Fish v. East

(four cases). EAST FISH et al. al. et CO. v. COHEN TIGER PLACERS RIVER CO. EAST. BLUE 2005, 2007,

Nos. Appeals, Tenth Circuit.

Circuit Court 29, 1940.

June

Rehearing Sept. 4, Denied

i8i participated organization and was a director throughout the active busi- ness life of the He re- fused to stand for April re-election in began purchasing against claims the said November, 1936, using company’s attorneys attorneys purpose. He director of the Mines Company during period in which judgments two of the on which now he bases his own claims Downing, Downing, Warwick Richard were taken bankrupt, and the Denver, Cranston, and Frederick P. all of case, labor claims in represented the Scott Colo., Boston, Mass., Hill, Donald M. pur- the two sheriff’s certificates of Grant, Denver, (Don- W. W. Colo. chase, during were incurred his director- Hill, Jr., Boston, Mass., ald M. on the ship. paid No taxes were brief), appellants, Company’s real after nor Hudson, W. and Tilos. Shireman K. John during all the time Fish awas director Denver, (Norma both of Colo. L. Com- bankrupt, although money some Denver, stock, Colo., brief), been available which could have been so appellees. applied. purchased Fish the Summit Coun- ty tax sale certificates on the Mines Com- PHILLIPS, BRATTON, Before and pany’s November, property outstanding in WILLIAMS, Judges. Circuit part using bankrupt’s money WILLIAMS, Judge. Circuit purchase. in such separate appeals, Six as above numbered judgment Another entered on foreclos- styled, and are hereinafter considered and ure of mechanic’s liens assigned was determined. is still Development held Western filing petitions At date Corporation, and Realization which is the Downing vice-president Richard personal Downings’ company. holding Royal Tiger Company, director of Mines Traylor, president A. of the said president Tiger and also Placers John Company, August, 1937, Mines until also Company. Downing Warwick and Richard president Company, of the Placers Downing attorneys have been for the Mines companies. force in dominant both They represent- since 1928. have potentially manager He also of both November, They organ- ed Fish since 1936. companies. during At all times his- Company, repre- ized the Placers and have tory prox- he had sufficient organization sented it since its 1932. personnel to name the ies its board of Downings, Traylor, president A. John directors, and this condition existed with bankrupt, an engineer connected with the Placers until 1935. the Securities Commission of Illinois draft- (October ed the contract 1932) between Usher, II, Samuel was a director of and the Miñes and the Placers Com- charge Boston office of bank- pany. Downings Tray- A. John rupt for years, being sixteen its' assistant organized lor Blue River secretary, secretary and also assistant Fish Usher, II, and formulated Company, Placers as well as director .the and drafted the contract between the Company. attempted of Blue River He Placers and Blue River Com- procure sheriff’s deed to Fish on March August 1937. After said 1, Gaspar 1938. Bacon was director of a voluntary (bankruptcy) petition was filed the Placers and is now a director (February 1938), prior to order Company. of the Blue River Hil- Horace adjudication, Usher, II, at- vice-president dreth was and director of tempted procure the issuance of sher- now director of deed, iff’s without succeeding, on the Blue Whatley whereby certificates Company’s property would be conveyed The directors of the Blue River Com- purchased Fish. Fish the Scott pany, shortly after organization, What- ley Hildreth, Hill, certificates week after adjudica- Fish, Donald M. Bacon and tion. Usher. 1S2 void, additional ob and creditors found The court that vendor, person organizing or the mak creditors making lease and ject of subsequent pur grant ing assignment, receive the Company to presump faith, good hinder and and this “to chasers or demise as lessee .in 1523; (G.S., Company, tion shall be conclusive. delay § creditors” of 14; ’61, G.L., 1264; p. R.S., L. p. found in fact of such § § direct evidence 2668; C.L., 5113.)” 244,, 15; ’08, meeting of the board R.S. minutes § § § (Italics Colo.Stat.Ann., bankrupt held Novem ch. of directors § supplied.) at ber resolution to, stock adopted that the effect ’creditors,’ in the last as used “The term issued to Ed should be section, include shall be construed Fish, Cunningham, Erland F.

ward persons shall ven who be creditors Traylor, for the Mines as trustees A. assignor, whilst suck time dor president and the his pos goods and chattels shall remain stating reasons one of the G.L., 1524; (G.S., session control. § § arrangement was de was that for this ’61, R.S., 15; 245, §; 1265; p. p. L. § of the name the stock “out sired to have 2669; C.L., 5114.)” ’08, R.S. § § at so it could of Mines sup Colo.Stat.Ann., (Italics ch. § Leather Shoe & re Holbrook tached.” Co., plied.) Pi Looschen D.C., 165 F. In re 93; Shapiro Co., D.C., 261 F. ano Case Traylor and the- The fact 348, 53 S.Ct. Wilgus, 287 U.S. Company may directors of the 355, 85 A.L.R. 128. L.Ed. profits, honestly large believed that have does, operations by placer be made could Company was At time the change illegality of the contract formed, property to conveyance it— no they attempted to divert assets of de- of sale —was deeds nor bills neither corporation livered, the two between and contract away from its Not is a creditors. May until companies was recorded not conveyance an illegal if made with intent possession in 21, change 1933. Neither grantor, the creditors to-defraud any nor such intention indicated. was made illegal equally if made with an intent also relating to statutes of Colorado Under Many an delay to hinder them. em creditors, pro- conveyances it is in fraud of genuine debtor belief barrassed holds the : vided season, if can staved a suits be off “Every conveyance assignment or in storm, pay weather financial he will a any otherwise, or in writing or estate Shapiro Wilgus, in full. v. 287 his debts lands, things in goods or or terest action, 355, 348, 142, S.Ct. L.Ed. A. U.S. 53 77 85 any profits issuing or rents 128, 131; Dowd, Means v. 128 U.S. L.R. upon lands, charge thereupon, every 65, The be S.Ct. L.Ed. 429. 9 32 action, upon the things in rents goods or or lief, though reasonably founded, well even thereof, with the intent profits made privilege debtor with a not clothe such does hinder, delay creditors or or defraud up obstructions that will his. build hold suits, damages, persons of their lawful bay. at creditors demands, every forfeitures, debt or Rothschild, Colo.App. v. In Curran 14 given, debt suits or evidence of bond .other 1111, conveyed 497, debtor his. 60 P. commenced, suffered judgment decree or corporation in return for its. a intent, person the like stock, purpose delaying his for the cred- defrauded, hindered, shall delayed or be so claims, enforcing though their itors G.L., 1267; R.S., 1526; p. (G.S., void. § § defrauding purpose of them in the- 17; 17; 245, 340, '61, ’08, p. L. R.S. § § § with, nonpayment, contrary, on the sense Colo.Stat.Ann., 2671; 5116.)” 1935 C.L. § by such honest belief that in- an action 71, (Italics supplied.) 17. ch. § benefited, would creditors be terest “Every goods by sale a vendor of any present or without future benefit possession or his under chattels was held to himself. transfer control, goods assignment every his because made with intent to de- fraudulent chattels, accompan- the same be unless lay creditors. delivery, immediate and be fol- ied decisions, Colorado a con Under change am and contimved actual lowed creditors to defraud veyance intended things as- possession sold existing, but also as to. only is voidable to presumed shall be to be fraudulent signed,

