# Petition — St. Paul Fire & Marine Insurance v. Community Oil Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1975
- **Citation:** 423 U.S. 835

## Text

IN THE ; .
6 19%

JUN
SUPREME COURT\

MICHA

OF THE UNITED STATES-—-——~-

October Term, 1974

“An 2
ST. PAUL FIRE AND MARINE INSURANCE COMPANY.
Petitioner,

COMMUNITY OIL COMPANY, INC.
JOSEPH E. SEAGRAMS & SONS, INC.
KODAY PRESS CO., INC.
UPACO ADHESIVES, INC.
EATON CORPORATION
MILLER, JENNINGS & KEARNEY
DAVID MICHAEL & CO., INC.
SEA LAND SERVICES, INC.
ZIGER, RESNICH AND FEDDER
PETER L. CHAKMAKIAN
GEORGE C. HESTER
JULIUS SANKIN
JEROME J. PARKS
CHRISTINE R. GAINER
EVELYN R. RUEHL
VINCENT V. CHANEY, SPECIAL RECEIVER, Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE
CIRCUIT COURT OF JEFFERSON COUNTY,
WEST VIRGINIA

PIERRE E. DOSTERT

888 Seventeenth Street, N.W.
Washington, D.C. 20006

June 6. 1975 Counsel for Petitioner

Strvker-Post Publications. Inc Washington. D

INDEX

Page
I leis Skea: 2 elodi al ds ak I
DE Cae CoCr a ee Le EL Bg ion
Pe OU eee a eet 2
Statutory provisions involved .......................... 2,3
I OU I nooo sc cock dcdancevcduecdeccccn 3
Reasons for granting the writ.......................... 8

1. The Court Below Decided an Important Federal Ques-
tion in a way in Conflict with the Decisions of this Court as to

Petitioner’ s Right Secured by Federal Law is Plainly Wrong... | 1

IIE PEP ET ENS Rome tt ne rose 12

Appendix (Judgment Order of the Lower Court) -.--... la
CITATIONS

CASES:

Commonwealth of Massachusetts v. United States, 335 U.S.

oo EEE PO op Pe Pret san Cl eas gan 9
ee Os i, ee vee enees 8
Illinois v. Campbell, 329 U.S. 362.................... s
Spokane County v. United States, 279 U.S. 80........... 9
ae Oe CU RR Os od igi cup ocunveeeue 8
RS Re Eon een ceenet 8
U.S. v. Oklahoma, 261 U.S. 253...................... 9
U.S. v. State Bank of North Carolina, 6 Peters 29........ .
eg Ue ee ee y
STATUTES:

West Virginia Code, Chapter 56, Article 7, Section 6..... 5

IN THE
SUPREME COURT OF THE UNITED STATES

October Term, 1974
No.

ST. PAUL FIRE AND MARINE INSURANCE COMPANY,
Petitioner,

V.

COMMUNITY OIL COMPANY, INC., et. al., Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE
CIRCUIT COURT OF JEFFERSON COUNTY,
WEST VIRGINIA

The Petitioner, St. Paul Fire and Marine Insurance Corapany
respectfully prays that a writ of certiorari issue to review the judg-
ment and opinion of the Circuit Court of Jefferson County, West
Virginia entered on the 24th and 26th days of June, 1974 review of
which were refused by the Supreme Court of Appeals of West
Virginia upon two petitions for appeal and supersedeas.

OPINION BELOW
The orders of judgment of June 24, 1974 and June 26, 1974 appear
in the appendix hereto. No opinion was rendered by the Supreme
Court of Appeals of West Virginia in refusing two petitions for
appeal and supersedeas.

JURISDICTION

The judgment of the Circuit Court of Jefferson County is contained
in orders entered on the 24th and 26th day of June, 1974. Timely

petition for appeal was presented to the Supreme Court of Appeals of
West Virginia (West Virginia Code, Chapter 58, Article 5, Section
4) on February 18, 1975, which petition was refused on February 26,
1975; a second petition was presented on February 26, 1975 which
was refused on March 10, 1975. Discretionary review having been
refused, the decision and judgment of the Circuit Court of Jefferson
County is that of the highest court in which decision could be had
(Minneapolis, St. P. & S.S.M.R. Co. v. Rock, 279 U.S. 410:
Virginian R. Co. v. Mullens, 271 U.S. 220). This Court’s jurisdic-
tion is invoked under 28 U.S.C. § 1257(3).

QUESTIONS PRESENTED

|. Whether the claim of a surety on a bond under which it has paid
money to the U.S. government, asserted in a state receivership
proceeding under Title 31 U.S.C. §191 and §193, can be defeated
through improper construction of state statutes and improper eviden-
tiary rulings favoring general creditors notwithstanding the priority
of such a surety under Title 31 §8$191, 193.

2.Whether the claim of a surety on a bond on which it has paid
money to the U.S. government can be impaired and superseded by
the judgment of a state court to the effect that the claim, presented
under Title 31 U.S.C. $2191,193, *‘has not been proved.”’

