The Birmingham age-herald., 1922-03-04
JUDGE TAXES MINE COMPANIES MOTION UNDER ADWSEMENT
MontevalIo Company Trustee and Certain Creditors Ask Dismissal of States Pe-
 tition in Bankruptcy
By FRED Fl. GORMLEY Montgomery Bureau The Age Herais 221-2 First National Bank BufIdin


 Montgomery, March 3.-(Special.) After hearing arguments of attor- neys throughout the day, Judge Hen ry D. Clayton of the federal court late Friday took under adyisement motion of the Montevallo Mining company, David Roberts, trustee, and certain creditors of the company for the dismissal of the states petition for an order vacating the bankruptcy proceedings started by the company.
 Throughout the day the state ar Eued that the company is seeking to use the bankrupt court in practicing q fraud against the state, against the public, and against some of it's creditors while the company insisted that no fraud had been shown and that bankruptcy was necessary to protect the interests of the company and creditors.
 Judge Clayton is expected to hand down decision on the motion to dismiss the states case Saturday morning. If the motion is overruled it is probable testimony will be re- eeiyed for and against the states al- legation of fraud.
 If the motion is granted, the state will have lost and only an appeal will prevent the adjudication of the affairs of the company in the Bank rupt court
 Knby Present
 Governor Thomas E. Kilby, for the state, and w. $. Lowell, president and treasurer of the company, were in terested spectators throughout the hearing. Several prominent coal men of the Birmingham district were in the court room.
 The bankrupt. the trustee and creditors, other than the state, filed their motion for dismissal as soon as the states petition was called before the court
 w. H. Sadler, attorney for the trustee, argued that the state has no right at this time to propose the dis missal of the proceedings as the referee has already adjudica ted the company a bankrupt and the admin istration of the state has been taken over by the federal court. MT. Sad Ter insisted that even though fraud had been practiced in filing the bankruptcy proceedings 1t would not be within the power of the state to interfere after the referee had ad- Judicated the petitioner a bankrupt.
 RushtOn's Statement
 Marion Rushton, special assistant attorney general, in reply charged that the company did not enter the bankrupt court with clean hands but dld enter with the intention of us- ing the court for the cancellation of It's contract with the state for the use of convict labor. He declared that the company in it's petition did not list all of it's assets and that al though ostensibly placing it's affairs In the bankrupt court, it has at tempted to keep the property in it's own possession and under its own direction
 lie said the state alleges fraud in the broadest sense and that if it had not alleged enough fraud the state Is willing to make further allega- lions. Hugo l.. Black, attorney for several state convicts who have suits alleging personal injuries against the company. charged that by the peti- tions. Hugo l.. Black. attorney for move it's liability for damages to the eonvicts and that if it's affairs are adjusted by the court the convicts will not be able to collect any dam ages.
 Judge B. P. Crum, who appeared For the company, admitted that the facts as alleged by the state in the petition for dismissal were true ax eept the allegations of fraud
 No Fraud Attempted
 He insisted that no fraud had been attempted and that the company had not gone farther than the law per niits it to go.
 He said the convicts are strangers to the proceedings as their claims can be maintained even during the pendency of the case.
 Judge Crum said that while fraud is alleged, nothing has been offered as proof, and that the states petition does not show any fraud. He insist ed that no fraud had been shown in any development of the case, and that the state may put forward it's claims under it's contract just as any other creditors may put forward their claims.
 Judge James J. Mayfeld, special assistant attorney general, gave a history of the case from the time the proceedings were started. He told the court that the state had offered to take over the company coal which 1t had been unable to sell and then had offered to pay every dollar owed by the company, and in addition to pay the difference between the as- sets and liabilities as scheduled, He charged that the intent and purpose of the proceedings are to de- ceive the court and the creditors by | retaining possession of the property <r~-<s-~>a >- W~~k R~~~l