Before MAJOR, Chief Judge, KERNER and DUFFY, Circuit Judges.
This appeal is from an order in a bankruptcy proceeding, entered March 4, 1949, directing Robert B. Fletcher (hereinafter referred to as respondent) to turn over to Charles L. Surprise, the Trustee in Bankruptcy (hereinafter referred to as the Trustee) of the Northern Indiana Oil Company, Inc. (hereinafter referred to as Northern Indiana or the bankrupt), certain described personal property and certain enumerated leases by which respondent was in possession of real property described therein. The decree also directs that respondent account for and pay over to the Trustee the net profits realized by him from the conduct of a business wherein the property described in said leases was utilized from January 1, 1947 until the date of the consummation of the turn-over.
The issues in the court below were formulated by the Trustee's petition filed January 29, 1948, to direct respondent to turn over to the Trustee property described in Exhibit A attached to and made a part of the petition, together with respondent's answer thereto. Two issues are raised here: first, that the court was without summary jurisdiction to direct the turn-over, and second, that the order is erroneous on its merits.
The court below made extensive findings of fact, together with its conclusions of law, upon which its order is predicated. The findings in the main are not in dispute and give a fairly accurate picture of the situation. We know of no better way to state the facts than to adopt the findings as made, with some subsequent explanation and the statement of some facts not disclosed in the findings. The court found:
"1. On January 15, 1945, the Northern Indiana Oil Company, Inc. (hereinafter called the bankrupt) was an Indiana corporation which was and had been engaged in the business of distributing petroleum products at wholesale; selling gasoline, oil, and auto accessories at retail; and operating automobile parking lots, all in the city of Gary, Indiana.
"2. On January 15, 1945, the bankrupt was operating five gasoline stations, six parking lots, and a bulk storage plant. These stations, parking lots, and bulk plant were being operated on lands which did not belong to the bankrupt, but which were under lease to the bankrupt from divers owners.
"3. On or about December 12, 1944, the Office of Price Administration issued an order or orders prohibiting the bankrupt from the further transfer, sale, or delivery of gasoline after January 15, 1945.
"4. On or about January 26, 1945, the bankrupt executed a certain 'lease with option to purchase', whereby its entire business, including the then-existing lease described in Finding 2, and all its other physical assets and property were leased or subleased to Robert B. Fletcher, effective as of January 15, 1945. This lease, designated Objector's Exhibit 8, is made a part of these special findings and incorporated herein by reference.
"5. Allegedly because of a typographical error, the lease provided for a $50 per month rental, but Fletcher paid $100 per month to the corporation until the bankruptcy, and he paid $100 per month to the Trustee from the time of his appointment through December, 1946.
"6. Fletcher did not demand or receive from the bankrupt a written list of names and addresses of the creditors of the bankrupt, nor did he at any time ever notify the creditors of the bankrupt of this transaction whereby he took possession of the entire business and physical assets of the bankrupt.
"7. An involuntary petition in bankruptcy was filed against the bankrupt on April 26, 1945. The schedules did not disclose the Fletcher lease. The Northern Indiana Oil Company, Inc., was duly adjudged a bankrupt on May 14, 1945. Charles L. Surprise was appointed the Receiver on April 28, 1945, and the Trustee on June 15, 1945.
"8. On October 10, 1945, the Trustee filed a petition with the Referee, asking permission to sell to Fletcher the items of personal property covered in the lease under the terms of the option contained in said lease. The Referee granted the petition but on review the Court reversed the Referee's holding and denied the petition to sell.
"9. Fletcher has continued to operate the parking lots, gasoline stations, and bulk plant and since January 15, 1945, has executed new leases between himself and the respective owners of the land where these gasoline stations, parking losts, and bulk plant are located.
"10. At no time subsequent to his appointment, did the Trustee give any oral or written notice to any of the lessors of the bankrupt that he intended to or did assume any of the leaseholds which the bankrupt held on May 15, 1945, and which it had sublet to Fletcher in the 'lease with option to purchase'.
"11. At no time since May 14, 1945, did the Trustee pay any rent on the leasehold properties described in the 'lease with option to purchase', but Fletcher has during that time paid the rent on these properties, except that location which he no longer operates. (See Finding 21.)
"12. The Trustee has never petitioned or been directed by the court to assume any of the leases described in the 'lease with option to purchase'.
"13. At the time the receiver was appointed, the bankrupt had no funds. In fact, its checking account at the Gary Trust and Savings Bank was overdrawn in the amount of $1,741.28.
"14. The income tax returns of the bankrupt corporation show net losses in 1937, 1938, 1940, 1941, 1943, and 1944, totaling $24,309.29; net profits for the years 1939 and 1942 totaling $5,640.84. The net loss for eight years' operation was $18,558.45.
"15. The Ohio Oil Company, through a representative, informed Mr. Surprise after his appointment as Trustee that it would not do business with him, as trustee. This company had supplied the ...