Larcon Company v. Wallingsford

• Decision Date: 13 December 1955
• Docket Number: Civ. A. No. 670.
• Citation: 136 F. Supp. 602
• Parties: LARCON COMPANY v. Robert C. WALLINGSFORD, Pan-Am Southern Corp.
• Court: U.S. District Court — Western District of Arkansas

136 F. Supp. 602

LARCON COMPANY v. Robert C. WALLINGSFORD, Pan-Am Southern Corp.

Civ. A. No. 670.

United States District Court W. D. Arkansas, El Dorado Division.

December 13, 1955.

Keith & Clegg, Magnolia, Ark., for plaintiff.

Walter L. Brown, Robert C. Compton, El Dorado, Ark., for defendant.

Mahony & Yocum, El Dorado, Ark., for garnishee.

JOHN E. MILLER, District Judge.

The plaintiff, Larcon Company, is a corporation organized under the laws of the State of Delaware and authorized to do business in the State of Arkansas. The defendant, Wallingsford, is a citizen of Arkansas and a resident of the City of El Dorado in said State. The amount in controversy exceeds the sum of $3,000, exclusive of interest and costs.

The plaintiff seeks judgment against the defendant Wallingsford for the sum of $36,165.48, with interest at 4 percent per annum from May 1, 1954, until paid, the said sum being the deficiency adjudged to be due on the notes herein sued upon after application of the value of the security.

In his answer to the complaint, the defendant admits that the notes were executed on August 10, 1950, by Roberts Petroleum, Inc., and himself, and delivered to the payee, Anatel Corporation, but alleges that the notes were paid by the execution and delivery of two other notes dates December 8, 1950, and that it was the purpose and intention of the parties that the notes sued on herein would be destroyed or surrendered to Roberts Petroleum, Inc.

It is also alleged in the answer:

"The defendant would further state that at the time of the execution and delivery of the notes on December 8, 1950, to Walter Bollenbacher and Louis L. Kelton, there was also an assignment made to them of certain oil, gas, and mineral interests which was accepted as full and complete payment of the notes of December 8, 1950, or with the full understanding that production from the assignments of the mineral interests was to be used in the retirement of the two said notes and in no wise would this defendant, Robert C. Wallingsford, be held personally responsible for the payment thereof.

"Defendant states further that the notes sued on herein should have been destroyed or returned to the defendant or Roberts Petroleum, Inc., upon the execution of the two notes of December 8, 1950, or the assignment of the oil interests."

The plaintiff filed a reply to the answer on August 29, 1955, in which it denied the allegations of the answer and stated:

"Plaintiff states that the Defendant, Robert C. Wallingsford, was a party to that certain proceeding in bankruptcy styled `In the Matter of Roberts Petroleum Inc., Bankrupt', being Civil No. 535 of this Court; that Walter Bollenbacher and Louis L. Kelton were parties thereto and that as alleged in the Complaint, the notes sued on herein were allowed in said proceeding as valid claims against the bankrupt, of which the Defendant was at all times the Vice President and principal executive officer; that the payment of said notes was an issue in said proceeding to which the Defendant was a participating party represented by counsel and a principal witness; that by reason of said proceeding and the Order of the Referee in Bankruptcy of this Court, dated January 26, 1954, the question of payment is res judicata and plaintiff specifically pleads res judicata as a bar to the defense alleged.

"That the Defendant is now estopped to raise the issue of payment of said notes and plaintiff specifically pleads estoppel as a bar to the defense of payment."

On September 29 the plaintiff served and filed its motion for summary judgment and judgment on the pleadings. On November 23, the defendant, Robert C. Wallingsford, filed his response to the motion in which he alleged that he has a good and meritorious defense to the claim of plaintiff and should be allowed to defend the action on its merits.

The facts are not in dispute, and the question before the Court is whether the plaintiff is entitled to a judgment as a matter of law. The burden is on the moving party to show that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law. See, Marion County Co-operative Association v. Carnation Co., D.C.W.D.Ark., 114 F.Supp. 58, and cases therein cited.

The attorneys for the respective parties have filed excellent briefs in support of their contentions, and the briefs have been considered along with the pleadings, the motion, response thereto, all exhibits, and the deposition of defendant, from all of which it appears that:

Roberts Petroleum, Inc., was incorporated under the laws of Arkansas in October 1948. Robert L. Schutter was president. The defendant at all times since the incorporation was vice president and general manager and principal executive officer. Edith Wallingsford, the wife of defendant, was at all times secretary of the corporation. The defendant and his wife owned 50 percent of the stock of the corporation, and defendant was in active charge of its affairs. Apparently the only other stockholder was Elizabeth Schutter, wife of Robert L. Schutter.

