Greensfelder v. St. Louis Public Service Co.

• Decision Date: 23 December 1940
• Docket Number: No. 11661-11664,11668-11670.,11661-11664
• Citation: 114 F.2d 53
• Parties: GREENSFELDER et al. v. ST. LOUIS PUBLIC SERVICE CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

114 F.2d 53 (1940)

GREENSFELDER et al. v. ST. LOUIS PUBLIC SERVICE CO. et al.

Nos. 11661-11664, 11668-11670.

Circuit Court of Appeals, Eighth Circuit.

July 24, 1940.

Rehearing Denied August 17, 1940.

Writ of Certiorari Denied December 23, 1940.

Bernard Greensfelder, Forrest M. Hemker, George T. Priest, Robert E. Moloney, Thomas S. McPheeters, Robert H. McRoberts, W. Frank Carter, Harold R. Small, Samuel W. Fordyce, Joseph R. Long, Greensfelder & Hemker, Boyle & Priest, Bryan, Williams, Cave & McPheeters, Carter & Small, and Fordyce, White, Mayne, Williams & Hartman, all of St. Louis, Mo., on general brief of appellants.

Robert H. McRoberts, of St. Louis, Mo., presented general argument for appellants.

Forrest M. Hemker, of St. Louis, Mo., (Bernard Greensfelder and Greensfelder & Hemker, all of St. Louis, Mo., on the brief), for appellant Edward Greensfelder.

George T. Priest, of St. Louis, Mo. (Boyle & Priest, of St. Louis, Mo., on the brief), for appellant Robert E. Moloney.

Robert H. McRoberts, of St. Louis, Mo. (Thomas S. McPheeters and Bryan, Williams, Cave & McPheeters, all of St. Louis, Mo., on the brief), for appellant Rhodes E. Cave.

Robert B. Caldwell, of Kansas City, Mo., for appellant Samuel A. Mitchell.

Harold R. Small, of St. Louis, Mo. (W. Frank Carter, William T. Jones, and Emmet T. Carter, all of St. Louis, Mo., on the brief), for appellants W. Frank Carter and others.

Hyman G. Stein, of St. Louis, Mo., pro se.

S. W. Fordyce, of St. Louis, Mo. (G. T. Priest, Frank E. Williams, Joseph R. Long, Boyle & Priest, and Fordyce, White, Mayne, Williams & Hartman, all of St. Louis, Mo., on the brief), for appellant Frank O. Watts.

T. E. Francis, of St. Louis, Mo. (O. P. Owen, B. G. Carpenter, and T. E. Francis, Jr., all of St. Louis, Mo., on the brief), for appellees St. Louis Public Service Co. and Henry W. Kiel, Trustee, St. Louis Public Service Company, debtor.

Edgar H. Wayman and Harold C. Hanke, both of St. Louis Mo., on the general brief for appellee City of St. Louis.

Before WOODROUGH and THOMAS, Circuit Judges, and BELL, District Judge.

Writ of Certiorari Denied December 23, 1940. See 61 S.Ct. 396, 85 L.Ed. ___.

WOODROUGH, Circuit Judge.

Edward Greensfelder, and other attorneys and individuals who filed claims for compensation for services rendered in the reorganization in bankruptcy of the St. Louis Public Service Company, appeal from the final decree rendered on the claims. Appeals have been taken severally but they present some issues of law which are common to several appeals and which have been presented in one brief for appellants and an answer brief for appellees. We consider them first.

The St. Louis Public Service Company is a utility corporation engaged in the business of furnishing transportation facilities in and about the City of St. Louis, Missouri. Its assets used and useful in this service were valued at $66,000,000 in January, 1927, by the Missouri Public Service Commission; its other assets not so used or useful were then valued at $1,200,000. The Company went into federal court receivership on April 15, 1933, at which time the book value of its property and assets was $73,000,000. The Company serves an area of some 110 square miles and a population of some 1,000,000 persons. At the time of the receivership it owned about 1,330 street cars, 176 trailers and 212 work cars, and operated over about 457.19 miles of tracks. In addition, it operated 93 motor buses and was under contract to purchase corporate stock which would give it control of other buses and bus lines and a monopoly of transportation by street car and bus in St. Louis. The capitalization, funded and other indebtedness of the Company on April 15, 1933, is given in the following table:

                  United Railways Company of St. Louis
                     First General Mortgage Four Per
                     Cent Gold Bonds, due July 1, 1934
                     (hereinafter referred to as "United
                     Railway 4's"), $35,075,000 held as
                     follows
                    Outstanding in the hands of the public                  $17,894,000.00
                    Pledged to secure 6%
                     Collateral Bank Loan
                     (The validity of this
                     pledge was disputed
                     but finally upheld) ................ $16,626,000.00
                    Pledged to secure appeal
                     bonds ..............................     437,000.00
                    Held in Treasury of the
                     Company ............................     118,000.00
                  City and Suburban Public Service
                     Company First Mortgage Sinking
                     Fund Gold Bonds, 5% Series A, due
                     July 1, 1934 (hereinafter referred to
                     as "Suburban 5's")
                    Outstanding in the hands of the public                    3,263,000.00
                  St. Louis Public Service Company Five
                     Year Six Per Cent Convertible Gold
                     Notes (hereinafter referred to as
                     "Convertible Gold Notes")
                    Outstanding in the hands of the public                    2,448,875.00
                  Florissant Construction, Real Estate
                     and Investment Company First
                     Mortgage Real Estate 5½% Notes
                     (hereinafter referred to as "Florissant
                     Notes") (Guaranteed by St
                     Louis Public Service Company):
                    Outstanding in the hands of the public                      541,000.00
                  Collateral Bank Loan originally in the
                     principal amount of $10,000,000
                     (hereinafter referred to as "Ten
                     Million Dollar Bank Loan") (This
                     loan was secured by a pledge of
                     $16,626,000 par value of United Railway
                     4's, the validity of which pledge
                     was subsequently disputed, litigated,
                     and finally upheld) ..................................   9,499,653.53
                 

                  Tort Creditors' Claims (as finally allowed) .............   2,229,274.75
                  General Creditors' Claims (as finally
                     allowed) .............................................      56,805.73
                  $7 Cumulative Preferred Stock, no par
                     value, stated value $100 per share:
                    Outstanding in the hands of the public,
                     70,848 shares of the stated value
                     of ...................................................   7,084,800.00
                    Held in Treasury, 2,482½
                     shares of the stated
                     value of ...........................     248,250.00
                  Common Stock, no par value, stated
                     value $30 per share:
                    Outstanding in the hands of the public
                     343,620 15/18ths shares of the stated
                     value of .............................................  10,308,625.00
                    Held in Treasury, 500
                     shares of the stated
                     value of ...........................      15,000.00
                                                                             _____________
                         Total ............................................ $53,326,034.01
                

The Public Service Company acquired its properties in 1927, when mortgages on the predecessor company, United Railways Company of St. Louis, were foreclosed. This foreclosure left outstanding certain first mortgage bonds, United Railways 4's, which had been formerly issued from time to time under an indenture executed in 1899 to the St. Louis Union Trust Company as trustee. The Reorganization Plan of 1927 contemplated issuance of a Supplemental Indenture extending this first lien to 84% of the property to be acquired through reorganization. Other street railway property was acquired at that time from another company, the City and Suburban Public Service Company, and taken subject to the liens upon it, particularly the mortgage securing the Suburban 5's, an issue of that company which was preserved by issue of a Supplemental Indenture preserving and assuming existing obligations. Some 96 miles of single track street railway lines, 57 miles of which were in St. Louis County, the balance in the City of St. Louis, and certain franchises, were covered by this indenture. Interest on the Suburban 5's had been paid up to the date of the commencement of the receivership. Interest on the United Railways 4's had likewise been paid up to the date of the receivership, and these bonds also matured on July 1, 1934.

At the time of the reorganization in 1927 Convertible Gold Notes were issued in the amount of $2,448,875; these obligations were unsecured and were originally due January 1, 1933. All but some $35,000 of the notes had been extended to July 1, 1934, and the interest had been paid thereon to January 1, 1933. There were also outstanding at the time of the receivership certain real estate notes secured by mortgage on property not used or useful in the operation of street railway business. These notes, obligations of the Florissant Construction, Real Estate and Investment Company, called the Florissant notes, were paid off from time to time and eventually retired.

A $10,000,000 bank loan was outstanding at the time of the receivership, and this also was made in furtherance of the 1927 reorganization. Bank loans were then outstanding in the amount of $4,100,000 secured by $6,000,000 principal amount of United Railways 4's. This loan and adjusted interest thereon was paid off in the $10,000,000 bank loan transaction, and $5,400,000 of the loan was used by the reorganized company to take up $9,000,000 principal amount of United Railways 4% bonds from holders who were willing to accept an offer to take $600 cash and $275 Convertible Gold Notes for each $1,000 bond. The balance of some $400,000 was paid in cash to the reorganized company. At the time of the 1927 reorganization there was a plan to refund the $10,000,000 loan by issuing securities which would not only take up this loan but also provide for the obligations falling due in 1933 and 1934. But due to delay in confirmation of a petition to secure an advance in fares, and due to the depression of October, 1929, no new issues were floated, and the $10,000,000 loan was renewed from year to year. The banks did not secure possession of the $9,000,000 bonds repurchased, but they were given an additional $1,626,000 of United Railways 4's as additional collateral for the loan when market value of the 4's fell from 85¢ to 15¢ on the dollar. The Mercantile-Commerce Bank and Trust Company desired its share of the...