3. Whether a state court can impair and supersede the priority of the
U.S. government or a surety who has paid money to the U.S.

government, asserted under 31 U.S.C. §§191,193, by refusing proof

of the surety’s claim while at the same time allowing general, unsec-
ured creditors an opportunity to assert and prove their claims and then
enter judgment in favor of such general, unsecured creditors.

STATUTORY PROVISIONS INVOLVED

United States Code, Title 31:
§ /9/. Priority established
Whenever any person indebted to the United
States is insolvent, or whenever the estate of any
deceased debtor is insufficient to pay all the debts
due from the deceased, the debts due to the United
States shall be first satisfied; and the priority es-
tablished shall! extend as well to cases in which a
debtor, not having sufficient property to pay all

his debts, makes a voluntary assignment thereof,
or in which the estate and effects of an abscond-
ing, concealed, or absent debtor are attached by
process of law, as to cases in which an act of
bankruptcy is committed. R.S. 23466.

§ 193 Priority of sureties

Whenever the principal in any bond given to the
United States is insolvent, or whenever. such
principal being deceased, his estate and effects
which come to the hands of his executor, adminis-
trator, or assignee, are insufficient for the pay-
ment of his debts, and, in either of such cases. any
surety on the bond, or the executor, administrator.
or assignee of such surety pays to the United
States the money due upon such bond, such
surety, his executor, administrator, or assignee,
shall have the like priority for the recovery and
receipt of the moneys out of the estate and effects
of such insolvent or deceased principal as is sec-
ured to the United States; and may bring and
maintain a suit in law or equity, in his own name.
for the recovery of all moneys paid thereon. R.S.
§ 3468.

STATEMENT OF THE CASE

John Brown Distilling Company, Inc. was incorporated in 1963
with principal offices at Harpers Ferry, West Virginia to process,
bottle and sell alcoholic beverages. Its principal officers, both mem-
bers of the bar of West Virginia, were Peter L. Chakmakian. Chair-
man of the Board of Directors, Treasurer and Secretary, and Jerome
Radosh, President. For purposes of importing alcoholic beverages
under bond, John Brown Distilling Company, Inc. executed a power
of attorney to Samuel Shapiro & Co., a licensed Custom House
broker in Baltimore, signed by Jerome Radosh, President and Peter
L. Chakmakian, Secretary. A second corporation, wholly owned by
John Brown Distilling Company, Inc., called Madison Avenue Im-
ports, Ltd., a New York corporation with its principal place of
business in Harpers Ferry, West Virginia. also executed a power of
attorney to the same broker, signed by Peter L. Chakmakian. Presi-
dent, and Jerome Radosh, Secretary.

A petition to appoint a receiver of John Brown Distilling Com-

3

pany, Inc. was filedin the Circuit Court of Jefferson County, West
Virginia by Jerome Radosh on September 18, 1972 which was
answered on September 19, 1972 by Peter L. Chakmakian, who
admitted all allegations in the petition and joined in the prayer for
appointment of a receiver. The grounds for this action were that John
Brown Distilling Company, Inc. had ceased operations and was
under attack by numerous creditors.

Proceedings before a court-appointed Receiver ensued; in his
report to the Court there were established nine priorities of secured
creditors with ascertainable liens of record at the time the receiver
was appointed, and a number of general creditors to whom the tenth
priority was assigned. Among the general creditors whose claims
were approved by the Commissioner was Koday Press, Inc. on
unpaid invoices for bottle labels addressed to John Brown Distilling
Company, Inc. for ‘‘Madison Avenue Imports’’ labels. Peter L.
Chakmakian, who claimed to be a general creditor of John Brown
Distilling Company, Inc. , objected to the report of the Commissioner
on the grounds, inter alia, that ‘‘The report fails to list all of the
liabilities which would enjoy a priority of preference. a. Excise tax
and customs duty tax payable to the United States Bureau of Cus-
toms. $13,087.12 . . ..’ No objection was made to the payment of
Koday Press, Inc. for Madison Avenue Imports bottle labels.

Petitioner St. Paul Fire and Marine Insurance Company moved on
August 21, 1973 for leave to intervene in the receivership proceed-
ing. In support of its motion, it alleged it had paid the sum of
$14,457.25 to the United States on a surety bond upon which John
Brown Distilling Company, Inc. was the principal obligor of customs
duties and import taxes. S.L. Minghini and B.B. Minghini, Partners,
doing business as S.L. Minghini and Son, Sea-Land Service, Inc..,
and Community Oil Company, Inc. , general creditors of John Brown
Distilling Company, Inc. opposed the motion, which was granted;
the Court (Sencindiver, J.) referred the claim to its Commissioner,
Henry W. Morrow. In its complaint which accompanied the Motion
to Intervene, St. Paul Fire and Marine Insurance Company alleged
that under the applicable laws of the United States it, as a subrogee
under a claim for unpaid customs duties and taxes due the United
States, was entitled to preference over each and every other creditor
in the receivership proceeding (Record, pp.140-14/). The federal
question sought to be reviewed by this Court was thus initially raised
in the trial court.

