*1 brokerage re- placed subscriber orders the sub- to the is credited this scriber, price agreed subscription monthly subscription price. duction Company’s service. This pay means paid that different subscribers Biddle to be for cent, re- service, different subscribers for sums the Biddle About sub- they the less through after order Biddle remittances cash ceive completely paid Company for they pay the more for informa- scriptions have been service, tional purchasing crediting of commissions. but I see by the nothing forbidding in the statute that. Biddle has found The Commission Only Company pays when Biddle over but for the sellers Company does not act brokerage fees in excess the subscrib- my opinion In only for its subscribers. subscription price buyer get er’s does the Biddle finding cannot sustained. this a discriminatory gives him rebate which brokerage regular Company performs a advantage competitor over who does a receives sellers and service for not take the Biddle service. It seems to pay brokers other same fee as me that the statute should be construed many The fact similar service. a to forbid Company’s Biddle method of Company the sell- selects instances Biddle doing only respect business to the er, frequently does since subscriber cent, really its customers who buy, shows designate from whom to get price а goods reduction on the through clearly Company performs a Biddle paid the commissions performs Company by Biddle a fur- service for seller. the sellers. Such a construction pro- will save bringing ther service in the seller’s a legitimate and useful business prices attention of the which ducts and to the has century, existed for half subscribers, though no sale imme- and one even I do Congress not believe diately Company per- results. Biddle also intended to outlaw question. the statute buyer by supply- forms a service for the ing market information addition to the I think the order of the Commission purchasing plac- service when an order is except vacated in so far as it it, ed. Unless the statute forbids there forbids the Company Biddle from paying objection be no could the Biddle Com- over to a subscriber excess of com- pany getting customary brokerage from missions subscription above the price of buyer, the seller and from also a fee the service. parties since the is to be know compensated by words, both. In other if Company kept Biddle paid the commissions sellers, the statute would for- bid it. exception It would be within “for services 1(c) rendered.” Section the Robinson-Patman Price Discrimina- Act, tion 49 Stat. U.S.C.A. § 13(c) though ungrammatically phrased, ex- presses the intention TAYLOR to forbid seller et al. v. STANDARD GAS & ELECTRIC CO. et al. paying a brokerage buyer fee to a agent or his payee unless the renders some No. 1545. service to object pre- the seller. Its is to competitive vent unfair Appeals, conditions which Circuit Court of Tenth Circuit. buyer created gets when lower April 27, 1938. price competitors than guise of a paid buyer commission to the or to some Rehearing Denied June agent dummy. my opinion, it was not intended to eliminate such a business as the Biddle Company does for 86 cent, goods subscribers. Their cost them as much competitors as their pay goods. the same addition, they pay something Company to Biddle for the service it renders them. In ef- fect, arrangement is that the Biddle charge will for its informational purchasing service the difference be- tween what it collects from sellers as *2 69i *3 Detroit, Honigman, Mich. L. Jason Dewey, (Sempliner, Honigman, Stanton & Milsten, Detroit, Mich., of Tulsa, Okl., Milsten & Sempliner, and A. W. Milton Miller, Horton, Leonard De- all of appellants.
J. troit, Mich., brief), on the for Gibson, Tulsa, (R. A. Okl. M. N. 111., Campbell, Chicago, and Wilbur J. Holleman, Okl., Tulsa, brief), on the. & for Standard Gas Electric Co. Oates, Jr., Chicago, F. James McPherson, (Sidley, Burgess, Austin & 111.,Campbell Biddison, Chicago, & Tul- Old., Dern, sa, Harper, Paul V. John Martin, Jr., Chicago, Charles F. all of and 111., brief), Reorganization for Com- mittee. Ramsey, Tulsa, George (Ed- Okl. S. Meules, Martin, gar A. de Villard Tulsa, Okl., all of Logan, on the Garrett Greis, brief), H. N. trustee. Semple, Tulsa, Okl., F.W. Corporation. Rock Oil PHILLIPS, BRATTON, wholly and investments public utility Befоre WILLIAMS, Judges. securities. year, Circuit In that because of cern respecting the existing financial situa- tion and PHILLIPS, diminishing public Judge, delivered returns from its Circuit utility investments, sought opinion it an investment of the court. opportunity in bring a field that would appeal This is from orders confirm- greater returns, and its attention was di- under section ing business, rected to wholly the oil unre- amended, Act, Bankruptcy 77B industry. lated Messrs. C. B. Shaffer ap- note, U.S.C.A. § E. E. Smathers very large owned a inte- proval of of a claim grated oil business in the states of Okla- plan. integral part debtor as an homa, Arkansas, op- and Kansas and the *4 incorporated under debtor was portunity acquire in an interest that busi- May on under laws of Delaware the name pany. brought ness was to the attention of Stand- Refining Com- Shaffer'Oil & of Negotiations ard. resulted in were carried on which changed In 1931 its name was 20, 1919, May a contract on be- Corporation. here- Deep It will Rock Oil tween Byllesby. provided Shaffer and Deep be referred to as Rock. inafter corporation that Shaffer organize should claimant, and Electric Com- Standard Gas under the laws of consid- Delaware and in Standard, or- was pany, hereinafter called $15,580,000.00,convey eration of it cer- laws of Delaware in ganized under the properties tain oil veloped lands, consisting de- 1910. undeveloped leаses, plants, and Company, Byllesby M. hereinafter H. & equipment stations and production for the Byllesby, organized under called was of crude oil and refining, manufacture is an invest- in 1904. It laws of Delaware petroleum and Byllesby products; sale of and that banking company engaged under- ment in purchase corpo- from the selling writing, marketing and securities ration $11,000,000.00par to be formed val- holding Prior in investment securities. and to 1919it also bonds, 50,000 ue of preferred each, shares of engaged engineering par stock value of and pay $100.00 management service. 120,000 shares of common stock and Company Light Standard Power and $15,200,000.00 therefor in cash. majority voting owned stock of Deep Rock organized, was Shaffer Byllesby and United Electric Standard. properties transferred the therefor to it and received majority Power owned cash, the note of voting Light stock Power and of Standard Byllesby and Standard due in four months Company; up through owner- this $1,000,000.00, 80,000 Deep shares ship, they jointly Byl- controlled Standard. Rock 50,000 common and Deep shares of lesby eight elected fifteen directors preferred. 