183 Bowen, Autrey 7 have to the time of v. person need not sale. future, creditors. A Colo.App. 408, 908; 43 P. Ray Raymond, the time v. existing creditor been an Bassinger Spang in- 15; order to Colo. 9 P. v. 8 ler, conveyance was executed 809; Sweeney House v. section. Colo. P. protection of the 9 10 voke ; Coe, Colo.App. 524, P. P. Atchison v. 743. 12 Colo. 21 19 76 Johnson, v. 705 Graham, 876; Allen v. Colo. P. 14 23 participated must intent Such 226; Steiger, P. Felt v. Colo. 17 31 grantee, parties, grantor and by both Colo.App. 4, Cleghorn, P. 813. 2 29 when mortgagee, but mortgagor and conveyance accompanied by A deliv case, sale not it is settled Livingston ery and followed continued mortgage null and void. actual and Co., change possession may 12 Colo. Dry be fraudulent Bros. Goods v. Swofford vendor, and void as to the creditors of App. P. 56 notwithstanding such creditors had knowl de- hinder and be to the intent Whether Stewart, edge Helgert v. 20 sale. them, legal lay creditors or to defraud 1091; Colo.App. P. Davis v. Patter 77 Bank Italian-American is the same. effect son, Colo. 193 P. Bartell v. 69 P. Lepore, 246 Colo. v. Griffin, 171; Lloyd Colo. 108 P. v. though for property, a A sale of Williams, Colo.App. P. Wil consideration, may void if made full Roberts, Colo.App. 149, lis v. 70 P. 445. hinder, delay or with intent to owner recording of a bill of creditors, partici vendee if defraud is no notice to sale creditors the ven intent, and such intent any such pated in Bassinger Spangler, supra; dor. v. Swee and circum from facts may be inferred Coe, ney supra. Colorado statute Brewster, 42 Colo. Helm v. stances. explanation excusing admits no deliv P. 1101. ery. Ray Raymond, supra; Allen v. rep as the right of the trustee Steiger, supra. creditor Sec. resentative The vendee must take actual Act, Bankruptcy U.S.C.A. e of the sub. possession open, and the must be e, aside contract sub. to set § notorious, unequivocal, and such as to conveyance has not been affect- fraudulent apprise community goods that the have limitation, which un- statute of ed hands, changed or the sale be void begin will to run statutes der not Colorado the creditors to of the vendor. This statute voluntary aside against an action set a permit does up the transaction to rest right creditor’s has conveyance until of good on the faith declarations of the by reducing judg- his to final claim accrued Williams, Lloyd supra; parties. v. Bas of his execution nulla ment the return and singer Spangler, supra; Coe, Sweeney v. v. might he The fact have sued that bona. supra. does of attachment not affect out a writ Dunklee, Colo.App. 12 matter. Rose v. A case is not taken out stat 403, 56 P. 342. by proving ute the sale was in fact Griffin, bona fide. Bartell v. Colo. 47 A recorded deed constructive no P. 171. 108 persons claiming of its contents to tice conveyed, thereby same what is joint concurrent possession or A title, but is not notice chain of vendor and vendee is not admissible. 351; Gaffney, v. Gillett Colo. persons. 3 possession must be exclusive of the Dunklee, Colo.App. 403, v. 12 P. Rose 56 Gathe, Donovan Colo.App. vendor. v. 3 Robinson, 342; 41 v. Colo. P. 92 Judd 436; Mann, P. Cook v. 32 6 Colo. Am.St.Rep. 14 Ann.Cas. 1018. 124 21; Jackson, v. Wilcox Colo. 7 4 P. 966; supra. Bassinger Spangler, v. by a Under Colorado statute sale a in his of chattels or un As far back 1936 counsel for vendor control, by delivery, considering possibility der followed bankruptcy proceeding may be void creditors the ven of a and avoiding Landon, Colo.App. 452, having friendly by a judgments Goff dor. stockholder Beall, 69; Colo. acquire Baur P. 23 P. tax deed. In con- Corrington, negotiations Goad v. 61 Colo. with between' 158 nection Fish’s Hill, Terry, attorney, Austin v. and Colo. Donald M. Warwick P. parties may Rights Downing, bankruptcy proceed- of the effect of P. not be by any subsequent ings transfer made discussed. Warwick Downing affected 18á Roller, attorney Downing, Douglas brought A. explained if Downings, and in the same suite with the Floyd the assets sell all about the would court Wilson, Downings. a friend liens, in which event “we” divested of J. presi- Downing Warwick first price became its purchase

would have first claim dent first secre- Downing and and- Richard approximately $75,000 amounting to tary. acquire for no doubt could that sum. parent In lease between the contract subsidiary (Mines (Plac- and its “Objections Company) An- upon and hearing At 23, pur- Company), ers Exhibit Trustee’s Company, Blue River swers” ported grant order, to the Placers to the turnover and parts dredg- referee, dredge, including old “fur- of three held before the June es, equip- testing day drilling and all the and on that objections” filed ther ment, respondents granting to a appellants, counsel “prorating right” party working in such machine was the “chief that Fish stated- shops Company might as the Mines there- represented chief client” interest” “the and own upon maintain after by them. paying its share of the cost Company, organized in The Placers taxes, operation maintenance, insur- subsidiary instrumentality or a anwas ance, machinery wear .of tear money public from- means to raise overhead, equipment, depreciation and bankrupt. Throughout purposes of the cost of labor and used. The materials Company’s years of the Mines fi-fteen Company granted leasehold inter- material, had no income existence it had operate by placer right est in except, and that derived from from loans mining parts or methods areas certain public. of its stock to sale placer claims, right of its lode and and the $75,000 it had raised about sale gold retain metals to ered associated recov- promissory own In 1932 it of its notes. placer mining operations, pro- purchasers could find for its stock no map areas vided affected adopted plan was formulated and notes. A prepared, operation none form a sub- would that the Mines opera- injure any interfere with or sidiary corporation, having a financial Company, present tions the Mines dominated structure future, injure any or' with im- interfere subsidiary give to the provements, structures, roads, ditches, pipe contract, substantially in favor lines, buildings or easements of the Mines Company, that would invest Mines subsidiary existing, then or thereafter nor ownership with ostensible upon any property be carried on bankrupt dredge then owned or thereafter ac- -Company ground of Mines as was sus- quired, might required for the ceptible operations by placer mining- Company’s operations. Mines future , securities sold methods. public the .The tP Jo Company assigned The Mines preferred td the to be shares of were the subsidiary, Company agreement an Placers between it of of stock the .one-half the Breckenridge relating of Company to and the town proceeds go the to to Mines operation subsidiary, of through to the town, the the the one-half ary’s the subsidi- options acquired by all it or by-the common stock to retained it, might except acquired thereafter be Mines such as it Traylor agreed to away assign deem cause A. tó give desirable to should as John options by him mining all held on lots and promote to the sale of the bonuses subsidi- town of ary’s pre- Breckenridge, claims specifying securities.' The investors in share, property listed, to ás to certain stock ferred were the con- as Company subsidiary to Placers leased the use of the unless it of trol failed to dividends, Company’s Mines water and pay three consecutive- the rights water quantities event, preferred points in such and at such stock.was to have vot- parties, rights. By retention would be both ing of as convenient to the common subsidiary of provided such use the water should Company of the stock Mines injure any operations to of subsidiary, be able dominate would The interfere plan use was formulated counsel for Mines should times be use Mines at all to the of and said subordinate A.. A. John Traylor. bankrupt. water The The directors were Richard' Placers John Company pay Traylor, parent was Downing, Warwick

ISo gross Traylor On wrote December percentage of the monthly basis a Usher, situation payment II, the most critical cover proceeds to or net proceeds estate; companies required concerning was the was both sale on real of taxes discovery up property taking Company taxes as the notify the Mines deposit judgments already taken and the three had been mineral or ore or lode developing generous loyal care of two stock- and assist agreed to aid Company pur- holders. When were the tax titles The producing the same. Mines chased, operations inspect Company’s mon- Mines right $500 had the ey applied had The been times. thereon. Company at all the Placers fifteen was made original contract preferred stock of the Placers Com- securing an years, was later aid pany money was sold and the indis- used indefinite for an loan extended additional criminately purposes for the of both com- period. panies. passed Checks were between the companies purposes two the re- a, as 21, sub. under Sec. At the examination spective companies required and as a, September, sub. held 11 U.S.C.A. John § Traylor A. directed. There was a com- testimony given: following mingling property, the funds organized in Company was “The Placers required shifted as company from one September 1932. It the child operated It they another. was stated that incor- Company. time of its Mines At the relation,” “brotherly sort of it, course, no stockholders. poration, had Company being always “short instrumentality sub- It was formed money.” pur- Company for sidiary Mines public pose offering stock Without rpgard company as to which set-up a basis of a financial created realty, held the record title to Company. by the dominated Mines Company operate right placer [Royal Company furnished Tiger] Mines deposits and owned the money with the raise instrumentalities to rights placer surface lode below public.” supplied.) from (Italics deposits. Personal both companies stored, distinguish- without testimony further showed that . marks, ing in a common warehouse in Mines and Placers Breckenridge. operated enterprise, one vari- ous forms of securities. Practically owned was the to extract Traylor general A. stated that John placer deposits. gold from The area affect- purpose organizing the Placers Com- "by companies ed the two was never pany way conceived be the shortest mapped, operations of the Placers Com- necessary of raising the finances for Mines being required so conducted as Company. assets of the Placers operations not to interfere with the bankrupt, from the came Company. being organized to real- capital ize for the benefit of the Mines reports making taxing authori- Traylor president A. reported always ties manager also as standing in real estate Its name companies. dominated both always He was bankrupt. This was so done that all procure proxies able to sufficient to name contiguous could Company, the directors of the Mines producing as one assessed mine and re- until the same condition existed as to in assessment of taxes on sult the real es- Company, the Placers and its control had Company of on tate the Mines the basis of through been stockholding the of the Mines production gold through of the the Placers Company. operations, (cid:127)Company’s at all times the real companies being as to both estate treated The annual statements furnished to purposes. for one unit tax The as Placers stockholders of Company, issued paid Company taxes on dredge the by directors, its board of refer personal property by held it. The Company Placers subsidiary. as its The Company paid no taxes after Mines Company Placers regarded by was A. John imposed Traylor being state of Colorado as so far the the of When the the Company Mines account dummy up tax a was set that on he sales its recommended Company, prior sale. of the Mines books to 1SG statute, having spent, of the sales tax been but the could the effective date boat run, showing; Company operations showing prior owed not that the Placers a loss $10,000, De- being operating this done to avoid Colorado to time. It in ceased cember, bankrupt December, sales tax on used 1935. Between by and the spring the Placers of efforts were money raise Di- to new make leases. adopted selling; The method of stock was attempt- Blake, rectors Bacon and Hildreth provide companies. money for both ing protect property, of ne- out their Separate kept by of account were books gotiations developed sugges- in Boston summary companies, the two a of put tion get up Usher Fish to in the transactions set out record money. Fish came to Colorado (Tr. pp. 570). procure In order to spring possibili- of investigate the - permit to sell securities Placers ties in erecting a custom ore mill at Breck- Company in bank- the state of Illinois the enridge, Traylor (John discouraged but A.) rupt company payment of guaranteed the him and instead him in the interested debts of the Company to extent Placers placer proposition. Traylor A.) (John $45,000. gave to Fish all the informa- confidential Company extended Mines regard tion at hand in to the extent indefinitely in Company’s contract Placers placer deposits. value verbal A Company in- could Placers that the agreement was reached between Fish dredge in the on mortgage crease Traylor, purchase began and Fish $25,000. sum of equipment May, in $30,- left ($1,503.40) balance developed the formation This situation November Downing on sent Company, Wyoming River cor- 'Blue Tray- over to A. turned at- Downings as poration organized concerns be- enterprise, the two lor for Fish, which torneys for the directorate of 84, 85). pp. one. (Tr. ing in effect persons who were associated consisted bankrupt and Placers with Company Placers operation of the follows: as was mined although gold was unsuccessful $120,000. After approximating value Fish, president (director of Erland F. preferred stock money the sale of from No- from Mines $50,000 company raised exhausted, the ; Gaspar April 8, 1936) vember 1932’ dredge, and mortgaging the in addition Bacon, director the Plac- (a director G. $75,000, all mortgage increased later Company during resigned but as ers December, By spent. 10, 1937); August Horaoe E. such money subsidiary without Hildreth, vice-president (director Company’s busi- active debt. resigned during December, 1935. At life ceased ness 10, 1937); August Donald M. bankruptcy, Placers Com- date Boston, Hill, attorney, resident of Massa- property, employees, no pany had chusetts, years attorney and for for the virtually dredge, except Company and also the Placers Com- paying watch- Traylor, who was hands pany attorney time of cre- and such Company to employed by the Mines men con- the Blue ation including property, after look attorney tinued act November, 1937. sank in dredge, which 3, 1939, adjudication order of of Placers the turnover date After June bankrupt, personal'attorney; also Fish’s creditors; on filed three June Usher, II, involuntary treasurer Mines Com- Samuel East, years its and for sixteen assistant secretary charge leave its office and of the Mines trustee Boston, intervened, court, of the Placers praying protected Massachusetts, April since as to 30th, August adju- of the said order. On now a director Mines appropriate Usher, II, Company signed same who as to the Placers was the Samuel and dication Court, bankruptcy. said the District order be- in its

