Phelan v. Middle States Oil Corp.

124 F. Supp. 728, 1952 U.S. Dist. LEXIS 1892
CourtDistrict Court, S.D. New York
DecidedFebruary 20, 1952
StatusPublished
Cited by5 cases

This text of 124 F. Supp. 728 (Phelan v. Middle States Oil Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Phelan v. Middle States Oil Corp., 124 F. Supp. 728, 1952 U.S. Dist. LEXIS 1892 (S.D.N.Y. 1952).

Opinion

SMITH, District Judge.

This matter involves the final accounting of the receivers of United Oil Producers Corporation. Objections thereto were filed by the executors of the estate of William W. Cohen, holder of some non-deposited United Oil Producers bonds and of shares in Southern States Oil Company, and individuals holding shares of stock and scrip in Oil Lease Development Company, and Southern States, two of the companies of the old Middle States Oil Corporation system.

The receivership grew out of the collapse of the system of oil, railroad, and land companies, security and holding companies, controlled by C. N. Haskell, formerly governor of Oklahoma. The system had comprised some fifty-five corporations, of which Middle States Oil Corporation and thirty-eight others which were, in August, 1924, wholly or partly owned by Middle States Oil directly or through sub-holding companies, [730]*730eventually were placed in receivership in this District. These were

Date of

Name of Company Receivership

1. Central States Oil and Gas Company 1/21/25

2. Columbia Petroleum Corporation 8/22/24

3. Corona Oil Company 9/5/24

4. Cotton Belt Petroleum Company 9/5/24

5. Diamond Pipe Line and Marketing

Corp. 9/5/24

6. Dominion Oil Company 10/4/24

7. Eureka Producing Company 8/22/24

8. Federal Oil Marketing Corporation 8/22/24

9. Gulf Coast Refining Company 8/22/24

10. Gulf States Oil and Refining Corpo-

ration 8/22/24 ’

11. Hobbs Oil Company 2/13/25

12. Imperial Oil Corporation 8/22/24

13. Judson Oil Company 8/22/24

14. Leahy Oil Company 1/21/25

15. Marr Oil Corporation 8/22/24

16. Middle States Oil Corporation 8/15/24

17. Midsig Corporation 9/5/24

18. Miles Oil Corporation 9/5/24

19. Number Eleven Oil Corporation 9/5/24

20. Number Nine Oil Corporation 8/22/24

21. Number One Oil Company 8/22/24

22. Number Seventy-Seven Oil Company 9/5/24

23. Oil Lease Development Company 8/22/24

24. O.L.D. Operating Company 8/22/24

25. Oliphant Petroleum Company 9/5/24

26. Pawnee Osage Oil and Gas Company 1/21/25

27. Peters Leahy Oil Company 1/21/25

28. Peters Oil Company 9/5/24

29. Plains Petroleum Company, Inc. 8/22/24

30. Ranger Texas Oil Company 9/5/24
31. Reliable Securities Corporation 8/22/24
32. Southern States Oil Corporation 8/22/24
33. Sure Oil Corporation 8/22/24
34. Texas Chief Oil Company 8/22/24
35. Turman Oil Company 8/22/24
36. United Oil Producers Corporation 8/22/24
37. Verland Oil and Gas Company 8/22/24
38. Western States Oil Corporation 8/22/24
39. Wichita Petroleum Company 8/22/24

The receiver Glass is charged with having, in combination with the reorganization committee members, engineered the reorganization to obtain control of the res, with having, by the terms of the reorganization agreement allowing stockholder participation, by the fixing of the bids at the sale and by later handling of the sale of properties of subsidiaries, by the allocation of overhead expenses, by reshuffling of the intercorporate claims, by enforcement of the Westervelt Gulf Coast and fraud claims on behalf of the new company, by illegal use of funds of subsidiaries by the new company, and otherwise defrauded the United Oil Producers bondholders, particularly the non-depositors, and with having defrauded the minority shareholders in Southern States and other subsidiaries.

Practically every act of Glass in the receivership is attacked as in bad faith and in pursuance of the scheme or conspiracy to defraud. The identity of the other claimed conspirators is difficult to ascertain.

Glass' answers to the charges are that he acted throughout in entire good faith, that some of the actions attacked are those of committees or committees’ counsel for which he has no responsibility, that in most cases court orders after sufficient notice protect him, that the bid prices at the sales were fair, that many of the actions attacked have no relation to United, as to which alone he is accounting here, and that in most instances the proportionate interest of any minority in the outcome of any particular transaction is so small as to be de minimis. He also asserts special defenses of failure to state a claim on which relief may be granted, estoppel, fraud, laches, payment, release, statute of limitations, waiver, res ad judicata, and transit in rem judicatam. Middle States Petroleum Corporation, the new corporation, depends also on laches, estoppel, and the statute of limitations, and counterclaims against Cohen’s estate for alleged conversion of $24,700 in United Oil Producers bonds alleged to have been held by Cohen as trustee or agent of Reliable Securities Corporation and for the distributive values received by Cohen thereon.

Findings of Fact

1. In June, 1924, or shortly thereafter, one Shivers, Haskell’s secretary, as a stockholder of Middle States Oil Corporation, filed a stockholders’ bill against that company, praying the appointment of a receiver.

2. The application for receiver was denied at the hearing in the stockholders’ suit.

3. Shortly thereafter a creditors’ suit was filed by Joseph A. Phelan who had claims against Middle States Oil Corporation and one of its subsidiaries.

4. John J. Curtin was attorney for Phelan.

[731]*7315. On August 15, 1924, in the creditors’ action, Joseph P. Tumulty and Julius Mayer were appointed receivers of the parent company, Middle States Oil Corporation.

6. Amended and supplemental bills were later filed, adding thirty-eight other •companies in the system and the receivership was, on consent, extended to those •companies.

7. Shivers formed a committee to represent Middle States Oil Corporation .■stockholders.

8. Joseph Glass was a junior member of the firm of Olcott, Olcott & Glass, which represented Shivers in the stockholders’ action. This firm was also retained as counsel for the stockholders’ •committee. Olcott, Olcott & Glass and John J. Curtin were appointed as the co--attorneys for the temporary receivers.

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124 F. Supp. 728, 1952 U.S. Dist. LEXIS 1892, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phelan-v-middle-states-oil-corp-nysd-1952.