, I do not think that milling and reducing ore come within the meaning of the word 'manufacturing' as used in the act. It is certainly not within the commonly accepted meaning of the word, nor do I think it within its technical meaning.

The words 'manufacture' and 'manufacturing' have been defined...