made subject appeal the in of Case No. the ing Fish, Hildreth and Usher and counsel August contract (of 1937) a formulated Company in Placers spring Placers the of executed the The to be wreck, financially $200,- they about when were assured same would a was and directors, thought of it did one its Usher Hildreth, and accepted, Bacon which “which make much was Placers difference the resigned from board the what effect and had never considered the Blue of Company and became directors his possibility taking title under Fish’s River properties the purchase certificates of to all more than By contract, received Fish the Company’s lease included in River Blue put to asked; Traylor endeavored he had company.” might have on that for money the getting means of in some pos- Company Blue had exclusive River opposed the Company, vigorously Mines at date of dredge the session the and contract, resigned as sign refused it and to Company en- was of the Mines Com- president of the Placers director and operable gaged putting in in condition. it granted Company pany. River Blue granted by property rights on a lease and Breckenridge, land In the town of Company Placers Company to the belongs Company, large which to Mines 22, 1932, agreement said of October located, shops Tono- machine are called Com- and which shops, of- pah also house used as an and right the fee acquired by to had sleeping place fice well for em- as a town corporate limits of the within the always which been ployees has used thereto, Breckenridge adjacent includ- Company Company and the Placers per- options, states that ing etc. lease shops necessity required. office pre-organization in interested sons they on which stand and the land are paid for Company Blue River had Company, purchased property of the Mines Company $11,598.20, of the Placers benefit Tonopah Company Placers from the being amounts due workmen em- or 1927. The Placers had Company agreed ployees. Blue River right shops pur- to use the limited pay or liabilities overdue accounts Un- poses under lease of October opinion its Blue der the River contract protect paid preserve should be the company to, and was claimed leased, “at or the time before that actually, shops, using the and also was any concerning emergency any arise bankruptcy, using the office the date of at liabilities,” exceeding accounts such surplus great when had deal it pay $20,000, not more a total than machinery materials stored in the options $3,000 on to purchase property, the shops shops, using such and office as go title of which to the Placers required. business pay expenses large part dormant, although a of its operation, putting dredge being records, books and as well as the books and predecessors recited in interest of the bankrupt, kept records in said expended April, large sums since lessee Breckenridge. office at purposes for such and the lessee The Blue was not at River expendi- of such should have benefit exclusive of- time royalty per- certain tures. The was to be shops. fice or These machine were used profits, centages ranging net from 25 extent as its cent, cent., per per term of required purposes and its watchmen were years. be for five If the lease to total net charge bankrupt’s proper- all the profits during equal $600,- the term did not including shops ty, office and machine the lease to continue so long then bankruptcy. the date of might thereafter as the Blue be desired After the decision referee on Jan- River and not terminate until the uary River Blue profits total should reach the sum net completed the rehabilitation $600,000. (See Exhibit attached to the beginning March was commence deposition and Trustee’s 28.) Fish Exhibit mining operations. pe- trustee filed a Blue In formation River Com- restraining prevent order tition corporation pany, a new chartered with the gold from the extraction mine, general right to same scheme as bankrupt, asking that order be in organizing in 1932 used Company, Fish, against Blue River adopted. Company was Hildreth, Downing, Warwick Richard sister, Fish, Downing Cranston, P. and Frederick apparently Bacon 24th, 1939, money, re- prin- heard March furnished straining issued Blue controlling so cipal stockholder and Hildreth, upon Fish company manager its and Erland F. that admis- by the Mines machinery sold that had been jurisdiction. to facts' as counsel sion of county. from and removed for petition subject of was the This applied the county not treasurer had The an order heard being' review, before but Downing payment of taxes May to the $500 on Judge, by the District was made applied having this $500 was successful in operation 1939, permitting the purchase of the certificates. on the conditions, Blue dredge on terms and applica- make permitted Company being Summary Jurisdiction operating ex- of its for reimbursement tion Bankruptcy Court. peti- two filed July on penses, and thereto. relative- Appellee (trustee) before the referee contends tions cross-peti- posses filed his answer in actual trustee was The the Mines July except on hearing was had involved property tion and a sion of all the referee, or- pond on contents, After decision boat and 1939. for review petition surrounding subject of bank a der was the floated and the affirmed, a certain except found, sub was sustained The referee area. was stricken. royalty provision, evidence, that the actual stantial 15% in determination tax questions are for property covered These including judgments, No. certificates Case lode Company ground and all the Placers claims, a member of a stockholders" Fish was except in Mines was investigating which was committee contents, pond and bank dredge boat and it .was time at the affairs bankruptcy. area, filing in at time of minutes of collapse about to Com practice of the Mines It had been the was sit- show that he September pany, Placers Com concurred board, it is member of ting as a property in its pany, report all the real present was he explained while he pur to the taxation name assessor present He time a director. not at that poses, standing in name including that which the formation meeting at at the Company. of the Placers discussed the Mines became a director It known extensive how Meeting (Stockholders’ was, placer November the claims ground certain Ex- Minutes, Trustee’s November operated in accordance were to be Company was form- 11), hibit after direction of the Mines director until af- ed, be a continued to petition signed collapsed in December 27, 1939, ter Placers attorneys May that no states April refused to of 1936 he of 1935. question jurisdiction of the existed as a member stand re-election interest of the court over the Traylor directors, (John telling agree- board in the which was included off the of more service A.) that he would be 22, 1932, consisting of a ment of October Traylor He assured said board than on it. lessor’s interest. purchase the tax certificates would that he possession the Placers Whatever claim or obtained and price could be if favorable lessee, posses- physical had as advantage company would take no Company was sion and that of the Mines nor of stockholders. separated, having neither Down- On November Warwick during the life of exclude the large ing wrote to Hill to the effect Company com- long as the Placers lease put ought go- together stockholders map plied agreement. with such $25,000 purchase certificates. up the tax probably agreed not not made being given at that time Consideration was but also the difficul- account the cost possi- bankruptcy and the to the matter of possession of ties As to the cer- involved. bility re- acquiring all of the assets at a consisting dredge and tain price. duced equipment parts mentioned 22, 1932, agreement, great amount October $30,000 Fish forwarded to Warwick machinery, equipment lo- material and days pur- Downing later with which to two shops Breckenridge in the machine outstanding cated judg- chase certificates Company’s which is listed price at which the tax certifi- ments. property, as its stated to lo- County schedule were offered Summit cates shops building, the office cated in $25,000; belonging to the Mines Com- $500 much of connected with county pany being then treasurer’s properties lode of the Mines proceeds hands, part from certain

