284 F. 899 | E.D. Mo. | 1922
Petitioning creditors, in the number required by statute and holding provable claims, filed an involuntary petition in this court for the adjudication as a bankrupt of one E. Lindsay Brown. The latter by answer defends upon the ground that he is not adjudgeable as a bankrupt upon an involuntary proceeding, for that he is a farmer, within the purview of section 4 of the Bankruptcy Act, as amended ( Comp. St. §• 9588). Upon this issue a trial was had before the court. By timely admissions, other necessary or jurisdictional matters were eliminated, so that the sole question presented and now remaining in the case is whether the acts, dealings, occupation, and business of Brown render him exempt under the statute from adjudication in this sort of proceeding.
“Any natural person, except * * * a person engaged chiefly in farming or the tillage of the soil, * * * may be adjudged an involuntary bankrupt upon default or an impartial trial, and shall be subject to the provisions and entitled to the benefits of this act.”
This statute is fairly plain. The facts alone are troublesome always, and in the case at bar peculiarly so, because of their involution, and of the many and diverse activities, dealings, and interests of the alleged bankrupt.
Brown, the alleged bankrupt, resided in the town of Charleston on the 27th day of August, 1921, when acts of bankruptcy were committed by him, and had resided therein all- his life. He owned on this day the equities in some 4,000 to 4,500 acres of farming lands, practically all of which were in cultivation. These lands were in a number of separate parcels, and it is probable that his residence in town was, as to these several parcels of lands, an approximately central location. He began his business life as an assistant cashier in a bank, but, having acquired some 450 acres of land, resigned in 1898 and began devoting his time, efforts and energies toward other pursuits, among which were (a) buying lands, clearing them, improving them, and causing them to be farmed, on what some of the witnesses call the “co-operative plan”; (b) engaging as a partner and afterwards, as manager of a corporation in the buying and selling of grain; (c) engaging as a partner with another in the business of operating a dairy; (d) manager and vice president and owner of stock to the amount of more than $40,(XX) par value in the Charleston Milling Company; (e) vice president and director and owner of $10,000 par value of stock in a bank; (f) owner of stock of the par value of $5,000 in each, and director in two mercantile concerns ; (g) owner of stock of par value of $1,000' in an abstract company; (h) partner in a real estate deal wherein some 3,000 acres of land were bought and held for investment or sale.
Being so insolvent, he executed on the 27th day of August, 1921, (a) a deed of trust, securing some $200,000, and conveying in trust for a part of his creditors all his lands, and (b) articles of incorporation of the Brown Farm & Stock Company, which had the effect to convey to the company so formed all of his farming tools, implements, live stock, and practically all other of his personal property and chattels. And on the 6th of September, 1921, he leased to the Brown Farm & Stock Company all of his lands. This was two days after the deed of trust was put on record. Since the 6th day of September, 1921, Brown has been the president and manager of the Brown Farm & Stock Company, of which he owns 244 of the 250 shares. October 7, 1921, he conveyed, by a second deed of trust, some 500 acres of land which were omitted in the deed of trust of August 27, 1921, in order, as it is recited, therein to correct such error of omission; but this latter deed omits to mention and fails to secure some 10 creditors who are named in the first deed of trust and to whom he is indebted in about the aggregate sum of $36,000.
In 1918, Brown and others incorporated the Brown-De Field Grain Company, in which he owned $15,000 par value of the stock, and of which he was manager at Charleston, while De Field was manager at East Prairie, each at a salary of $100 per month. This corporation succeeded the Brown-De Field Grain Company, which as a copartnership had been operating since 1911. This concern did an annual business of some $1,500,000, or more, and purchased and sold one-half, or more, of all the grain produced in Mississippi county, Mo. In 1919 the Brown-De Field Grain Company consolidated with the Charleston Milling Company, and Brown, as the holder of $40,500 par value (approximately one-third) of the stock, became vice president and manager of the grain business thereof.
