Appeal from the District Court of the United States for the Middle District of Pennsylvania; Albert L. Watson, Judge.
Before BUFFINGTON, DAVIS, and BIGGS, Circuit Judges.
BUFFINGTON, Circuit Judge.
In this case it appears that the Philadelphia & Reading Coal & Iron Company and the Fulton Coal Company owned the anthracite coal mining land here involved and leased the same to the Northumberland Mining Company on a coal royalty per ton for all coal "mined and shipped from the Fulton lands and that may be taken and shipped from the Enterprise culm banks or sold upon the demised premises." If further provided the lessee each month make a statement of all coal "mined and shipped from or sold upon the demised premises."
On May 30, 1934, Charles Spruks, the appellee, by written contract with the lessee, agreed to buy approximately 25,000 tons of coal which, when mined, was to be stored on the premises. This was done, Spruks paid for it, and on the huge pile of coal thus paid for and stored on the premises he placed a conspicuous sign reading as follows:
"Property of Charles Spruks
Thereafter Northumberland became in arrears for its coal royalty and on November 3, 1934, Reading and Fulton issued a landlord's warrant and levied on Spruks' coal.
On November 5, 1934, Northumberland petitioned the court below to reorganize under section 77B, Bankr. Act (11 U.S.C.A. § 207), and thereupon the court below restrained Reading and Fulton from taking action against Northumberland on the landlord's warrant. Subsequently Reading and Fulton petitioned for leave to sell the coal. Spruks and Northumberland denied such right, the former averring that "he purchased and paid for the coal for the purpose of removing it from the premises and selling it to purchasers as fast as orders for it were obtained." Spruks further averred that, "although the coal in the bank referred to has been fully paid for by him, he has been obliged to leave the coal on the premises until a market for it could be obtained." In its answer Northumberland averred that "Philadelphia & Reading Coal & Iron Company and the Fulton Coal Company were notified of the storing of said coal upon said premises for the account of said purchasers."
Subsequently, by consent, it was agreed by all parties that the coal should remain on the premises and Spruks be allowed to sell as he could and pay the money received by him into the registry of the court; that from the money so paid in, Reading and Fulton should be paid the tonnage royalty owing by Northumberland on Spruk's coal, and the claims of all parties on the stored coal should attach to the fund.
Upon hearing the proofs and contentions of all parties, the trial judge held the fund paid in by Spruks should be paid to him less the royalty and costs of administration. Did the court below, sitting in bankruptcy, commit error in so decreeing? We are of opinion it did not.
Putting aside the many questions discussed and assuming the right of Reading and Fulton to levy and sell on a landlord's warrant, we feel that the decisive question is the one on which the court below based its decision, namely, whether the case ...