In re 2168 Broadway Corporation

• Citation: 11 F. Supp. 404
• Parties: In re 2168 BROADWAY CORPORATION.
• Decision Date: 08 May 1935
• Court: U.S. District Court — Southern District of New York

11 F. Supp. 404

In re 2168 BROADWAY CORPORATION.

District Court, S. D. New York.

May 8, 1935.

Harper & Matthews, of New York City (Mark M. Horblit, of Boston, Mass., and Harold Harper, of New York City, of counsel), for appellant.

Daniel A. Shirk and Milton A. Goldiner, both of New York City (Edwin R. Wolff and Daniel A. Shirk, both of New York City, of counsel), for appellees.

Petition dismissed.

Order affirmed 78 F.(2d) 678.

KNOX, District Judge.

A receivership that is merely incidental to the foreclosure of a mortgage upon real estate of a corporate debtor that is unable to meet its debts as they mature is not of the quality of the "equity receivership," which, under the provisions of subdivision (a) of section 77B of the Bankruptcy Act (11 USCA § 207 (a), and in the absence of an act of bankruptcy, will confer upon creditors of such debtor a right to subject it and its property to the jurisdiction of this court. See Matter of Laclede Gas Light Company, United States District Court, Eastern District of Missouri, June 26, 1934;¹ Standard Accident Insurance Company v. E. T. Sheftall & Company (C. C. A.) 53 F.(2d) 40; and Schmidtman v. Atlantic Phosphate & Oil Corporation (C. C. A.) 230 F. 769, 771.

In my opinion, the "equity receivership" contemplated by section 77B is of much wider scope than that which frequently accompanies foreclosure proceedings; for example, a general receivership, or one such as characterized the so-called "conservation suits" with which all of us are familiar. These suits usually resulted in the reorganization of a corporate debtor, or the pro rata distribution of its assets among its creditors. I am aware, of course, that the United States District Court for the Eastern District of Illinois in the Matter of Flamingo Hotel Company, decided August 9, 1934,¹ and in the case of In re Surf Building Corporation, 11 F. Supp. 295, decided October 13, 1934, entertains a contrary view. But I cannot agree therewith. Adjudications dealing with section 3a, subd. 5, of the Bankruptcy Act, 11 USCA § 21 (a) (5), and which long antedate the enactment of section 77B, hold that an appointment of a receiver or trustee of the property of an alleged bankrupt, in order to constitute an act of bankruptcy, relates to such an appointment in the course of a general receivership, and not to one for specifically described property, and which occurs in the progress of the ordinary foreclosure action. I see no occasion to infer that Congress, in enacting section 77B of the act (11 USCA § 207) intended that a foreclosure receivership of a specific piece of real estate, even though it may constitute the debtor's only asset, should be comprehended by the words "equity receivership" ...