Price v. Spokane Silver & Lead Co.

• Decision Date: 13 June 1938
• Docket Number: No. 10968.,10968.
• Citation: 97 F.2d 237
• Parties: PRICE et al. v. SPOKANE SILVER & LEAD CO.
• Court: U.S. Court of Appeals — Eighth Circuit

97 F.2d 237 (1938)

PRICE et al. v. SPOKANE SILVER & LEAD CO.^*

No. 10968.

Circuit Court of Appeals, Eighth Circuit.

June 13, 1938.

COPYRIGHT MATERIAL OMITTED

E. B. Adams, of Hot Springs, S. D. (W. P. Rooney and C. S. Eastman, both of Hot Springs, S. D., on the brief), for appellants.

Charles C. Goldman, of Cleveland, Ohio (Goldman & Wyman, of Cleveland, Ohio, and Gale B. Wyman, of Deadwood, S. D., on the brief), for appellee.

Before GARDNER, SANBORN, and THOMAS, Circuit Judges.

SANBORN, Circuit Judge.

This appeal from an order confirming a plan of reorganization of the Spokane Silver and Lead Company, a debtor corporation which filed a petition for reorganization under Section 77B of the Bankruptcy Act (48 Stat. 911, 912, 11 U.S.C. § 207, 11 U.S.C.A. § 207), is taken by objecting creditors.

Since confirmation of a plan of reorganization is a "proceeding in bankruptcy," the petition for the allowance of the appeal was properly made to this Court, under section 24b of the Bankruptcy Act, 11 U. S.C. § 47(b), 11 U.S.C.A. § 47(b). Meyer v. Kenmore Granville Hotel Co., 297 U.S. 160, 56 S.Ct. 405, 80 L.Ed. 557.

The debtor has moved to dismiss the appeal as having been taken out of time. The record discloses that the order appealed from was entered May 3, 1937; that the petition for allowance of the appeal was filed in this Court on June 2, 1937; that notice of a hearing upon the petition to be held June 14, 1937, was served upon an attorney of record of the debtor on June 8, 1937; and that, after the hearing held on June 14, this Court entered an order on June 29, 1937, allowing the appeal.

Section 24c of the Bankruptcy Act, 11 U.S.C. § 47(c), 11 U.S.C.A. § 47(c), provides: "All appeals under this section 24 shall be taken within thirty days after the judgment, or order, or other matter complained of, has been rendered or entered." The debtor argues that the failure of the appellants to notice the petition for hearing and to secure the allowance of the appeal by this Court within thirty days from the date of the challenged order requires a dismissal of the appeal. It is our opinion that an appeal is "taken" within the meaning of section 24c when a proper petition therefor is filed within thirty days from the date of the entry of the order. The failure of this Court to act upon such a petition within the thirty-day period does not require nor permit the dismissal of an appeal allowed after the expiration of the thirty-day period. This is nothing more than a common-sense interpretation of the applicable section and is in accord with the rulings in other Circuits. In re Hoffman, 7 Cir., 82 F.2d 58, 59; In re National Lock Co., 7 Cir., 82 F.2d 600, 605; In re Foster Construction Corporation, 2 Cir., 49 F.2d 213, 214. In the First Circuit it is regarded as permissible practice to set down for hearing the petition for leave to appeal and the merits of the case at the same time and to dispose of both in one decision. Downtown Inv. Ass'n v. Boston Metropolitan Bldgs., Inc., 1 Cir., 81 F.2d 314, 317.

The debtor corporation was organized under the laws of South Dakota. Its business was the development and operation of mining claims and mining property owned by it and located entirely within Custer County, South Dakota. On January 27, 1933, in a suit brought by Steve Ainslie and Mark J. Kelly against the debtor and others, in the Circuit Court of the Seventh Judicial Circuit in Custer County, South Dakota, Thomas W. Delicate was appointed receiver for the debtor, to take possession of all of its property. Thereafter such proceedings were had in that court that on January 31, 1933, a decree was entered directing the receiver to sell all of the property of the debtor and to pay, from moneys received by him, claims according to the following priorities:

(1) The costs of the receivership and taxes, which the court adjudged to be liens superior to all other claims and liens.

(2) The miner's lien claim of Harry S. Price and T. A. Ferneding for $56,163.58 and interest, which the court decreed to be a valid and subsisting lien upon all property and money of the debtor.

(3) The miner's lien of A. W. Margileth for $2200 with interest, which was decreed to be a valid and subsisting lien upon all such property.

(4) The miner's lien of W. D. Philips for $1500 and interest, which was decreed to be a valid and subsisting lien upon all such property.

