Gottlieb v. Crowe
| Decision Date | 10 February 1938 |
| Docket Number | No. 24207.,24207. |
| Citation | 12 N.E.2d 881,368 Ill. 88 |
| Parties | GOTTLIEB v. CROWE et al. |
| Court | Illinois Supreme Court |
OPINION TEXT STARTS HERE
Action by William Gottlieb against S. A. Crowe, Jr., and others. From a judgment of the Appellate Court (289 Ill.App. 595, 7 N.E.2d 469), reversing a judgment of the trial court for plaintiff, plaintiff appeals by leave granted.
Judgment of the Appellate Court reversed, and judgment of the municipal court affirmed.
Leo Segall and Samuel M. Bloomberg, both of Chicago, for appellant.
Albert W. Froehde, of Chicago, for appellee.
Plaintiff (appellant here) brought an action in the municipal court of Chicago to recover on three bonds of $500 each, with interest thereon, against the defendants on their guaranty to pay the bonds. The defendant S. A. Crowe, Jr., was not served with process and did not enter his appearance. Stoll will hereafter be referred to as the defendant. There was a trial before the court without a jury and a finding and judgment in plaintiff's favor for $1,583. An appeal was taken to the Appellate Court for the First district where the judgment of the trial court was reversed, and the cause is brought to this court by appeal, on leave granted.
The record discloses that on January 15, 1927, the Ten Fifteen North Clark Building Corporation issued its construction bonds aggregating $250,000. Some years afterward this corporation was financially embarrassed and filed its proceeding in the District Court of the United States for the Northern District of Illinois, Eastern Division, under section 77B of the Bankruptcy Act, as ameneded, 11 U.S.C.A. § 207. November 26, 1934, the District Court entered a decree confirming a plan for reorganization of the property. The decree found the plan for reorganization filed by the debtor had been referred to Referee Adock, as special master; that the court considered the report of the master and the petition for confirmation of the plan, and found that the petition of the debtor was filed June 20, 1934, pursuant to the provisions of section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207; that on September 25, 1934, the debtor filed its proposed plan for reorganization and a hearing thereon was set for November 5, 1934, and notice given to all creditors and stockholders of the debtor by publication and by mail; that, thereafter, the plan was referred to Special Master Adcock and, after a hearing, he made his report on November 21, 1934, in which it was found that the plan was fair and equitable; that ‘It complies with the provisions of subdivision (b) of section 77B of the Bankruptcy Act [11 U.S.C.A. § 207(b)]’; that the plan provided it should not become effective until accepted by the required number of creditors; and that the plan was presented in good faith.
The court further found that on June 20, 1934, and thereafter, the debtor was unable to meet its debts as they matured and unless relief was granted by the court great loss would occur to the debtor's creditors and stockholders; that the plan for reorganization had been accepted in writing by more than two-thirds of a certain class of its creditors and by more than a majority of another class of creditors; that no objections were made to the plan and it was ordered and decreed that the report of the Referee Adcock, as special master, be approved; that the plan and order of confirmation be binding upon the debtor, all stockholders and ‘all creditors, secured or unsecured, whether or not affected by the plan, and whether or not their claims shall have been filed, and if filed, whether or not approved, including creditors who have not, as well as those who have, accepted.’ The plan provided for the organization of a new corporation and that for each $100 of first mortgage bonds issued by the debtor there be issued to the owners one share of common stock in the new corporation known as the Olympic Hotel Building Corporation; and the plan further provided for the payment of certain overdue interest to the bondholders, and that ‘that personal guaranty of J. O. Stoll and S. A. Crowe, Jr., of said First Mortgage 6 1/2% Gold Bonds shall be canceled and surrendered in consideration of the transfer of all the assets of said debtor to the Olympic Hotel Building Corporation and the surrender of the said common stock of the debtor’ and that all claims and rights of stockholders and creditors of the debtor, upon the confirmation of the plan, be discharged and canceled, and the only rights of such stockholders and creditors shall be those accruing to them in and through the securities to be issued by the new corporation. It further appears that notice of the hearing for the purpose of considering the plan was given to plaintiff; that, after the plan was approved, it was fully carried out and bonds aggregating $206,000, which was 96 per cent. of the total bonds outstanding, had been surrendered and canceled.
It further appears that creditors of the same class as plaintiff in the instant case filed written objections to the cancellation of the guaranty of the defendant and moved that the confirmation of the plan, as approved by the district court be vacated. The objections were referred to a special master to take evidence and make up his report and recommendation. The master heard the evidence and recommended that the objections be overruled, and the court followed the recommendations of the master. All of the assets of the debtor have been transferred to the new corporation, the Olympic Hotel Building Corporation.
Plaintiff did not appear in the proceedings in the District Court, but, during the pendency of the instant case in the municipal court of Chicago, he filed his verified petition in the District Court, in which he set up the ownership of the three bonds of $500, each, and that he had not approved or accepted the plan of reorganization theretofore confirmed by the District Court, and averred that the District Court did not have the power to cancel the written guaranty of the defendant. The prayer was that the District Court enter an order vacating or modifying the decree so as to eliminate the cancellation of the guaranty. The debtor filed a verified answer to the petition in the...
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