St. Paul Fire and Marine Insurance Company submitted proof of its
claim in the form of an affidavit accompanied by exhibits to which
reference was made in the affidavit. A memorandum in support of the

4

priority granted by 31 U.S.C. §§ 191, 193 was submitted with the
affidavit (Record, pp. 276-281). Community Oil Company, Inc.
responded with an affidavit purporting to deny that St. Paul Fire and
Marine Insurance Company **made a payment to the United States
Bureau of Customs in the amount of $14,457.25 for and on behalf of
John Brown Distilling Company, Inc. , by virtue of any obligation of
John Brown Distilling Company, Inc. , to the United States Bureau of
Customs. . .”

Discovery procedures undertaken by St. Paul Fire and Marine Insur-
ance Company (West Virginia procedure is almost identical to the
Federal Rules of Civil Procedure) revealed that the denial was with-
out substance and that the person signing the affidavit was ** without
knowledge or information sufficient to form a belief’ regarding the
claim of St. Paul Fire and Marine Insurance Company. There was
also a **demand’”’ that St. Paul Fire and Marine Insurance Company
prove its claim, followed by a general denial of the claim and a
second demand requiring “‘strict proof thereof.”’

In hearings before the Commissioner, St. Paul Fire and Marine
Insurance Company offered its affidavit and exhibits, having the
same marked by the Commissioner, and submitted additional docu-
ments. The original check from St. Paul Fire and Marine Insurance
Company payable to the Bureau of Customs was exhibited to the
Commissioner and a copy thereof was marked and included in the
record. The other documents included the bonded warehouse entry
document and the surety agreement under which St. Paul Fire and
Marine Insurance Company guaranteed payment of customs duties
on 88 barrels of scotch whiskey consigned to John Brown Distilling
Company, Inc. The Commissioner ruled that the purported denial
of the claim by Community Oil Company, Inc. was a valid denial of
the claim of St. Paul Fire and Marine Insurance Company. The law
involved in the ruling of the commissioner,Chapter 56, Article 7.
Section 6 of the West Virginia Code, provides, inter alia:

‘*Every creditor in any chancery cause pending in any
court before a commissioner in chancery under a decree of
reference in such cause may establish his debt or demand
against the debtor, if it be for the recovery of money due
on contract, by filing before the commissioner with such
debt or demand, completely itemized where it is upon an
account, the affidavit or affidavits of any person or per-
sons competant and not disqualified by law (which compe-
tency the affidavit or affidavits shall affirmatively show in
every case where the creditor is seeking to prove a debt or
demand against a deceased debtor or his estate) to testify

as a witness or as witnesses before the commissioner about
or concerning the debt or demand in question, such af-
fidavit or affidavits stating every essential element neces-
sary to constitute proof of such debt or demand, the same
as though affiant or affiants had testified before the com-
missioner as a witness or as witnesses in person, unless the
debtor, his personal representative, or any party or cre-
ditor, or other person interested, shall file before the
commissioner a counter affidavit denying the correctness
of the debt or demand, as a whole or in part, or the validity
of any lien by which it is secured, in which case the
creditor presenting such debt or demand shall be required
to produce his witness or witnesses before the commis-
sioner, reasonable notice of which shall be given in writ-
ing to the creditor or his attorney, and the taking of the
testimony relative to such debt or demand, or the validity
of such lien, as the case may be, shall be proceeded with
before the commissioner in like manner as if no affidavit
or affidavits had been filed.”’

(Emphasis supplied)

When St. Paul Fire and Marine Insurance Company insisted that
the counter affidavit was spurious and rested before the Commis-
sioner, Community Oil Company, Inc. called Peter L. Chakmakian
over the objection of St. Paul Fire and Marine Insurance Company on
the ground of surprise, since he had filed no objection or counter
affidavit to the claim of the surety. He testified a flat denial that
‘John Brown Distilling Company, Inc. owes any money whatsoever
to St. Paul Fire and Marine Insurance Company by reason of St. Paul
Fire and Marine Insurance Company paying to the United States
Bureau of Customs the sum of . . . $14,457.25 on December 16,
1971.°° Upon further examination the Treasurer of John Brown
Distilling Company, Inc. and President of Madison Avenue Imports,
Ltd. stated that Madison Avenue was billed by the Bureau of Cus-
toms on a warehouse entry, for $14,457.25, that it did not pay the bill
and that St. Paul Fire and Marine Insurance Company did pay the bill,
maintaining that ‘‘it was not John Brown's obligation. ”’

Further cross examination established that prior to 1967 John
Brown Distilling Company, Inc. imported scotch whiskey, but after
its wholly-owned subsidiary, Madison Avenue Imports, Ltd., was
formed, John Brown Distilling Company, Inc. imported scotch only
through its subsidiary and others, and not in its own name. With

respect to the 88 barrels of scotch whiskey for the import of which St.
Paul Fire and Marine Insurance Company paid the Bureau of Cus-
toms, ‘it all came to John Brown Distilling Company” and that **it
was treated, packaged and bottled and shipped to various customers.
And, hopefully, consumed.’ The Commissioner ruled that the claim
of St. Paul Fire and Marine Insurance Company “‘has not been
proved,’* which ruling was accepted over objection of St. Paul Fire
and Marine Insurance Company, by the Circuit Court of Jefferson
County as its ruling.

