Watters v. Hamilton Gas Co.

• Citation: 29 F. Supp. 436
• Decision Date: 01 September 1939
• Docket Number: No. 2889.,2889.
• Court: U.S. District Court — Southern District of West Virginia
• Parties: WATTERS et al. v. HAMILTON GAS CO.

29 F. Supp. 436

WATTERS et al. v. HAMILTON GAS CO.

No. 2889.

District Court, S. D. West Virginia, at Charleston.

September 1, 1939.

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J. E. Campbell and Arthur S. Dayton, both of Charleston, W. Va., for trustees.

All the lawyers applying for allowances for themselves or committees, for respondents.

McCLINTIC, District Judge.

This proceeding is before the Court upon application for various allowances to Committees, attorneys and others with respect of the Hamilton Gas Company.

That corporation was chartered in 1927 under the laws of Delaware, and admitted to do business in the State of West Virginia, where it owned a large number of oil and gas properties. It also owned all the capital stock of certain subsidiaries.

The total record embraces many thousands of pages of pleadings, exhibits and testimony, not taking into consideration the numerous petitions and briefs; statements as to certain phases of it will be found in an opinion by this Court reported in 10 F.Supp. at page 323.

It is not necessary to make more than a general statement of the course of this litigation.

In January, 1932, there was filed in Delaware an application in equity for a receivership of the Company; followed immediately by the filing on January 18, 1932, of the ancillary equity cause in this Court of Clarence L. Harper and Arthur Peck, partners trading as Harper & Turner, against the Hamilton Gas Company. The bill was a typical receivership proceeding, alleging that the defendant corporation had outstanding $2,325,500 of First Mortgage 6 1/8 % Sinking Fund Gold Notes, and $756,000 of debenture bonds, and current obligations in excess of $300,000, and, while solvent, was unable to pay its debts.

On January 18, 1932, the Delaware Court appointed Alex F. Crichton and William A. Larner, Receivers. On the following day, a decree was entered by this Court taking ancillary jurisdiction of the assets and property of the defendant within its jurisdiction, A. F. McCue, B. A. Wise, and William J. Maier, being appointed, Mr. Maier later resigned as Receiver, the other two named serving throughout the litigation.

Ancillary proceedings were also commenced in Kentucky.

All of the physical properties of the Company, except certain office furniture and tangible property of little value, are located in West Virginia and Kentucky, much the greater part being in the former state.

Under date of July 29, 1932, Clarence L. Harper, Samuel McCreary, John H. Smaltz and Louis J. Groch filed a petition, setting out an agreement entered into as of February 1, 1932, whereby they agreed to act as a protective committee to represent owners of the First Mortgage bonds, the petition likewise praying for the issuance of certain Receiver's certificates and the transfer of certain moneys to Kentucky.

On August 18, 1932, the Chase National Bank and John A. Burns, as Trustees, filed their petitions asking leave to file foreclosure bill under the First Mortgage, and, permission being given, on the same day their bill of foreclosure was filed. The pre-existing receivership was extended, and the receivership suit consolidated with the foreclosure suit. On September 13, 1932, a bill of complaint was also filed against the Larner Gas Company and others, the named corporation being a wholly owned subsidiary of the Hamilton Gas Company, seeking foreclosure of a mortgage in the amount of $300,000. This cause remained quiescent until after the reorganization of the Hamilton Gas Company, the notes secured by said mortgage having been acquired by the Hamilton receivers during the course of the litigation. Following the institution of these proceedings, the record discloses various parties in interest made unsuccessful efforts to agree upon a voluntary plan of financing the Hamilton Gas Company.

Under date of November 13, 1933, William A. Larner and A. F. Crichton, as Delaware Receivers, filed a petition in this Court exhibiting a proceeding in Delaware, whereby, by decree entered in August, 1932, William A. Larner, as Delaware Receiver, had been allowed the sum of $8,474.91 expenses and $9,000 as allowance as Receiver; $526.59 being allowed as expenses to his attorneys. Subsequently, this Court entered an order allowing Mr. Larner $5,000 upon his petition, and such sum was paid.

On December 16, 1933, the consolidated equity causes were referred to Beverley Broun, Special Master, and, after the incidence of the bankruptcy proceeding, hereinafter noted, the reference was extended to those proceedings. Proof was taken in February, 1934, showing the default of the First Mortgage and there were a large number of bonds and indebtedness proved before the Special Master, and also certain proof with respect of contracts of the defendant corporation.

