United States v. Buffalo Coal Mining Company, Inc., Buffalo Coal Mining Company, Inc., Cross-Appellants v. United States of America, Cross-Appellee

These appeals concern the liability of Buffalo Coal Mining Company, and two of its shareholders, on a promissory note executed by Buffalo to Reconstruction Finance Corporation, an agency of the United States.

During World War II the United States Army seized Buffalo’s coal mine near Palmer, Alaska and commenced making substantial physical changes in the property for the purpose of increasing production. Before the project was finished, the war ended and the army returned the property to Buffalo, but in an inoperable condition. Buffalo lacked money to complete the work and was unable to borrow it. All activity ceased and the mine became flooded.

Some years later Buell A. Nesbett, together with several other individuals, became interested in the mine. Upon investigating, they concluded that, with production of not less than 400 tons of coal per day, the mine could be profitably operated; that the cost of completing the Army’s unfinished work and rendering the mine capable of such production would be about $400,000, and that a loan in that amount could be secured from RFC. They acquired control of Buffalo and made Nesbett president. After considerable negotiating he succeeded in…