McCullough v. Satterthwait

• Decision Date: 19 January 1926
• Docket Number: No. 6521.,6521.
• Citation: 11 F.2d 111
• Parties: McCULLOUGH v. SATTERTHWAIT et al.
• Court: U.S. Court of Appeals — Eighth Circuit

11 F.2d 111 (1926)

McCULLOUGH v. SATTERTHWAIT et al.

No. 6521.

Circuit Court of Appeals, Eighth Circuit.

January 19, 1926.

B. B. Blakeney and Hubert Ambrister, both of Oklahoma City, Okl., for appellant.

Hunter L. Johnson, of Tulsa, Okl. (J. H. Maxey, of Tulsa, Okl., on the brief), for appellees.

Before STONE, KENYON, and BOOTH, Circuit Judges.

BOOTH, Circuit Judge.

This is an appeal from a disallowance of a claim in a receivership suit. The appellees were appointed temporary receivers of the Gilliland Oil Company on July 6, 1921, by the United States District Court for the District of Delaware, in a suit brought by a creditor and a stockholder against the company, a corporation of Delaware, for wrongful transfer of its property and diversion and dissipation of its assets. The appointment was made permanent on July 12th. An ancillary suit was commenced in the United States District Court for the Eastern District of Oklahoma, and on July 27th the same receivers were appointed by that court.

The appellant, asserting that she was a creditor of the Gilliland Company, filed a claim in the District Court of Delaware. Exceptions were filed thereto by the receivers. Upon petition by the receivers, the District Court of Delaware by its order directed that the claim should be litigated in the District Court for the Eastern District of Oklahoma on account of convenience of parties and witnesses; and the District Court for the last-named district by its order referred the matter to W. E. Utterback as special master.

The order appointing the special master stated that he was appointed "for the purpose of hearing and taking proof of said claim and the said exceptions thereto and making such findings and determinations both of law and fact with respect thereto as may to him seem proper, and reporting his findings and determinations to this court, * * * and after the filing of said report by said master, the claimant or exceptants may file exceptions to said master's report and findings on said claim or any part thereof to be disposed of by the court in due course. The evidence taken on said claim shall be reduced to writing and returned to this court by said master as a part of his report."

The proof of debt consisted of an affidavit by appellant, evidently made on a printed form. The affidavit stated that the amount of the claim was $42,000 with interest; that the debt was incurred as part of the consideration for the assignment of an interest owned by her in a lease of certain lands in Louisiana. Attached to the affidavit was the assignment of the lease by her to the company, the consideration being therein stated as $1 and other good and valuable considerations. The affidavit also stated: "This debt is also evidenced by letter from the Gilliland Oil Co., which is hereto attached, marked `Exhibit B' and made a part hereof." Upon the trial before the special master, both sides admitted that no such letter as Exhibit B was written. It may therefore be disregarded. The exceptions by the receivers to the claim consisted, so far as here material, of a denial of any indebtedness of the company to appellant; an admission of the assignment of the lease as evidenced by Exhibit A; and an averment that the total consideration agreed to be paid by the company to appellant had been paid. With the issues thus made up, evidence was offered at the hearing before the special master by the claimant and by the receivers.

The evidence establishes without dispute that the agreement for the purchase of the leasehold interest owned by appellant was an oral one made by Grant McCullough, husband of appellant, acting for her, and by J. W. Gilliland, president of the Gilliland Company, acting for it. It is further established by the evidence that the amount of the consideration agreed upon was $450,000, to be paid in part as follows: $100,000 in cash; $250,000 as a credit on the books of the company, to bear interest at 6 per cent. There is no question that this part of the consideration was paid. The dispute between the parties centers around the remaining $100,000. Appellant contends that 2,500 shares of the company's stock was put up with her husband to be held by him for six months as security for the $100,000, and that then the stock was to be taken up by the company and the $100,000 paid by it. Appellees contend that the 2,500 shares of stock were transferred by the company to appellant in payment of the $100,000; and that any agreement to take up the stock later, made by J. W. Gilliland and the husband of appellant, was merely one that J. W. Gilliland personally would take it up and pay $100,000; that the company did not know of any such agreement and had no interest in it.

The special master found:

"That claimant transferred the lease, as alleged, or her interest therein, to the Gilliland Oil Company on February 12, 1920; the Gilliland Oil Company on said date agreed to pay to claimant for said lease the sum of $450,000; and that on the following day, to wit, February 13, 1920, confirmed the oral purchase by a letter, in which the company advised the claimant that the price they were to pay her for the property was as follows:

"`Cash, $100,000.00. (This amount was paid to you under date of February 9, 1920.)

"`Amount placed to your credit on the books of the Gilliland Oil Company, same to bear interest at 6 per cent. from February 12, 1920, $250,000.00.

"`2,500 shares of Gilliland Oil Company common stock.'

"That thereafter, on the 24th day of April, 1920, at a special meeting of the board of directors of the Gilliland Oil Company, this purchase from claimant of this property at the above price was submitted to the board of directors and by them approved; that the officers of said company carried out the terms of said purchase by paying to claimant on April 26, 1920, two checks, each for $100,000.00; and on August 15, 1920, by paying to claimant one check for $53,908.33, and by delivering to claimant 2,500 shares of the common stock of the Gilliland Oil Company, the exact date of the delivery of this stock to the claimant not being shown; that said stock was regularly issued and the certificates delivered to the agent of the claimant; and that these payments, together with the $100,000 paid February 9, 1920, constituted and was full payment of the purchase price as agreed upon by the Gilliland Oil Company, and paid in full the claim of Mrs. Clara E. McCullough.

"I further find the facts to be that later John W. Gilliland bought the stock from Mrs. McCullough, but that that transaction had nothing to do with the purchase of the oil and gas lease, and the payment for same, but was a separate and distinct transaction.

"It is therefore recommended that this claim be not allowed, but denied in full."

Exceptions were taken to the report and findings of the special master by appellant, on the broad ground that they were not supported by the evidence. The court overruled the exceptions and confirmed the report, disallowing the claim. Appeal has brought the case here.

Attention is called by appellees to the failure of appellant to observe rule 24 of this court, requiring specifications of error in appellant's brief. The omission is disapproved, but inasmuch as all of the assignments of error raise in one form or another the single question of the sufficiency of the evidence to sustain the findings of the special master and the court below, we have concluded to consider the merits of the appeal and to overlook the nonobservance of the rule.

The vital question in the case is: Did appellant receive the 2,500 shares of the company's stock as part payment for the lease, or simply as collateral to secure $100,000 of the consideration with a promise that it would be taken up by the company within six months. Another question may also be involved: If the evidence shows that the stock was taken as collateral...