In re Missouri Pacific Railroad Company, 6935.

• Decision Date: 25 February 1955
• Docket Number: No. 6935.,6935.
• Citation: 129 F. Supp. 392
• Parties: In the Matter of MISSOURI PACIFIC RAILROAD COMPANY, Debtor.
• Court: U.S. District Court — Eastern District of Missouri

129 F. Supp. 392

In the Matter of MISSOURI PACIFIC RAILROAD COMPANY, Debtor.

No. 6935.

United States District Court E. D. Missouri, E. D.

February 25, 1955.

COPYRIGHT MATERIAL OMITTED

Russell L. Dearmont and Thomas T. Railey, St. Louis, Mo., for Guy A. Thompson, Trustee, Missouri Pac. R. Co. and all other debtor companies.

Burton K. Wheeler and Edward K. Wheeler, Washington, D. C., and Oliver & Oliver, Cape Girardeau, Mo. (Wheeler & Wheeler, Washington, D. C., of counsel), for Missouri Pac. R. Co., debtor.

John L. J. Hart, John Fleming Kelly, and Jay W. Tracey, Jr., Denver, Colo. (Holland & Hart, Denver, Colo., of counsel), for Alleghany Corp.

Percival E. Jackson, New York City (Theodore N. Tarlau and Joseph J. Bryer, New York City, of counsel), for Group of Holders of First and Refunding Mortgage Bonds of Missouri Pac. R. Co.

DeLancey C. Smith, San Francisco, Cal., Henry I. Stimson, New York City (Tralles, Hoffmeister & Gilpin, St. Louis, Mo., and Hale, Stimson, Russell & Nickerson, New York City, of counsel), for Protective Committee of 5¼% Secured Serial Gold Bonds of Missouri Pac. R. Co. and certain stockholders of N. O. T. & M. R. Co.

Harry Kirshbaum, New York City, for Missouri Pac. Convertible Bondholders Group.

Robert E. Smith, New York City, for Protective Committee for Holders of Preferred Stock of Missouri Pac. R. Co.

Abraham K. Weber, New York City, for Carl Rosenberger et al., holders of International-Great Northern R. R. Adjustment Mortgage Bonds.

Charles W. McConaughy, New York City, and Jacob Chasnoff, St. Louis, Mo. (Cadwalader, Wickersham & Taft, New York City, and Lowenhaupt, Mattingly, Chasnoff & Stolar, St. Louis, Mo., of counsel), for Group of Institutional Investors Holding First and Refunding Mortgage 5% Bonds of Missouri Pac. R. Co.

W. Hugh Peal and Allan Kuller, New York City, Chadbourne, Parke, Whiteside, Wolff & Brophy, New York City, for Manufacturers Trust Co., Trustee, Missouri Pac. R. R. First and Refunding Mortgage.

James I. Wyer, New York City, Ballantine, Bushby, Palmer & Wood, New York City, for Bankers Trust Co., Trustee, Missouri Pac. 5½% Convertible Bonds.

Emmet McCaffery, New York City, Dorr & Hand, New York City, for Chemical Corn Exchange Bank, Trustee under Indenture Securing Missouri Pac. 5¼% Secured Serial Bonds.

Hugh L. M. Cole, New York City, Milbank, Tweed, Hope & Hadley, New York City, and Wm. G. Pettus, Jr., St. Louis, Mo., Shepley, Kroeger, Fisse & Shepley, St. Louis, Mo., for City Bank Farmers Trust Co., Trustee under International-Great Northern First Mortgage.

Moses & Singer, New York City (Felix Fishman and Lyonel E. Zunz, New York City, of counsel), for Oscar Gruss & Son, as Holders of International-Great Northern R. R. Adjustment Mortgage Bonds.

Edward F. Colladay, Colladay & Colladay, Washington, D. C., and Everett Paul Griffin, St. Louis, Mo., for Protective Committee of First Mortgage Bonds of International-Great Northern R. Co.

William H. Biggs, St. Louis, Mo., for Missouri Pac. 5¼% Secured Serial Gold Bonds Committee.

Frederick M. Myers, Jr., and L. George Reder, Pittsfield, Mass., on behalf of Independent Directors, Missouri Pac. R. Co.

S. Mayner Wallace, St. Louis, Mo., Leonard D. Adkins, New York City, for Savings Banks Trust Co., Holder of N. O. T. & M. First Mortgage Bonds.

Wm. C. Connett IV, St. Louis, Mo., Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., for St. Louis Union Trust Co., Trustee, and Roland C. Behrens et al., as a Bondholders Protective Committee for Little Rock & Hot Springs Western Bonds.

Smith, Harris & Hanke, St. Louis, Mo., and Milton Paulson, New York City (Samuel M. Koenigsberg, Newark, N. J., of counsel), for Estate of Adelaide Loria, Deceased, Owner of $5,000 principal amount of Missouri Pac. R. R. General Mortgage Bonds.

James J. Lewis, Alfred B. Teton, Grant G. Guthrie, Chicago, Ill. (Froelich, Grossman, Teton & Tabin, Chicago, Ill., of counsel), for Protective Committee for Holders of Common Stock of Missouri Pac. R. R. Co.

