James A. Wallace, Bankrupt v. Lawrence Warehouse Company and Crocker-Anglo National Bank and Small Business Administration

On July 2, 1962 James A. Wallace, whose business is described as that of mining, selling, hauling and spreading gypsum, filed in the district court a petition proposing an arrangement under Chapter XI of the Bankruptcy Act (11 U.S.C. §§ 701ff). He was permitted to continue in possession of his property and he thereby became vested, subject to the control of the court, with all of the powers of a trustee in bankruptcy. ( 11 U.S.C. § 742 ). On July 18, 1962, he filed a “petition to classify creditor as unsecured.” In that petition he alleged that, on September 12, 1961, Lawrence Warehouse Company, one of the appellees herein, issued warehouse receipts on 287,497 tons of gypsum situated at Wallace’s mine, as security for an indebtedness of Wallace to Crocker-Anglo National Bank and Small Business Administration, an agency of the United States government. He alleged that on the date of the filing of his petition, the unpaid balance of the debt was $130,737.92. He claimed that the warehouse receipts had been issued in violation of California Civil Code § 1858, and alleged that Lawrence Warehouse Company did not have the gypsum in its store or under its control. He prayed that the liens…