31, 1920, From March However, Byllesby of Standard. in 1936 March Shaffer was a director and wholly was divorced Standard. president Deep Rock. Standard was dis- Byllesby Engineering Management satisfied with the results obtained under- Corporation, hereinаfter called Manage- management. Shaffer’s arrange- Corporation, organized ment under the ments were made for him to retire from- Deep laws Delaware 1919. It took over under which he surrendered: .Rock engineering management Deep staffs bonds par Rock of the value of- Byllesby. $200,000.00,preferred It furnishes the service of train- stock Deep Rock: experts ed par and technicians in the $5,000,000.00, fields of value 80,- management, engineering, insurance, ad- 000 shares of Deep Rock, common stock of vertising, making, financing, rate for which paid $10,000.00’ valu- him ation. It also maintains a purchasing gave de- cash and notes, him two partment through purchases aggregate mass $740,000.00, amount of and cer- quantity properties discounts are corpo- made for the tain oil in the state of Louisiana. rations resigned it serves. All its stock was is- Shaffer as an officer and director- sued to and four Standard. other directors who had been request elected at the of Shaffer also re- Since its Standard en- has organization May, 1921, signed. appropriate re- gaged in the investment business. Since serve reduction assets was set: 1919 has engaged, through also wholly up Rock’s books. subsidiary Management owned Corpo- ration, capital in furnishing engineering structure of and other Rock at Up organization technical of its 500,000’ service. the time Standard’s
G97 stock, Moody, par value Francisco and Kerr were $1.00 of common shares stock, not preferred officially interested in share, 50,000 associated with shares per $15,000,- share, Byllesby. Standard or par value $100.00 After mortgage bonds. of first 000.00 Deep Rock organized as a de- $10,000,- consisted capital structure partment kept separate of Standard. Each notes, per cent publicly owned 000.00 and distinct records books publicly owned 50,000 shares properties former and assets of the 580,- share, and stock, par value $100.00 commingled lat- with those of the From the stock. of common 000 shares ter. paid its own officers and Rock, owned formation of employees. The offices of Rock were stock. shares of majority first Chicago. maintained at Soon after of Shaf- the retirement the time of From Gray Mr. became executive vice substantially all of fer, Standard owned general manager they were moved to inception the time of common stock. At Tulsa, Oklahoma. The officers at Tulsa to, referred hereinafter receivership, frequent held with the officers consultations common stock. it owned of Deep Chicago up- directors Rock in inclusive, From questions acquiring gaso- additional directors elected the board stations, line gas leases, oil аnd and other directors were of such majority A Rock. properties, oil and with reference to financ- *5 During that of Standard. also directors ing general policies. and These business Deep Rock officers period certain of the conferences were consultive in character. of Standard. officers were also The officers at charge Tulsa were in actual operations experienced and affairs 1924, Gray, Deep Rock an In L. John and were employ- refinery operator, dictated to engineer and was Standard Deep its meetings officers. At survey report on these the make and annual ed to 1, budget Deep subsidiaries; gone over, Rock on October was its and its Rock requirements president considered, financial 1924, executive vice and he became its requests officials, in that Tulsa ’general manager and continued Standard and frequent made 28, L. B. advances capacity February 1933. and loans of funds until Deep pro- charge ability Rock. But for its president in to bor- Riddle was vice 1922, Standard, from May, Deep un- liquid from row Deep duction of Rock Rock’s Deep funds 28, would not have February The business been sufficient to take 1933. til manage- expansion care of the under the cost of from 1924 on was and current requirements. Gray and Riddle. ment and direction Deep Each of them owned securities 1923, In 1922 and on the recommenda- in had interest Stand- Rock and neither Riddle, tion of and the use of funds ad- except during year the Byllesby, ard or by Standard, which vanced amounted in the only Gray served as a director $2,544,591.00, aggregate Deep Rock ac- Standard. quired producing properties certain and cracking plant built a thereon Rock, which became Deep organization Ber- On important part Deep refinery Rock’s Majewski manager nard L. became division operations. legal proper- title to such He of sales its lllinois-Indiana division. ties, Refining hereinafter referred to as the properties was connected with the under Company properties, was ownership. transferred He became a di- the Shaffer J. Kennedy, trustee, Deep C. Rock was charge of rector and vice sales charged with the funds advanced Stand- capacity in 1928 in that and continued until February Deep 28, ard. On February Moody Oil 1933. W. E. Refining Company, & charge refinery operations, hereinafter called the first under Refining Company, organized Deep under the Shaffer and later under Rock. capi- laws of Delaware with presi- he became a an authorized director vice 15,000 par charge refinery operations. tal stock of shares dent without val- Later as ue. the result of William R. Francisco became re- associated transactions Deep flected on books of charge corpora- the three with 1919 in audit- tions, became ing, accounting and He Standard the owner of the finance. became capital Refining entire stock director and in 1923 and Com- treasurer 28, pany capacity and its unsecured note February tinued in that until in the sum of $1,894,592.11, with Rock was 1933. O. O. Kerr became associated credited $2,544,591.00 expended organization. acquisi- Rock at the time its Refining Company properties. He became treasurer tion assistant in 1922 and capacity continued in that until Rock retained February realized Immediately duly Refin- cause previous operation thereafter- the from the October, of the United Company and in removed to the Court ing properties, District Refining Com- District of Oklah from the States for the northern leased them oma1a $75,000.00 per month and on pany March at a rental of appointed $50,000.00 H. Moore H. N. Greis and E. first months three re- The lease was coreceivers of Rock. per month thereafter. Thereafter, newed December August filed On Standard its Refining Company declared dividends on petition receivership intervention in rent equal to the payable stock to Standard up its claim proceeding in which it set Compаny Refining due to against Deep $9,342,642.37. All Rock for pay rentals Deep Rock no't Rock. did relatively except amount small charged they accrued. Standard April subsequently claim had accrued credit- open account and Rock therewith on the receivers 1928. On November equivalent Company with Refining ed filed their answer and counterclaim all the received. amounts as dividends They petition Standard’s in intervention. Deep Rock Stand- between transactions ard, Refining Com- attacked the transfer Company Refining the transfer pany the leases from stock to Standard and Re- the lease of the stock to Standard Deep Rock and Refining Rock at fining Company properties Deep Rock, Refining Com- averred that only very large instance rental is a" Corporation pany, Management its exercised it can be said Standard where agents, mere were and at all times had been and to the of Standard benefit control instrumentalities, adjuncts of Standard Deep Rock. detriment of organized By utilized Standard purpose transacting business in Okla- its $10,000,000.00 of When prayed separate