Court Opinion

ID: 8828806
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:56:24.422023+00
Date Added: 2024-06-11T17:04:51.188136
License: Public Domain

MANTON, Circuit Judge
(dissenting). The affairs of Hannevig and Hannevig, Inc., were being administered through receiverships. The principal asset of the Hannevig estates consisted of all the stock of the Pusey & Jones Company. This property consisted of a plant at Gloucester, N. J., another at Wilmington, Del., and a large claim against the United States Shipping Board. The shipbuilding plant at Wilmington was idle, as was the plant at Gloucester, because ship- 1 building activities had ceased. It appears, however, that at the Wilmington plant the Pusey & Jones Company was engaged in manufacturing some paper-making machinery. The principal asset of the Pusey & Jones Company consisted of the claim against the Shipping Board amounting to $14,000,000. That this was the principal asset is asserted by the special master in his findings. Negotiations were pending, looking to an adjustment of this claim, and were conducted by Mr. Wise, who was named receiver for the Pusey & Jones Compány. On March 18, 1921, an order was entered in the District Court, pursuant to an agreement of that date, which recognized that the administration of the Pusey & Jones Company was necessarily ancillary to the .receivership of Hannevig and Hannevig, Inc. In this way, under one' general control, the affairs of the Pusey & Jones Company were *99being carried on. It met with the approval of the then stockholders of Hannevig and Hannevig, Inc., and the principal creditors.
■ The question presented by this appeal is: What was the principal business of the corporation for six months prior to July 19,1921, when the receiver was appointed for the bankrupt? The manufacturing of paper-making machinery at this time was a small part of its business, considering all of its business in the entirety. This principal business was endeavoring to make an adjustment of this large claim against the Shipping Board. The order of the District Court, which approved the agreement of May 18,1921, read in part:
“The court, after due deliberation, being of the opinion that the interests of this estate and of all other parties requiré a prompt, just, and equitable distribution of all claims of the Pusey & Jones Corporation against the United States government and the United States Shipping Board and the Emergency Meet Corporation, and the court finding further that the plans proposed to be carried out pursuant to said agreement should accomplish such a disposition of said matters.”
•Thus recognizing the chief duty of the directors of the Pusey & Jones Company. It appears that after this agreement a new board of .directors was elected for the Pusey '& Jones Company. Thus, by this arrangement, it was determined to try to avoid a receivership of the Pusey & Jones Company. It is clear from the record that the administration of the affairs of this company, in so far as the acts of its board of directors are concerned, were carried on in the city of New York, and the office at which this business was carried on was that of Mr. Wise, who was one of the receivers of Hannevig and Hannevig, Inc., and chairman of the hoard of directors of the Pusey & Jones Company, as newly constituted. He says he spent 50 per cent, of his time about the affairs of the Pusey & Jones Company. Dam con-, vinced that the principal business of this corporation was endeavoring to liquidate its affairs in New York City. The special master found that, since the appointment of the new executive committee, all its meetings have been held in New York City, except in one case, when it was held in Washington; all the new directors’ meetings were also held in New York City, and the same is substantially true of the old board, although a few meetings were held in Wilmington and Philadelphia. This applied to the period of six months preceding the bankruptcy. This corporation was in the position of one which has more than one plant situated in different districts, with an office from which supreme direction or control of its property is had. Under thése circumstances, the rule is that, if the corporation has an office in a third state, having plants in two different states, and business operations are conducted by management and control from such office, that would constitute its principal place of business within the meaning of the bankruptcy statute. In re Guanacevi Tunnel Co., 201 Fed. 316, 119 C. C. A. 554; In re Matthews Consolidated Slate Co. (D. C.) 144 Fed. 724. In the Matthews Case the court said (144 Fed. at page 738, 75 C. C. A. 604) :
“We are of the opinion that when a corporation, operating factories, mills, oe mines in various states, has a principal office where business is transacted *100of the character of that conducted at the Boston office, * * ” rather than a factory, mill, or mine, according to ordinary understanding and speech, as well as according to the intent of Congress, constitutes the ‘principal place of business,’ within the meaning of the Bankruptcy Act. Not only is this the natural interpretation, but it seems to us the only practical interpretation; for, since there can be but one principal place of business, if regard is paid to the amount of property owned or kept in a particular jurisdiction, or to the aihount of product there turned out, or to the number of workmen employed, it might follow that the inquiry would be, which is the largest mine or factory? a question having little relation to the purpose of administering the assets.”
To the same effect, see Continental Coal Co. v. Roszelle Bros. (C. C. A.) 242 Fed. 243, 155 C. C. A. 83, and In re Marine Machine & Conveyor Co. (D. C.) 91 Fed. 630.
The principal place of business of a corporation is usually where the general offices or headquarters are located, without regard to the place named in the charter as the principal place of business. The test is where the actual business of the concern is chiefly prosecuted and managed, and where a corporation has several places of business located in different districts, its principal place of business is where the affairs of the corporation are actually managed. To be sure, this is a question of fact, to he determined by the circumstances of each par-, ticular case; but the rule is clear. It appears that Hannevig was the principal stockholder of the Pusey &, Jones Company; that the Pusey & Jones Company was in fact Hannevig. He conducted all his business and had a place of business in the city of New York, with these plants in New Jersey and Delaware. His financing was done there. When the new board of directors carried on the business under this arrangement with the District Court, they but continued what Hannevig did before them.
It also appears that a voluntary petition in bankruptcy, verified July 25, 1921, was filed, and the corporation, after due authority, petitioned the District Court to be adjudicated a bankrupt in the Southern district of New York. A board of directors of a foreign corporation has power to file a voluntary petition in bankruptcy. In re De Camp Glass Casket Co. (C. C. A.) 272 Fed. 558. And this authority includes the power to declare the place which the board has regarded as the principal place of business and to determine any bona fide and serious question which may arise as to its locality. Such power is inherent and incidental to the power to determine whether the corporation is solvent or not and whether or not it has committed acts of bankruptcy:
“The corporation is presumed to know where it has had its principal place of business, and when the corporation itself files its petition jurisdiction is conferred on the court where filed, subject to a showing in that court that the principal place of business was or had been elsewhere.” In re Beiermeister Bros. Co. (D. C.) 208 Fed. 945.
I think the facts require a finding that the principal place of business, as well as the actual management of the corporation, was in the Southern district of New York. Therefore I dissent.