On June 7, 1934, E. McLain Watters, Arthur Peck and Pierce Archer, Jr., as Debenture Holders Protective Committee, acting under an agreement of deposit with respect of such securities, dated January 28, 1932, and certain general creditors filed a petition for reorganization under Section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207, the petition immediately following approval by the President of this statute. On the 8th day of June, 1932, similar proceedings had been instituted in New York, and thereafter the defendant company set up these proceedings as a bar to those in West Virginia. The issue presented was as to location of the principal place of business during the six months period prior to the filing of these petitions.

On June 21, 1934, this Court entered its order approving the petition filed in this jurisdiction, similar order having been entered on June 9, 1934, by the United States District Court for the Southern District of New York, approving the petition filed in that Court. Subsequently, after appeal to the Circuit Court of Appeals, 4 Cir., 75 F.2d 176, and extended litigation, the venue of the proceedings was determined to be in this District. See prior opinion in this case reported in, D.C., 10 F.Supp. 323, 324.

The jurisdictional litigation, however, occupied a considerable period of time, the Circuit Court of Appeals for the Second Circuit, In re Hamilton Gas. Co., 79 F.2d 97, reversing the District Court for the Southern District of New York, and the Circuit Court of Appeals for the Fourth Circuit finally sustaining the position of this Court, 79 F.2d 438. In both of these decisions, certiorari to the Supreme Court of the United States was sought and refused, Hamilton Gas. Co. v. Harper, 296 U.S. 647, 56 S.Ct. 307, 80 L.Ed. 460; Hamilton Gas Co. v. Watters, 296 U.S. 647, 56 S.Ct. 309, 80 L.Ed. 460.

On June 21, 1934, decree was entered holding that petition for reorganization had been filed in good faith setting forth a plan of reorganization on behalf of the petitioning creditors in the bankrupt cause. It is unnecessary to go into the details of this plan, as it was subject to subsequent modifications.

On August 16, 1934, Clarence L. Harper and his Committee associates and E. McLain Watters and his Committee associates filed petitions for the approval of the deposit agreements, under which they, respectively, acted as committee for the First Mortgage and the Debenture Holders, and on September 10, 1934, a decree was entered approving these petitions. On December 19, 1934, decree was entered, noting the appearance of counsel on behalf of Harry M. Blair, Robert Owston and Joseph Walsh, as a Stockholders Committee. On January 5, 1935, there was filed the petition of Stewart Jamieson, John K. Blair, and Ambrose C. Hindman, recited as a Committee for Protecting Debenture Holders and other unsecured creditors, counsel being recited as Tompkins, Boal & Tompkins, Samuel T. Spears and Thomas J. Barrett.

In February, 1935, extensive evidence was taken here as to the jurisdictional question, and meanwhile the litigation in the New York jurisdiction was being vigorously prosecuted. Subsequently, appearances were made of petitions filed by Ronald M. Craigmyle and his Committee associates, as Committee for the First Mortgage Bondholders (that Committee acting, until the final agreement, in opposition to the so-called Harper Committee), and W. A. Nash, Elmer E. Powell, and S. P. Woodward, members of the so-called Independent Bondholders Committee.

Under date of October 31, 1935, the so-called Harper Committee and the Watters Committee, respectively, filed acceptances of the plan of June 21, 1934. The acceptance of the plan by the latter Committee lists total claims of general creditors represented of $2,194.50, and of depositing debentures from whom no dissent has been received of $518,500. It further reflects $6,000 of nondepositing debenture-holders from whom acceptances and approvals had been received, and depositing debenture-holders who failed to dissent within fifteen days, but who later forwarded dissents, of $65,000. Acceptances filed by the Harper Committee reflected deposited bonds as to which no dissents had been received of $1,292,000, and deposited bonds as to which dissents had been received of $251,000, and deposited bonds as to which dissents were later received in the amount of $180,000.

On November 23, 1935, there was filed the petition of the so-called Craigmyle Committee, reciting that the plan then before the Court was unsatisfactory and suggesting an alternative plan. On December 3, 1935, an order was entered by Judge William E. Baker, sitting specially, lodging the petition of the Craigmyle Committee for further consideration, but that Committee was enjoined, pending hearing, from soliciting acceptances of its plan. During this period there was extensive circularization by the respective committees for and against the pending plan.

On December 12, 1935, the mandate of the Circuit Court of Appeals of the Fourth Circuit finally upheld the jurisdiction of the ...