corpo- in homa issued Deep Rock and sold *6 adjudged Deep to Rock the sum $11,086,195.85 de- indebted Deep Rock for against $8,756,719.50. appointed The 24, 1928, 90,000 of Hon-’ court February as of termined or,able speciаl to Preston C. West master preferred Deep of Rock 7 shares the 40,000 hear the Standard claim and counter- A of Class and shares stock stock, 442,448 claim the receivers. of in lieu received thereof and Deep common stock. These Rock shares 19, 1934, Deep Rock filed its On June position improved the the transactions petition 77A, under 77B the sections .of Deep by the elimination of cent notes Act, Bankruptcy U.S.C.A. §§ im- Standard indebtedness to and Rock’s day ap- and On the same the court note. other holders of position of the proved the appointed Greis proved petition and the the preferred stock the elimination of 9, 1934, July ap- it temporary trustee. On by Standard, re-. held and preferred stock permanent pointed as trustee. Greis On substantially no to Stand- suited benefit proof Standard filed June it stockholder since al- as a common ard bankruptcy proceeding. The claim in the substantially ready all owned of the out- had challenge the he trustee renewed as- of-Deep standing common stock Rock. again receiver. The claim was serted as Thereafter, special continued make master with in- Standard referred to West report and the latter made take the evidence and advances structions to findings payments time to time. his of fact and conclusions account the court. law 28, 1933, Gray February Riddle On County, in the district court Tulsa filed Oklahoma, hearings Extensive were conducted be proceeding equity special throughout fore master the Rock, Standard, Refining the Com early the months of 1935. Witnesses were and the Gas pany, Oklahoma & Electric Chicago examined and Tulsa. Elaborate at prayed for the Company, appointment interrogatories prepared were Messrs. Deep Rock.1 receiver for of a Meules, Ramsey, Logan,2 de Martin and day bill was for receivers and counsel later for On filed state presented appointed trustee, receiver to and for and were Rock. answer Shortly George Ramsey 2 Judge leading S. after the institution of was as to ail for and later for it was dismissed the defend- counsel the receivers suit except Deep Rock. ants trustee. 1a brevity For hereinafter referred to “the court.” officials, both agents settlement, legitimacy various the basis and ed An extensive the claim, items constituting Rock. Standard and exhibits, legal principles was accompanied by 28 stipulation, and issues In involved. for trus counsel for into between counsel the committee advised entered witnesses its members The and Standard. that Standard would have tee sup disposition any reorganization be considered in plan, nо evidenced Standard since opinion instrumentality in their material fact. press applicable rule was not and Standard could issue note approximate establish a claim in the amount Rock had been preferred stock of $7,300,000.00. Company, by Byllesby, & Janney sold Corporation. In Federal Securities August, 1934, more 18 months than Byllesby for a 1932, Deep engaged inception after the receivership pro- endeavor to ar- reasonable consideration to ceeding, the committee concluded that a maturity of the range extending reorganization plan submitted to 1, 1933,to March from March *7 Ardmore, Main Line of the Trust plan specifically provided that whatever _ Pennsylvania. reorgani- of No member the might by the court as to the determined any of zation committee owned the validity, extent and rank of the Standard had Rock securities. Mason no interest in all noteholders who had theretofore claim Byllesby or direct with or connection deposited, with the committee be ac- Robertson, Frye, Murphy, Standard. and opportunity an withdraw corded without had no or Holden interest connection expense after of being informed the result Byllesby except they with Standard adjudication the the Standard claim. on Byllesby occasions acted had with February On six months after syndicates underwriting selling and sеcuri- original plan, submission of the the Messrs. employed independent The ties. committee Taylor Taylor, M. and H. William who wholly John Byllesby disassociated with counsel pre- then the owners of shares of were Standard. and stock, in the proceeding. ferred intervened recognized The committee the va- large prefer- number of noteholders and A lidity and extent of the Standard claim was accepted orig- red stockholders had then the important the formulating an element in plan deposited and inal had securities any plan reorganization. It made the committee. with deposits secure no effort to notes and began There soon stock under terms insistent the of the demands con- deposit depositors legal agreement. proceeded proceedings that the the ventional independent reorganization complet- with an and the and terminated at once careful February, 1935, study relationship Mr. and ed. Shinners call- transactions Deep Rock, Standard, upon Ramsey, Judge counsel Byllesby, between for the ed the trustee, Management Corporation, inquired and whether there the Refining compromise Company. on With the aid of its basis counsel a the accountants the claim could be Judge committee reviewed the effected. Standard his- claim, tory Ramsey question of the Standard the refused to consider the effect of the complet- ties compromise proofs com- the continue their efforts to effect a until February promise. ed. The was closed on evidence proceeded 1935. Mr. Shinners then September 27, On court the district its his Standard and with efforts to induce of the United States the District of counsel to trustee his counsel acquired jurisdiction Delaware over Stand- compromise. As result Stand- arrive at a ard addressed an offer of a proceeding ard in a under section 77B compromiseto the Bankruptcy Act. providing trustee for the allowance January reorganiza- About aggregate amount of Standard claim the reported tion informally committee approximately $5,000,000.00,approximately presence court in the of counsel parity a rank on thereof to trustee, Standard, Taylors, new with the On March noteholders. compromise offer claim of the Standard petition reporting the of- the trustee filed plan reorganization. and an amended authority requesting fer to court Early January, the court informal- petition approval accept it. his ly proposal compromise referred the new given he careful stated that had trustee plan and amended ing to a committee consist- comprоmise offer of sideration Ramsey, Judge representing the many counsel, de- his had consulted batable sented, trustee, Gibson, Esq., representing N. A. pre- questions of and fact were law Standard, Milsten, rep- Esq., and Travis I. to be he believed the offer and that Taylors, resenting request that div- interests acceptance for the best fair and report A consider and thereon. of the estate. filed, Ramsey report ided Messrs. petition referred the court com- proposal of favoring Gibson the new question approval compromise plan promise and Milsten amended and Mr. special special master. to West as master Upon receipt re- opposing them. gave ample notice due and port the informal committee hearing creditors and stockholders February 17, 1936, an entered court Ramsey compromise. Judge offer on the reorganization commit- directing order special master prepared