Union Elec. Co. v. Hubbard

• Decision Date: 17 May 1917
• Docket Number: 1494.
• Citation: 242 F. 248
• Parties: UNION ELECTRIC CO. et al. v. HUBBARD et al. In re MOUND CITY COAL CO.
• Court: U.S. Court of Appeals — Fourth Circuit

242 F. 248

UNION ELECTRIC CO. et al. v. HUBBARD et al.

In re MOUND CITY COAL CO.

No. 1494.

United States Court of Appeals, Fourth Circuit.

May 17, 1917

Joseph R. Curl, of Wheeling, W.Va. (William Erskine and John C Palmer, Jr., both of Wheeling, W. Va., on the brief), for petitioners.

George A. Blackford, of Wheeling, W. Va., for certain respondents.

Before KNAPP and WOODS, Circuit Judges, and SMITH, District Judge.

SMITH District Judge.

The Mound Coal Company, J. C. McKinley, and Nelson C. Hubbard filed a bill of complaint in the circuit court for Marshall county, in the state of West Virginia, against the Mound City Coal Company and others, under which, on the 12th of October 1915, the Dollar Savings & Trust Company, one of the defendants to the bill, was appointed by the state court receiver of all the property of the Mound City Coal Company. On the 10th of February, 1916, a petition for involuntary bankruptcy was filed against the Mound City Coal Company in the District Court of the United States for the Northern District of West Virginia, and on the 2d of March, 1916, that concern was adjudicated bankrupt, and thereafter the Security Trust Company, a West Virginia corporation, was appointed trustee in bankruptcy. Thereupon the Dollar Savings & Trust Company, the receiver in the proceedings in the state court voluntarily turned over all the real and personal property of the bankrupt to the trustee in bankruptcy and the trustee took possession of the same. All the creditors of the bankrupt proved their claims before the referee in bankruptcy. The appraisers appointed by the referee appraised the assets of the bankrupt estate at about $204,000. The claims secured by lien were found to amount to about $140,000, and the unsecured claims to about $75,000.

Thereafter the receiver in the state court, the Dollar Savings & Trust Company, and the complainants in the state court proceedings viz., Mound Coal Company, Nelson C. Hubbard, and J. C. McKinley, filed a petition before the referee in bankruptcy, praying that all the property of the bankrupt be returned by the bankrupt court to the receiver in the state court, to be dealt with by the state court, viz., the circuit court of Marshall county. This petition was refused by the referee in bankruptcy, and the petitioners thereupon filed a petition praying the District Court to review and reverse the order of the referee.

On the 11th of December, 1916, the District Judge filed his order reversing the order of the referee, and remanded the proceeding to the referee, with instructions to enter an order directing the trustee in bankruptcy to surrender up and deliver to the receiver in the state court all the property of the bankrupt, and further directing the trustee to seek by petition to intervene in the state court and ask that court to modify its decree, so as to provide that, before any sale of the property or any distribution of the proceeds of such sale be made, the validity of the liens thereon and the order of priority, may be determined, and to provide that the trustee in bankruptcy be afforded full opportunity to contest the validity or extent of any and all such liens, and to direct that any surplus funds arising from the sale or operation of the property, after payment of all proper costs, charges, and expenses of the suit and the receivership, should be paid over to the trustee in bankruptcy. The decree of the District Judge further provided that the District Court of the United States reserved and retained the right to take exclusive jurisdiction of the bankrupt estate and administer it, and to stay the...