Jones, Hocker, Gladney & Grand and George S. Roudebush, St. Louis, Mo. (Hopkins, Sutter, Halls, Owen & Mulroy, and Harry B. Sutter, C. Ives Waldo, Jr. and James J. McClure, Jr., Chicago, Ill., of counsel), for Avery Brundage et al., Stockholders of N. O. T. & M. R. Co.

Walter H. Brown, Jr., New York City (Willkie, Owen, Farr, Gallagher & Walton, New York City, of counsel), for New York Trust Co.

MOORE, Chief Judge.

These are proceedings under Section 77 of the Bankruptcy Act, 11 U.S.C.A. § 205, for the reorganization of the three principal debtors, Missouri Pacific Railroad Company, New Orleans, Texas & Mexico Railway Company, and the International-Great Northern Railroad Company, and their subsidiary debtors. The matter before the Court is a plan of reorganization for the aforesaid companies, which plan, herein called the 1954 Plan, is the fourth Plan of Reorganization submitted to this Court by the Interstate Commerce Commission. Previous plans were submitted in 1940, 1944 and 1949, with respect to which previous opinions of this Court may be found under the style of In re Missouri Pacific Railroad Co., 39 F.Supp. 436; Id., 50 F. Supp. 936; Id., 64 F.Supp. 64, and Id., 93 F.Supp. 832.

The 1949 Plan, though approved by this Court and affirmed by the Court of Appeals for the Eighth Circuit, sub nom. State of Texas v. Group of Institutional Investors, 191 F.2d 265, certiorari denied 342 U.S. 904, 72 S.Ct. 293, 96 L.Ed. 676; Morris v. Group of Institutional Investors, 342 U.S. 918, 72 S.Ct. 364, 96 L.Ed. 686; Chemical Bank & Trust Co. v. Group of Institutional Investors, 343 U.S. 929, 72 S.Ct. 757, 96 L.Ed. 1339, and Chemical Bank & Trust Co. v. Group of Institutional Investors, 343 U.S. 982, 72 S.Ct. 1018, 96 L.Ed. 1372, was returned to the Commission prior to final confirmation pursuant to a petition under Section 208, Title 11 U.S.C.A., eighteen months having expired since the Commission filed its plan with the Court. The Commission reopened its proceedings upon concluding that "changed conditions are such as to constitute developments which have occurred since approval of the 1949 Plan of Reorganization which make it necessary that the Commission re-examine and reconsider such Plan pursuant to the provisions of Section 208(b) of Title 11, U.S.Code, and, if necessary, to modify such Plan."

Accordingly, the Commission held hearings, and in February, 1954, an Examiners' Proposed Report was issued recommending substantial modifications and changes in the 1949 Plan of Reorganization.

Meanwhile, the Trustee of all Debtor Companies, Guy A. Thompson, pursuant to an order of this Court on the Trustee's motion, offered his services and cooperated with the parties to these proceedings in an effort to aid them in composing their differences with respect to a plan of reorganization, so that a final reorganization of the debtor companies might be expedited. As a result of extended negotiations, stipulations were signed by a large majority of the parties in interest approving what was called an "Agreed System Plan". This plan modified in certain respects the plan approved by the Examiners; and the Plan approved by the Commission and certified to the Court substantially adopted the modifications of the 1949 Plan proposed by the Examiners as modified in the "Agreed System Plan".

The details of the 1954 Plan of Reorganization need not be set out here in detail. The Plan appears in Volume LXIV of the Missouri Pacific Reorganization Proceedings. The distribution of cash and new securities under the plan is in accordance with the Commission's Appendix "J", which is attached at the end of this opinion.

Objections and claims for equitable treatment were filed prior to the hearing for approval of the Plan by eight groups. One group, Stewart Huston et al., so-called "Independent Directors of Missouri Pacific", was permitted to participate in the hearing subject to objections that they have no authority to represent the Debtor, its Board of Directors, or any defined or determinable group of creditors, stockholders or others having a right to be heard. Those objections are now sustained, see Huston v. Thompson, 8 Cir., 1954, 217 F.2d 308, and the objections of the so-called Independent Directors will not be further considered.

Objections of St. Louis Union Trust Company, Trustee under the Little Rock & Hot Springs Western First Mortgage Bonds will not be herein considered because the claim of these bondholders has been separately determined in a manner which dispenses with the objections.

The remaining objections are primarily directed to two propositions: (1) that the treatment accorded certain claims are unfair and inequitable, and that the Commission failed to apply applicable legal standards; and (2) that the Commission lacked power to approve and certify to the Court a plan providing for the merger of the debtor companies under the facts in this case.

It is worthy of note at this point that as to all the objecting parties, there are other parties representing the same securities, or interests, which have appeared in this Court strongly advocating the prompt approval of the Plan. In contrast with hearings on earlier plans submitted to this Court, no oral testimony was offered in support of objections, and only two documents were offered which the Court believes are immaterial.

This is not to say that the objections are considered frivolous or insincere, but merely to point out that the record is substantially without conflict and the objectors are relying primarily on legal argument to sustain their position.

The group of Institutional Investors Holding First and Refunding Mortgage 5% Bonds of Missouri Pacific Railroad Company has filed Objections and Brief in support thereof, urging that the Plan is unfair to those bondholders, that the Plan is unsound, and that the Commission failed in the performance of its duties in accepting and approving the "Agreed System Plan".

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