189 shops. machine where the company stored could well stated to be not included do Company’s so. Mines schedules The per- including “all other general statements possession may Constructive exist yard property in the and fixtures sonal property where the is in the hands of the office, assay shops, in the lab- around the Company’s Mines agent or lessee or sub- office, house, oratory, and staff and retort or lessee held one with a colorable Company as residence.” The Blue River claim, jurisdiction a turnover order ex for Company inwas lessee of isting. Fox, Taubel-Scott-Kitzmiller et v. dredge occupancy possession of sole al., Trustees, 264 44 U.S. S.Ct. repairing bankruptcy. It at the date of 770; 68 Looney, L.Ed. Keaton al. 10 et v. shops using and also Cir., 111 F.2d 34. Company office of the Mines to such extent necessary pur- reasonably as for such purpose The court greater had no pose. Blue River determining alleged adverse whether properties right these than its to the use of merely claims are substantial or colorable Company) (Placers had under its lessor into examine all the evidence and ad Neither contract October Blue missions part submitted and as a of its Company, Fish, nor the Placers Com- findings on which juris conclusion that bankruptcy in was on the date of express diction exists qualified itself in a possession shops sole and exclusive sense on controversy. the merits of the and office. Irving Fleming, Cir., 4 Trust Co. v. 73 F.2d 423; In possession by House, Cir., The Eilers Music re 9 claims, property including per- page of its lode F. and authorities cited 924; sona] property Co., In re or Franklin Suit & connected therewith Skirt D.C., 591, 600; thereon, placer ground, property personal F. Cohen v. Hes sel, Cir., 929; thereon, shops office, per- In machine 278 F. re Holbrook Shoe therein, Co., property D.C., & Leather sonal is consistent with 165 F. 973. qualified possession existing in for use found, finding referee or Blue River approved by court, was sustained and bankruptcy. at the date of merely that possession Fish’s lode subsidiary instrumentality of the Mines certificates, claims under tax sheriff’s Company operation portion of a transcript judgment certificates and business, operation and that in the placer ground the same to all as and all placer ground, Company, property covered the tax certifi- separate corporation, agent is an cates, sheriff’s transcript certificates and 'Mines and its asserted claims to judgment. possession ownership the Mines Company’s taking evidence without into are unsubstantial and con- jurisdiction only, agreement sideration admission colorable and that in the as substantially-supports record finding October between the two cor possession of the referee that actual porations of all being is void as to the trustee as except dredge, per- delay bankrupt’s intended to and hinder sonalty it, pond and its surround- creditors, being delivery there no such area, ing bank the Mines change filing voluntary petition date of to . be effective creditors bankruptcy. undisputed property, evidence and Mines and all its both personal, circumstances in commingled connection with real and so ad- support missions of record separating purpose the finding of it for of administra approved by the referee delivery tion court could In done. re jurisdiction. Co., considering C., referee in Piano all Looschen Case D. 261 F. 93; of the evidence heard him for In Co., Holbrook turnover re Shoe & Leather including orders supra; Co., Franklin Suit controverted re & Skirt D. given C., Section covering supra. 21a finding approved This rela- referee tionship between the will ap trial not be court disturbed on peal supported by found that it if was one substantial evidence. enterprise Theleman, Cir., Placers Company Alexander F.2d subsidiary was a Mullen First Nat. Bank of Ard ego, organized, alter more, Cir., controlled and 57 F.2d man- Reiss v. Rea aged purpose Cir., don, sole of carrying 18 F.2d 200. n in the Mines Traylor, stands the name of 1932, A. stated September, John property Company. respect With to this plan “to realize president, proposed a who Company, the officers of the Placers which Royal Mines” capital Tiger for the Company, the Mines were also officers of Com- Placers the led to the formation of taxing reported the subsidiary property also to this instrumentality and pany as an Mines property of the authorities as the Company. dominated the of Mines bankrupt The the minutes Traylor, the two set-up, by it in the said the are in decision concisely the abstracted Roller, attorney, with Douglas Downings, orig 172-180, Tr.). The (pp. the referee Denver, in Downing suite offices in the is Trus Company inal book Mines minute Wilson, Colorado, a friend Floyd J. printed is not in the Exhibit tee’s the being directors of Downings, to the court as record transmitted company. said of these original exhibit. Ah examination Company Placers A with the said contract Company discloses the Mines minutes Traylor, by A. was formulated John operating dominating business representative of the Downings, and a own, in as its Company the Placers Illinois, the bank- Securities Commissionof sell the Placers could Company rupt Company) guaranteeing (Mines Illinois, guar Company in the Mines stock anteed the rebuilding, en- constructing, cost of payment certain its debts oper- dredge putting it into larging ation, (p. Tr.); paying it commissions'to Company con- not to Placers the said Company the salesmen of the Placers its consent. obligations without summate stock; prop visiting its directors were Minutes, (Trustee’s Exhibit November erty progress to the reporting as 1932, 174, Tr.) p. dredge the rehabilitation of the (p. bankrupt options At time Tr.); discussions the Mines Com between mining claims within on certain lots and Company Placers were had to Breckenridge, its own town of some inter-company of handling the manner A. name and others Traylor, the name John $46,000 Tr.) ; loans of it nec (p. expectancy president, to with place essary mortgage dredge on the 56’4, Tr.).. (pp. '565, acquire others to finance the Placers which was options were afterwards These exercised 179, Tr.); reports (p. facilitated be were taken the name and title to the Company ing made Mines by Placers Company provi- with funds Placers figures Company to the of- amount by (pp. Tr.), ded put necessary dredge money into sub-placer and’ which owned the surface condition; operating sound Mines Companyhaving

rights, changed1 agree the terms of the deposits. dredge gravel The officers ment of October with the Placers were who also officers the Placers Company so that mortgage it on reported prop- of Mines $75,000 could increased erty taxing authorities assess- (p. Tr.). The minutes as referred to name as the ment of and referee in his decision bear out the Company. testimony that the two companies operated “just enterprise com- In transactions between two as one vari separate panies, Tr.). was no distinct ac- ous of securities” (p. there forms Money directors. tion of the two boards of giving away shares as of was transferred from one to in the Placers common stock preferred Traylor sales it of directed. stimulate A. stock. John companies were so connected and no ground does outside Neither map of the area affected the Placers Breckenridge of the limits of the town of required. Company contract was made as name of in the stand As as November late when Down descriptions included in in tax nor of that money, $1,503.40 over ing turned Fish’s purchased Fish or for Fish certificates hands, remaining the balance no dis iij County the Summit tax certifi- nor was made between the two com tinction panies, covering shops cates turned being over to A. Breckenridge including John that which town of Traylor used for the partly of the Mines in the name stands as occasion and/or should arise. partly Company (bankrupt) Uslier, II, Traylor $1,000of same sent dis- assessor's office record county use, on account for his both except payment above the land closes that companies flexibility board A. being to him. indebted Traylor is dem did members of re- company know which in remainder, money ceived onstrated by facility by benefit the board dividual company got transferred one directors off from plans re throughout period group’s policies another when A. John Traylor quired preferred stock or Richard directed. action. Downing The apparent holders control finally took paid The Placers Company accounts of through the board of the Placers bought the Mines Company and latter Hildreth, Bacon, the busi Blake after Company. material for the Placers Ac- ness col had cording Traylor to the evidence of A. lapsed, relinquished immediately but “when one company had both money they required control when interests Fish’s money.” personal The they act on the Blue River board. and the Placers Com- commingled is reasonable without The appli- instrumentality rule here has possibility of identification. cation. The determination as a to whether The real estate affected the contract subsidiary is an instrumentality primarily of October between two com- question a degree. fact follow- The panies sub-placer as to the surface and ing recog- determinative circumstances are rights belongs Company. the Mines As nized : deposits the area of which is Plac.er parent (1) corporation The all or owns determinable, reasonably capital majority of the stock sub- Company holds at most a leasehold in- sidiary. (2) parent subsidiary The terest as lessee. The Mines owns corporations have common directors or of- rights lode all real estate standing (3) parent corporation ficers. The companies. finan- the name both subsidiary. ces parent (4) corpo- Separate companies books for the two ration capital subscribes all the stock of kept bookkeepers, same audited the subsidiary or otherwise causes in- its using auditors same offices same corporation. (5) The subsidiary has equipment, and office transactions grossly inadequate capital. (6) The parent only nominally different account of the corporation pays the salaries expenses or names, of different use no actual dis- subsidiary. losses (7) The sub- tinction made between the transactions of sidiary has substantially no business ex- corporation one and that of the other. cept parent corporation with the or no as- purpose money was to raise primary except conveyed sets those to it by the Company. the Mines business of parent corporation. (8) In papers exploit placer Company was parent corporation, and in the state- deposits except small for a amount of officers, ments of its subsidiary” “the ground sluicing con- referred to as such or department as a the name ducted all business (9) division. The directors or executives do subsidiary independently not act Corporate entity may disre subsidiary in the interest of the' but take pub to do so garded defeat where will parent corporation. direction from the convenience, protect justify lic wrong legal requirements formal (10) The al., Cir., et Henry v. Dolley fraud. 10 99 separate subsidiary a independent 94; Taylor Gas F.2d v. Standard & Elec corporation are not observed. Cir., 693; Id., 96 tric 10 F.2d instrumentality U.S. 59 S.Ct. 83 L.Ed. 669. 306 rule situations of each company The board was at all similar to that in the instant case has often up of applied. members times made dominat been Many involved turnover employees group of their or their at orders most of ing them have been re- torneys. quoted as peatedly authority.1 Henry Dolley 1 al., Cir., Rieger, Kapner Altmark, D.C., et 10 99 In v. F. re & Taylor 94; 609; Standard Co., D.C., 2d v. Gas & Elec 157 F. In re Lake & 5 693; Co., Id., F.Supp. 179; Irving Trust Co. v. Flem Cir., 10 tric 96 F.2d 306 669; ing, Cir., ; 59 S.Ct.