St. Paul Fire and Marine Insurance Company then filed a Motion
for Relief from Judgment requesting that its claim be recommitted to
the Commissioner for further proof, accompanied by a copy of an
affidavit interlineated, but not signed, by Jerome Radosh indicating
that at the time of the subject transaction, John Brown Distilling
Company, Inc. was the guarantor of the obligations of Madison
Avenue Imports, Ltd. The trial court refused to recommit the claim of
St. Paul Fire and Marine Insurance Company on the ground that **the
case has already progressed too slowly and should not further be
delayed.*’ It emphasized the proposition that the debt was that of
Madison Avenue Imports, Ltd. and not that of John Brown Distilling
Company, Inc. although the report of the commissioner indicated
only that St. Paui Fire and Marine Insurance Company *‘had not
proved its claim. The Court also indicated that it **is somewhat
troubled about the relationship of the two aforesaid corporations,
relationship of some of the attorneys and officers of these corpora-
tions...” At the same time, the court recommitted the matter to the
Commissioner to give general creditors who had not proved their
claims the first time around another opportunity. Among those
granted this opportunity was Peter L. Chakmakian. who claimed he
was owed $ 21,650.00.

The proceedings before the Commissioner took another five
months, after which the court entered a final order of distribution of
the remaining assets of John Brown Distilling Company, Inc.. The
distribution would exhaust the funds in the hands of the Receiver, so
distribution on a pro-rata basis was ordered. Among those claims
allowed in the third committal to the Commissioner was that of Peter
L. Chakmakian in the amount of $21 650.00 The court ordered a stay
of distribution to enable St. Paul Fire and Marine Insurance Company
to appeal to the Supreme Court of Appeals of West Virginia, condi-
tioning its stay upon payment to the Receiver of $957.09 costs by St.
Paul Fire and Marine Insurance Company.

A petition for appeal to the state appeals court was denied on
February 26, 1975 and a second petition was denied on March 10.

1975. The Receiver continues to hold funds allocated to general
creditors lest he be held liable under 31 U.S.C. § 192 in the event that
this Court grants certiorari and directs payment of the claim of St.
Paul Fire and Marine Insurance Company.

REASONS FOR GRANTING THE WRIT

1. THE COURT BELOW DECIDED AN IMPORTANT
FEDERAL QUESTION IN A WAY IN CONFLICT WITH THE
DECISIONS OF THIS COURT AS TO THE PROPER INTERPRE-
TATION OF 31 U.S.C. §§ 191, 193.

This Court has on numerous occasions construed the meaning of
Section 191, Title 31 of the United States Code. It has stated the
purpose of the section is **to secure an adequate revenue to sustain the
public burden”* United States v. State Bank of North Carolina, 6 Pet.
29, 35. Its language, granting the United States priority, over all
unsecured creditors as to the estate of an insolvent, is **to be liberally
construed to effectuate that purpose.*’ U.S. v. Emory, 314 U.S. 423,

Section 193 grants the priority of the U.S. to a surety who has paid
money to the United States (see Hunter v. U.S., 5 Pet. 173, 182).
This also is toward the purpose expressed in U.S. v. State Bank of
North Carolina, supra, inasmuch as the United States has a continu-
ing interest in the availability of solvent sureties willing to hold
harmless the federal government against problems in collecting ob-
ligations owing to it, and against the insolvency of principal debtors.
St. Paul Fire and Marine Insurance Company asserted the right of the
United States in the trial court and before the Supreme Court of West
Virginia which right was wrongfully defeated.

The propriety of asserting such a right arising under federal law ina
State forum is clear. See, e.g. U.S. v. Knott, 298 U.S. 544, 552. This
Court has held that a denial of that right by the state court is reviewa-
ble by certiorari, and that this Court has the jurisdiction and power to
review the correctness of such a denial in //linois v. C ampbell, 329
U.S. 362, 363, 366. In that case the Court further stated at page 371

The effect and operation of a lien in relation to the
claim of priority by the United States under Rev. Stat. §
3466 is always a federal question. ‘The priority given the

United States cannot be impaired or superseded by state
law.’ United States v. Oklahoma, 261 U.S. 253, 260.
Hence a state court's characterization of a lien as specific
and perfected is not conclusive. United States v. Waddill
Co., 323 U.S. 353, 357. The state characterization,
though entitled to weight, is always subject to reexamina-
tion by this Court.”

