In re Warner Coal Corporation

• Citation: 83 F. Supp. 961
• Decision Date: 18 May 1949
• Docket Number: No. 3940-W.,3940-W.
• Court: U.S. District Court — Northern District of West Virginia
• Parties: In re WARNER COAL CORPORATION.

83 F. Supp. 961

In re WARNER COAL CORPORATION.

No. 3940-W.

United States District Court N. D. West Virginia.

May 18, 1949.

G. Alan Garden, Wheeling, W. Va., for Wheeling Electric Co.

Carl G. Bachmann, Wheeling, W. Va., for the trustee, Charles P. Mead.

BAKER, District Judge.

This matter is before me on a review from an order of the Referee, Thomas H. Duval, pertaining to a claim of the Wheeling Electric Company.

Warner Coal Corporation, prior to bankruptcy, operated a coal mine in Wheeling, known as the "Richland" or "Costanzo" mine. The Wheeling Electric Company is a public service corporation, furnishing electric power in and about the City of Wheeling, and furnished the power necessary to the operation of this mine. It filed its claim, being Claim No. 60, in the amount of $13,153.14.

The Warner Coal Corporation ceased operations upon June 25, 1943. An involuntary petition in bankruptcy was filed against the company on October 9, 1943. An operating receiver was appointed October 22nd, and qualified and began operations October 23, 1943.

The claim of the Wheeling Electric Company breaks down into three distinct parts. That portion of the claim, which represents power supplied prior to June 25, 1943, is conceded by the electric company to be a common claim. This amounted to $9,626.98. The current furnished between October 9 and October 23, 1943, is conceded by all parties to be a preferred claim, and was so allowed by the Referee. This amounted to $634.86. This left, as the matter in dispute, a balance of $2,891.30, representing the current furnished between June 25, 1943, the date that the mine ceased active operation, and October 9, 1943, the date the petition in bankruptcy was filed. The electric company claimed that this should be allowed as a preferred claim, since the power was used to preserve the mine.

The coal seam in this mine slopes away from the pit mouth, and it is necessary to pump the same at all times or it will fill with water. In addition to pumping the mine, the Warner Coal Corporation kept a maintenance crew at work in the mine, clearing out falls, repairing tracks, etc. In order for this maintenance crew to work, it was necessary to ventilate the mine by blowing air through it. The testimony of the Receiver, taken before the Referee, and the testimony of Whitney Warner, Jr., President of the Warner Coal Corporation, establishes the fact that had the current been turned off at this mine on June 25th, the mine would have so filled with water that it would have required six months of more pumping before the Receiver could have started operations after the Receiver took charge. This, from a practical standpoint, would probably have meant that the Receiver could never have operated, since without the income from the operation of the mine, the Receiver would not have had funds to pay for six months pumping.

I, therefore, find as a fact that the electric current, furnished between June 25 and October 9, 1943, made possible the operation of the mine by the Receiver when he was appointed. Under this situation, I wish sincerely that I could, as a matter of law, allow the electric company a preferred claim for this current. However, the language of the Bankruptcy Act, 11 U.S.C.A. § 1 et seq., and the decisions construing the same, require me to hold that this is a common claim.

Section 64, sub. a of the Act, 11 U.S.C.A. § 104, sub. a, reads in part:

"The debts to have priority, in advance of the payment of dividends to creditors, and to be paid in full out of bankrupt estates, and the order of payment, shall be (1) the actual and necessary costs and expenses of preserving the estate subsequent to filing the petition".

The courts have been unanimous in holding that this Act must be strictly construed, since its purpose is to protect the assets of bankrupt estates for the general creditors. See In re Hutchins, D.C., 36 F.Supp. 895; In re Public Ledger, D.C., 63 F.Supp. 1008; Goldie v. Cox, 8 Cir., 130 F.2d 690;

Collier on Bankruptcy, Section 64.102, page 2063, Volume 3, reads:

"Costs And Expenses Incurred Prior To Bankruptcy. * * * Section 64-a (1) creates a priority for debts arising from `the actual and necessary costs and expenses of preserving the estate subsequent to filing the petition'. The very language of clause (1) itself excludes its application so as to grant a priority within Section 64 to claims for expenses or services accruing prior to the petition. * * * Such actions are generally deemed to be taken primarily in the creditors own interest and claims arising therefrom are not entitled to priority, either under Section 64-A (1) or on equitable principles, and have only a general claim against the estate, except where an attachment...