Chase v. Austrian

• Decision Date: 11 May 1951
• Docket Number: No. 6278.,6278.
• Parties: CHASE et al. v. AUSTRIAN et al.
• Court: U.S. Court of Appeals — Fourth Circuit

189 F.2d 555 (1951)

CHASE et al. v. AUSTRIAN et al.

No. 6278.

United States Court of Appeals Fourth Circuit.

Argued May 11, 1951.

Decided May 11, 1951.

Writ of Certiorari Denied June 4, 1951.

Leo B. Mittelman and T. Roland Berner, pro se, New York City (George E. Allen, Sr., Richmond, Va., Norman S. Nemser, New York City, and Alfred J. Kirsh, Richmond, Va., on the brief), for appellants.

George Rosier, Carl J. Austrain, Walter H. Brown, Jr., New York City, Thomas C. Egan, Philadelphia, Pa., Morton G. Rosenberg and Thomas F. Boyle, New York City (Austrian & Lance, Saul J. Lance, Victor Brudney, Willkie Owen, Farr, Gallagher & Walton, New York City, Denny, Valentine & Davenport, Charles S. Valentine, Williams, Mullen, Pollard & Rogers, Fred G. Pollard, Richmond, Va., Harry R. Axelroth, Philadelphia, Pa., David J. Mays, Richmond, Va., Francis E. Walter, Easton, Pa., Tucker, Mays, Cabell & Moore, Richmond, Va., on the brief), for appellees.

Roger S. Foster, General Counsel, Washington, D. C. (Lawrence M. Greene, Special Counsel, Manuel F. Cohen, Special Counsel, and Aaron Levy, Attorney, Securities & Exchange Commission, all of Washington, D. C., on the brief), for Securities and Exchange Commission.

Before PARKER, SOPER and DOBIE, Circuit Judges.

Writ of Certiorari Denied June 4, 1951. See 71 S.Ct. 1021.

PER CURIAM.

This is another appeal in the bankruptcy reorganization proceedings of the Central States Electric Corporation. The petition for reorganization of this corporation was filed in 1942, when it had assets of a value of approximately $1,400,000 and an outstanding indebtedness exceeding $18,000,000. The affairs of the corporation have been handled under the direction of the court and its assets have increased to approximately $38,000,000. In 1948 a plan of reorganization was worked out, which was approved by the Securities and Exchange Commission and by the District Court. The order of the District Court approving it was affirmed by this court in August 1950 and the Supreme Court denied certiorari. See Central States Electric Corp. v. Austrian, 4 Cir., 183 F.2d 879, certiorari denied 340 U.S. 917, 71 S.Ct. 350. The plan of reorganization is set forth in our opinion, from which it appears that the fact that the value of the assets of the corporation exceeded its debts was thoroughly understood and taken into consideration. It was one of the facts urged in the objections made to the plan approved by the commission and the court.

After certiorari to review our decision had been denied by the Supreme Court, the District Court confirmed the plan and appeals to this court from the order of confirmation were dismissed. After the entry of the order of confirmation, appellants here made a motion in the District Court to dismiss the reorganization proceedings on the ground that the value of the assets of the corporation exceeded its debts and that by making sale of assets, or by borrowing $10,000,000 thereon, it would have sufficient cash to pay its indebtedness and that it should be returned to its stockholders in order that this might be done. The motion was denied and the correctness of this denial is the sole question presented by the appeal.

There is no merit either in the motion or the appeal. They amount to nothing more than an attempt on the part of appellants to relitigate questions which were before us and were decided when we affirmed the order of the District Court approving the plan of reorganization. There would be no end of reorganization proceedings if it were permissible to retry in this way issues that have been decided by the court.

It is contended that the courts are without power to go forward with reorganization proceedings if it can be shown that the value of the assets exceeds the debts of the corporation; but the idea that jurisdiction over reorganization proceedings is lost because of a fortunate administration of the corporation's assets under the court's direction is supported neither in law nor in common sense¹ and is violative of the well settled rule that a court of equity, having once taken jurisdiction, will do complete justice in the premises. See Young v. Higbee Co., 324 U.S. 204, 214, 65 S.Ct. 594, 89 L.Ed. 890; Securities and Exchange Comm. v. United States Realty & Improvement Co., 310 U.S. 434, 455, 60 S.Ct. 1044, 84 L.Ed. 1293. When a court has properly taken jurisdiction in a reorganization proceeding upon a finding of insolvency, that question may not be raised again in the...