Matter of Twist Cap, Inc.

• Decision Date: 06 November 1979
• Docket Number: Bankruptcy No. 79-1170-T.
• Citation: 1 BR 284
• Parties: In the Matter of TWIST CAP, INC., Debtor. TWIST CAP, INC., Plaintiff, v. SOUTHEAST BANK OF TAMPA, Aluminum Company of America, and Central Can Company, Defendant.
• Court: U.S. Bankruptcy Court — Middle District of Florida

1 B.R. 284 (1979)

In the Matter of TWIST CAP, INC., Debtor TWIST CAP, INC., Plaintiff, v. SOUTHEAST BANK OF TAMPA, Aluminum Company of America, and Central Can Company, Defendant.

Bankruptcy No. 79-1170-T.

United States Bankruptcy Court, D. Florida, Tampa Division.

November 6, 1979.

Stanley M. Lane, Tampa, Fla., for plaintiff.

Francis H. Cobb, Tampa, Fla., for defendant.

ORDER DENYING MOTION TO DISMISS

ALEXANDER L. PASKAY, Bankruptcy Judge.

THIS IS an arrangement proceeding and the matters under consideration are the motions to dismiss the complaint filed by the defendants, Aluminum Company of America (Alcoa) and Central Can Company (Central). In order to put this controversy into proper focus, a recital of the relevant facts and procedural posture of this case is in order.

It is without dispute that on March 28, 1978, Twist Cap, the above-named debtor, entered into a security agreement with the Southeast Bank (the Bank) which secured monies paid by the Bank on behalf of the debtor. It is also without dispute that on December 5, 1977, and June 14, 1978, the Bank issued two letters of credit for the account of the debtor, each in the amount of $30,000 which were payable to the defendant Alcoa. Additionally, on March 19, 1979, the Bank issued a letter of credit in the amount of $25,000 for the account of the Debtor, payable to the defendant Central. On August 22, 1979, the debtor filed a petition for relief under Chapter XI and on August 28, 1979, the debtor filed a complaint and sought an order restraining the Bank from honoring the letters of credit. The complaint under consideration was originally filed only against the Bank, but Alcoa and Central were later added as party defendants.

On August 29, 1979, the debtor obtained a Temporary Restraining Order prohibiting the Bank from honoring the letters of credit payable to Alcoa and Central until a full and final hearing on the matter could be had. On September 6, 1979, Alcoa and Central each filed motions to dismiss the complaint both of which challenged this Court's subject matter jurisdiction over the dispute and also the in personam jurisdiction over the defendants in that no service of process was made on either defendant. At the hearing on the motions to dismiss, however, the defendants waived any defects in service of process leaving only the challenge as to subject matter jurisdiction for consideration.

It is the position of the Bank that it will honor the letters of credit upon presentment, unless enjoined by order of this court, and that, by virtue of the security agreement entered into by the Bank and the debtor on March 28, 1978, the security interest created thereby would extend to and will cover the total obligation owed by the debtor to the Bank including the monies paid by the Bank on the letters of credit to Alcoa and Central.

It is the contention of the defendants that inasmuch as this Court's jurisdiction is limited to the "properties" of the debtor under Sec. 311 of the Bankruptcy Act, that this Court is without jurisdiction of this controversy because the letters of credit are not "properties" of the debtor. In support of this contention, the defendants cite In re Marine Distribution, Inc. v. Smith, 522 F.2d 791 (9th Cir. 197...