On August 10, 1950, the corporation and the defendant, Robert C. Wallingsford, executed and delivered two promissory notes, payable to the order of Anatel Corporation (a California corporation), each for the sum of $20,000. The notes are identical, and are as follows:

"$20,000.00 El Dorado, Arkansas "August 10, 1950. "Ninety days after date for value received, I, we, or either of us promise to pay to the order of Anatel Corporation (A California Corporation) Twenty Thousand and — no/100 — Dollars with interest at 4% per cent. per annum from date until paid. The makers and endorsers of this note hereby severally waive presentment for payment, demand notice of non-payment, protest and consent that the time of payment may be extended without notice thereof. "Payable at 945 No. La Cienega Blvd., Los Angeles, California. "Due _______ Address _______ Roberts Pet. Inc "No. _______ Address _______ "by /s/ Robt. C. Wallingsford, V. P "Address _______" /s/ Robt. C. Wallingsford

The payee of the notes was dissolved and one of the notes was assigned by the payee to Walter Bollenbacher. The other was assigned to Louis L. Kelton, he and Bollenbacher being the only stockholders of the payee corporation.

On December 8, 1950, Roberts Petroleum, Inc., assigned to the said Bollenbacher and Kelton an undivided one-fourth interest in and to a certain oil and gas lease from J. R. Winn et al., lessors, to Robert C. Wallingsford, lessee, said assignment being placed of record on the same day in Record Book 583 at page 95, of the Miscellaneous Mineral records of Union County, Arkansas.

On the same day, the defendant, Robert C. Wallingsford, and wife, Edith Wallingsford, assigned to the said Bollenbacher and Kelton 7/32nds of all of the oil, produced, saved, and marketed from a 50-acre tract of land in Section 14, Township 18 South, Range 13 West, in Union County, Arkansas, subject to certain other assignments previously made. This assignment was likewise recorded on the date of its execution, and appears of record in Book 583 at page 97 of the Miscellaneous Mineral records of Union County, Arkansas.

On May 16, 1952, the corporation filed a debtor's petition for arrangement under Chapter 11 of the Bankruptcy Act as amended, 11 U.S.C.A. § 701 et seq. On July 31, 1952, the corporation was adjudicated a bankrupt.

On October 16, 1952, the said Bollenbacher and Kelton filed proof of their individual claims as secured claims for the balance due on the notes in the sum of $19,751.47 each.

On October 27, 1952, the defendant, Robert C. Wallingsford, filed a claim as an unsecured creditor of the bankrupt corporation in the amount of $79,515.59.

In December 1952 the Harris Trust and Savings Bank and Franklin O. Mann, as trustee, filed their petition for an order marshalling liens and interest in certain property in the custody of the court and for other relief. In paragraph 19 of the petition it was alleged that the said Bollenbacher and Kelton, along with other persons, may have or claim to have some right, title, interest, or lien in and to certain leasehold estates, but that such rights, if any, were subject and inferior to the right, title, interest, or lien of the petitioners.

In subparagraph (E) of paragraph 20 it was alleged that the claims of Bollenbacher and Kelton upon the promissory notes for the total sum of $39,502.94 represented funds paid by Anatel Corporation to the bankrupt under and pursuant to a contract dated August 28, 1950, between Robert C. Wallingsford and Roberts Petroleum, Inc., as seller, and the said Bollenbacher and Kelton as buyers for the purpose of paying or reimbursing the bankrupt for the cost of drilling certain oil wells, and for the purpose of paying the consideration for an assignment to the said Bollenbacher and Kelton of an interest in said leasehold estate rather than a loan made by the Anatel Corporation to the bankrupt.

In paragraph 26 of the petition the last known mailing address of the persons who have, or may claim to have, some right, title, interest or lien in and to the leasehold estates, the personal property located thereon, and the rents, issues, and profits were set forth. Among the persons named and whose addresses were given were Bollenbacher and Kelton and the defendant, Robert C. Wallingsford.

The prayer of the petition as set forth in paragraph (A) thereof was that the court adjudicate and determine the right, title, interest, or lien of the petitioners and each of the persons, firms, and corporations named in paragraph 26 in and to the leasehold estate, the personal property located thereon, and the rents, issues, and profits thereof, and the relative priority of the right, title, interest, or lien of each of them over the others. In paragraph (J) the petitioners prayed, "that an order be entered herein directing each of the persons, firms, and corporations named in...