Matter of Lumpkin Sand and Gravel, Inc.

• Decision Date: 25 August 1989
• Docket Number: Bankruptcy No. 87-40005-COL,89-4034.,85-40160-COL,Adv. No. 89-4033
• Citation: 104 BR 529
• Parties: In the Matter of LUMPKIN SAND AND GRAVEL, INC., Debtor. KAL-O-MINE INDUSTRIES, INC., and Lumpkin Sand and Gravel, Inc., Plaintiffs, v. Wilson M. CAMP, II, Defendant. In the Matter of CAMP LIGHTWEIGHT, INC., Debtor. KAL-O-MINE INDUSTRIES, INC., and Lumpkin Sand and Gravel, Inc., Plaintiffs, v. Wilson M. CAMP, II, Defendant.
• Court: U.S. Bankruptcy Court — Middle District of Georgia

104 B.R. 529 (1989)

In the Matter of LUMPKIN SAND AND GRAVEL, INC., Debtor.

KAL-O-MINE INDUSTRIES, INC., and Lumpkin Sand and Gravel, Inc., Plaintiffs, v. Wilson M. CAMP, II, Defendant.

In the Matter of CAMP LIGHTWEIGHT, INC., Debtor.

KAL-O-MINE INDUSTRIES, INC., and Lumpkin Sand and Gravel, Inc., Plaintiffs, v. Wilson M. CAMP, II, Defendant.

Bankruptcy Nos. 87-40005-COL, 85-40160-COL, Adv. Nos. 89-4033, 89-4034.

United States Bankruptcy Court, M.D. Georgia, Columbus Division.

August 25, 1989.

Jerome L. Kaplan, Wesley J. Boyer, Macon, Ga., for Lumpkin Sand and Gravel, Inc. and Kal-O-Mine Industries, Inc.

James A. Elkins, Jr., Columbus, Ga., for Wilson M. Camp, II.

Stephen M. Bailey, Denver, Colo., for Ventures Plus.

Ernest Kirk, II, Columbus, Ga., for Trustee.

STATEMENT OF THE CASE

ROBERT F. HERSHNER, Jr., Chief Judge.

Camp Lightweight, Inc., Debtor ("Camp Lightweight"), filed a petition under Chapter 11 of the Bankruptcy Code on March 22, 1985. Camp Lightweight filed a disclosure statement on March 20, 1986. An addendum to the disclosure statement was filed and approved by the Court on April 23, 1986. A second addendum was filed on May 8, 1986 and approved on May 15, 1986. Camp Lightweight filed an amended plan of reorganization on June 23, 1986. A modification of the amended plan was filed on August 19, 1986. The Court entered an order confirming the plan on August 19, 1986.

Lumpkin Sand and Gravel, Inc., Debtor ("Lumpkin Sand"), filed a petition under Chapter 11 of the Bankruptcy Code on January 6, 1987. Lumpkin Sand filed its disclosure statement and plan of reorganization on March 2, 1988. The Court approved the disclosure statement on March 31, 1988. Mr. Wilson M. Camp, II, Defendant, filed an objection to confirmation of the plan on April 20, 1988. On September 9, 1988, the Court entered an order overruling Defendant's objection and ordered that Defendant be forever barred from claiming ownership of certain property which Defendant had conveyed to Kal-O-Mine Resources, Inc. Kal-O-Mine Industries, Inc. ("Kal-O-Mine"), the sole shareholder of Lumpkin Sand, filed a disclosure statement and plan of reorganization on September 20, 1988, which adopted Lumpkin Sand's disclosure statement and plan. The plan was orally modified at the confirmation hearing on September 26, 1988. The Court conditionally confirmed the plan on November 17, 1988. On January 13, 1989, the Court entered an order determining that Lumpkin Sand is the owner of a certain 579.66-acre tract of land in Muscogee County, Georgia, bordering on the Chattahoochee River (the "Lumpkin property").

On April 6, 1989, Kal-O-Mine and Lumpkin Sand, Plaintiffs, filed a "Complaint for Declaratory Judgment, for Damages, and for Preliminary and Preliminary Injunctions" ("Complaint") against Defendant. Kal-O-Mine and Lumpkin Sand filed an adversary proceeding in the Lumpkin Sand case and one in the Camp Lightweight case. The two adversary proceedings are exactly the same and seek the same relief from Defendant. The Court joined the two adversary proceedings for trial. Kal-O-Mine alleges that it owns all real and personal property and equipment leases previously owned by Camp Lightweight. Lumpkin Sand alleges that it owns the riverbed and minerals in and under the riverbed adjoining the Lumpkin property to the extent the riverbed and minerals may be privately owned. Lumpkin Sand claims it owns all the fixtures, equipment, and other personal property on the Lumpkin property.

Kal-O-Mine and Lumpkin Sand allege in their adversary proceedings that Defendant has interfered with their business and reorganization plans by telling third parties that Defendant owns the real estate and personal property. They ask the Court to declare that they own the real estate, riverbed, and personal property, to enjoin Defendant from asserting a claim of ownership to said property, to enjoin Defendant from interfering with Lumpkin Sand's and Camp Lightweight's plans of reorganization, and to award damages for Defendant's liable and slander concerning title to said real estate.

