In re Yaryan Naval Stores Co.
| Decision Date | 15 May 1914 |
| Docket Number | 2598,2599. |
| Citation | 214 F. 563 |
| Parties | In re YARYAN NAVAL STORES CO. |
| Court | U.S. Court of Appeals — Sixth Circuit |
C. A Seiders, of Toledo, Ohio, for appellants Brunswick Bank & Trust Co. and others.
G. P Kirby, of Toledo, Ohio, for appellants James S. Brailey and others.
C. F Chapman and C. A. Schmettau, both of Toledo, Ohio, for appellees.
Before WARRINGTON and KNAPPEN, Circuit Judges, and SESSIONS, District judge.
The Yaryan Naval Stores Company is an Ohio corporation having factories and places of business located at Brunswick in the state of Georgia and at Gulfport in the state of Mississippi. On May 24, 1913, in a suit brought by a creditor of the corporation, the United States District Court for the Southern District of Georgia appointed receivers of its property. The same receivers were appointed in Mississippi. They immediately qualified and took possession of all the property of the corporation in those states. The order appointing the receivers was in the usual form in such cases, commanding the officers, agents, and employes of the Yaryan Naval Stores Company to turn over and deliver to the receivers all of its property, authorizing the latter to continue the business and to operate the plants at Brunswick, Ga., and Gulfport, Miss., requiring all creditors to intervene in that suit and assert their claims, and enjoining--
'the defendant company and its officers, directors, agents and employes and all other persons claiming to act by, through, or under said company, and all creditors and persons whomsoever, from interfering or attempting to interfere in any manner whatsoever with the possession, use, operation, or control of any part of said property, or interfering in any way so as to prevent the discharge of the duties of said receivers or the operation of said property, * * * and from instituting or prosecuting any actions, suits or proceedings against the defendant, the Yaryan Naval Stores Company, or any action, suits, or proceedings affecting any property in which the Yaryan Naval Stores Company is interested, without the order and permission of this court.'
In accordance with the terms of this order, the receivers have continued the business of the company, and in so doing have incurred debts and have entered into various contracts which are in process of performance. No ancillary proceedings have been instituted in the state of Ohio, where a small part of the company's property is located.
On December 1, 1913, three unsecured creditors of the Naval Stores Company, who had not appeared in the suit in Georgia, nor obtained leave of that court so to do, filed a petition in the United States District Court for the Northern District of Ohio, Western Division, praying that the company be adjudged a bankrupt. On December 15, 1913, the board of directors of the company adopted a resolution and caused a written copy thereof to be delivered to one of the petitioning creditors, whereby the company, in writing and substantially in the language of the Bankruptcy Act, admitted its inability to pay its debts and its willingness to be adjudged a bankrupt on that ground. Thereupon the creditors' petition was amended by leave of court, so as to allege the above admission as an act of bankruptcy. The answer of the company 'admits each and every allegation contained in said petition and said amendments. ' Answers were filed by upwards of 20 opposing creditors and the receivers appointed by the court in Georgia, proofs were taken, a hearing had, and an order entered adjudging the Naval Stores Company a bankrupt upon the sole ground that it had committed an act of bankruptcy by its admission above set forth. This appeal from such order is prosecuted by the opposing creditors and the receivers.
The precise contention of the receivers and opposing creditors, urged in the court below and here, is thus stated by their counsel:
'The acts of the petitioning creditors in filing the original petition and the amendment thereto, and the several...
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