Citations
- 17 F. Supp. 3
Full opinion text
WATSON, District Judge.
The plaintiffs filed a bill in equity, in which they allege, inter alia, that the Capital Bakers, Inc., received from Carl A. Schug, trustee of the estate of Winner-Franck Baking Company, bankrupt, a deed for certain real estate of the bankrupt’s estate situate in the Eleventh ward of the city of Williamsport, Lycoming county, Pennsylvania, fully described in the bill, and that the Capital Bakers, Inc., had failed to pay the purchase price of said real estate to the trustee of the bankrupt’s estate. The prayer of the bill is for a revocation of the court’s order of confirmation of the sale for a decree declaring the deed by Carl A. Schug, trustee, fraudulent, void, and of no effect, and for a decree directing the Capital Bakers, Inc., to reconvey the premises described in said deed to the present trustee of the bankrupt’s estate free and clear of all liens and encumbrances. In the answers filed by the defendants many of the facts alleged in the bill are admitted, but the Capital Bakers, Inc., one of the defendants, in its answer averred that it paid to the trustee of the bankrupt estate the full purchase price for the real estate, being the sum of $65,000, the amount which it bid' for said real estate at the public sale thereof held in pursuance of an order of this court.
The matter came on for hearing, and, from the evidence, the court finds the following facts:
1. That on February 26, 1931 the Winner-Franck Baking Company was duly adjudicated a bankrupt in the District Court of the United States for the Middle District of Pennsylvania.
2. That, on June 29, 1931, Carl A. Schug was duly elected trustee of the bankrupt estate of said Winner-Franck Baking Company and, after having been duly qualified, served in the capacity of trustee until November 12, 1933, the date of his death.
3. That, on June 30, 1931, upon petition of said Carl A. Schug, the United States Court for the Middle District of Pennsylvania, authorized and empowered the said trustee to employ A. R. Jackson as his attorney in the said bankruptcy proceedings, and that, pursuant to this authority, the said trustee appointed A. R. Jackson as his attorney.
4. That the said attorney, A. R. Jackson, performed many of the administrative duties of the trustee such as employing individuals to aid in operating the bakery of the bankrupt company, receiving and depositing the daily receipts from the operations of the plant, appearing at all meetings before the referee, and making expenditures on blank checks, executed by the trustee, which had been entrusted to him by the trustee.
5. That Carl A. Schug never appeared personally as trustee in the office of the referee in bankruptcy but A. R. Jackson represented him in all instances and at all occasions before the referee.
6. That, on or about June 31, 1931, Carl A. Schug filed a petition with William W. Champion, referee in bankruptcy, for permission to sell the real estate owned by the bankrupt at public sale, free and discharged of all liens; and that notice of this petition was duly mailed to all creditors and rules were duly issued and served on all lien creditors.
7. That objections to the sale were filed on behalf of the plaintiff bondholders, who were secured by a mortgage on the premises, but these objections were subsequently withdrawn, whereupon, in the absence of other objections, the trustee on or about August 10, 1931, was authorized to sell the real estate of said bankrupt free and clear of all liens.
8. That notices of the proposed sale were published and posted according to law, said notices designating A. R. Jackson as attorney for the trustee.
9. That on or about November 28, 1931, the land petitioned to be sold (with buildings, machinery, etc.) was sold at public sale to the Capital City Baking Company of Harrisburg, Pa., at the price or sum of $65,000, being the highest bid for the said property.
10. That after the said sale and on the same date, to wit, November 28, 1931,‘the Capital City Baking Company paid 10 per cent, of its bid ($6,500) to A. R. Jackson, by a treasurer’s check in the amount of $10,000 issued by the treasurer of the Allison-East End Trust Company, payable to the order of Capital City Baking Company, and indorsed in blank by the Capital City Baking Company; $6,500 of this check was in payment of 10 per cent, of the bid for the real estate, and the remaining $3,-500 was paid on account of the bid for certain personal property which had been purchased by the said, vendee.
11. That, subsequently, Carl A. Schug, the trustee, filed a return of the said sale and a petition for confirmation thereof, and after the sale was confirmed nisi, due notice given to all creditors and parties in interest, including the bondholders, and no objections filed, the District Court on December 23, 1931, ratified and confirmed the sale and decreed that the property “be and remain unto Capital City Baking Company