and filed with the re- an tee to submit organization amended of the evidence on the statement narrative part integral an thereof and as and an exhaustive brief .Standard a new offer of presented, the issues both fact and law. court. the Delaware claim authorized objections Taylors to the offer of filed the Delaware On November comprоmise predicated on the as- defenses authorizing Standard entered order new offer of trustee the allowance serted of compromise and submit the hearing before A was held the claim. accept plan. the amended After March the master on 9, 1936, Deep Rock, with On November special filed master lapse of six weeks court, amend- made approval report carefully he considered in which his originally proposed in ments to matters, pertinent found that the all the presented its August, *8 debatable, legal were that and issues factual set The court compromise. of new offer fair, accept- compromise was that the ance was for tate, compromise of hearing on new offer the the the best interests of the es- December plan for amended and strongly ap- recommended its and to reorganization committee the directed proval. plan offer and new amended submit the report hearing The came on for master’s and stock- the creditors compromise to of September on the court 3 and before 23, June Rock, to advise those Deep and holders Taylors appeared and' ob- 1935. The that original plan the accepted had who jected approval report. After to the se- their to withdraw entitled they were the court refused to careful consideration De- expense or before on without curities compromise. The approve the refusal was they failing 5, 1936, which cember predicated ground the claim on the that not should not be accepted the amended to have be deemed compromised, rather on but compromise. new offer plan and compromise the proposition that the provided compromige offer of new related; definitely the com- plan the Standard allowance part integral an promise be made follows: as together considered plan, and that being $2,376,076.31, The sum (a) September fair. On offer was not the amount, allowing after principal the denying entered an order court the it, by made payments par- Rock credit the petition and directed the trustee’s not ceive parties ranking cash and se- highest the by paid to third curity. account the with Standard .affiliated February Rock since Pursuant to the order November obligated legally Deep Rock was for which reorganization the fur- committee parties. such third nished to the creditors and stockholders complete report Rock a being the on the $1,585,485.18, (b) The sum plan amended reorganization. It set expended actually amount forth Re- the terms of plan, the аmended development purchase and plan, differences original between it and the rentals Company properties, fining less settlement, compromise, the terms of the new offer of prior which accrued to the appraisal the tentative stock. of the trustee and common received for which Standard complete earnings statement of and $2,376,076.31 (c) embraced Interest history financial Rock since per cent (a) per in item at the rate of announcement original plan in Au- 28, 1933, to February annum gust, depositors, 1934. It advised the both compromise, approval date of preferred stockholders, noteholders and per cent (b) of 5 on item rate right their to withdraw their securities from per August to the annum from deposit reorganization with the committee compromise. approval of the date of expense without if did wish aggregate $1,500,000.00 (d) accept plan approve amended rank on (a) (b) amount items compromise. the new offer parity Deep Rock with the notes. meantime, independent an com- provided organized by Standard should mittee had Taylors. further been independent transfer to the trustee of On November outstanding capital stock pre- entire issued and committee circularized the owners of stock, Refining Company, R. urging ferred them withdrаw from J. Graf, trustee, Kennedy deposits who had succeeded with the com- trustee, should execute and deliver mittee and independent authorize com- good suffi- represent trustee of opposing mittee them conveyances approval cient transfers and of the Re- plan of the amended and new fining properties. It was compromise, offer stating that such approval plan of representation ditioned on the of a would be without individual February 8, reorganization on or liability expense. before for any 1937. plan approved The amended question- The new offer eliminated all «Company, Inc., Standard Statistics able items in the Standard claim Moody’s Service, nationally Investor rec- subject the trustee and his counsel felt were ognized analysts. investment to disallowance on their merits. hearing on the amended The amended later modified the new offer of came on provides the court that the new securities before court on December solely shall of in- consist independent permitted committee stock; come debentures to intervene. The went into the shall noteholders receive thoroughly exhaustively. matters debentures, of new cent cash income spe- Judge Ramsey had testified before the plus $1,200,000.00, amount hearing original master cial at the equal amount annum on offer the assets of Standard *9 principal the amount of their notes from Deep Rock commingled; had not been that 1, January 1937, to the date of the new separate corporate kept records each had debentures, approximately income and books; Tulsa and that the local officers at stock; per of new cent the that charge producing of and had been the shall full receive in satisfaction operations Deep Rock, refining that approximately per its claim cent handled Rock’s finan- Standard had stock; pre- of the common the and that ces, had not under- and that Standard approxi- ferred stockholders shall receive operate tell Rock how to taken to mately per cent new common properties; and that after deliberate stock. was his view that the consideration it law debatable fact and were so will be observed that Standard is issues of so wholly creditor and and the ultimate result contest eliminated as a the acceptance of justify as to the other creditors are to re- doubtful noteholders and .preferred by,Stand- hear- compromise. the notes and original offer At stock and plan ard. the amended ing before court on the Ramsey compromise Judgе offer and new 22, Following the December order of offer, compromise explained the new 1936, reorganization advised the committee detail; and went into it in the items that the and creditors stockholders of com- stated in that under the he substance plan of the modification amended charges and promise all rental fraudulent by de- made that order and notified items contested the trustee all positors they without that could withdraw eliminated; that Standard claim had been expense accept if did wish up the items that went to make the Stand- the amended as modified. $12,000,- aggregated in ard claim excess of 3, Standard, acting February On 000.00; instrumentality rule that unless the the Dela- authority under of an order of applied .by courts, the claim should be January ac- ware court made approximately at probably be allowed cepted plan modified. the amended orig- $6,000,000.00; Rock.was agency inally department organized as February 1937, approximately On Standard; kept separate and that each preferred in amount stock- cent books; (cid:127) and