A judgment of a court denying a debt due the United States
prejudices its right of priority (U.S. v. Knott, 298 U.S. 544, 551). In
the cases of United States v. Oklahoma, 261 U.S. 253, 260 and

Spokane County v. United States, 279 U.S. 80, 93 this Court held

that the priority under 31 U.S.C. 2 191 ‘attaches upon the appoint-
ment of the receiver.’’ After it attaches it is indefeasible according to

the language of Commonwealth of Massachusetts v. United States.

335 U.S. 611:

**The only such consistent application would seem to be
one giving the government the prior and indefeasible right
to take the fund available, up to the amount necessary to
pay its claim as of the date the priority attaches, not as it
may be affected by later contingencies other than pay-
ment. In enacting § 3466 Congress gave no indication
whatever of intent to create defeasible priorities.”’

The decision of the lower court to the effect that St. Paul Fire and
Marine Insurance Company **had not proved its claim’ constituted a
denial of its right under federal law. If its priority could not be
“impaired or superseded by state law.”’ it is clear that the same
priority could not be defeated by state procedure.

2. THE DENIAL OF PETITIONERS FEDERAL RIGHT BY
THE STATE COURT WAS THE PRODUCT OF A COMPLETE
DEPARTURE FROM THE ACCEPTED AND USUAL COURSE OF
JUDICIAL PROCEEDINGS.

The provisions of Chapter 56, Article 7, Section 6 of the West
Virginia Code set forth in the Statement of the Case. supra, obvi-
ously had the purpose of providing an efficient, inexpensive means
for proof of claims before a Commissioner in a receivership proceed-
ing by the filing of an affidavit or affidavits with exhibits. The same

statute contains provisions allowing a contest over a debt or claim by
the filing of a counter affidavit. The statute does not contemplate that
one creditor may increase the expense of another in proving his claim
by filing a spurious denial; if such were the case, the entire intent of
this section of the code would be routinely defeated.

St. Paul Fire and Marine Insurance Company established before
the commissioner that the denial of its claim by Community Oil
Company, Inc. was in fact spurious since it was based on a supposed
lack of knowledge and information of the affiant with respect to the
claim of St. Paul Fire and Marine Insurance Company. A lack of
knowledge of the claim of another is not a denial of its correctness.
Nevertheless, the report of the Commissioner to the effect that the
claim of St. Paul Fire and Marine Insurance Company *‘has not been
proved”’ was solely predicated on the spurious counter affidavit of
Community Oil:

‘*The Commissioner is of the opinion, and so reports to
the Court, that the affidavit of Barbara J. Heil, Claims
Manager for St. Paul Fire and Marine Insurance Com-
pany, and the exhibits heretofore mentioned filed before
the Commissioner by St. Paul (sic) are insufficient to
establish the debt and demand of St. Paul (sic) where a
counter affidavit has been filed by another party in in-
terest, as was done in this case.’’

(emphasis supplied)

Presumably, absent the purported counter affidavit, the Commis-
sioner would have reported that the claim and demand of St. Pau! Fire
and Marine Insurance Company had been proved. Following this
report, the trial court’s refusal to recommit the claim of St. Paul Fire
and Marine Insurance Company to the Commissioner on the ground
that “‘the case has already progressed too slowly and should not
further be delayed’’ was clearly the imposition of a **later conting-
ency’’ to ‘impair and supercede"’ the priority of St. Paul Fire and
Marine Insurance Company. When at the same time the Court re-
committed the proceeding to the Commissioner to allow general
creditors, including Peter L. Chakmakian, a second opportunity to
prove their claims, it is clear that it departed from the accepted and
usual course of judicial proceedings through partiality to general
creditors over the priority claim of St. Paul Fire and Marine Insurance
Company.

3. THE JUDGMENT OF THE LOWER COURT IN DEFEAT-
ING PETITIONER'S RIGHT SECURED BY FEDERAL LAW IS
PLAINLY WRONG.

Even if the testimony of Peter L. Chakmakian, given before the
Commissioner in opposition to the claim of St. Paul Fire and Marine
Insurance Company, is considered in its totality together with the
record of the entire proceeding, the judgment of the lower court
denying petitioners claim and authorizing payment of the balance of
funds by the receiver to general creditors was plainly wrong. The
witness, Chairman of the Board of Directors of John Brown Distilling
Company, Inc. and President of Madison Avenue Imports, Ltd.,
testified to the effect that the claim of St. Paul Fire and Marine
Insurance Company was a debt of Madison Avenue Imports, Ltd. and
not that of John Brown Distilling Company, Inc. This contention
cannot be sustained for the following reasons:

|. Peter L. Chakmakian had objected and excepted to a prior report
of the Commissioner on the ground that it did not reflect a debt due
the Bureau of Customs in excess of $13,000. by John Brown Distil-
ling Company, Inc. (not Madison Avenue Imports, Ltd.), further
Stating that such a claim had priority.