U.S. 83 L.Ed. 4 73 F.2d 423 Commerce Trust Co. v. Bartley, Cir., Woodbury, Cir., 478; Forbush Co. v. 10 8 78 F. 77 F.2d 805; Pulp Cir., System Co., Payne, In re Muncie Cir., 2d Trustee’s Co. 3 546; Ridge 103; Rep. Hamilton 139 F. Sales F.2d Cent. Lbr. B. & T. Co. v. Corp. Wilson, Cir., Caldwell, Cir., F.2d 58 F.2d A.W. court, less the exercise sum in a turnover allowing 'In direct, discretion, of its separate may otherwise where mary proceeding, even involved, stay a interfere execution does not priorities are creditors as issue of lien, a the its enforce- merely controlling is not same recognition of ment. levy A sheriff determined, though priorities having rule then goods virtue of the fieri facias on principles equitable bankruptcy under prior than four Rieger, more months re recognized and observed. In exponas bei'ng bankruptcy, D.C., 609; In a venditioni Altmark, F. Kapner & sale, issued to make House, supra. pending which the re Music Eilers petition, defendant not- voluntary files a Colorado, has debtor levy, validity withstanding venditioni property possession of real to remain in exponas stayed, it not must be issue, prac actually until sheriff’s deeds being essential that it levy should same as und'er Ohio Statutes tically the executed, goods having been drawn Beeler, Cir., F.2d upon 6 90 Willis v. into the control of the court. bankruptcy posses 538, predicated, and title D.C., 742, In re Baughman, 138 F. and In judg premises remain in the sion of the D.C., Vastbinder, re 132 F. 718. is is sheriff’s deed debtor until the- ment Barker, See Metcalf v. delivered, U.S. hav 187 sheriff actually sued and 165, 67, 23 S.Ct. 47 L.Ed. where solely process execute ing authority to bill, creditor’s by statute, did acting as a ministerial from the complainant specific lien, secure a Rec., Boynton, McArthur, 19 v. officer. court in which was filed it obtained direct 540; Colo.App. Strehlow, Manning 74 P. v. jurisdiction property over 625; Hayes 18 P. 11 Colo. asserted, equity which the being it Co., 2 et al. York Gold M. Colo. v. New Heron, reference to such situation that bank