distinct records independent holders, acting through the commingled; their assets were never approxi- committee, disapproved, had and in- doubt entertained serious he strumentality mately. per cent amount of such applied bе rule would reorgan- stockholders, acting through the courts; judg- good think it did not he approved committee, expressly ization had séven dollars ment bet six or million “to the new and as modified amended uphold the courts will instrument- that the remaining 20 compromise, and offer of rule”; judgment it was his and that ality tacitly manifested per cent-by inaction had and consideration the full deliberate after thereof; per cent approval compromise approved. be offer of approved expressly of the noteholders had compromise, no note- plan and such reorganization com- Counsel for objected had thereto. holder representing excess mittee cent of noteholders hearing February 1937, a further On in amounts stockholders objections and which additional had at approve urged the new also the court testimony counsel presented were compromise. offer of the hear- independent After committee. final order ing entered its the court Ramsey Judge long, has had honor modified and plan as firming the amended distinguished career at the bar. able and the offer of part approved thereof as a many years recognized been he has For compromise claim. Standard’s lawyers eminent as one lawyer special master is Southwest. trusteе, with the assistance of experience. many long ability For staff, ap- made technical years leading of a firm he the head physical properties of praisal lawyers Tulsa, Counsel Oklahoma. fixed September Rock as of coun committee are $9,508,848.37. th.e thereof at the value They high standing ability. sel value, going included concern as fixed value position in a to exercise an unbiased integral part being as an unit valued each independent judgment. Plainly complete going concern. of a such eminent advice recommendation sheet Octo- The consolidated balance lightly disregarded. were not counsel physical assets ber value contrary, justified the court On the above being based included therein great weight giving reach thereto in assets, appraisal, showed total value ing ultimate determination. his liquid were added assets cash after en- December the court On deducted, $16,- liabilities and current orders, tered two conditional one of 847,348.37. approved of the expert, Berend, qualified checked O. J. *10 the final claim on confirmation conditioned employed, factors con- the the methods plan, the other confirmed the of the sidered, by the results obtained the plan by as modified the terms amended the appraisal approved samе. trustee’s upon order, conditioned of the ac- .the by Smith, called the plan modified, a witness ceptance amended as C. J. committee, his requisite gave opinion as by independent percentage the the holders of Deep Rock of physical showing that the clear discretion, assets of an abuse of $13,- going a had value of will as a not appeal.3 concern be set aside on 600,000.00. admitted, however, that He We shall consider the merits of the produc- qualified he was to value the not only claim to necessary the extent to de- ing properties. based His estimate was termine whether the issues fact wholly capitalization current earn- on the reasonably debatable; law were whether ings. the claim was clearly so invalid as to afford no compro- the substantial basis a that value of court found the mise. properties Deep Rock was in excess $17,000,000.00. The factors to be considered are: independent Counsel committee the compromise; par amount the the pages 275 brief ticipation devoted inordinate of Standard new in the securities proposition the that the Standard claim modified; under the amended the as should be on the merits. probable disallowed amount of the allowance event Standard should in estab succeed independent committee in effect 4 claim; lishing participation its the Stand adjudicate us the asks the merits of ard would be accorded if its claim should light then in the qlaim established; uncertainty the out the adjudication retrospectively consider claim; come the contest over the the approving the action of the court already time litigation consumed in compromise. seeking approach the claim; time probably it would take independent If committee takes no risk. litigate determination; it to final adversely should we decide claim delay and prolonged litiga inconvenience of merits, they dis ask us on then tion; the adverse effect interests on the approve compromise. If we long creditors con stockholders of merits, claim decide in favor of the on the tinued administration of a a business against injury by the are insulated supervision ;4a trustee under of the court compromise agreement. The unfairness compromise fact aside set Clearly approach is such manifest. the only transaction where Standard con entitled al whether Standard was to the trol in benefit resulted to Standard and claim on the merits lowance is detriment to Rock and eliminated all presented. issue here That issue doubtful and debatable items from the passed special master never claim; and the fact than 60 more real the court. The is whether issue preferred cent in amount of the stock requirements meets the of section 82 holders and cent in amount of the Act, (b) (e) (f) of the Bankruptcy 77B noteholders, being after informed fully amended, 11 207 (b) (e)^(f), U.S.C.A. § facts, approved the relevant equitable, and is fair whether only slightly in excess approv court abused its discretion in amount stockholders compromise. ing the offer .of opposed it. proposed compromise precedents yet Whether a have not defined Judicial instrumentality approved degree claim a debtor shall be rule with certainty applied precise discretion it can be in the sound of the trial rests approving compro yardstick Its action in legal admeasurement of court. presumptively right and, is rights.5 mise absent a Eshelman, prerequisite Co. Pullman Couch was a the- consummation reorganization. Cir., 888; any plan 1 F.2d Drexel The con- Cir., Loomis, 807; already F.2d the claim In re test over had result- Riggi Co., Cir., 176; delay long Bros. F.2d ed in the consummation Bankruptcy, Remington vol. and a § continuation of the Id., Supp., adjudication 1147, 1152.50’. final §§ contest meant much November, 1928, delay. A rescission more Rock, Latty, transactions between Mr. R. Stan- Elvin Professor of Law Refining Company University Missouri, dard and the in- would in his book crease the Standard claim entitled “Subsidiaries Affiliated Cor- porations,” discussing because the after be entitled the state of instrumentality rule, to a return of funds advanced on the the decisions acquire Refining Company prop- concludes: get judicial expressions erties. “Until we about 4a disposition specific policy-factors A of the Standard *11 704 responsible obligations in will Cardozo As Mr. stated Justice Co., its has been subsidiary 244 N.Y. when its control Ry. Third Ave. Berkey v. sub- degree exercised to such that 61, 599: a 58, A.L.R.
