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In re Bell Lumber Co.

June 8, 1945


Author: Sparks

Before SPARKS, KERNER, and MINTON, Circuit Judges.

SPARKS, Circuit Judge.

On December 22, 1943, Bell Lumber Company, a Wisconsin corporation, filed its petition for reorganization under Chapter 10 of the Bankruptcy Act, 11 U.S.C.A. ยง 526. The District Court approved the petition and appointed trustees who, on order of that court, took custody and control of the debtor's assets.

By leave of court, Modern Housing Company, a Maryland corporation, hereafter referred to as Modern Housing, was permitted to intervene and file its petition to recover from the debtor, hereafter referred to as Bell, certain moneys in the hands of the trustees in which plaintiff claimed a proprietary interest by virtue of a written contract between Modern Housing and Bell dated June 8, 1942. The court held that the contract relied upon was void for non-compliance with the Wisconsin statute requiring licensing of foreign corporations doing business in that state, and dismissed the petition.

The contract recites that it is a memorandum of an agreement between Modern Housing, of Washington, D.C., and Bell Lumber Company, of Green Bay, Wisconsin; that the parties have had understandings from time to time concerning their rights and interests in a joint enterprise concerning the obtaining and execution of contracts for housing and other construction; that it is a stipulation to consolidate such agreements in the light of present developments, and shall represent a replacement and amendment in full substitution of all previous understandings on the topics covered by the contract.

In substance it provides that Modern Housing shall furnish Bell the former's "Pre-Fabrication and Plant Service," which includes plans and designs of houses and other buildings and their appurtenances, as well as operational methods incident to the Shultz Process of streamlined factory production and assembly line methods, which is under exclusive lease to Modern Housing; that such service includes all shop drawings, details covering the necessary jig and pattern layouts, shop floor plan, all shop and time controls necessary to production, and supervision by a qualified housing engineer supplied by Modern Housing, fully acquainted with all incidents to the prosecution of the Shultz Process, who will train Bell's personnel in the technique of its prosecution. All plans furnished, or developments or improvements thereon, are to remain the property of Modern Housing.

Bell agreed to employ the service of Modern Housing on such contracts as the latter might secure for Bell, and in consideration of such service Bell agreed to pay Modern Housing an amount equal to two percent of the face of such contracts, when payments thereon were received by Bell.

Bell further agreed to pay from the proceeds of such contracts all expenses in connection with the setting up of plant facilities for the construction of houses, and all other expenses incident to the carrying out of any housing contracts secured.

Upon securing each housing contract, Bell was to advance to Modern Housing $680 to provide for the expense incident to the installation of its services, and was to pay the salary and expenses of the supervisor for such time as it might require them. Such advances were to be deducted from the amount due Modern Housing under the two percent clause above referred to.

In the event that any contract was cancelled, any advances covered by the $680 above referred to were to be classed as liquidated damages, and Bell was to pay Modern Housing only on such buildings as had been manufactured and delivered.

Both parties agreed to use their best efforts to contribute to the preparation and submission of all proposals, data, and plans incident to the securing of contracts and they agreed to cooperate fully in all matters that might lead to the successful conclusion of such business.

The agreement was to terminate on ninety days notice by either party, and if at that time a contract had been secured, then such termination was to become final upon the completion of such contract, until which time the terms of the agreement should remain in full force and effect. Upon such termination all plans furnished by Modern Housing, or developments or improvements thereon were to be returned to Modern Housing.

Modern Housing signed the contract by Samuel M. Shultz, its vice-president and general manager, which positions Shultz has held at all times since. Bell signed the contract by its president and secretary. It was drawn by Modern Housing's attorney, and was the only contract Modern Housing had with Bell. The former had no contract with any of Bell's customers. Modern Housing agreed to and did secure the customers' contracts for the prefabricated material, and furnished Bell all plans and specifications. However, such contracts were executed only by such customer and Bell, and the materials when fabricated by Bell, in compliance with the specifications, were required by the customers' contracts to be shipped by Bell to the respective customers F.O.B. cars at Green Bay, Wisconsin. After that neither Bell nor Modern Housing was required by any contract to be at the point of destination at any time, except that the contract between Bell and each customer required Bell to have a man in the field for the purpose of checking the material as it arrived in the field. Neither party hereto was required to do anything with respect to the actual erection of the building.

On June 16, 1942, Shultz came to Green Bay where he lived at a hotel until February or March, 1943, and from that time on he made his permanent residence at Green Bay, Wisconsin, until after the hearing of this case on April 17, 1944. At the time this contract was executed, Modern Housing maintained an office in Maryland but discontinued it in September, 1943, and since that time until ...

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