The Charleston Milling Company operated a large flouring mill in-Charleston, a cotton gin in East Prairie, various warehouses, three elevators, and it bought and sold grain, as its other component company had done before the consolidation. ' It had branch sales offices in Pine Bluff, Ark., and in Memphis, Tenn., and bfanch purchasing offices, whereat it bought much wheat, in St. Douis, Kansas City, and Chicago.
The record shows that, for 10 or 15 years before Brown became insolvent, by far the largest.part of his time was spent in looking after his farms. He did not cultivate these lands himself; that is, he did no work manually, except in the negligible instances of 2 half days’ work in some 15 years; nor did he cultivate these lands in late years with hired labor. Just before the 27th. of August, 1921, he planted some .peas on some 160 acres of this land, using hired labor. Since the lease to the Brown Farm & Stock Company, he has, as manager and president thereof, taken over some 490 acres of this land, which the Brown Farm & Stock Company is actually farming with hired labor.
Upon the remaining 4,000 acres of land there are various tenants, who farm on what is called in the record the “co-operative plan.” Some distinction was attempted to be drawn by the witnesses as between the co-operative plan and the ordinary “tenancy upon shares,” or “farming on shares.” The co-operative plan, as explained by the witnesses, involved a contract between Brown and the tenant, whereby the tenant lived upon the land and furnished all teams, tools, implements, and labor and one-half of the threshing expenses and feed (which latter as a rule was raised on the farm), while the landlord furnished the land and bore the other half of the expenses of threshing and feed. The tenant delivered the produce to the market, and the tenant and Brown divided equally the price for which the produce was sold. Brown consulted and advised with his tenants as to crops to be planted and as to rotation of crops. So far as the record discloses, the tenant was not a partner of Brown in a legal sense; i. e., in the sense that Brown assumed, or in any way became liable for, any debt made or incurred by the tenant in furnishing labor, tools, implements, teams, or other portion of the things agreed to be furnished by the tenant; neither did Brown share the losses with the tenant, if the cost of labor was greater than the value of the crop raised; nor was Brown’s moiety at all contingent upon the making of actual profits. In looking after the tenants so engaged in cultivating these lands, by far the lar
I have found no case, nor has any been called to my attention by the diligence of counsel, which characterizes the manner of dealing with farm lands pursued and carried on by Brown as either farming or tillage of the soil. The cases of In re Driver (D. C. N. J.) 42 Am. Bankr. Rep. 106, 252 Fed. 956, In re Disney (D. C. Md.) 33 Am. Bankr. Rep. 656, 219 Fed. 294, and In re Leland (D. C. Mich.) 25 Am.
As is to be expected, there exists no hard and fast rule by which, inevitably, it may be determined whether one sought to be adjudicated a bankrupt is or is not a farmer. Each case must be determined by its own peculiar facts. If every contradicted question of fact be found in favor of the theory that Brown was a farmer when the act or acts of bankruptcy here relied on were committed, I am yét constrained to find, on facts which are not disputed, that he was merely one who held large investments in farming lands, which lands were in broad effect rented to tenants actually residing on the lands, and from whom he received, in lieu of rent in cash, one-half of the produce grown upon these lands. Whether, if there had been thoroughgoing partnerships existing between Brown and his several tenants as to the farming operations, this would have served to change the rule, I need not here decide, for such is not the fact. Barring one-half of the feed, which was, as a rule produced on the farm, and likewise one-half of the somewhat negligible expenses of threshing the grain, when threshing was necessary, Brown paid no expenses, took no risks, and, except upon the contingency of a total crop failure (in which event he lost only the feed he furnished), could suffer no losses. In this situation, even if there were no other facts, I am not able to find that Brown was a farmer. He was not even a partner in the farming business. Donnell v. Harshe, 67 Mo. 170; Musser v. Brink, 68 Mo. 242.
It results that the issue, mooted upon the hearing, should be found in favor of petitioners and against the alleged bankrupt, and an order adjudicating the alleged bankrupt as such may be entered, and the case ■thereupon referred generally to the referee in bankruptcy.