84, 50 155 N.E. instrumentality. sidiary has its mere become be- the relation problem of whole “The corporations subsidiary parent and recognized tween Instrumentality “The Rule is -mists enveloped in the is still country is one that jurisdictions in all in this metaphor.” problem our is to determine therefore subsidiary circumstances which render the authority for respectable is There ‘instrumentality’ meaning of an within the applica justify that proposition to primarily question This is a the decisions. instrumentality rule between tion of the degree.” and of of fact there corporation, subsidiary parent and the elements .present in to sub- rendering addition “The circumstances must be ownership and through sidiary instrumentality. stock control an It is manifest- officers, elements ly impossible catalogue the varia- directorates and to infinite part of wrongdoing on but there or tions of fact that сan arise of fraud detriment parent corporation certain common circumstances are persons in their which, present subsidiary important and third are if subsidiary.5a combination, controlling. proper with the relations are as follows: These on Parent Powell 5 and 6 of Sections part, read: Subsidiary Corporations, parent corporation all “(a) owns capital sub- or most of the stock Rule, short- its Instrumentality “The sidiary. form, may now est be.stated: parent subsidiary question cor- “(b) as the of control far “So concerned,' parent corporation porations officers. have common directors or alone is Wash., 990, underlying Matthews, considerations involved v. 74 P.2d Garvin allowing refusing Finley 992; or a claim- Land Union Stock decision v. Joint corporation recovery Detroit, 214, tibe Bank 768, ant of a parent 281 Mich. 274 N.W. corporations, 769; Tex.Civ.App., Bahner, related or other Irish v. predictability 1025; 1023, will continue the unsatisfactory. Pueblos basis 109 S.W.2d Ranch & Dos technique long Improvement Ellis, as the So Co. v. 8 Cal. recovery to, denied, 617, 340, when is is resorted 2d 67(P.2d corporation something is to separate cases cited in note 6. assert See Improvement Company from the distinct stock- In Don Pueblos recovery allowed, holder, Ellis, supra, 340, is and where Cal.2d 8 P.2d v. 67 corporation sep- page is not the court said: assert at legal it so is control- distinct when arate “In order cast aside fiction be a in- dominated as to mere led and as of distinct existence distin- strumentality, may expect capital guished continue we own who those enough stock, Armed these two verb- confusion. with it is it so or- is major premises, ally conflicting ganized and controlled its affairs so typical ‘merely managed either result can reach parent-subsidiary it in- to make an adjunct’ strumentality, situation and still leave conduit or of its stockholder’s, appear enlightenment must but it furfher than us no nearer before.” 5a Carpenter, are the ‘business conduits and York Trust Co. v. that alter recognize New Duffy ego another,’ 668; Treide, Cir., F. v. one and that 6 Cir., 250 4 separate George 17; F.2d Mi their entities would 75 Finn v. T. Co., wrong.” Cir., 41 consummation of 9 F.2d ckle Lumber 678; aid Finley Smith, Cir., Detroit, v. Bank of su- Wheeler 9 F.2d v. Land 30 Majestic Orpheum page 60; pra, 769, 274 v. 281 Mich. N.W. Cir., Circuit, 720, 724; quoted approval from 21 the court 8 F.2d re Paper Company, Ballantine, Cir., 2 article of Mr. in Amer- 60 Watertown Review, pp. 19, 28, 252, 257; Wood, Cir., 234 Law as follows: F. Peckett v. ican “ treating Corporation 833; Fumigating justify F. Owl sole stock- v. ‘But holding company Cyanide Co., responsi- D.C.Del., California 24 F. holder subsidiary 720; enough 2d ley, Forbush Co. v. Bart it is not ble organized Cir., McCurdy 805, 808; make 78 F.2d is so controlled as to “merely Spokane instrumentality, Western Power & Traction conduit adjunct” Co., 24 P.2d of its stockholders. It must 174 Wash. or further аppear Fickling Inc., Smith, recognize Properties, separate 42, 43; aid in the Fla. ty So. Jefferson entities would Coun ” wrong.’ Cotton, Burial Soc. v. Ala. summation 256, 259; gee, also, Subsidiary In re Es Parent Cor- So. Greenwald’s 40-54, Cal.App.2d 12, pp. 70, 72; porations, Powell, tate, P.2d §
705
“(k)
legal requirements of
The formal
finances
parent corporation
“(c) The
subsidiary
are not observed.”
subsidiary.
independent
Counsel for the
committee
corporation subscribes
parent
“(d) The
agency
assert
ten of the indicia of
subsidiary
capital stock
all the
instrumentality
or
enumerated
Powell
incorporation.
its
otherwise causes
or
present in
cannot
are
the instant case. We
grossly inad-
has
subsidiary
“(e) The
conclusion; a,
c,
b,
agree with counsel’s
capital.
equate
f,
present
case;
and d
instant
pays the
corporation
parent
“(f) The
absent;
i, j,
may
h
g,
and k are
e and
expenses or losses
and other
salaries
fairly
said to be
debatable.
be
subsidiary.
brought
While
about
substantially
subsidiary has
“(g) The
organization
plain
it is
parent cor-
except with the
no business
inception
Rock was not
its
except
con-
those
or no assets
poration
department
instrumentality
or
corporation.
parent
veyed
to it
signif
d
little
so that indicium becomes of
parent cor-
papers of the
“(h)
In
icance.
officers,
of its
in thе statements
poration or
department
corporation
fact
one
owns
subsidiary is described as a
parent corporation,
majority
or
a
through
the stock
another
division of the
or
responsibility
control
its stock
selects from its
or financial
is
business
own,
corporation’s
parent
majority
directors and officers a
or
as the
own
all of the directors and officers
referred
corporation
parent
uses the
“(i) The
more,
corporation, without
does
other
not
subsidiary as its own.
property of the
application
justify the
of the instrumentali
or
“(j) The directors
executives of the ty rule.6
subsidiary
independently in
do not act
corporation
subsidiary
parent
is
but take their
the natural
interest
subsidiary’s
Plence,
parent corporation in the
credit.
from the
source
orders
parent corporation
that the
finan-
interest.
the fact
latter’s
identity
corporate
6
Woodbury,
Trust
v.
cient to create
in-
Commerce
Co.
8
companies
Cir.,
478, 487;
Bldg.
two
Bee
terest between the
or to
agent
F.2d
Co. v.
Texas
77
principal
Daniel,
Cir.,
61;
the relation of
57 F.2d
create
or to create
relationship
8
representative
Mexico, A.,
Roos,
fiduciary
v.
or
S.
5
15;
Cir.,
the two.
If such
43 F.2d
re Fox West Coast
between
potential
ownership
Theatres,
Cir.,
212, 228, 229;
control
9
88 F.2d
stock
only
purpose
Gillis
Jenkins Petroleum Process Com
be resorted to
normally
participating
pany, Cir.,
79, 80; Shep
in the affairs
9
84 F.2d
Banking
subsidiary corporation in a manner
herd v.
& Trust Co. of Jones
boro, Cir.,
pur-
709;
F.2d
to stockholders and
6
Menihan
usual
pose
79
Commissioner,
Cir.,
taking
advantage
some
2
79 F.2d
unfair
subsidiary
; City
using
City
as a mere
306
of Holland
it
v. Holland
Cir.,
adjunct
corporation
Co.,
679, 684, 685;
main
Gas
257 F.
to the
or as
subterfuge
justify wrongdoing,
Ry.
Chicago,
Co.,
Peterson v.
R. &
I.
P.
corporations
identity
separate
390, 391, 392,
U.S.
S.Ct.
will
disregarded
respective rights
841;
but their
L.Ed.
Pullman’s Palace
bo
Car Co.
Ry.
dealing
Co.,
respect
v. Missouri Pac.
with each other in
U.S.
when
separate property
recog-
6 S.Ct.
29 L.Ed.
to their
Pacific Can
will
Hewes,
Cir.,
42, 46;
maintained. The
Co. v.
F.2d
nized and
extent of
Kentucky
ownership
potential
and mere
Electric Power Co. v. Norton
stock
Mining Co., Cir.,
company
Coal
one
93 F.2d
trol of
over another has
regarded
determining
as the
never been
factor in
Kentucky
v. Nor-
consideration of such
Electric Power Co.
cases.
