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IN RE WALMAR SCREEN PRINTING CO.

June 21, 1960

In the Matter of WALMAR SCREEN PRINTING CO., Inc., Debtor


The opinion of the court was delivered by: BYERS

A motion was decided April 4, 1960 in connection with an application to declare the debtor in contempt of court for failing to perform a fiduciary duty which attached to it in connection with an order of this Court.

This is a Chapter 10 proceeding, 11 U.S.C.A. § 501 et seq., the ultimate outcome of which does not clearly appear in the record.

 The motion was granted so far as the corporate debtor was concerned, and at the hearing the creditor who made the motion, sought to have the order also declare that Everett Jacobs, the president of the debtor, be declared personally in contempt. The Court pointed out that as of the date of the said decision, no evidence had been offered to justify granting the motion against the individual, and consequently a further hearing was had in that behalf on May 11, 1960, as a result of which the Court makes the following

 Findings: 1. The original petition for reorganization disclosed that the assets and liabilities of the debtor were made up as follows: Assets: /-- Accounts Receivable $ 4,293.72 Machinery and Equipment 187,327.21 Screens (the product produced by the debtor) 50,000.00 $ 241,620.93 Liabilities: /-- Accounts Payable 28,630.00 Note secured by Chattel 22,000.00 Mortgage Note secured by Chattel 29,591.75 Mortgage Miscellaneous loans 15,073.85 Pension Fund 300.00 Vacation Fund 300.00 Rent and Power 7,171.46 Taxes, Social Security and 28,440.39 Withholding Unemployment Insurance 2,800.00 Federal Income Tax 7,500.00 $ 141,807.45. (Government lien)

 2. The entire capital stock of the debtor, 150 shares, was owned equally by Everett Jacobs and his wife, who were the only officers and directors.

 3. Everett Jacobs was president of the debtor and operated its business.

 4. Everett Jacobs is found to have been doing business in the corporate form and is to be held personally responsible for any dereliction on the part of the debtor in possession, namely, a failure to perform all the duties of a trustee of the corporate property.

 5. During the month of July, 1959, the plant and equipment of the debtor were moved from the premises which it occupied at the time this proceeding was instituted, to Hicksville, Long Island.

 6. By some process that has not been laid bare, the property was acquired by Consolidated Screen Printing Corporation, all of the stock of which was owned by Jacobs and his wife, or by Jacobs himself.

 7. There seems to have been no formal transfer of title to the corporate property of the debtor, to Consolidated. Thus:

 'The Court: How did Walmar transfer title to this machinery and equipment to Consolidated?

 'Mr. Lessler: (Attorney for debtor) It never did.

 'The Court: Then the machinery and equipment in Hicksville is still the property of the debtor?

 'Mr. Lessler: Yes -- not all of it -- but that which was listed in the schedules.

 'The Court: It continued to be its ...


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