Fernschild v. Vedder

• Decision Date: 11 January 1898
• Citation: 154 N.Y. 667,49 N.E. 151
• Parties: FERNSCHILD v. VEDDER.
• Court: New York Court of Appeals Court of Appeals

154 N.Y. 667

49 N.E. 151

FERNSCHILD

v.VEDDER.

Court of Appeals of New York.

Jan, 11, 1898.

Appeal from supreme court, appellate division, Second department.

Action by William Fernschild against Commodore P. Vedder, as receiver of the D. G. Yuengling Brewing Company, on bonds. From a judgment of the appellate division (44 N. Y. Supp. 106) reversing a judgment in favor of plaintiff, plaintiff appeals. Affirmed.

George P. Hotaling, for appellant.

Samuel Untermyer, for respondent.

O'BRIEN, J.

The plaintiff owned two $1,000 bonds issued by a corporation to which the defendant succeeded by a process of reorganization. The name of the corporation that had issued the bonds differed from that of the defendant only in the use of the word ‘Junior’ after the name of the person from whom both corporations derived their name. The old company was insolvent, and a committee of the bondholders were engaged in reorganizing it under the statute. The plaintiff's bonds are part of an issue of $1,258,000 by the old company, secured by a second mortgage upon the plant of a brewery. The prior liens amounted to over $302,000, and were in process of foreclosure, thus imperiling the only security that the plaintiff and his fellow bondholders had for the payment of their obligations. The plan of the committee was to purchase the property at the foreclosure sale, organize a new company, scale down the second mortgage bonds, issuing new ones in their place secured by mortgage from the new company. It, of course, required the assent of the bondholders, and was reduced to writing, and signed by the owners of $1,202,800 of the bonds. The plaintiff and a few others, owning in all about $56,000 in bonds, refused to sign, or, at least, did not sign. The agreement provided that the bondholders should surrendertheir bonds, and take bonds of the new company equal to 75 per cent. of the face value of the bonds surrendered, and, in addition, 25 per cent. of the face value in stock of the new corporation. The agreement further provided that, in case any of the bondholders withheld their consent from the agreement, then the new bonds issued against the old bonds of such nonassenting parties should be sold or used by the committee to pay the parties not consenting the distributive share of the proceeds of the sale of the property to which they might be entitled. At the foreclosure sale, the committee purchased the property covered by the mortgage, but this did not include the personal property, accounts, and some other assets of the old company. The plant was transferred to the new company, the defendant, but the personal property had to be acquired by the new company in some other way. Besides the bonded debt, the old company had a large floating indebtedness, represented by notes and open accounts. The committee arranged to have this debt assumed by the new company upon a transfer to it of the personal property, notes, and accounts by the old company, and a bill of sale of the property was prepared and executed in order to effectuate that purpose. Before this bill of sale was finally delivered, the directors of the new company, the defendant, passed the following resolution: ‘Resolved, that this company assume all the debts, obligations, and liabilities, of every kind and description of the D. G. Yuengling, Jr., Brewing Company, in addition to the bonds and other obligations mentioned in the agreement of reorganization, and thereby provided to be assumed by this company, and that in return for, and as a consideration of, the assumption of said debts, obligations, and liabilities, this company accept from said D. G. Yuengling, Jr., Brewing Company the bill of sale presented by the chairman transferring unto this company all the personal property, effects, and chattels of every kind, including the stock in trade, book accounts, and good will of said D. G. Yuengling, Jr., Brewing Company, not included in the property covered by the trust mortgage given by said company to the Farmers' Loan & Trust Company to secure bondholders, and not heretofore acquired by this company, the intent hereof being to vest in this company all the property, right, franchises, privileges, and good will of the old company, and to assume all the obligations...