Something
Mining Company, supra,
ton Coal
must be disclosed to indicate
court said:
in-
the exercise
undue domination or
infringement
resulting
upon
hand,
“On
in an
the other
is likewise
fluence
well
rights
corporation
ordinarily
corpora-
settled that a
is
subservient
separate
entity,
apart
dominant
tion for the benefit
Otherwise,
one.
from its
rights
separate
stockholders,
ownership
and mere
of all
resрect
corporations
corporation
to their
the stock
one
anoth-
er,
identity
governed by
property must
of officers of
the rules
one with
applicable
another,
ordinary
cases.”
officers
are not alone suffi-
*13
Standard,
corporations were
render
the
of the
that the two
subsidiary will not
ces the
businesses,
instrumentality
engaged
wholly
in
unrelated
subsidiary mere
kept separate
com- that
ownership
each
and distinct cor-
parent, although stock
porate
books,
assets
records and
that their
present.7
personnel
also
mon
are
commingled,
setting
aside
divi
three
at
is leveled
Criticism
only
the
trol
transaction where Standard
stock
the common
dends declared
Deep
in
to Standard and
resulted
benefit
1928,
1926,
years
in
Rock
detriment
to
Rock would increase
suffi
A
1930,
to Standard.
and credited
claim, that
rather than decrease the
shows
the evidence
cient answer is
other
the two cor-
transactions between
at the
therefor
earnings available
actual
porations
in
resulted
benefit to
were declared
dividends
these
times
injury
in
hence
no
by a Delaware
payment
furthermore
stockholders, that the local
officers
wast
justified under
corporation ‘was
management
part in
large
Rock had a
rule.8
asset
ing
affairs,
operations
of its
eminent counsel
trustee and
for the
by control
corporate
Where
issues
special
learned
believed the
master
through stock
subsidiary
parent
over
of fact and law debatable
recommend-
of directors
the election
ownership and
approval
compromise,
ed
cannot
of the
we
the manner
exercised
and officers is
say
the result of the contest over
majority stockhold
usual with
normal and
claim was not so doubtful or the
entity
be
should
reco
ers, distinct
no
itself so devoid of merit as to form
however,
Where,
the relations
gnized.9
justification
compromise.
reasonable
subsidiary
.so in
parent and
between
n
pertinent factors afford-
Each of the other
over
the former
timate,
the control
strong support
the court’s action
ed
dominating, and the business
latter so
the
and assets
compromise.
approving the
commingled, in
so
of the two
entity
distinct
will
recognition of
The fairness of the
is attacked
per
injustice
third
or
wrong
alleged improper ap-
result
ground
on the
through the fiction
sons,
look
courts
proval
deal with the situa
entity and
of distinct
challenge
and a
of the correctness
'claim
requires.10
justice
tion
appraisal.
appeal
uncertainty
an
from confirma
On
Having in mind
is
the review
limited
of a
instrumentality rule and tion
respect
of value is
facts,
finding
оf law.11 A
issues
particular
application to
finding of fact.12
department a
organized as a
‘adjunct’ may
Corporation
mean in
applicable
Fumigating
7
this
“Whatever
v. Cali
Owl
connection,
must,
718,
Co., D.C.Del.,
Cyanide
24
it
be
F.2d
fornia
720;
definition,
all,
given
involving
Chicago,
Ry.
R. I.
a new
be
v.
Peterson
&.P.
purpose
wrongful
364, 393,
513,
or
sinister
Co.,
27
51
the idea of
S.Ct.
205 U.S.
agency
City
or
841;
If
means
instru-
v.
results.
of Holland
Holland
L.Ed.
684;
mentality
Cir.,
679,
City
Co.,
the sense
means to ef-
F.
6
257
Gas
wrong,
through
wrong
Subsidiary Corporations,
which
is
fect
Parent
done,
p.
it. But
Powell,
content with
11.
we
meaning
too uncertain in
it is a word
Cyc. Corporations,
8
Perm.
Fletcher’s
incorporated
rule
into an inexorable
Corporation
11, 5347;
Ed.,
General
vol.
§
just
exception
long
an
of law
rule
34,
Delaware,
Rev.Code Del.
§
Act of
qualified
way
unless
in such a
established
Wittenberg
2066;
1935,
Federal Min-
§
as to cover the kind
cases to which
Co.,
351,
Smelting
ing
138
15 Del.Ch.
&
apply;
it was intended
cases
352.
A.
sepa-
to the doctrine
adherence
Reading Company,
9
States v.
United
entity
corporation
of a
rate and distinct
63,
425, 434,
26, 62,
40 S.Ct.
64
253 U.S.
injustice.”
would work
Chicago,
Ry.
760;
P.
M. & St.
Co.
L.Ed.
11 Meyer v. Kenmore
Hotel
Granville
Ass’n,
Minneapolis C.
C.&
247 U.S.
160, 166,
Company,
297
56 S.Ct.
U.S.
490,
such circumstances exception Riddle, Moody, years, with fraud itself in a claim tion of bona Dale, Francisco, Kennedy, and Kerr. Forbush Co. fide creditors. all of the directors of elected Cloth- Cir., F.2d Clere Bartley, 1 1923 Engineering Management Deep Rock Byllesby Corp Directors Directors .Directors Directors Co. H.M.Byllesby H.M.Byllesby H.M.Byllesby H.M.Byllesby N.Moore G. R.J.Graf R.J.Graf A.S.Huey R.J.Graf R.J.Graf S.Huey A.S.Huey A.S.Huey A. J.J.O’Brien J.J.O’Brien J.J.O’Brien J.J.O’Brien W.R.Francisco F.W.Stehr F.W.Stebr J.H.Briggs J.H.Briggs H. C.Cummins H.C.Cummins H.C.Cummins H.O.Oummins M.A.Morrison M.A.Morrison M.A.Morrison M.A.Morrison W.Lynch B.W.Lynch B.W.Lynch B. R.K.Huey W.H.Cannady A.S.Cummins A.S.Cummins A.S.Cummins A.S.Cummins J.J.O’Brien J.J.O’Brien J.J.O’Brien J.J.O’Brien R.J.Graf R.J.Graf R.J.Graf R.J.Graf J.L.Gray J.L.Gray M.A.Morrison M.A.Morrison M.A.Morrison M.A.Morrison H.C.Cummins H.C.Cummins H.C.Cummins H.C.Cummins A. S.Cummins A.S.Cummins A.S.Cummins A.S.Cummins W.R.Francisco J.H.Briggs J.HBriggs J.H.Briggs J.H.Briggs W.Lynch B.W.Lynch B.WXyneh B.W.Lynch B. R.K.Huey F.W'.Stehr F.W.Stehr L.B.Riddle R.G.Hunt R.G.Hunt R.G.Hunt R.G.Hunt O.G.Corns O.G.Corns J.H.Roemer J.H.Roemer J.H.Roemer Meetings period founded covers a from 1919 from 1921 to 1932. Deep Rock held charges aggregating It embraces were of directors of the board fifty-two Al- dollars, more per month. than million about one the rate of were exceeding forty-three dol- credits operations of million though the board Oklahoma, meetings of the lars. discloses that the cash advanced all the by during in the office Standard to held of directors were the period Chicago; was more than million seventeen of Standard kept dollars; meetings were advancеd fund- for interest on minute books merely millions; meetings were ed debt ad- city. exceeded three in that fiscal Instead, all sinking vanced for fund ex- requirements in character. consultative fixed millions; policy were ceeded with and matters of three matters advanced important pay at them. No note of and determined Rock which no substantial policies determined and Standard had discounted than was more upon agreed dollars; without expenditures were two thousand ad- hundred vice-president president and approval vanced for interest on note of dollars; approximately was associated Cummins fifty of Standard. thousand years; he number of Byllesby payment for a that advanced on by of dividends twenty for fifteen director of Standard stock of Rock owned vice-president years; he became public approximately two manager of Rock. Standard