273; 41 P. Paxton Colo. 92 v. ruptcy proceedings may have 123; no effect. Am.St.Rep. 124 Farmers’ Union present In the case res is Bank, not under Ass’n v. San Mut. Prot. Luis State jurisdiction of another court. 86 281 P. 1166. Colo. 66 A.L.R. addition, In stipulation under a Beeler, supra, between In is said Willis v. [90 trustee, Fish and by the issuance of record F.2d “The shows that 542]: sheriff’s deeds and in the name possession land, had actual company of the bankruptcy, trustee in deposit and the buildings dispute, using property such deeds ruptcy court, custody in the of the bank it in the conduct of business at the time same while petition bankruptcy. of the filing of question referee had the jurisdiction his trustee, appointment, ever since his consideration, effect stip of the possession land, has had in- fact of the ulation and execution and delivery property. buildings and Thus while these deeds to and the name of the proceeds sale of were realty from the approval of trustee with the terminated the referee payment appropriated judg question pro of state court ment if and when sale should made and ceedings. juris had the state court If confirmed, did levy not confer con bankruptcy, by diction the date of at it was possession actual structive or All thereof. Mfg. In re this action terminated. Kornit fixtures, realty, including the there of the Co., 392; D.C., Camp F. 192 Wiswall v. passed custody bank fore into the of the bell, 923; 23 L.Ed. In re 93 U.S. upon filing peti ruptcy court of the Co., D.C., Motor Hoover-McClintock Car tion.” 660; Page Arkansas 1 F.2d Corp., Nat. Gas v. adjudication bankruptcy An 27, 28; Cir., In 8 53 F.2d re bankruptcy jurisdiction court draws to to administer D.C., Hollingsworth Whitney & bankrupt, F. 233 446. personal, though it real and bemay subject possession acquired judgment lawfully obtained by to levy lien or the a valid prop officers of the of an execution more than four court them, bankruptcy; the court prior erty drawing to the date claimed months lien may enjoined, jurisdiction questions of all title thereto and sale under such thereon, trustee, recognized. re sold or liens In and the un- Reynolds, 623; Page Cir., 4 F.2d v. Arkansas Nat. Gas Liller B. Co. 247 F. Corp., 27; Co., Cir., 90; F.2d In re Holbrook Shoe & D. 53 Schoen re L. 8 973; berg, Cir., C., F.2d 165 F. Industrial Research 2 70 Corp., D.C., Corp. Motors v. General Hollingsworth possess, su tofore any enlargement nor Whitney & Wash., D.C., thereof pra; Robinson, Stipulation. In re D.W. reason of parties agree Tim Both F. Hobbs Tie & Isaacs that Sheriff’s Certifi- Co., cates of ber 282 U.S. Purchase be withdrawn S.Ct. New, surrendered L.Ed. 283 U.S. to the said Sheriff for Straton v. purpose Stipu- into carrying effect this 51 S.Ct. L.Ed. 1060. lation. Dated November appearance “Erland F. Fish enters East, (signed) Trustee in Jr., H. John plea jurisdiction and files Shireman, Bankruptcy, W. Norma L. ap- court to enter (turnover) Comstock, attorneys Herein, for Trustee plied days by the Three trustee. Erland Cranston, F. Frederick relating consumed in taking evidence attorney.” subject whether or not the stipulation was in date marked “Received and filed bankruptcy, November filing (signed) Frank McLaughlin, probable Bankruptcy.” Referee in juris- (Tr. order to ascertain the 103, 104). diction of attorney the court. ‘The open juris- Fish then in court admitted following appears transcript Therefore, ju- diction.’ court having stipulated: further required peti- risdiction is to consider the “It is Stipulated Hereby by between upon of tion upon the trustee the merits based the Trustee in Bankruptcy herein and hearing.” evidence taken at the Fish, Erland F. as follows: recital foregoing under record made previous “That if stipulation dated this 25, by referee is under date November day parties between the same relating 1938, and marked “Received and filed No- (3) three Certificates of Purchase issued (signed by) 1938 vember Frank'Mc- by the County, Sheriff of Summit Colo- Laughlin, Bankruptcy.” Referee in rado, performed is carried out 26, 1938, stipulation On November be- Sheriff County, Colorado, of Summit bankruptcy, tween the trustee in East, H. John Sheriff’s Deed forthwith issued to II. John Fish, appears Jr., and Erland F. in East, Jr., Bankruptcy, in par- Trustee both transcript as follows: “It the that Erland F. Fish is is recited agree ties harmless, to save said Sheriff holder of three him release from all liability for so Purchase, each (3) Certificates issued doing. Dated November 1938. (signed) County, Colorado, the Sheriff Summit East, Jr., I-I. in Bankruptcy Trustee John August, day on the 28th and the herein, Shireman, W. Norma L. Com- John parties preserve protect desire to the stock, Attorneys for in Bankruptcy Trustee Fish, rights of or or both either Mr. the herein, Fish, by Erland F. Frederick Cran- Trustee, be, case may as the and have ston, attorney. His Approved: Frank in deeds issued accordance with and within McLaughlin, Referee, Received and filed provided Colorado, the act the time M., P. November 1938. Frank Mc- 1937, page Laws 472. Therefore the Laughlin, Bankruptcy.” Referee in parties agree the said three sheriff’s that page transcript On 105 of the the fol- East, Jr., deeds H. Trus- issued John lowing appears: herein, in Bankruptcy as stakeholder tee and stakeholder only, and that copy Upon “Order. Motion of Erland F. stipulation, approval with this of the Fish, It Is Ordered: That memorandum thereon, referee endorsed shall re- be the decision dated November parties quest of the hereto to issue deeds amended to conform to the facts in accordingly. stipulation This shall be following particulars and in following rights prejudice without of either language: party and neither party shall be considered “That the sentence in paragraph the fifth having gained anything by lost rea- of said memorandum decision ‘The Attor- hereof, excepting son it is the ney Fish, then, open court, for Mr. in ad- hereof up- intent that deeds may be issued jurisdiction’ mitted amended so that as on said of Purchase for the Certificates amended the same shall read as follows: protection rights of Mr. title “ Trustee, Attorney then, or the for Mr. Fish as the case be. ‘The Fish in may court, open jurisdiction It is also does admitted understood that Mr. to all Royal Tiger jurisdiction hereby consent to Mines Com- pany.’ this this Court which not here- Court did day Colorado, Denver, acquisition by August, 1st him in “Dated at Mc- December, (signed) assigned Frank judgment DuPont Re- Bankruptcy. Nemours, de constituting in Laughlin, lien on Referee property, Frank December neither him nor ceived and filed vested title in Bankruptcy.” entitled property. him to McLaughlin, Referee Farmers’ Union Prot. Mut. v. San Ass’n Com- On November Morris, Bank, supra; Luis State Lane v. it did stated of record court Heron, 77 Colo. 237 P. Paxton v. except ownership anything claim supra; Bailey Erny, 68 Colo. P. lessee, through the Blue River Howes, Carlson Colo. prop- to-wit, dredge boat and other P. 490. (Tr. pp. belonging it. erties A. 527.) The showed that evidence objection pe In his and answer to president Traylor, of the Mines order, tition he he for turnover stated that paying watchmen for the time employed expense own watchmen at his fof property, purpose watching all the purpose protecting and preserving continuously Company having doing pos properties so lawful possession of all such many years asserted 63, 64, 65, (pp. Tr.), session but no thereof property. evidence, employees, him or his from either Rapids, City Bank of Dell Granite re Allen, otherwise, appears Hildreth and S.D., Cir., held: “An F. it was record, support statement. adjudication bankruptcy operates aas Though furnished have he bankrupt’s property, seizure of protect moneys prop Company erties, legis where- which it taken custodia in the nature such would be of loans States, the United ever situated within advances, support and not claim of possession pass right of and and the title possession. jurisdic to His admission of trustee, by law to the operation of as cus- bankruptcy tion of court all the the of court, the at once on selec- todian for property bankrupt (Tr. pp. 102), the of property qualification. Whether tion and possession by disposed a.ny question of of immaterial is the district not is within him ex as claim and to the lode chattels right exclusive of the court to affect the cept connected with the as were same adjudication the to direct its which dredge. does contend that the res He thereto, all sale, claims and to determine possession was in of state courts the the parties interest, the in proper notice to bankruptcy and the court no thus that had they within or the reside without whether thereof, jurisdiction support which has no district; petition in filing of the bank- the in this record. the ruptcy caveat to itself properties other There certain con- are world.” claims, sisting placer mining in of both and also, See, Nugent, U.S. Mueller Breckenridge, of re- outside the town International 46 L.Ed. 22 S.Ct. in stands name of cord to title which 403, 406, Sherman, L. 101 U.S. Bank v. agreement Company under the be- Cir., Rodgers, 125 F. 169. In re Ed. Company the Placers of tween it and Oc- pp. (Tr. 562-567), cer- tober jurisdiction legal of in Admission thereon, located property tain of chattel Com possession, Placers effect admits Company claimed which Placers to be claiming ownership possession pany not possession. agreement in In this of Octo- dredge boat and other but the anything of 22, 1932, Mines'Company designat- ber was to it belonging or connected properties as lessor ed and executed contract in it, included Company as lessee. are Placers There al- order. turnover placer so certain claims in the town other of the tax Fish was holder Breckenridge, the record of title property this covering lode as certificates Company, in Placers and certain stands by placer ground,' but virtue well as located, personal property thereon of which transcript judg (certificates thereof Company possession. claims possession right nor no he had ment) possession by its was stated nature of transcript of evidence con entire does the objection in its effect that at the any evidence tain turnover petition (Tr. answer to possession bankruptcy he held date respondent follows: “This pp. 63), as property. lessee, through Blue possession signed the owner and in exclusive petition properties by a dredge pp. be- its attorneys (Tr. other May boat it, longing sought 526-529), be affected question states as no that there is order, jurisdiction turnover has been the owner and court over the possession continuous and property exclusive interest in which was 22, 1932; the ma- included agreement (October same since October that conveyed jor portion property 1932), property lessor’s consisting of a interest; agreement to it dated previously under an October in its and ob answer 21, 1933, May jections petition (Tr. Book recorded for turnover order County pp. page 63), implied at 96 of the records of the it parts or all of County, property Clerk and Recorder of Summit granted to it Octo * * * Colorado; ber agreement. ”. Examination of agreement document itself and pos- found that referee actual occupa evidence with relation to the session covered the Fish tion, use and ground treatment of tax certificates and the liens virtue of purposes, supports tax the contention judgments in possession the trustee. Whatever claim of filing the time of (Tr. pp. 526- bankruptcy. The tax certificates held 529), physical possession lessee. placer ground all the covered well the lessee and of the lessor in this real as the lode as it had been the claims cus- Property long itas continued under said tom of the agreement separated, cannot be neither report real all the having to exclude the 1 he other. purposes the assessor for taxation name obviously, reason the was never made- maP 300, 302, 317, bankrupt (Tr. pp. expense was on dif- account and the 566), including standing of record in fiordty in making (Tr. pp. same of the Placers name assessed 507). in name of Mines As to such The Placers standing the name also the Pla- claims now to acquired have cers been in the actual cer- title personalty, tain including taken for the benefit of Mines options provided dredge parts, under the for in cqttip- well as certain terms Company agreement ment generally of the Placers mentioned of in the Oc- October (Tr. 564), money agreement. tober the There is amount material, machinery, through equipment derived Company from Mines the and ló- shops stock in the cated in the sale Placers machine Company at Brecken- (pp.- ridge, Tr.), (schedule which is Company signed and Placers scheduled possession Downing) only property claimed as as stated in Mines Com- its re- pany, sponse and shops stated to as the Blue River be located in Company, the or in provided building. the office Said contract Much this that property came from Company granted properties lode the leasehold interest Company Mines and is right operate parts in and stated the to be stored areas of claims, shops. in the machine certain of the the These and schedules re- general contained gold operations tain recovered statements pro- including “all personal property map and made, that a to be fixtures” in vided the shops, yard done, shops, the around provided and the opera- in the that the office, assay laboratory house, Company and tions of the retort Placers should not office and staff any operations residence. personal with All interfere this of Mines property commingled Company, or and injure interfere unmarked so as any structures, indistinguishable to be improvements', etc., as property of then or Company Mines property existing, nor be of the upon thereafter carried on Placers Company. property any Mines Company, then acquired, might or thereafter be appears re- There question no that the operations quired future for its (Tr. p. Company, Blue River as lessee of the Plac- Company 564). to retain Mines the ers inwas occupancy, sole placer rights deposits below lode and possession and of the dredge at date of rights; it was not surface known all how ex- bankruptcy, at which time it was repairing placer ground was, tensive the and dredge certain the rising and shops and office operated were to be claims ac- to such extent as was reasonably nec- with directions cordance essary Mines repairing Com- to the dredge. Ap- pany. pp. 391, (Tr. 565.) pellants Shireman, contend Mr. that attor- ot jurisdiction admitted as to ney effect admitted appellee, in appellants ad- exclusive in the Mines and a,ll Blue River May jurisdiction on possession shops office. mitted and at they stated that petition in which written part P. was in A. Stuard The evidence of any question of no time had there been 521) p. (Tr. as : follows bankruptcy court over jurisdiction operation “Q.' You have observed any nor property of Mines you dredge Do boat. .know who. the ref- question jurisdiction as to IA. possession dredge boat? now of Company’s interest eree Mines over Company because suppose River the Blue Octo- included in the property which was are working the fellows checks 22, 1932, lessor’s agreement constituting ber signed River the Blue described in the real interest checks number of “Q. have seen You therein. operation pay roll for the District In case No. orders Yes. dredge- boat? A. 18, 1939, Judge May June February “Q. you Do remember tunc, pro nunc affirmed referee’s possession? who was in bank- January holding that as question There is no “Mr. Shireman: ruptcy jurisdiction court date, Company was River Blue summary jurisdiction of the Company and there. to-wit, against Mines claims stipulated then "Mr. Cranston: It Traylor, B. claims of possession of that the Blue River was lease from February 1938? dredge boat on summary jurisdiction Placers claimed, of Mines toas right. That is In actual “Mr. Shireman: Company, and time repairing dredge boat at possession pleas of Fish and the denying shops office.” In the that date. bankruptcy jurisdiction, Company as to during the examination of That was plea River Com- sustaining of Blue witness, being made as the statement jurisdiction not as be and what evidence would corporation, its franchise as a stipulation legal they effect contents, pond dredge boat and its exclusive, owners. possession absolute area, and other- surrounding bank and its Blue River was in should the turnover order wise that under its contract. unconditionally Fish and granted Trustee’s Exhibit record as unconditionally Company, and lease, denominated Company with against Blue River lessor, the Blue therein called the exceptions. stated lessee, it is recited that lessor owns a and other boat action No. 1955 is as to an Case necessary property used «and in connection in Fish by against East which Fish trustee operation with and maintenance of adjudicated in prayed he that boat, “granted, and has said demised to action be his and East as trus such civil let, presents by grant, and these does convey directed same to him tee to purposes let mining demise and for unto quieted him. A motion thereto be in title lessee described the said all the above by having the action been filed to dismiss property, any together with real estate the trustee was sustained the court. acquired, ap- together hereinafter with all complaint, Fish his re trustee amended purtenances, together all with newed his motion to dismiss was rights granted arid to the by the court and Fish on sustained stood agreement under said lessor between amended same as and the action dis and Mines lessor hereinabove missed, court and the held that bank to.” referred ruptcy only jurisdiction had not to court attorneys, open court, action, Fish’s in at conclu- property involved in also but order, hearing of the the turnover sion to the in jurisdiction claim of Fish2 1925, p. petition adjudication bankrupt- Tr. in No. Proof Debt Unsecured): cy (Secured filed, Individual Due “ been has was at and before the « * * Fi¿h * * * filing petition just- F. Erland of said and still says Royal ly truly Tiger deponent oath and that The to indebted in * * * corporation by following whom sums: a. B. rem, mi agreement tied the sought of such an existence which a lien bankrupt East in that he swore that the in- Fisli and trustee controversy between him, bank- debted attaching in the being retained sheriff’s cer- relative thereto ruptcy The assigned judgments tificates and to his future consideration. court for debt, can Fish claim as seeking is whether evidence of the question involved preference priority.3 action such civil maintain commence and determination for the the District Court controversies considering In motion to trustee’s time are which at dismiss, the judicial District Court took a court court as litigated in the same notice of its purpose own records for the complaint his bankruptcy. framing In of determining what matters relative to East, por- Fish exhibited trustee such matter had been considered tions, all, in the bank- not of the record court, bankruptcy what decision had been commenced the action ruptcy proceeding, disposition made and what was for future the bank- in the court where being ruptcy proceeding same in the bankruptcy Thompson court. v. pending. The trustee Co., Ry. Maxwell Land-Grant & 168 U.S. to dis- motion proceeded directly to file a 539; 18 S.Ct. 42 L.Ed. Bienville miss, as exhibits attaching to his motion Supply Mobile, City Water Co. v. 186 U. bankruptcy portions of the record in 1132, 1133; S. 22 S.Ct. 46 L.Ed. Fish which by plaintiff proceeding omitted Hart, Egan 165 U.S. 17 S.Ct. had a claim as whether Fish disclosed 41 L.Ed. 680. prayed him could on which relief as jurisdiction The bankruptcy of the court civil Such rec- granted action. adjudicate growing controversies out bankruptcy proceeding ord in the in the agreement between Fish and the filing court was that date of trustee as filed controlling court is bankruptcy, possession of had exclusive, neither surren- controversy, only had dered nor control over such confided matter thereto, when title commenced but also at the time Fish to a different tribunal. United F. States action, civil such title Bray, & G. Co. U.S. 32 S.Ct. in trustee deed East sheriff’s issued 620, 56 L.Ed. 1055. stipulations pursuant to him between complaint as amended stated no parties proceed- bankruptcy as made in plaintiff entitling facts relief ing approved by the referee. See shows no in Fish to institute the civil date, copies November as here- action, jurisdiction no in the court outside in, supra, (pp. set 42-44). out bankruptcy jurisdiction grant the record disclosed that the sheriff’s prayer made, relief for which nor deeds, as sought well title leave obtained to institute such action. him, quieted in which he seeks obtain controversy between Fish and the then in juris- of and respects trustee raised the civil bankruptcy diction court. exclusively bankruptcy action rests jurisdiction in the jurisdiction and could be As tried power to the court’s adjudicate court. contention such matters rights might based on jurisdiction, have been court’s see Tax Service re Ass’n, jurisdiction him raised in another 305 U.S. S.Ct. 83 L.Ed. jurisdiction bankrupt- court Fox, had Taubel-Scott-Kitzmiller Co. v. attached, cy agree- 264 May Henderson, court no such U.S. 44 S.Ct. 68 L.Ed. ment been made between him and the trus- 268 U.S. 45 S.Ct. approved by tee as East the referee L.Ed. as acquisition East’s trustee of the sheriff’s petition the hearing At on trustee’s etc., purchase, of certificates cannot now be order, a turnover the of agree- existence a civil action. heard in law purchased ment under which Fish cer- the arrangement tificates under with Mines No. 1968 In Case is involved an order Company, representative, or its proved 4, 1939, was Judge August of District in and the referee held that Fish had no affirmed of which he referee of June itself, property to the only establish wherein the referee directed claim based filing Company, Fish, thereon. in Tiger Placers. and Blue at- bankruptcy tested claim in Company court ad- River to turn over to the trustee * * * ** * except principal C. D. for the K ferred claim sum * * * ** * G. §86,060.54.” F. of H. pre- 2, supra. That said claim is not a See note pos- books Placers impound Downing Company has in with Richard which it its control, and session its wheresoever containing minutes of stockholders' books, be, may account not the the same and whether or meetings, directors’ stock list; books, subjoined Tiger same be property and books described in said * *» * Com- Blue River Placers and the Downing pany, Richard and the same as to is It admitted claims of these Hildreth of E. of and Horace Denver in num- sufficient petitioning creditors are making inspection and Breckenridge for amount, Tiger ber Placers in bank- by East as trustee copies thereof adjudi- as is such one properties to to turn ruptcy, over time the bankrupt, cated a that at the n saidtrustee Com- Mines belonging petition pay it filed was unable was “except that is held them they debts as matured. pos- may retain said Blue River East, Jr., appellee, located The other H. as of that session certain County, of Mines Breckenridge, bankruptcy Summit such trustee Town of Colorado, Tiger Dredge known intervenor claims as the as such 1,” owned such real estate and also of of No. Company or the Company. background interesting Mines The claimed specified. ap- as explaining therein and instructive East, trustee, appellee here- pearance of a few Appeal 2005. Within Case as intervenor. the order di entered days the referee after findings The on which the turnover order Company and the recting the based are that Mines trustee to surrender respondents ego and the Placers are alter assets, said invol the Mines untary petition other, and constituted but one business each enterprise; part on the and that the Placers Harry Cohen, doing business Samuel organized and a made to lease Stafford, Carl pro Frank Cohen hindering and de- lessee for laying purpose Kaiser, parties any of A. of the Mines creditors Company bankruptcy ceedings matter, against the Placers Com was filed requiring the The turnover order Plac- East, Jr., pany, H. as said in which John surrender the ers trustee, intervened. within which 1939. The time June could upon creditors file claims stay proceedings petition A denied, involuntary petition Company bankruptcy proceedings expired 2, 1938, September prior trial was had on merits. on to the nine months making turnover order. petition alleged the com- involuntary filed the ap- creditors’ bankruptcy, two acts ground, one mission of pellant days three after the June withdrawn, later third order was made. turnover ground being the fifth set forth the other Act, Bankruptcy language Chapter sub. of the Sec. sub. a Section Act, ground (5) Bankruptcy sub. a. The fifth U.S.C.A. U.S.C.A. § § “* * * a(5), provides: upon, entry by the referee sub. relied While they pay unable to his directing insolvent or debts as Placers Company the order mature, procured, permitted, or suffered the trustee of to surrender involuntarily voluntarily appointment suffering Company constituted Mines involuntarily charge take trustee to a receiver or appointment by it ** property; charge property. of its take a trustee Evans, Duparquet Huot & M. Co. v. pertinent portion of the order * * “* 56 S.Ct. L.Ed. U.S. Tiger said The follows: provision arose under matter directed ordered and Company is forthwith the Act 11 77B U.S. of East, and turn over to Section H. surrender Bankruptcy^ 207, permitted an involuntary which bankruptcy Royal Jr.', trustee in of The C.A. as § prior reorganization petition to be filed if a all of the Tiger Company Mines receivership pending against was subjoined equity the list which in the described in its has there held that control; It was such receiv- possession or under and debtor. general ership liquida-, a one for must be any and all other property of the also Royal Tiger cognate purposes, and or for be Company Tiger tion must Mines and 199 comply receivership Blue was to Company River general as contrasted with lease of the the terms and conditions of a lien.4 enforcement incidental Company from the Mines October by the property claimed directing' para and under Company to the Placers East, trus- appellant to be turned over as plan worked royalty graph thereof a 6 tee, had found the referee was after cent, per of the out would restore 75 which entirely companies iden- that the two Company. proceeds to Placers operating tical, and con- ego of each other so alter in bank the referee January On organ- doing two as business under stituted order, ruptcy, “The in his and said: finding names, and that and izations both lease, to the validity as the Blue River subsidiary, organized the parent company depends upon va bankrupt’s property, Company, to hinder Placers in order the Placers lidity held the contract delay Company. of the creditors (in found has been Company which herein Company that had Creditors of yoid against as 1968) to be cases 1925 and may accumulated in the meantime been bankrupt, of the void the creditors have the to elect their own trustee bankrupt against the creditors proceed rights may avail- in in successor void as by intervention.5 able knowledge and notice of terest who had Creditors invalidity. That includes the Blue though instrumentality it be an Company.” (Case appeal River No. Company, may paid entitled to be pp. 210.)7 Tr. preference Company from the Placers claims of Such shops and office were in- machine protection questions be raised6 and ordered to be turned in the cluded sought. The modification of trustee. over to the adding May order of No. 2007. Paragraph Case 3 August provision: “That at the time lease is a demise from additional Decree remains full Company direct Placers to the Blue that this Order and River Company have and to hold for force and said Horace E. effect definite period, by paragraphs County, from 4 is absent Summit the Hildreth 4-g 4 property upon Accident To the real Standard Ins. Co. v. E. T. “4. Co., Cir., dredge actually floating, 5 Sheftall & 53 F.2d 19 boat is now A. 49; B.R.,N.S., is, is Bramwell v. United States whether the same not covered Fidelity Guaranty agreement Co., August 13, 1937, & 269 the lease U.S. 368; 46 S.Ct. 70 L.Ed. In re In reason that limited area of Mining ground Co., D.C., possession ternational Coal 143 F. was in the actual 665; States, Cir., Adams v. United 9 24 the Blue River connected with Morgan possession F.2d Walker v. & Bird its actual of the boat. Cir., pleas jurisdiction Co., 5 20 F.2d 547. Gravel “The to the of the prop- Blue River as to all other 5 Russell, Oriel U.S. S. erty acquired which it claims to have 173, 73 L.Ed. Farmers’ & Me Ct. bankrupt company Tiger from the or the Wilkinson, National Bank chanics' Company ought to be overruled 45 S.Ct. U.S. L.Ed. denied, prop- for the reason that Stern, Cir., Carroll v. 223 F. 723. erty not, filing at date finding petition pos- bankruptcy, and order In the of the ref- of the said; it is also eree River session the Blue jurisdiction plea possession bankrupt “The to the to the is and/ subsidiary. River sustained in the Blue or its following particulars: “Any claim to that which the rights against to the franchise “1. As River claims Blue corpora- Blue creditors is colorable and invalid. tion. Dredge boat, petition To the which was in “2. “The trustee against Tiger Blue River ‘Turn Over’ order filing petition against the date and as Erland ought granted to which for that rea- uncondition- F. summary jurisdiction ally. does not attach. son any property To of the Blue Riv- “3. “The trustee for a ‘Turn not described either er Over’ Blue River Com- indirectly directly exceptions the lease from is denied as to the here- Tiger ought stated and inabove be otherwise Blue August 13, unconditionally.” granted dated 1937. River

