The Birmingham age-herald., 1922-03-05
MONTEVALLO CO.
 WINS VICTORY BY
 CLAYTON'S DECREE
Orders Bankruptcy Proceed ings Before Referee to
 Take Usual Course

Montgomery, March 4.-fSpecial) The Montevallo Mining company won a victory today in federal court here when Judge Henry D. Clayton handed down a decree dis missing the states petition for dis missal of the bankruptcy proceed ings started by the company in the court in Birmingham
 Following a conference between Governor Kilby and counsel for the state it was announced that an appeal would be taken from the decision.
 Judge Clayton held in his opinion that an individual or corporation is entirely within it's rights in seeking relief in the bankruptcy courts even though it be solvent. He ordered that the administration of the es- tate proceed before the referee in the usual course
 Clearly within Rights
 In an opinion containing more than three typewritten pages Judge Clay ton announced that he regretted it is necessary to decide against the states, but that the company was clearly within it's rights in going into the bankrupt court. He also said that all creditors of the company, includ- ing the state, could submit their claims to the court and they would be considered in the general adjust ment of the company's affairs The decision on the states petition car ried with 1t the dismissal of the peti- tion of Hugo L. Black. attorney for Stafford Reese, a state convict. who requested the court to dismiss the bankruptcy proceedings on the ground that the company Is solvent, that Reese has a claim against the company for personal injuries and that this claim will be rendered in- valid If the company is permitted to have its affairs adjusted in the bank rupt court Judge Clayton held that if Reese has a valid claim against the company it will be considered in con- nection with the general adjustment, also.
 Trwstee sustnimed
 In his decision denying the petition of the state for the dismissal of the bankruptcy proceedings, Judge Clay ton also denied the states petition for the appointment of a receiver to sue ceed the trustee, David Roberts. who
 
 the creditors. He held that 1t Is not within the power of the court to re- move trustee except for cause aris- ing from the administration of the estate.
 Judge Ciayton's decision denying the states petition fFr the dism ss,, | of the bankruptcy proceedings 10 lows:
 Tn the district court of the United States, northern division, middle dis trict of Alabama at Montgomery:
 Tn the matter of the Montevaiio Mining company.
 ton under the voluntary petition of the bankrupt denied.
 -Harwell G. Davis. attorney gem oral of Alabama; Marion Rushton. assistant attorney general of Ala bama; ]. J. Msyfieid, all of Mont gomery. Ala. for the petitioners,
 w. H. Sadler. IT,. and F. II. Cab aniss, fof Birmingham, Ala. and Ben P. Crum, of Montgomery, Ala, for the bankrupt
 ''H D. Clayton. district judge.
 The Montevailo Mining company, a corporation. having been adjudged a bankrupt in voluntary proceeding. a receiver was appointed by the ref efCS anu eLNcr Wdios tue Ctto'eoA D elected trustee who has qualified
 The State of Alabama now peti- tions the court to vacate the order of adjudication and to dismiss the original petitions of the bankrupt.
 This petition of the State alleges that by virtue of contract between the state and the mining company the state convicts were let to the company and that thereby the com pany has become indebted to the state in large sum. past due and unpaid; that the contract has con siderable period to run and that should it be fully performed the state will become entitled to furth- CT large sum, estimated at about s25e, ,000.0o.
 Claims Company Solvent
 The petition of the state also ayers that the company called the bankrupt, is solvent--that it's assets are of a value largely in excess of its liabilities. Furthermore the re- tition charges that the bankrupt committed a fraud in that it's volun- tary petition was not filed in good faith or for the bona fide purpose on the part of the bankrupt to deliver up it's property and thereby be re- lieved of it's debts; but that on the contrary the purpose in filing the pe- tion and procuring the election of the trustee was a fraudulent scheme to avoid the liability to the state under it's contract for the hire of convicts. Certain facts are stated tending to show the friendly per-