general dollars, a half million while that advanced *16 Gray employed and sent him to Oklahoma payment for of dividends common stock on Deep report property of on the to make a was more than a hundred dol- thousand Deep president of ; later became Rock. He redemption lars that advanced for cent, made the of Standard per Rock. The Deep notes of in Rock due salary Gray his under which contract with fifty 1941 was about two hundred and $36,000 per year president was fixed at dollars; thousand that advanced for _fed- ap- profits. plus in the Standard a share Refining eral Deep income taxes of Rock he employment of proved Riddle Company thirty was about dol- thousand charge of vice-president in ; later became payment lars that advanced for domi- production. Standard dictated Deep note of Rock due Na- Continental Brad- nated transaction in which the Company tional Bank and Trust al- was Kennedy, conveyed properties were street dollars; most four hundred that thousand trustee; and was for as In like he trustee Standard. purchase preferred advanced for stock of manner, dom- dictated and Utility Standard Corpora- and Industrial relating crack- inated the transaction to the purchased Deep for more Rock—was tion— ing plant; and Graf was trustee for Stand- seventy-five than two hundred and thou- Deep board ard. The of directors of dollars; sand entries) and that book (by advanced authorizing any did not take Rock action payment compensation transaction, concerning or otherwise either by Byllesby procur- services rendered ing in knowledge of and its had scant officers deposit of Shaffer notes under in the facts. addition to the manner agreement one extension was more than vested, which titles were transferred forty hundred and addition, thousand dollars. Deep required seventy- pay Rock was charge on made for interest five dollars fifty three thousand month for *17 No. 249. plainly were agents Appeals, Circuit Court of Circuit. Second in to Standard biddable and subservient May 2, any mea respect without and were every freedom; independence or sure organized in while depart agency-, the first instance as Standard, ment, instrumentality relationship in 1921 and it was assumed of re until the intervention continued took ad ceivership in that Standard existing relationship thus vantage concerning effecting the transactions cracking property Bradstreet not ef such plant; that transactions Rock; the benefit of fected for the dominant interest of Standard was the motive; very substan tially through enriched them and con rights unjust upon infringement stituted n Rock; allowance and that" amounts Stand claim sum itself ard asserting claim having interest. in legal fraud of others made these Rock. Advancements an indebt circumstances constitute do. a edness which he asserted can bankruptcy Forbush Co. proceeding. Gray Corporation Bartley, supra; E.E. Corporation Meehan, supra; Centmont Kentucky Wagon Marsch, supra; v. Mfg. In re Co., supra. notes rate disregarded entities be surrеndered
Notes
notes security form might holders in a undertaking this Byllesby engaged was susceptible promptly of consummation was insti- receivership proceeding when upon the determination procured agree- extension tuted and had August, 1934, claim. the committee in- per cent ments from more than tervened in bankruptcy proceeding and Up- notes. of such amount the holders deposit filed a agreement together with a receivership Byl- the institution proposed plan reorganization. After due lesby determined form notice all security holders, creditors consisted of committee. The committee deposit agreement adjudged by was Shinners, Bylles- president vice J. John by, provisions court to be fair and its terms and president Holden, Robert F. vice approved. The committee author- Frye, presi- Company, P. Janney & Newton deposit ized solicit Rock notes Republic of the Central dent acceptance stock in president Chicago, formerly vice proposed reorganization. Corporation, G. M. P. Federal Securities proposed by Deep Rock as debtor." It n (cid:127)Murphy, prominent of New banker York predicated upon the allowance Robertson, City, vice Albert J. $5,000,000.00, claim for least Moines, Iowa, banking institution, a Dcs which a substantial was to rank amount Mason, formerly II. chairman of John parity aon with the notes.
notes was receivable than hundred more one dollars months and thousand dollars; eighty charge thousand cent, subterfuge thereafter month rentals, under the five-year made for interest on notes En- of which reached all Standard. owned Standard pur- tries on the books of thirty than three hundred more reflect porting to Stand- transfer represent- thousand dollars. debits Refining ard of stock of on ing dividends stock of subserviently made in con- slightly Rock owned Standard was more formity with directions of Standard. dollars; than a million and half money representing large furnished the debits dividends com- sums on Deep Rock needed time to mon stock nine from exceeded a million operation Finally, time ing of its business dur- hundred thousand dollars. question. period charge sundry Some of it for cash ex- advanced liquidate obligations, penditures used to some was more than a million dol- deposited Rock, bank to the were made credit of lars. Credits from time to pur- some forty-three was used for other million They time. exceeded poses. dollars, The account ac- which claim is and reduced balance due proposed reorganiza- to Whether plan account cording to the face original approved large tion shall be mea- rests amount —the sure in judicial transactions sound discretiоn Virtually claim. all assuming But, were evi- the trial court. corporations between the two exclusively debits claim been of Standard have solely should not denced any Many sum, night other allowed in as the it follows on the books. and credits day long record the the approval of this appear in the pertinent facts with the liability untenable claim included as a us, serve but before corporation constituted purpose them. to detail useful prejudice grave rights others in proposed com question whether a interest. against a disputed promise of a is respectfully submitted very largely rests approved shall be debtor toto; claim should have disallowed been court, trial sound discretion proposed disturbed should not be and its action have been with the claim included showing clear appeal of a in the absence disapproved; reasons and that for these discre such improper exercise orders should be reversed. and circum facts But here the tion. reasonably and the inferences stances and them, considered fairly be drawn from all together, convincing that at times disposition of C. B. Shaffer made after owned virtu his interest in ally stock all of Rock; directors elected that Standard year; year who were Rock' directors of the- BREWERY, INDIA In re WHARF Inc. the officers not directors of Standard