Ashton v. Town of Deerfield Beach

• Decision Date: 26 April 1946
• Docket Number: No. 11383.,11383.
• Citation: 155 F.2d 40
• Parties: ASHTON v. TOWN OF DEERFIELD BEACH, BROWARD COUNTY, FLA.
• Court: U.S. Court of Appeals — Fifth Circuit

155 F.2d 40 (1946)

ASHTON v. TOWN OF DEERFIELD BEACH, BROWARD COUNTY, FLA.

No. 11383.

Circuit Court of Appeals, Fifth Circuit.

April 26, 1946.

W. Terry Gibson, Herbert T. Gibson, and Samuel H. Adams, all of West Palm Beach, Fla., and Augustus T. Ashton, of Philadelphia, Pa., for appellant.

Morton B. Adams, of Miami, Fla., and Elliott Adams, of Jacksonville, Fla., for appellee.

Before SIBLEY, WALLER, and LEE, Circuit Judges.

SIBLEY, Circuit Judge.

Appellant Ashton, owning $6,000 of $323,000 principal of outstanding bonds issued by appellee dated January 1, 1926, appeals from an interlocutory decree approving a plan of composition under Chapter IX of the Bankruptcy Act, 11 U.S.C.A. § 401 et seq., and following, and especially by virtue of subsection j of Section 83, 11 U.S.C.A. 403, sub. j, in that bondholders who had accepted refunding bonds under a plan made operative in 1937 were included as consenting creditors in this proceeding. The appellant filed a statement of the points on which he would rely in his appeal under Federal Rules of Civil Procedure, rule 75(d), 28 U.S.C.A. following section 723c, to-wit: (a) The plan is inequitable in requiring all bondholders to deposit their bonds with Broward County Bondholders Protective Association. (b) The plan provides that the refunding bonds are to have all the characteristics of the old bonds except maturities and interest rates which would be in violation of the present laws of Florida. (c) The plan includes an allowance of expenses to said Bondholders Association incurred prior to the filing of the petition and incident to the original voluntary plan, which are separate and apart from the expenses of this proceeding allowed by the Court. The appellant's brief specifies these additional points: That the present plan is not identical with the original plan, and Section 83, sub. j, cannot be applied; that the court has no power to allow amendments of the plan, either to remove objectionable features, or to make the new plan conform to the original plan; and that modifications made of the original plan are an abandonment of it as respects the application of Section 83, sub. j; that the court could not under Section 83, sub. j, complete a plan to which only assenters to the original plan assent, because the original plan was completed, and this composition proceeding is a mere club to force non-assenters, and is not filed in good faith.

Appellee protests the consideration of the questions not covered by the original points on appeal, but nevertheless argues them, and makes no claim of prejudice for lack of an adequate record on appeal. The requirement of Rule 75(d) (made applicable to appeals in bankruptcy by General Order 36, 11 U.S.C.A. § 53), that where the entire record is not specified by appellant to be sent up he shall specify the points intended to be relied on, is evidently intended to enable the appellee to determine what additional portions of the record he shall specify. The purpose is to get an adequate record for the purposes of the appeal. If a new question is raised in the appellate court and the claim is made that the record is incomplete touching it, the appellate court might well refuse to consider the question, unless the record could be supplemented. Where, as here, no such claim is made and the new questions appear to arise importantly upon the record presented, we may and should decide them. Adams v. New York C. and St. L. R. Co., 7 Cir., 121 F.2d 808.

These new questions all relate to the application in a municipal composition proceeding of Section 83, sub. j. This court in Re City of West Palm Beach, 5 Cir., 96 F.2d 85, held that where a plan of voluntary settlement of municipal debts had been carried out with most of the creditors, those fully settled with could not be counted as creditors on presenting the plan in court as a municipal composition in bankruptcy. Thereupon Congress enacted Section 83, sub. j, ordaining that "the partial completion or execution of any plan of composition as outlined in any petition * * * shall not be construed as limiting or prohibiting the effect of this title, and the written consent of the holder of any securities outstanding as the result of such partial completion or execution of any plan of composition shall be included as consenting creditors to such plan of composition * * *." This legislation is not a new grant of a peculiar bankruptcy jurisdiction. It merely enacts that the partial execution of a general plan before a petition is filed shall not prevent the plan from being presented in court as a plan or composition, and that those who took and hold thereunder new securities instead of their old ones are to be counted as creditors as though they still had the old. But the jurisdiction is still that prescribed for all municipal compositions, with the same general powers and duties in the court. But the fact that creditors are to be treated as consenters who have already been finally settled with under the plan requires that the plan presented to the court be the plan to which these creditors had before consented. This must be so, as pointed out in Wright v. City of Coral Gables, 137 F.2d 192, 195, in order to preserve the identity of situation of the consenting majority which makes it fair to bind the dissenting minority by their votes for the plan. It must be so also in order that creditors of the same class shall receive the equal treatment which is the great aim of the bankruptcy proceeding. But this does not mean that every detail and incident of the plan presented to the court must be identical with the original plan or that no alteration or amendment whatever can be made, even though the equality of treatment of all is preserved. The Coral Gables decision cannot be so understood. The plan there offered to the court was held not to be an uncompleted voluntary plan. The court said: ...