2. Peter L. Chakmakian made no objection to the portion of the
first Commissioner's report allowing payment by the receiver of John
Brown Distilling Company, Inc. for scotch whiskey labels bearing
the imprint Madison Avenue Imports, Ltd.

3. Madison Avenue Imports, Ltd. was a wholly-owned subsidiary
corporation of John Brown Distilling Company, Inc. through which
the latter imported the 88 barrels of scotch whiskey subject to cus-
toms duties paid by St. Paul Fire and Marine Insuance Company as
surety.

4. The scotch whiskey subject to customs duties and taxes paid by
St. Paul Fire and Marine Insurance Company actually went to John
Brown Distilling Company, Inc. which in turn processed it, bottled it
and sold it to its customers, who ‘*hopefully’’ consumed it.

It is apparent from the record that the lower court was aware of the
above by virtue of its statement to the effect that it was **somewhat
troubled about the relationship of the two aforesaid corporations,
relationship of some of the attorneys and officers of these corpora-
tions.”” The intent of 31 U.S.C. §§ 191, 193 is not satisfied by a
judgment of a court granting priority to general creditors over the
United States or sureties which have paid money to the United States.
This result in the lower court in the case at bar is plainly wrong and
resulted in an injustice which should be corrected by this Court.

CONCLUSION Certificate of Service

For these reasons, a writ of certiorari should issue to review the
judgment and opinion of the Circuit Court of Jefferson County, West I hereby certify that on this Sth day of June, 1968, three copies of
Virginia. the Petition for Writ of Certiorari were mailed, postage prepaid, to
the following attorneys, organizations and persons:

F. Dean Nichols, Esq.

Respectfully submitted, Nichols & Skinner

P.O. Box 487
my watcha “N W Charles Town, West Virginia 25414
Washington, D.C. 70006 Attorney for Community Oil Company, Inc.

G.A. Ochs, Esq.

Joseph E. Seagram & Sons, Inc.
P.O. Box 240, Seagram Building
Louisville, Kentucky 40210

Counsel for Petitioner.

June 6, 1975.
Koday Press Co., Inc.
Eugene Koblentz, President
47 West Quackenbush Avenue
Dumont, N.J. 07628

Upaco Adhesives, Inc.
Philip A. Christopher
1605 Hyde Park Avenue
Hyde Park, Massachusetts

The Eaton Corporation

N.A. Hamilton, Assistant Treasurer
100 Erieview Plaza

Cleveland, Ohio 44144

Ralph Gano Miller, Jr., Esq.
Miller Jennings & Kearney
530 Broadway, Suite 1230
San Diego, California 92101

13

Paul Kraft, Esq.

Kraft & Kraft

1530 Chestnut St.,

Philadelphia, Pennsylvania 19102
Attorney for Javid Vichael & Co., Inc.

John C. Skinner, Jr., Esq.

Nichols and Skinner

P.O. Box 487

Charles Town, West Virginia
Attorney for Sea-Land Services, Inc.

Peter L. Chakmakian, Esq.
P.O. ox 547
Charles Town, West Virginia 25414

Peter L. Chakmakian, Esq.

P.O. Box 547

Charles Town, West Virginia 25414

Attorney for George C. Hester, Julius Sankin,
Jerome J. Parks, Christine R. Gainer and
Evelyn R. Ruehl

Vincent V. Chaney, Special Receiver
1616 Charleston National Plaza
Charleston, West Virginia 25301.

I further certify that all parties required to be served have been
served.

/s/ Pierre E. Dostert
Pierre E. Dostert

888 Seventeenth St., N.W.
Washington, D.C. 20006
Counsel for Petitioner.

APPENDIX

IN THE CIRCUIT COURT OF JEFFERSON COUNTY, WEST
VIRGINIA

THE LEVON CORPORATION, a corporation,
Plaintiff,

VS.

Civil Action No. 2025

JOHN BROWN DISTILLING COMPANY, INC..,
a corporation, et. als.,

Defendants.

ORDER

THIS 24th day of June, 1974, came S.L. Minghini and B.B.
Minghini, Partners, doing business as §.L. Minghini and Son, How-
ard S. Koonce and Henrietta L. Koonce, Sea-Land Service, Inc. and
Community Oil Company, Inc., by F. Dean Nichols, their attorney;
John Brown Distilling Company, Inc. and Peter L. Chakmakian, by
Peter L. Chakmakian, their attorney; Peoples Bank of Charles Town,
Anchor Hocking Corporation, Thatcher Plastic Packaging Co. and
Lee Bushong, Trustee, by Lee Bushong, their attorney; Smith-
Nadenbousch Insurance, Inc., by Thomas W. Steptoe, its attorney;
Sheriff of Jefferson County by Robert R. Skinner, his attorney;
Henry W. Morrow, Commissioner, and W.H.S. White, Jr., Re-
ceiver, and St. Paul Fire and Marine Insurance Company, by Pierre
E. Dostert, its attorney, and, The Levon Corporation made no ap-
pearance.

. . (Immaterial portions of order omitted.)