(5) The lien of Lorain Street Savings and Trust Company, as trustee under a deed of trust securing an issue of $250,000 of 7%, ten-year gold bonds, which was decreed to be a valid and subsisting lien.

(6) The judgment of Mark J. Kelly for $8,627 and interest, which was decreed to be a valid lien.

(7) The judgment of Steve Ainslie for $11,905 and interest, which was decreed to be a valid lien.

(8) The judgment of the Mine and Smelter Supply Company for $605.56 and interest, which was decreed to be a valid lien.

(9) The judgment of George Williams and F. W. Sellers for $4,025.58 and interest, which was decreed to be a valid lien.

The State court further decreed that, after the payment of these liens, any moneys remaining in the hands of the receiver should be applied to the payment of the claims of Rapid City Lumber and Machinery Company, Shann & Welty Lumber Company, the Superior Creamery, C. X. Covertson, and the Black Hills Wholesale Grocery, which were decreed to be general claims; and that, if, after the payment of the liens and general claims as determined by the decree, there were any moneys left in the hands of the receiver, such moneys should be paid to the debtor.

The record shows that the Lorain Street Savings and Trust Company, trustee, was granted an exception to the decree, but that no appeal was ever taken.

After the entry of the decree, the receiver, as thereby directed, sold the property of the debtor to a new corporation known as Spokane Silver and Lead Company, Incorporated, upon its offer to pay "$4,253.62 in cash, together with its receipt for credit on first liens it is now the lawful owner of, the sum of $51,909.96;" to give preferred stock to bondholders equal to the face of their bonds plus 10%; to give to judgment creditors and lienholders preferred stock and two shares of common stock up to the full value of their respective claims; to give preferred stock in satisfaction of general claims; to give certain noteholders 122,696 shares of common stock, and to give the stockholders of the debtor 405,000 shares of such stock. This sale was confirmed by the State court on August 29, 1933, but the terms of the offer were not carried out, and, by a decree of the State court, filed December 6, 1935, the sale was vacated and declared void and the receiver directed to repossess himself of the property of the debtor and to resell it. The receiver sold the property on January 14, 1936, one day after the petition of the debtor for reorganization under § 77B was filed.

In this petition the debtor stated that its properties are "subject to a mortgage bond issue of $250,000, various miners' and judgment liens, notes and open accounts, all as more particularly shown on said Exhibit `A'."¹

As grounds for relief under § 77B the petitioner stated that "its assets consist of said mining claims and property which are only of value in case the same are further developed and operated"; that "it is unable to borrow or otherwise procure funds at this time sufficient to meet and discharge the said debts, or to protect said property, and that because thereof, reorganization of the debtor is clearly necessary"; and that it "believes that such reorganization can be carried out more economically and expeditiously, and for the benefit of all parties interested therein and having claims against said debtor Company, under and in pursuance to Section 77B, Chapter 8 of the Acts of Congress relating to Bankruptcy, 11 U.S.C.A. § 207 and that reorganization under said section would be for the best interests of the creditors and security holders of all classes of the debtor."

Thereafter, on August 14, 1936, the debtor filed a plan of reorganization in which it is stated:

"This company and its predecessors, namely The Spokane Lead and The Cuyahoga Mining Company (both having merged into The Spokane Silver and Lead Company), have been engaged for more than thirty years last past in the mining of lead, gold and silver on forty-nine mining claims covering 910 acres of land located in Section 26-27 and 35 T. 2S.-R. 6E., Custer County, South Dakota, and in Section 20, 21, 28, 29, 32 and 35 T. 2S.-R. 6E., Custer County, South Dakota, the former location comprising the so-called `Spokane Group' and the latter location comprising the so-called `Cuyahoga Group'. Substantial sums have been expended for a main shaft on the Spokane mine property which is now 340 feet deep. Long tunnels leading therefrom on the one hundred, two hundred and three hundred feet levels have been drifted. These tunnels extend in some instances over 500 feet long. The total footage being 1440 feet. These excavations together with a 54 foot raise from the 300 foot level, proved the existence of vast ore bodies easily accessible.

"There are considerable permanent buildings on the property, all in a good state of repair, consisting of: the superintendent's house, bunk house, flotation plant, forge, boiler room, power house, mess hall, one hundred ton four story mill, assay office, commissary, and general office, besides numerous other small buildings. There is also considerable equipment and tools used and employed in mining operations.

"It is further estimated that there is approximately 10,000,000 feet of standing timber on this property, which timber is necessary and required in mine operation. There is an estimated and blocked out 96,000 lead ore tonnage in the east drift of the main shaft of the Spokane Group, as set forth in plans prepared January 1, 1931 by W. J. Wilbur Harris, Engineer, and approved by Minor...