200 a may special up “Tiger and in Dredge Colorado, Allen fund be set then E. shall to as Tom Fund,” Com- of employed Royalty be Blue River No. 1 none by said the upon expended except be superintendent, shall was to and such further order for re- the Petition custodian Blue River of court. of by view was filed Blue River gold of silver amal- and Trustee the and and/or upon gam hearing Judge District gold nuggets, and as hereinabove thereon the provided, order, except provision affirmed the as to and absence during the cent, Hildreth, subject relating per royalty 15 to all said and be have rights, granted finding by eliminated. The the as made of duties liabilities n evidence, the upon upon referee was imposed the said Horace E. conflicting by Judge, affirmed Hildreth District terms hereof.” being supported by evidence substantial that: And further may not set aside here on review. expressly modified or “Except herein amended, disqualification and Decree of of said Order As 1939, referee, 25, full force 3, shall 28 for May continue U.S.C.A. § disqualification terms until according judges, effect to its affidavit must and expiration of days Order ten before the be the further filed not less than thereof or ginning of the court or a the term of of Court. ' good for cause shall be shown failure 14, 1939.” “Dated June -within United file it States time. reports certain made After this order Parker, D.C., ap F.Supp. 23 880. The filed been appear to have maps plication was filed the clerk of referee, not admitted office evidence of the 2, August 1939, District on Court hear pp. 20 to 24 On considered. nor having on related been held ing to which it appeal in case transcript relating to 31, term opening July 1939. to have 2007,-an appears application No. 2,May 1939. The ref District Court 1939, clerk 2, with the August been filed on of already findings and an eree ref- disqualify District Court petition as to the for re nounced order reimburse- hearing petitions for on A eree. pro nunc Such written order imbursement. held Company was River Blue ment on 4, signed August 1939 as tunc on transcript does July judge 1939. The referee not a July within disqualify application to that said disclose 1(20) meaning of the Bank § Dis- passed either heard or was trict Act, ruptcy 11(20) 11 21 U.S.C.A. § § 26, 1939, Blue River Judge. July On Code, 28 U.S.C.A. 25. The § Judicial petitions reimburse- for Company filed two bankruptcy an referee is officer of filed day the trustee On same ment. appointed removable court cross-petition. The matter was answer and States District judge the United Court. Disputes concern- July heard on Act, 34(1), Bankruptcy 1(22) and § § ground ownership upon ing the 62(1). The District 1(22), U.S.C.A. §§ operated were considered. which the at time for cause Judge may also conflicting the referee fixed evidence Upon referee to from one another. transfer a case shops compensation for the at. the rate b, b, U.S.C.A. sub. sub. § § per authorized the day trustee $15 appears There to be Bankruptcy Act. no answer, August 4, amend his district, inor either rules rules in which he asked amendment filed an compensation general or procedure, of civil material after use for ders, disqualifi relating to the removal prior May bankruptcy and date of party aggrieved by A referees. cation of per cent of the mint net file the referee order of gold reg- be retained returns from subs, c, (10), Bankrupt review. § until istry bankruptcy court the ac- subs, Act, a(10) cy 11U.S.C.A. c. The § ownership premises tual be deter- assignment application as to the of error August pro nunc tunc mined. On disqualify must be the referee overruled.8 setting over was entered general $3,050 funds bankruptcy trustee As to whether the compensation power estate, allowing withhold money court had de shops per place day rate Blue posited the same $15 cent, general per of 15 funds directing the reduction bank estate, trustee, gold ruptcy net mint returns sale held from the to be § parte Co., Henry American Steel Barrel Ex 230 U.S. S.Ct. L.Ed. Speer, Cir., 201 F. 869.

