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Acker v. Girard Trust Co.

June 30, 1930

ACKER
v.
GIRARD TRUST CO. ET AL.



Appeal from the District Court of the United States, for the Eastern District of Pennsylvania; Oliver B. Dickinson, Judge.

Author: Buffington

Before BUFFINGTON and DAVIS, Circuit Judges, and AVIS, District Judge.

BUFFINGTON, Circuit Judge.

On October 3, 1927, the court below, on a bill filed that day, duly appointed receivers for the South Penn Collieries Company, an insolvent corporation of the state of Delaware.

On the same day the Girard Trust Company, trustee under a second mortgage of said company, was, on its petition, allowed to intervene.

On October 27, 1927, Franklin Spencer Edmonds was appointed a master "to take evidence and report the same with his findings thereon, upon the following matters; * * * (h) the amounts of the claims of creditors of the defendant, South Penn Collieries Company, other than the holders of first and second mortgage bonds."

On January 23, 1928, Warren T. Acker, the present appellant, filed a petition which so far as here pertinent represented that he owned all the stock of the Von Storch Collieries Company, which had valuable coal property in fee, and that he had sold to the South Penn Collieries Company all such capital stock, receiving in pay therefor two millions in cash and certain capital stock of the buying company. He further stated that part of the consideration was that the latter agreed to employ him as manager for five years and "that if at any time the company should desire to retire him as manager, it should pay to him the sum of $500,000, and your petitioner was then to transfer to the company his said five per cent. of the common stock," to wit, $500,000 of stock. He further averred that his contract with the company "was a closed contract as to prior liens which might dilute or jeopardize the value of your petitioner's stock representing the balance of the purchase price for his said valuable properties." He further alleged that the buying company had later by "repeated and continued interferences and violations of the said contract and the usurpation of his rights and powers was such as to deprive him of all power and authority as general manager and, in the language of the contract, to 'retire' him as general manager." He further alleged that the buying company had, in violation of its contract with petitioner, given to the Girard Trust Company the second mortgage upon its property for $2,000,000, which said trustee was now seeking to foreclose, which foreclosure "would result in wiping out your petitioner's contract and the payment to him of $500,000, the balance of the purchase price for his said coal property and which is owing to him because of violations of his contract as aforesaid."

As here pertinent the petition prayed:

"7. That the Special Master appointed by the Court be authorized and directed to hear and determine the various rights and questions involved in the claim of Warren T. Acker against the South Penn Collieries Company arising from or affecting his contracts with said company and any violations thereof, and also any acts or things showing any conspiracy or fraudulent or unlawful confederacy or action on the part of directors or officers of said company affecting his rights under said contracts, or to bring about the appointment of a receiver, or the foreclosure of the second mortgage on the property of said company, and also to determine whether said mortgage and bonds thereunder have priority, and to what extent, if any, over the claim of the said Warren T. Acker."

On February 7, 1928, the court referred Acker's claim to the master already appointed and directed him --

"To hear evidence and report his findings and conclusions to the Court upon the following matters in addition to the matters heretofore referred to him:

"1. What amount, if any, is due and owing by the South Penn Collieries Company to Warren T. Acker under or by virtue of his contracts with said company, and the lien of priority, if any, to which such claim may be entitled.

"2. All relevant matters affecting the validity, lien and priority of the mortgage of $2,000,000 made by the South Penn Collieries Company to the Girard Trust Company, trustee, under date of January 1, 1926."

Much testimony was taken, and on June 13, 1929, the master filed his report; the pertinent findings of fact and conclusions ...


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