Upon the motion of S.L. Minghini and Son, et. als., that the Court
overrule the exception of St. Paul Fire and Marine Insurance Com-
pany, came Pierre E. Dostert, attorney for St. Paul Fire and Marine
Insurance Company, in support of its exception to the Report of the
Commissioner insofar as the Commissioner disallowed the claim of
St. Paul Fire and Marine Insurance Company against John Brown
Distilling Company, Inc., upon Report of the Commissioner, ex-
hibits and evidence taken and returned to the Court, and, upon

argument of counsel, the Court, upon consideration, doth overrule
the exception of St. Paul Fire and Marine Insurance Company
hereinbefore filed with the Commissioner and doth further ORDER
that the Report of the Commissioner dated May 30, 1974, is hereby

sustained, insofar as the Commissioner finds that the claim of St.

Paul Fire and Marine Insurance Company against John Brown Distil-

ling Company, Inc. has not been proved, to which action of the
Court, St. Paul Fire and Marine Insurance Company objects and

excepts and excepts.

Upon the motion of S.L. Minghini and Sons, et. als., that all the
costs of the recommitment to Henry W. Morrow, Commissioner, be
assessed against St. Paul Fire and Marine Insurance Company, pur-
suant to the Order of this Court dated September 18, 1973, IT IS
FURTHER ORDERED that the fees and expenses of the Commis-
sioner in and about his Report dated May 30, 1974, in the amount of
$855.44, and the expenses of taking and transcribing the evidence
before him by Business Services-East in the amount of $101.65 be
forthwith paid by St. Paul Fire and Marine Insurance Company to
W.H.S. White, Jr., Receiver, to reimburse the Receiver for costs
hereinbefore ordered by the Court to be paid from the funds in the
hands of the Receiver. to which action of the Court, St. Paul Fire and
Marine Insurance Company objects and excepts.

. . . (Immaterial portion omitted.)

Upon the motion of S.L. Minghini and Sons, et. als., that the
priorities of the creditors of John Browr. Distilling Company, Inc. be
established, and, it .»pearing to the Court that the claims of the first
NINE priority lien creditors have been established and the Receiver
ordered to pay the same under this Order, and that the cliam of St.
Paul Fire and Marine Insurance Company, who has claimed a tenth
priority of all the general creditors set forther in the Report of the
Commissioner dated April 2, 1973, under TENTH PRIORITY (b)
through (1) has heretofore been denied, and, it further appearing to the
Court that the general creditors under the **TENTH PRIORITY” (b)
through (i) have previously established their claims as creditors for
the amounts set forth therein before the Commissioner without objec-
tion, IT IS ORDERED that the claims of said general creditors (b)
through (i) for the amounts set forther therein be, and the same are
hereby confirmed over the objection of St. Paul Fire and Marine
Insurance Company and the Court overrules the said objection which
is excepted to by St. Paul Fire and Marine Insurance Company.

The Court, on its own motion, pursuant to the Court’s Order dated
May 29, 1973, Page 4 thereof, after noting that no hearing had been
held and no Report has been made by the Commissioner dealing with

3a

the imperfected claims of creditors under the Report of the Commis-
sioner dated April 2, 1973, on Page 5 thereof, beginning with the
words: **The following creditors presented claims, but the claims are
not in the form prescribed by law.”* and continuing **(a) Linden J.
Bush dba Valley Hardware Company .. . (through) (m) Vincent
Chaney, Special Receiver’’, IT IS ORDERED that the Report of the
Commissioner, insofar as said claims are concerned be recommitted
to Henry W. Morrow, Commissioner, to permit the following cre-
ditors who timely refiled to establish their claims and priorities:

1. Ziger, Reznich and Fedder
. Peter L. Chakmakian
. George C. Hester
Julius Sankin
Jerome J. Parks
Christine R. Gainer
Evelyn Ruehl
. Vincent Chaney, Receiver

Provided, however, the claims of said creditors shall in no way
change the priorities of creditors set forth under TENTH PRIORITY
(b) through (i) - (a) having been previously disposed without objec-
tion by any party hereto.

To which ruling of the Court in not making distribution to the
general creditors under TENTH PRIORITY (b) through (i), Com-
munity Oil Company, Inc. and Sea-Land Service, Inc. object and
except, and to which Peter L. Chakmakian objects and excepts on the
ground that the Court established a priority distribution to creditors
under TENTH PRIORITY (b) through (i).

Pierre E. Dostert, attorney for St. Paul Fire and Marine Insurance
Company, moved the Court to reopen and recommit the claim of St.
Pau! Fire and Marine Insurance Company to the Commissioner for
further proof and further moved the Court for a continuance in order
to file an affidavit of Jerome Radosh in support of the motion to
recommit, whereupon the Court continued said motion until Wed-
nesday, June 26, 1974, at 11:00 o'clock a.m., or as soon thereafter as
said motior may be heard.

The Clerk will enter the foregoing as of the date first above written.

Din ws wv

/s/Gray Silver, Jr.