201 Rehearing. for Petition On provides: Act 68, Bankruptcy sub. mutual debts or of mutual “In cases PER CURIAM. bankrupt the estate credits between be stated shall a creditor the account filed appellants for have Counsel against off set they debt shall be and one as petition rehearing in which for allowed other, shall and the balance opinion leaves court sert that the paid.”9 remedy for the Erland F. Fish without bankrupts by him for the funds advanced with bankruptcy was vested court acquire judgment liens. We to the tax possession of the assets To reimburse did not so intend. secure power filing petition, with as of date of advanced, Fish is ment for the funds so money depletion. prevent Whether tax judgment entitled to benefit held set the trustee over to gen filing statutory for liens. time may bankruptcy estate general funds hav expired having and Fish eral claims expenses fees pay used claim, ishe not entitled ing withdrawn his litigation appfellant within ad for excess allowance to an vances not satisfied bankruptcy jurisdiction of the court. It But by his securities. though the fund appear that has does been lien creditor does not lose his a secured general set funds over to Remington on Bank failure to file a claim. has been estate that the same bankruptcy 2, 910; Nat. First ruptcy, Ward v. vol. § illegally permitting the used. The order 609, Cir., Ironton, Ohio, 6 202 F. Bank of 612; appeal operation pending Co., Fidelity 6 Cir. Courtney Trust lim- made under its bankruptcy court 57, 63; Serv In Public F. re Cherokee 219 appear itations be an abuse of does 536, Co., Cir., The trus 94 F.2d 538. ice 8 powers. subject bankrupt estate took the tee Fish’s lien. Case to order No. As Judge 25, District October still entitled the bene- Hence, Fish is 1939, request to denying withdraw Fish’s them enforce fit of his securities and duly exhibits theretofore filed to claim may, if he so proceeding. He proper in a for lien on elect, petition the trustee file a court, being bankruptcy in the files of seeking enforce- bankruptcy court the ment of his securities court, request the bankruptcy but on his event, the and in that permitted to withdraw his claim or tax and order sale referee should much so thereof as hold he desired and the satisfy Fish’s advances judgment liens ing the trustee in virtue trustee make reimbursement unless the his claim Fish’s withdrawal of for a lien Fish therefor. custody then in jurisdiction any rights that the reserved referee of the bankruptcy court could cause such Company may to file have Blue claim sold in bankruptcy to be free and in- for It was not the reclamation. encumbrances, clear all liens and includ pass upon or fore- tention of this court ing claimed, lien of is without Blue River Com- any right that close error.10 by way of pany may reclamation. have respects, judgments 1925, No. ordered. In 1968, cases It so 2023, 1955, 2005, rehearing is denied. 2007 are affirmed.11 9 D.C., cited; 1, 1938, Hanson, Act, 22, Sec. Chandler ties In re June therein 575, 840, 440; 108, Schloerb, c. Stat. 11 178 U.S. 52 18 F.2d White v. § U.S.C.A. a; 1183; Bankruptcy 542, 1007, In sub. 44 L.Ed. Act c. 20 S.Ct. Whitney a, 505; Hollingsworth sub. 30 & § Stat. Cumberland re Mfg. D.C., supra; Drayton, Witt, Glass Co. v. In F. De 237 U.S. re 135 1042; cited; D.C., Cann, In 35 59 In Ros authorities re S.Ct. L.Ed. re Corp. Co., (Nairn Brewing enbaum Acos Pilsener Grain v. J. A. 47 F.2d re al.), Cir., Cir., ta & Co. et 7 103 F.2d 9 79 F.2d 63. 11 Nelson, Ins. Prudential Co. of America v. The six cases: 1968 and Nos. up Cir., 441; Pepper brought transcript Litton, 6 F.2d under one 101 2023 1-752), (Tr., pp. 308 U.S. and the other three L.Ed. S.Ct. separate transcripts. decided Dec. No. eases under b, Bankruptcy Act; 1-47), (pp. (pp. 1-17) sub. 10 § U. No. b; (pp. 1-79), sub. In re S.C.A. Jackson Brick No. are § consolidated D.C., Co., purposes opinion. Tile& F. and authori-

Case Details

Case Name: Fish v. East

Court Name: Court of Appeals for the Tenth Circuit

Date Published: Jun 29, 1940

Citation: 114 F.2d 177

Docket Number: 1925, 1955, 1968, 2005, 2007, 2023

Court Abbreviation: 10th Cir.