Kal-O-Mine and Lumpkin Sand filed an amendment to their complaint on April 24, 1989. The amendment asks the Court to award them damages for conversion of property for minerals and topsoil removed from the Lumpkin property. Defendant timely filed his answer on May 26, 1989.¹ A hearing was held on April 25, 1989. The Court entered an order on April 26, 1989 which preliminarily enjoined Defendant in accordance with oral instructions issued by the Court in open court at the conclusion of the hearing held on April 25, 1989.

Kal-O-Mine and Lumpkin Sand filed a Motion for Preliminary Injunction on May 26, 1989. They allege that following the issuance of the Court's order on April 26, 1989, someone under the direction of Defendant entered their Ft. Gaines property.²

A trial on both adversary proceedings was held on June 23, 1989. At the conclusion of the trial, the Court invited all parties to submit briefs on the matters in issue. This opinion only addresses the limited issues of ownership of the riverbed, ownership of the personal property on the Lumpkin property, and ownership of the Camp Lightweight property. The Court reserves its decision concerning Kal-O-Mine and Lumpkin Sand's demands for actual damages, punitive damages, and other remedies. The Court, having considered the arguments and briefs of counsel and the evidence presented at trial, now publishes its findings of fact and conclusions of law.

FINDINGS OF FACT

Mr. John William Cooper conveyed a tract of land in Muscogee County, Georgia, to Defendant³ by deed dated June 1, 1961 (the "Cooper Deed"). The deed described the land as containing 679.58-acres, more or less, lying in one body and composed of six contiguous tracts. Tracts one through five are near or bounded by the Chattahoochee River. Tract six is the riverbed of the Chattahoochee River, which bounds some of the other tracts described in the deed. The riverbed described in Tract six extends to the Georgia-Alabama State line. On January 5, 1986, Defendant entered into an agreement with Kal-O-Mine Resources, Inc.⁴ to convey the land described in the Cooper Deed to Kal-O-Mine in exchange for three million shares of Kal-O-Mine common lettered stock. Defendant conveyed Tracts one through five of this land to Kal-O-Mine by deed dated January 23, 1986 (the "Camp Deed"). The deed describes the land as containing 579.66 acres,⁵ more or less, lying in one body and composed of five contiguous tracts. The land, in part, is bounded by the Chattahoochee River on three sides. The Camp Deed neither included nor specifically excluded the riverbed from the conveyance.

Kal-O-Mine conveyed the Camp Deed property to Lumpkin Sand by deed dated December 29, 1986. Kal-O-Mine owns one hundred percent of the stock of Lumpkin Sand. Located on this land (the "Lumpkin property") are a dredge, several trucks, various pieces of equipment, and scrap iron. These items are not listed in the deed. No bill of sale or other document of title was executed covering these items.

Camp Lightweight's amended plan of reorganization was signed by Defendant as president of Camp Lightweight. The disclosure statement was also signed by Defendant.⁶ Kal-O-Mine executed an agreement on January 5, 1986⁷ to acquire one hundred percent ownership and control of Camp Lightweight.⁸ Under Camp Lightweight's amended plan of reorganization confirmed by the Court, Kal-O-Mine is to retain one hundred percent ownership following reorganization. The plan states that Kal-O-Mine has completed a registration statement for a $2.5 million preferential stock offering, the proceeds of which are committed to investment into and reorganization of Camp Lightweight. Title to the assets of Camp Lightweight is to be assigned and transferred to Kal-O-Mine on the distribution date. The plan also states that Kal-O-Mine has contracted with Defendant to continue his employment to manage the day-to-day, nonfinancial operation of Camp Lightweight under the ownership, direction, and complete supervision of Kal-O-Mine.

Kal-O-Mine offered Defendant an employment contract. Defendant made several changes in the contract and returned it to Kal-O-Mine. Defendant's changes included striking the provisions that he would not be responsible for financial management of Lumpkin Sand and that he could be discharged for disloyalty or inattention to duties.

CONCLUSIONS OF LAW

The two adversary proceedings before the Court concern the ownership of real and personal property in two separate but related bankruptcy cases. The Court first will address the property involved in the Lumpkin Sand bankruptcy case. This property is located in Muscogee County, Georgia. The Court then will address the property involved in the Camp Lightweight bankruptcy case. This property is located in Clay County, Georgia.

I. Ownership of the Riverbed Adjacent to the Lumpkin Property.

Lumpkin Sand and Defendant both claim ownership to the riverbed and the minerals in and under the riverbed (the "riverbed") adjoining the Lumpkin property.⁹ Defendant claims title under a deed from John William Cooper dated June 1, 1961 (the "Cooper Deed"). The riverbed is described in Tract six of the Cooper Deed. Defendant contends that he never conveyed the riverbed to Kal-O-Mine.

Kal-O-Mine claims to have held title to the riverbed under a deed from Defendant to Kal-O-Mine dated January 23, 1986 (the "Camp Deed"). Kal-O-Mine claims it conveyed title to the riverbed to Lumpkin Sand¹⁰ by deed dated December 29, 1986. Lumpkin Sand thus claims title to the riverbed.

Resolution of title to real property acquired by deed hinges on state law. Kal-O-Mine argues that, by construction of law, the Camp Deed conveyed the riverbed. Kal-O-Mine also argues that the parties intended that the riverbed be conveyed. Kal-O-Mine and Lumpkin Sand argue that title passed to Lumpkin Sand when Kal-O-Mine executed the deed on ...