JUDGE OF THE CIRCUIT COURT OF
JEFFERSON COUNTY, WEST VIRGINIA

4a

(Caption)

ORDER

THIS 26th day of June, 1974 came Pierre E. Dostert, attorney for
St. Paul Fire and Marine Insurance Company, Peter L. Chakmakian,
in person and as attorney for John Brown Distilling Company, Inc.
and F. Jean Nichols, attorney for Community Oil Company and Sea
Land Services, Inc.

Upon the motion of St. Paul Fire and Marine Insurance Company
to grant relief from the Order of this Court dated June 24, 1974 and to
reopen and recommit the claim of said creditor to Henry W. Morrow,
Commissioner for further proof of its claim as provided for under the
last paragraph of the Order of this Court dated June 24, 1974.

Whereupon counsel for St. Paul Fire and Marine Insurance Com-
pany tendered to the Court and asked leave to file a document
‘*Motion for Relief from Judgment and Order and Motion for a new
trial’ to which is attached a sheet entitled **Points and Authorities,”’
‘‘Affidavit of Pierre E. Dostert’’ duly executed and a three page
paper entitled **Affidavit of Jerome Radosh’’ bearing certain inter-
lineations in ink and a purported facsimile signature unsworn to
together with the original “*Affidavit of Jerome Radosh’’ which
contained no interlineations and was both unsigned and unsworn to:
all of which are hereby ORDERED filed.

The Court thereupon proceeded to a hearing on the said motion for
relief from said Order which consisted of a study of the
commissioner's report dated May 30, 1974, the exhibits and trans-
cript of the testimony and the arguments of counsel for and against the
granting of said motion.

And it appearing to the Court from W. Va. Code 56-7-1 unnum-
bered paragraph three (3) thereof that the report of the commissioner
dated May 30, 1974 should not be recommitted to the Commissioner
except for good cause shown and that from the record and the
transcript made up before the Commissioner that the Bureau of
Customs treated Madison Avenue Imports, Ltd. as the importer
creating an obligation on Madison Avenue Imports, Ltd. to pay the
U.S. import duty and taxes even though they may in turn ship it to

Sa

John Brown Distilling Company for processing such as cutting,
bottling, labeling and packing on a service charge per case basis, and
that the payment of the duty and taxes was the obligation of Madison
Avenue Imports, Ltd., and it was its failure so to do that created
obligation of the surety company, St. Paul Fire and Marine Insurance
Co., to pay, if in fact it did make payment as surety.

There is no clear showing in the evidence that the obligations of
Madison Avenue Imports, Ltd., a New York Corporation, nut qual-
ified to do business in the state of West Virginia are the obligations of
John Brown Distilling Company, Inc., a West Virginia Corporation
and should be treated as such to the disadvantage of the established
claims of other creditors.

The Court is somewhat troubled about the relationship of the two
aforesaid corporations, relationship of some of the attorneys and the
officers of these corporations but finds no error in the report of the
commissioner in respect to the claim of St. Paul Fire and Marine
Insurance Company and must consider the motion as a motion for a
new trial made in an appellate Court to reopen a case for further proof
where there was no such motion made in the ‘‘trial court’’.

The motion would hardly come within the rule for new trials on the
ground of newly discovered evidence (13 M.J. 636 et. seq.-New
Trials, Sec. 22) in that it does not meet the five requirements on this
ground, the Court noting that excluding the affidavit of Pierre Dos-
tert, the only other affidavit is neither signed nor sworn to.

It further appearing to the Court that the case has already progres-
sed too slowly and should not further be delayed.

It is ADJUDGED, ORDERED AND DECREED that the motion
for a Recommital to the Commissioner entitled ** Motion for Relief
from Judgment and Order and Motion for New Trial’’ heretobefore
filed by St. Paul Fire and Marine Insurance Company be denied to
which action of the Court St. Paul Fire and Marine Insurance Com-
pany objects and excepts.

And counsel for St. Paul Fire and Marine Insurance Company
having announced his intention to seek a removal of this proceeding
in this Court designated as Civil Action 2025 from this Court to the
United States District Court for the Northern District of West Vir-
ginia and that it would need ten (10) days therefor, it is further
ADJUDGED AND ORDERED that all further proceedings herein be
stayed for a period of thirty (30) days from June 26, 1974 to allow it to
take such action if it be so advised, except that the disbursements by
the Receiver as hereinbefore ordered by the Court under Order dated
June 24, 1974 of the first nine (9) priority lienholders and of the costs,
this proceeding to which there was no objection by any party, shall

6a

not be stayed and the Receiver shal! make such disbursements and
report to the Court as to what the Receiver has done under order of
this Court dated June 24, 1974, to which action of the Court in staying
said proceedings, counsel for Community Oil Company and Sea
Land Services, Inc., object and except.

The Clerk will enter the foregoing as of the date first above written.

/s/Gray Silver, Jr.
Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_0509%3A1. Public record. Not legal advice.